At its plenary session on March 29, 2023, the Culture, Sports and Tourism Committee of the National Assembly passed a resolution on the “Legislative Bill on Creating a Fair Distribution Environment for Cultural Industries” (hereby referred to as the “Bill”) to prepare protective measures regarding authors’ rights.

In the aftermath of the recent passing of the author of the “Black Rubber Shoes” cartoon (Korean Romanization: Geomjeong Gomusin) following a copyright dispute with his publisher, there have been increasing calls for improved protection of authors’ rights. In response, the Culture, Sports and Tourism Committee of the National Assembly passed a resolution on the Bill at its plenary session on March 29, 2023. The Ministry of Culture, Sports and Tourism (the “MCST”) - the competent ministry - announced its intention to pass the Bill by the first half of this year.

However, related agencies, including the Korea Communications Commission and the Ministry of Science and ICT, have raised concerns regarding a regulatory overlap with the Broadcasting Act, Internet Multimedia Broadcasting Business Act, and Telecommunications Business Act. The Culture, Sports and Tourism Committee passed the Bill at its plenary session noting that it will reevaluate the Bill if the relevant ministries reach a consensus.

Below is a summary of the key provisions of the Bill.
 

The Bill follows the Framework Act on the Promotion of Cultural Industries’ definitions for key terms such as “cultural industries” and “cultural products” (Article 2 of the Bill). These definitions cover the majority of cultural industries and cultural products, such as movies, videos, music, games, publishing, broadcasting content, cartoons, advertisements, performances, digital cultural content, and user-generated cultural content. As a result, the Bill partially overlaps with the Broadcasting Act and the Telecommunications Business Act, among others, in terms of scope of application.
 

The Bill sets forth 13 types of prohibited acts (including the following) that have recently been the subject of controversies: (i) hindering the production activities of cultural product manufacturers by modifying the production direction, designating/replacing production personnel, etc. and (ii) forcing the transfer of intellectual property rights, acquiring them free of charge or distributing the profit gained from using intellectual property rights at a significantly lower level compared to normal trade practice. However, the Bill delegates the detailed implementation of these prohibitions to the Presidential Decree (Article 13 of the Bill).

In the event of a violation of the aforementioned prohibitions, the Minister of the MCST may issue a corrective order (Article 15 (1) of the Bill) and failure to comply with the corrective order may result in imprisonment of up to two years or an administrative fine of up to KRW 150 million (Article 20 of the Bill). However, if the MCST determines during its investigation that the act in question constitutes an abuse of market dominance or unfair trade practice under the Monopoly Regulation and Fair Trade Act, the MCST must request the Korea Fair Trade Commission to take necessary measures (Article 15 (3) of the Bill).
 

The Minister of the MCST must regularly conduct surveys on the state of the creation/production and distribution environments of cultural industries (Article 9 (1) of the Bill). To this end, the MCST may request businesses to provide materials, and businesses must comply unless they have a justifiable reason (Article 9 (2) of the Bill). Failure to submit or submitting false materials may result in an administrative fine of up to KRW 5 million (Article 22 (2) 1 of the Bill).
 

Parties to a contract concerning cultural products will be required to stipulate certain items in the contract and exchange signed and sealed copies of the contract (Article 11 (2) of the Bill). A party that fails to either include the required items or provide a signed/sealed copy of the contract to the other party may be subject to a corrective order by the Minister of the MCST (Article 11 (5) of the Bill). Failure to comply with the corrective order may result in an administrative fine of up to KRW 10 million (Article 22 (1) of the Bill).
 

The MCST recently announced that it would re-examine the terms and conditions of the 82 standard contracts in the 15 fields under its supervision. Although companies are not required to use these standard contracts, they may be taken into consideration during the review of terms by regulatory agencies or in the enforcement of individual laws. The standard contracts may also serve as a basis for judgment by a court or relevant ministry in consumer disputes. The Bill also provides that a person who uses a standard contract under Article 12 of the Bill or any other law is deemed to comply with the obligation to specify the necessary matters and the obligation to provide the contract to the other party as discussed in Section D. above (Article 11 (3) of the Bill).
 

Cultural product business operators must preserve cultural product-related contracts for at least three years as prescribed by the Presidential Decree (Article 11 (4) of the Bill). Any person who violates the above may be subject to an administrative fine of up to KRW 5 million (Article 22 (2) 2 of the Bill).
 

The Bill is to take effect within one year of the date of its promulgation (Article 1 of the Addenda). If the Bill is passed by the National Assembly, companies may have to review their contracts and business practices, monitor the MCST’s drafting of the Enforcement Decree and its review of the standard contracts and provide their opinions as necessary. Furthermore, as the MCST is likely to conduct large scale surveys before and after the Bill takes effect, companies are advised to respond appropriately to such surveys and legislative changes.

[Korean Version]