i Overview of the Korean media and entertainment industry
The Korean media and entertainment industry comprises different branches that include print and visual media.
The Korean commercial broadcasting industry is broadly categorised into terrestrial broadcasters, cable TV broadcasters, internet TV provided by telecommunications operators and satellite broadcasting operators. In the past, terrestrial broadcasters and cable TV broadcasters held a dominant share of the Korean commercial broadcasting market, but this landscape is rapidly changing with the growth of internet TV broadcasters.
In the area of print media, the newspaper industry is considered to be the largest and most significant sector, although the size of this market continues to decrease with the development of visual broadcast media.
Finally, the Korean entertainment industry encompasses different forms of media, including films, videos, music, games and cartoons, and is currently thriving with the rise of K-pop and the growing interest in Korean films. Domestically, businesses involving Korean games and internet cartoons (or ‘webtoons’)2 have also seen substantial growth.
ii Recent market trends and policy developments
Growth of programme providers
Programme providers are businesses that provide programmes to broadcasters that either exclusively air only those programmes on channels or air those programmes on channels at certain allotted time slots. Multi-programme providers (programme providers that service multiple broadcasting channels) have recently experienced significant growth in the broadcasting industry.
Acquisition of cable TV businesses by telecommunications operators
The top three telecommunications operators in Korea, SK Telecom (SKT), KT and LG U Plus (LG), are all attempting to enter the rapidly expanding commercial broadcasting market by acquiring cable TV businesses. Currently, SKT (for the acquisition of T-Broad) and LG (for the acquisition of CJ Hello) are awaiting approval from the Korea Communications Commission (KCC) and the Korea Fair Trade Commission (KFTC). By tapping into the commercial broadcasting market, telecommunications operators are striving to diversify their businesses in the face of a shrinking domestic telecommunications market that has resulted from market saturation.
Growth of and debate on over-the-top media
The over-the-top (OTT) media market, led by global service providers, such as Google’s YouTube and Netflix, is dramatically expanding in Korea. As there are no specific laws or regulations that presently apply to the OTT media industry, this industry has become a hot point of contention among the Korean National Assembly and various government agencies. An amendment bill to treat OTT media businesses as ‘broadcasting system operators’ (thereby making the Broadcasting Act applicable to these businesses) was introduced in the Korean National Assembly on 12 January 2019, and is currently being reviewed.
II LEGAL AND REGULATORY FRAMEWORK
In Korea, the different forms of media are regulated by different laws and regulations.
The Act on the Promotion of Newspapers, etc. (the Newspaper Act), which is regulated by the Ministry of Culture, Sports and Tourism, governs newspapers. Among other things, the Newspaper Act regulates business registration for newspaper businesses and prohibits foreigners or foreign entities from publishing newspapers in Korea.
To publish and distribute newspapers (including online newspapers), a business must complete registration with the corresponding local government. Furthermore, foreign newspaper businesses are required to establish and register a local Korean office or branch.
The Newspaper Act prohibits the publishing of any newspapers by foreign governments, companies or organisations; companies or organisations whose representative executive officer is a foreigner; and companies or organisations whose shares or equities are held by foreigners or foreign entities in excess of a threshold rate. Furthermore, the Newspaper Act prohibits the publishing of online newspapers by foreigners.
ii Broadcast communications
Broadcast communications are governed by the Broadcasting Act and the Internet Multimedia Broadcast Services Act, the latter of which governs businesses delivering broadcasts through internet protocols, and both of which are regulated by the KCC and the Ministry of Science and ICT (MSIT). Among other things, the acts regulate broadcasting operator licences and rating systems.
Broadcasting operators must either obtain a licence from the KCC, or obtain a licence or an approval or file a registration with the MSIT.
Korean television broadcasters are required to self-rate their programmes based on five elements that may be harmful to viewers (theme, violence, sexuality, imitation risk and language) before broadcasting the programmes, and must display the rating throughout the broadcast. The ratings categories are: ‘for all, ‘viewers 7 and up’, ‘viewers 12 and up’, ‘viewers 15 and up’ and ‘viewers 19 and up’. The KCC assesses the appropriateness of the rating after the programme is broadcast.
iii Online media
Although there are no laws that specifically govern OTT or online media, the Telecommunications Business Act (TBA), regulated by the MSIT and the KCC, generally governs services provided through telecommunications technology. Among other things, the TBA imposes restrictions on telecommunication business operators, which includes value-added service providers (VSPs). There are also laws that regulate the management of personal information relevant to online media, which are not covered in this chapter.
