Fair Trade Commission imposes a 500 million KRW fine on Kakao Entertainment

Fair Trade Commission: Kakao monopolizes secondary creation rights of contest-winning works... Restrictions on webtoon and film adaptations

Kakao Entertainment was sanctioned by the Fair Trade Commission for signing contracts that exclusively determine the adaptation of contest-winning works into dramas or films and the production companies involved.

On the 24th, the Fair Trade Commission announced that it decided to impose corrective orders and a fine of 540 million KRW on Kakao Entertainment for abusing its superior bargaining position to restrict the secondary creation rights of contest-winning authors (violation of the Fair Trade Act).

According to the Fair Trade Commission, Kakao Entertainment signed serial publication contracts with 28 authors who won five web novel contests held between 2018 and 2020, granting itself exclusive rights to create secondary works such as webtoons, dramas, and films. While contest organizers typically contract with a condition of having the right of first negotiation for secondary works, Kakao Entertainment demanded exclusive production rights. The Fair Trade Commission pointed out that due to these unfair contracts, authors were deprived of the opportunity to choose better terms, and even if Kakao Entertainment did not produce secondary works, it could neither produce them directly nor allow third parties to do so.

The Fair Trade Commission stated, "This case involves a major platform operator using its superior bargaining position to restrict the rights of creators in contests that serve as gateways for new authors. This is contrary to the intent of copyright laws that strictly limit the comprehensive transfer of secondary creation rights, the Ministry of Culture, Sports and Tourism’s ‘Guidelines for Creative Work Contests,’ and normal trade practices, constituting unfair conditions."

This content was produced with the assistance of AI translation services.