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

Posted by Joseph Hwang Joseph Hwang 8/07/2024

Structure of an Exclusive Management Agreement for a K-Pop Artist (Standard Form Contract) - Part 16.

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")

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Article 17 (Confidentiality)

The Company and the Artist shall not disclose the contents of this Agreement and the counterparty's business secrets obtained in connection with this Agreement to any third party or use them for any unjust purpose. This obligation of confidentiality hereby shall be maintained even after the cancellation or termination of the contract and the end of the contract period. However, it shall be exempted from responsibilities except in the case of providing information to experts such as lawyers, governments, etc. who are obligated to maintain confidentiality for contract-related advice.

Article 18 (Dispute Resolution)

① The Company and the Artist shall endeavor to resolve any disputes arising out of this Agreement spontaneously and smoothly.

② In the event that a dispute is not resolved in accordance with Paragraph ①, the following procedures may be used prior to litigation, and both parties shall engage in such procedures in good faith.

1. Mediation by the Content Dispute Mediation Committee

2. mediation by the Korean Copyright Committee

3. arbitration by the Korean Commercial Arbitration Center

☞ 'Arbitration' is a system that resolves disputes by judgment of experts in the field, and unlike litigation (three-judge system), it ends in a single judgment (arbitral award has the same effect as a final judgment of a court).

③ In the event that the procedure pursuant to Paragraph ② is not carried out, the resolution of disputes regarding this Agreement shall be subject to proceedings under the Civil Procedure Act.

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Article 17 of the SFEC is a confidentiality clause. The Agreement does not define accurately what constitutes a "business secret" that must be kept confidential. "Business secrets" are most likely secrets of the Company, not the Artist. Or it could include secrets of other companies with which the Company does business or collaborates. Therefore, I recommend that the Company specify the kind of secrets in an Addendum to this Agreement.

Although the " business secrets" are specified, it is often difficult for a Company to prove a breach of contract by the Artist if the secrets are disclosed after the termination of the Agreement. And even if the Company can prove that the Artist breached the contract, whether the secret is worthy of legal protection is another matter. The secrets must be valuable enough to warrant enforcing the obligation of confidentiality, and this issue may require the application of other standards covered by the law. An example is the application of "trade secret" as defined by the Unfair Competition Prevention and Trade Secret Protection Act of South Korea.

Article 2 (Definitions), Section 2 of the Act defines "trade secret" as follows.

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2. The term "trade secret" means information, including a production method, sale method, useful technical or business information for business activities, which is not known publicly, is managed as a secret, and has independent economic value;

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According to the regulations, a "trade secret" is (i) information that is not known to the public, (ii) has independent economic value, and (iii) is technical or managerial information that is useful in the production methods, sales methods, and business activities that have been kept secret. In other words, the law does not protect information that a company arbitrarily claims to be secret; it is more likely to be recognized as protected if it is not known to the public and is something that the company has made every effort to keep secret and of great importance.

A few "trade secrets" have been recognized in Korean civil or criminal cases. Therefore, even if a Company and an Artist exemplify a trade secret in a Supplemental Agreement, it is important to consider whether it is a secret that would be recognized in court.

Next, in the event of a dispute, the SFEC recommends that Companies and Artists try to mediate the conflicts with a third-party neutral organization before going straight to court. Of course, you can skip this pre-litigation process and go straight to court. However, the downside of filing a lawsuit is that it can be costly in terms of attorney fees and other legal expenses, and it can take a long time to get a judgment. Any party can also try to settle or arbitrate during a lawsuit. It is recommended that the parties consult with an attorney before entering into a settlement or arbitration process, as the positions expressed during the settlement or arbitration may affect the outcome of the lawsuit if the settlement or arbitration is unsuccessful.

* Standard contract analysis continues in the series.

** References and quotations:

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

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.

https://www.musicbusiness.co.kr/2024/06/structure-of-exclusive-management.html

Part 3.

https://www.musicbusiness.co.kr/2024/06/structure-of-exclusive-management_16.html