VSPs must obtain approval from or file a report with the MSIT before operation. VSPs broadly include telecommunications service providers that provide telecommunications services using facilities leased from facilities-based telecommunications service providers (i.e., internet service providers (ISPs)). Online media services are normally required to report to the MSIT as VSPs.
The TBA generally prohibits certain types of conduct by telecommunication service providers that can harm consumers or fair trade.
Films are governed by the Promotion of the Motion Pictures and Video Products Act (the Motion Pictures Act). Among other things, the Motion Pictures Act regulates the film rating system and imposes a quota of Korean films on film theatres (called the screen quota system).
The Korea Media Rating Board (KMRB) rates films based on content. Unrated films cannot be screened in theatres. There are five ratings: ‘for all’, ‘12 and up’, ‘15 and up’, ‘restricted for teenagers (under 18)’ and ‘restricted’.
Film theatres are required to screen Korean films for at least 20 per cent of each business day.
III FREE SPEECH AND MEDIA FREEDOM
i Protected forms of expression
Freedom of expression is a right recognised by the Constitution of Korea. In Korea, freedom of expression encompasses the freedom of speech and press. The Korean Constitutional Court has held that all forms and channels for communication and expression are protected by the right.3 Nevertheless, this right may be restricted based on the content of expression, including those that harm another party’s reputation or infringe upon another party’s rights.
Restrictions on freedom of expression
There are some restrictions on freedom of expression that are particular to certain forms of communications.
The KCC publishes the Regulations on Broadcasting Standards, and reviews broadcast communications after they have aired. The KCC also publishes the Regulations on Broadcast Advertisement Standards for advertisements. After a review of the content that was aired, the KCC may impose sanctions on the relevant broadcasting companies, programme providers or production companies when the content, as a whole or in part, is not compliant with the above regulations.
The KMRB requires films and videos to be rated by it before they are distributed through various channels. While there are broad exceptions to this requirement (e.g., free videos open to the public provided through telecommunications network are exempt from this requirement), if a person screens films or videos without a rating, or provides these films or videos in a way that is not compliant with the rating, that person may be subject to criminal sanctions. As mentioned in Section II.ii, broadcasters are required to rate their broadcast programmes and indicate the rating while broadcasting the programme.
The Act on Promotion of Information and Communications Network Utilisation and Information Protection, etc. (the Network Act) prohibits the distribution of illegal content, including content that is obscene, injures another’s reputation, or is greatly harmful to teenagers and juveniles. The KCC regulates accordingly by establishing content standards and conducting an ex post review of the content. After the review, the KCC may issue a corrective order to the telecommunications service operator or the publisher of the content.
Regulations on hate speech
To date, there are no laws in Korea that regulate hate speech (i.e., speech that spurs animus towards a particular race, nationality or class of people). While Section 2 of the National Human Rights Commission Act considers any discriminatory actions against another party because of their sex, religion, etc., to be an infringement on their right to equality (as protected by the Korean Constitution), this law has little practical effect as there are no sanctions against violators under the law. In response, there have recently been moves to submit bills that regulate hate speech.4
General civil and criminal regulations
Any infringements on another party’s rights, such as reputation, privacy, or image, may be subject to criminal and civil liabilities.
There are no laws that provide immunity to liability for newsgathering. A recent lower court decision held that, notwithstanding the freedom of press, any actions by the press that are in violation of express laws are not protected, and that the legality of an investigative action by the press can only be determined after a balancing of the legitimacy of the purpose behind the action, the rights protected by the act, the rights infringed by the act, the commonality of the action, and the exigency of the situation.5 A person who trespasses, secretly records a third party’s conversation or commits other violations of law (or causes another person to commit any of the foregoing violations) for the purpose of newsgathering may be criminally liable. Under current law, a party to a conversation may legally record the conversation without the other parties’ consent, but on 27 June 2019, a new bill was introduced that criminalises the act of recording a conversation without the other parties’ consent.
