[Representation] IP

Barun Law Obtains the Decision from the Supreme Court That Overturns Lower Courts’ Rejection of Copyright Infringement for In-Store Music Playback

Case Overview

a. Party Represented by Barun Law:

The Korea Music Copyright Association (KOMCA).

b. Case Background:

A background music service provider obtained digital audio files from music distributors—similar to commercially sold music—and stored them on its servers. These audio files were then transmitted via webcasting to retail stores, where they were played as background music.

KOMCA argued that this playback constituted a public performance and thus infringed the copyright holders’ performance rights, demanding compensation for unauthorized use.

However, both the first-instance and appellate courts dismissed KOMCA’s claims, ruling that the audio files in question qualified as ‘commercial sound recordings’ under Article 29(2) of the former Copyright Act, which limited performance rights in certain cases.

?Key Legal Issue

Article 29(2) of the former Copyright Act allowed public performance of ‘commercial sound recordings’ if no direct compensation was received from the audience. The key question was whether the audio files transmitted to stores fell under the definition of ‘commercial sound recordings,’ which the Supreme Court had interpreted as recordings ‘produced for the purpose of commercial sale.’

?Our Argument and Role

We contended that the classification of ‘commercial sound recordings’ should be determined based on the intent at the time of their production. We challenged the appellate court’s ruling (i.e., the audio files played in the defendant’s stores were merely reproductions of sound recordings originally produced for commercial sale and therefore qualified as ‘commercial sound recordings’) by arguing:

• The digital audio files stored on the service provider’s servers should be treated as separate recordings, not mere reproductions of commercially sold music.
• These files were not fixed for public sale but were exclusively created for background music services, distinguishing them from ‘commercial sound recordings.’

These arguments ultimately convinced the Supreme Court.

?

Supreme Court Ruling

The Supreme Court ruled that:

“When the background music service provider stored the audio files on its servers, they were fixed for the purpose of providing background music services rather than for commercial sale, and therefore, they do not qualify as ‘commercial sound recordings’. Thus, playing these audio files in retail stores constituted an act of infringing performance rights.”

?

Significance of the Ruling

This ruling clarified that digital music files provided by background music service providers are not ‘commercial sound recordings’ under the former Copyright Act. Therefore, businesses that play such music in stores must pay performance royalties to copyright holders, reinforcing the protection of performance rights in the digital era.

□? Attorneys in charge: Lee Eung-Se, Nam Yeon-Jeong

?Attorney Lee, Eung Se's profile

?Attorney Nam, Yeon Jeong's profile

?

?