Structure of an Exclusive Management Agreement for a K-Pop Artist (Standard Form Contract)

Posted by Joseph Hwang Joseph Hwang 8/01/2024

Structure of an Exclusive Management Agreement for a K-Pop Artist (Standard Form Contract) - Part 10.

Joseph Hwang

* Attention: This article is based on the latest version of the “Standard Form of Exclusive Contract for Musicians (hereinafter referred to as “SFEC,” Notice No. 2024-0021, Ministry of Culture, Sports and Tourism of the Republic of Korea, amended on June 3, 2024).”

** Contract parties: Artist (hereinafter referred to as “Artist”) and artist management company (hereinafter referred to as “Company”)

***

Article 9 (Publicity Rights, etc.)

① The Artist’s name (including real name, alias, nickname, group name, etc.), photograph, portrait, handwriting, voice, and anything else representing the Artist’s identity created by this Agreement shall belong to the Artist. The Artist shall have the property right to commercially utilize it. The Company shall have the right to exclusively use it in connection with the Artist’s popular culture art service or the Company’s business for the period of the Agreement unless otherwise agreed between the Company and the Artist.

② The Company’s rights under Paragraph ① shall expire upon the end of the contract period. However, if the Company wishes to use the property rights under Paragraph ① even after the end of the contract period, it must agree in advance in writing with the Artist.

③ The Company shall not damage the Artist’s personality, such as honor when exercising the rights under Paragraph ①.

***

SFEC regulates the “Publicity Rights” of Artists. Publicity rights are not a concept or regulation initially stipulated in the Korean legal system. Korean courts have previously recognized a concept similar to publicity rights under the term “Portrait Right,” but “Portrait Right” is also not a defined legal term. Furthermore, while portrait and publicity rights are interchangeable, they are not the same concept.

As mentioned above, because these are not defined legal terms and concepts, Korean courts have recognized the publicity rights of entertainers and celebrities differently in each case. The United States initially recognized publicity rights as an adjunct to the privacy right. Still, it wasn’t until the Federal Circuit’s 1953 decision in Haelan Laboratories, Inc. v. Topps Chewing Gum, Inc. that the right was recognized as a separate and independent economic value distinct from the general privacy right. Since then, publicity rights have been identified in other states through legislation such as the New York Right of Publicity Act of 1903 and have been protected by case law.

Since it is recognized as a right based on human personality, there has been much controversy over whether it is a personal right or a property right in the process of its legal recognition. If it is recognized as a personality right, the right of publicity is an inalienable right that cannot be transferred to others. Still, if it is defined as a property right, the disposition of the right to transfer the right to a third party can be recognized. The controversy arises because the right of publicity has the characteristics of a right of personality. Still, it also has the characteristics of a property right to earn a living for celebrities and entertainers. For this reason, the right to publicity is arguably a very peculiar right.

As a result of this peculiarity, Korean courts have ruled in favor of the right holder in some cases but not in others. In the process, there has been a growing consensus that it is better to recognize the right of publicity as a separate special right rather than simply interpreting it as a right of portrait. As Apple’s VR/AR device “Vision Pro” has recently begun to use facial anatomical features as data by allowing users to use avatars, the need for legislation in this regard can no longer be postponed.

South Korea is the first country to legislate the right of publicity in Article 2 (Definitions), Provision 1. (l) of the “UNFAIR COMPETITION PREVENTION AND TRADE SECRET PROTECTION ACT.” In other words, the new legislation aims to prevent unfair competition from infringing on the property rights of celebrities’ right of publicity. The provision is as follows.

“(l) An act of infringing on another person’s economic interests by using a mark that can distinguish the individual’s identity, such as name, portrait, voice, or signature, which is widely recognized in the Republic of Korea and has economic value, for one’s own business without permission, in a manner contrary to fair commercial practices or competition order;”

This new regulation first came into effect on June 8, 2022. It was followed by Article 3 of the Amendment to the Civil Act, which clarifies the right of publicity under the name of the “right of personality marking profit.” The Civil Act is currently being revised. This Civil Act amendment defines the right to commercialize personal characteristics as “the right to commercially exploit one’s name, portrait, voice, and other personal characteristics.” Paragraph 4 of Article 3 (3) of the same amendment defines this right as an inheritable right for 30 years after the person’s death and explicitly defines the general content of the right of publicity and its property rights aspects.

With this legal background in mind, let’s examine the SFEC’s regulations on the right of publicity.

“Article 2 (Definitions), Provision 1. (l) of the UNFAIR COMPETITION PREVENTION AND TRADE SECRET PROTECTION ACT” provides the legal requirements for recognizing the right of publicity. To qualify for a statutory right of publicity, a person must first be widely known worldwide. Second, the publicity must have economic value. If these two requirements are met, a famous celebrity or entertainer will likely have a legally recognized right of publicity. If so, an artist who is a party to SFEC’s contract will sign an exclusive artist agreement to identify the right of publicity in accordance with Article 9 of this Agreement, and the right will be protected by law.

Given the personal nature of the Artist’s publicity rights, Article 9 of the SFEC stipulates that the rights are non-transferable. However, this contract stipulates that the Company shall legally and exclusively utilize the Artist’s non-transferable publicity rights to generate revenue during the contract term. Although the rights cannot be transferred from the Artist, the contract allows the Company to exercise its property rights to demand payment from third parties using the contract period only. However, the SFEC also stipulates that the Company’s exercise of such exclusive rights can be separately agreed with the Artist to use publicity rights outside of the exclusive form, such as non-exclusive or joint rights.

The SFEC also stipulates that the Company’s right to use the publicity rights shall expire upon the termination of the Company’s contract with the Artist. However, if the Company wishes to continue to use the Artist’s publicity rights even after the termination of the Agreement, the Company must obtain separate written consent from the Artist. Furthermore, the SFEC stipulates that the Company may not use the publicity rights in a way that would disparage the Artist’s personality. Therefore, the Company must obtain the Artist’s written consent during the “trademark registration” process described in the previous article, which must also include the Artist’s written authorization to use the publicity rights.

* Standard contract analysis continues in the series.

** References and quotations:

https://www.mcst.go.kr/kor/s_data/ordinance/instruction/instructionView.jsp?pSeq=2413

https://namu.wiki/w/%ED%8D%BC%EB%B8%94%EB%A6%AC%EC%8B%9C%ED%8B%B0%EA%B6%8C

https://www.copyright.or.kr/information-materials/trend/precedents/view.do?brdctsno=16617&list.do?pageIndex=1&searchText=&servicecode=06&brdctsstatecode=&brdclasscode=&searchTarget=ALL&nationcode=

https://www.lawtimes.co.kr/LawFirm-NewsLetter/188790

Series Articles

Overview

https://www.musicbusiness.co.kr/2024/05/structure-of-exclusive-management.html

Part 1.

https://www.musicbusiness.co.kr/2024/05/structure-of-exclusive-management_26.html

Part 2.