A recent lower court decision found a person who replayed a secretly recorded conversation (in which the person was a participant) civilly liable for violating the other party’s voice rights (portrait rights).6 This case is considered noteworthy because, although secretly recording conversation is not illegal in Korea as noted above, the court found the party civilly liable because the person replayed the recording without modification or alteration (consequently holding that this replaying of the recording infringed upon the subject’s portrait rights).
iii Freedom of access to government information
There are no laws that provide the media with special access to information. However, under the Official Information Disclosure Act, any Korean citizen, company or entity can request disclosure of any information held or managed by national or state agencies, local governments and local public enterprises (together, public agencies). A foreign individual can request information held or managed by public agencies only if he or she is domiciled in Korea, or is temporarily in Korea for academic research. A foreign company or entity can make the same request only if it has a domestic office or presence. In the case of companies or entities, the request should be filed by an authorised representative. Even then, in certain circumstances, such requests may be denied based on eight express exceptions specified under the law (e.g., infringements on an individual’s or company’s trade secrets that may materially harm that entity), in which case, administrative action (administrative suit, administrative appeal or objection) must be filed to reverse the decision.
Cases pertaining to information disclosure (and denials of requests thereof) are not all made public. Accordingly, only portions of a small number of court cases and appeals to the denial of requests for information are accessible. The most recent high-profile court case involving the issue of information disclosure was the denial of access to documents, such as reports on rescue activities, pertaining to the Sewol Ferry incident that claimed the lives of 304 people. On 16 April 2014, the National Archives of Korea denied a request for disclosure of documents produced by the Blue House (the President’s office) when the Sewol Ferry sank. On 21 February 2019, the Seoul High Court held that the documents should be kept confidential because they were part of the Presidential Archives designated under the Act on the Management of Presidential Archives and did not fall under an exception category specified thereunder.7
iv Protection of sources
Any express laws that provided journalists with the right to remain silent to protect their sources have been abolished. Currently, there are no laws that expressly allow journalists to protect their sources and it is unclear whether source protection falls under the umbrella of the constitutional right of freedom of expression (which encompasses the freedom of press and publication).
v Private action against publication
Main claims filed against the press
Under the Act on Press Arbitration and Remedies, etc. for Damages Caused by Press Reports (the Press Arbitration Act), injured parties can file a claim against a media company for correction, counter statement or further reporting. Correction requests are made to correct untrue statements published by the company. Counter statements are available irrespective of the truthfulness of the report. Further reporting requests are claims that can be filed by a person that was suspected of or prosecuted for a crime on the fact that he or she was later deemed to be innocent or had had his or her charges dropped. These claims can be resolved by direct claim against the media company, mediation through the Press Arbitration Commission or litigation. If a report is false or materially harms the reputation of the subject and does not promote public interest, the injured subject can file for a request to delete the report.
Mediation through the Press Arbitration Commission
The Press Arbitration Commission is an alternative dispute resolution body that specialises in disputes involving press reports. The arbitration department is composed of judges, attorneys and ex-media personnel. A successful agreement between the aggrieved party (the petitioner) and the media company (the respondent) is legally binding under Korean law.
If a media company acts illegally, the aggrieved party can file for damages for economic harm or emotional distress, which needs to be proved by such party. Unlike the Press Arbitration Act, these suits can be filed against individual reporters.
In Korea, if an aggrieved party’s reputation is injured because of a media report, a criminal suit can be filed against the publisher and individual reporter regardless of whether the report is false or not. However, in the case of reports that are truthful, statutory criminal sanctions are relatively lower. Additionally, potential safe harbours may exist for the publisher and individual reporter if the report can be proven to be both truthful and in the service of public interest (i.e., the publisher and the individual reporter may not be held criminally liable). For false reports, such safe harbour rule does not apply.
Defences for the press
Regardless of the truthfulness of a report, if a report harms an aggrieved party’s reputation, the aggrieved party may take civil and criminal action against the publisher. The aggrieved party must prove that he or she was defamed by the report. However, if the report is found to be truthful and in the service of public interest, then the publisher may not be criminally liable. Furthermore, even if some information in the report is false, if the publisher believed the information to be true (and had reasonable grounds to believe so), and the report was published for the public good (i.e., in the interest of society or large groups or members of society), the publisher may not be held criminally liable.8 However, the burden is on the publisher to prove their beliefs.9 Both the Constitutional Court and the Supreme Court have held that the level of protection for a public figure or a case involving social issues is lower,10 which means that the report involving such figure or case is likely to be recognised as servicing the public good.
