SM vs Chen Baekxi Legal Dispute Expected to Prolong... EXO Full Group Comeback Prospects

The dispute between SM Entertainment (hereinafter SM) and Chenbaekxi is expected to be prolonged. Both sides have indicated legal action without narrowing their sharp differences through press conferences and official statements.

EXO ChenBaekXi.
[Photo by SM Entertainment]

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According to the music industry on the 16th, Chenbaekxi's agency INB100 reportedly did not pay SM royalties for IP (intellectual property) such as music and statements from January to June.

In response, INB100 denied this, stating that the agreement did not specify IP royalties and that they had never been asked to pay royalties.

Earlier, on the 14th, INB100 stated, "The agreement last June allowed us to use the IP, but there was no mention of any compensation," and "We have never received a request from SM to pay IP royalties, so the claim that we did not pay royalties is unreasonable."

Chenbaekxi further emphasized that they had actually proposed to SM at a press conference that they were willing to pay IP royalties first. INB100 added, "SM has not responded to our position at all and is playing the media by claiming unpaid IP royalties, which is regrettable."

That morning, Chenbaekxi announced they would file a lawsuit demanding settlement payments. This is interpreted as a countermeasure against SM's lawsuit against Chenbaekxi for contract enforcement.

INB100 stated, "Since SM filed the lawsuit first, we will disclose everything including last year's negotiation process and actively respond," adding, "Through this legal process, we will obtain accounting and settlement documents as stipulated by law and the exclusive contract to assert our rightful claims, and it will also be revealed in court that SM's settlement system is not proper."

Chenbaekxi had a conflict last June with their agency SM, claiming unfair long-term contracts and opaque settlements. The two sides then reached a dramatic agreement, and in January this year, Chenbaekxi announced they would operate independently by establishing the independent label INB100 based on mutual consultation with SM.

SM explained the situation at the time, saying, "Going forward, all eight members of EXO will continue activities together as EXO," and "For Chen, Baekhyun, and Xiumin, under the above exclusive contract, the artists agreed with us to allow separate individual activities," suggesting the conflict was resolved.

Chen Baixi's press conference site. (From left) Lawyer Lee Jae-hak, Cha Ga-won, CEO of One Hundred, Kim Dong-jun, CEO of I&V100. [Image source=Yonhap News]

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However, on the 10th of this month, Cha Gawon, chairman of the parent company of Chenbaekxi's agency INB100, Kim Dongjun, CEO of INB100, and lawyer Lee Jaehak from Law Firm Lin held an emergency press conference titled 'Accusation of SM Entertainment's Deceptive Agreement.'

On that day, Chenbaekxi stated, "We will not remain silent about unfair demands," and demanded that SM: ▲ acknowledge the failure to fulfill the promise of a 5.5% album distribution fee made before last year's agreement ▲ refrain from demanding 10% of the artist's personal sales as SM failed to fulfill the agreement ▲ provide settlement data, not SM's standard settlement forms, for activities as EXO after the agreement ▲ provide existing exclusive contract and settlement data.

SM, through an official statement that day, announced it would hold Chenbaekxi legally responsible. They clarified that the core issue lies in prior tampering by MC Mong and Chairman Cha Gawon’s side. SM also explained that the claims regarding the distribution fee rate, strongly raised by INB100, are untrue and that SM is not a distributor and thus has no authority to decide on this matter. Furthermore, SM stated they have sufficiently provided settlement data to artists including Chenbaekxi, and that Chenbaekxi's claims are merely nitpicking.

Chenbaekxi responded with another official statement, expressing deep regret over SM's repeated tampering claims and demanding SM disclose the standards for tampering. They also declared they would strongly respond by pursuing all civil and criminal liabilities against SM for defamation and spreading false information.

With SM filing a contract enforcement lawsuit against Chenbaekxi on the 12th, the conflict between the two sides is expected to be prolonged in court. The originally planned full EXO group album release scheduled for this winter has also become uncertain amid the ongoing litigation.

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