IV INTELLECTUAL PROPERTY
i Copyright and related rights
Copyright law of Korea and its comparison to the Berne Convention
Under the Korean Copyright Act, both Korean and foreign copyrighted works are protected upon their creation in accordance with treaties that Korea has acceded to, which include the Berne Convention for the Protection of Literary and Artistic Works (Berne Convention). The Berne Convention was ratified by Korea on 2 August 1996.
The Copyright Act has since been amended several times, and recent notable changes were intended to make the Copyright Act compliant with free trade agreements entered into respectively with the European Union and with the United States (together, the FTAs). One significant change includes the extension of the protection of neighbouring rights (excluding broadcasts) from 50 years after the creator’s death to 70 years thereafter.
Korea is also a member of the World Intellectual Property Organization (WIPO), and is subject to the WIPO Copyright Treaty (WCT). Korea has complied with its duties under the WCT by reflecting necessary obligations in the Copyright Act (e.g., adopting the right of communication to the public).
Recent developments in copyright law
As mentioned above, recent notable changes were intended to make the Copyright Act comply with the requirements under the FTAs. First, the act was amended to re-establish indemnification requirements for the secondary liability of online service providers (OSPs). Second, the scope of permitted reproduction was expanded to include temporary reproduction in accordance with the FTA entered into with the United States.
The expansion of the scope of copyrighted work is also a recent development in Korea’s copyright regime. For instance, the Korean Supreme Court recently recognised that television programme formats can be regarded as work product and are thus protected by copyright law for their distinct creativity in the particular selection and sequencing of programme elements (e.g., stage, background, props, music).11 Similarly, the Supreme Court held that the rules of games (an element that comprises the game, and that were previously viewed as ‘ideas’ and not recognised as ‘expressions’ protected by copyright) can be considered in determining the ‘creativity’ of a work, which is a key element for copyrighted work.12
ii Publicity rights
There are no laws or regulations in Korea that expressly recognise publicity rights for public figures, such as celebrities. There are no Korean Supreme Court cases that provide guidance on this issue, and there is a split in lower court decisions on the recognition of publicity rights (some courts have recognised damages for the unauthorised use of celebrities’ images and names). Whether publicity rights should be recognised is a frequently debated issue in Korea.
iii Unfair business practices
Lack of protection for ‘hot news’
Coverage of ‘hot news’ is not expressly protected under current copyright law or other relevant regulations. There are different views on whether hot news should be protected. In addition, the issue of whether the distribution of ‘fake news’ should be regulated, and which authority should be responsible, is also actively debated in Korea.
Current regulations regarding news articles
In Korea, news reports on current events are generally not protected under copyright law. However, in some exceptional circumstances, news articles may be protected for their creativity or originality. A news article can be recognised as work product protected by copyright law for its creativity and originality based upon its unique content, style and vocabulary. The Supreme Court has, therefore, held that the unauthorised publication of a news article by another third-party media company can be a violation of the Copyright Act.13
V COMPETITION AND CONSUMER RIGHTS
There are no laws or regulations that specifically govern competition and consumer protection in the media and entertainment industry. These industries are, however, subject to general competition and consumer rights laws and regulation, including the Monopoly Regulation and Fair Trade Law, which regulates trade among businesses, the Regulation on Standardised Contract Act (RSCA), which regulates standard contracts between consumers and business providers, and the Act on Consumer Protection in Electronic Commerce Transactions, which applies to online business providers and consumers.
ii Regulation of the film exhibition market
The Korean film market is driven by a few major multiplex theatres. The KFTC has regulated the industry to ensure that such major companies do not commit any unfair market practices against third-party film distributors, such as the favouring of affiliates in the distribution, screening or screening duration for films.
iii Consumer protection
There has been a recent surge in the KFTC’s intervention of large businesses in their contracts with counterparties and end users; for example:
- entertainment industry: in 2007, the KFTC reviewed and regulated contracts between entertainers (e.g., singers and actors) and their management agencies for potential violations of the RSCA arising from such agencies’ unfair treatment of the entertainers. In 2017, the KFTC further amended the contracts between eight major management agencies and their trainees for similar violations, expanding the scope of protection for entertainers;14
- webtoon industry: in 2018, the KFTC examined 26 contracts executed between webtoon service providers and their artists, and ordered an amendment of any unfair provisions.15 For example, before the KFTC’s involvement, the price of webtoon content was deliberately fixed, and some provisions even allowed for the right to create derivative work; and
- gaming industry: in 2019, the KFTC examined the terms and conditions of 10 major game services, and ordered amendments of any terms that were unfair to users, including the disabling of cancellations for purchased game item gifts between users, even when such gifts were not recognised or received by the recipient user.
iv Net neutrality and recent development
In Korea, there are no express laws or regulations that mandate net neutrality of OSPs. However, the MSIT has published the Guidelines for Net Neutrality and Internet Traffic Control.
Views on net neutrality differ between the OSPs and the content and application providers. The advent of 5G networks has fuelled this already heated discussion. To foster discussion on net neutrality, in 2018, the KCC created the Internet Cooperation and Development Committee, composed of relevant government authorities, online-based companies, telecommunications service providers, non-governmental organisations and experts. The Committee is currently preparing a guideline on network usage fees to prevent unfair discrimination in the collection of network usage fees between domestic and foreign businesses, and to protect consumers during the process of network usage fee negotiations.
VI DIGITAL CONTENT
Where it is clear that defamatory content posted on a website is illegal, the website operator has the duty to take down the content and further deny access so that similar content cannot be posted, if the website operator received a request to take down specific content, or even in the absence of such request, if the website operator knew of, or if it is clear that the website operator could have known of, such content having been posted, unless the website operator, technically and economically, is not able to manage or control such content.
Under the Copyright Act, both civil liability and criminal penalty may result from copyright infringement. Separately, under the Network Act, anyone who distributes illegal content, such as obscene content or defamatory content, through communication networks (such as the internet) may be subject to criminal liability. OSPs can be held secondarily liable for the aforementioned illegal activities by their users. However, OSPs will be exempt from such civil and criminal liability if the violation occurs without the website operator’s knowledge, and notice and takedown actions are implemented pursuant to the Copyright Act’s safe harbour provision or the Network Act.
VII CONTRACTUAL DISPUTES
i Disputes regarding exclusive contracts for entertainers
Recently, the number of disputes involving exclusive contracts between entertainers and their management companies has increased. One type of common dispute involves the validity of allegedly unfair contracts; however, since the KFTC began introducing sample standard contracts following notable disputes between famous K-pop singers and their agencies, this type of dispute has become less common. Another type of dispute involves the claim of a party’s rescission of the exclusive contract based on the other party’s violation of such contract.
ii Disputes between broadcasters and content providers
Disputes often occur between terrestrial broadcasters and content providers (CPs) (in particular, production companies). In most cases, however, the disputes fall short of litigation because broadcasters leverage their market dominant positions to settle with the production companies. The most common issue is the attribution of copyright of cinematographic productions.
Because of the KCC’s publishing of different guidelines (such as a guideline regarding the process of outsourcing production of broadcasting programmes) and the growing interests in copyright, the number of such disputes is expected to increase along with the number of programme providers and CPs.16 The aforementioned guideline published by the KCC sets forth regulations, including the requirement of written contracts before the commencement of shooting, the calculation of production costs based on provided payment standards and reasonable estimated costs, and clear indications of entitlement of relevant property rights.
iii Venues and resolutions
Petitioners generally seek damages and often challenge the validity of contracts in disputes involving the media and entertainment industry. In cases where copyright or trademark infringement is recognised, the infringing party may be held criminally liable. While parties mainly seek help from the court system in such situations, for minor disputes with consumers another possible venue is the Dispute Resolution Committee of the Korea Creative Content Agency. If the issues are deemed confidential, the Korean Commercial Arbitration Board is another preferred venue. Parties have increasingly been using these two options in recent years; a decision from the Korean Commercial Arbitration Board is as effective as a court decision.
For entertainment work products, such as films or recordings, taking preventive measures is crucial because the timing of release is often crucial in determining the success of a product. As such, preliminary injunctions are frequently sought, and during the development of the case for the injunction, the merits of the case are often reviewed thoroughly, which often leads to settlements of the dispute.
VIII year in Review
The biggest issue of 2019 may be the growth of OTT businesses. Local regulators are beginning to focus their attention on major global OTT operators, such as Netflix, YouTube and Facebook. In particular, there has been significant debate on the issue of free-riding by global OTT businesses as they do not pay network fees for their use of online networks. While discussions on how to regulate these businesses are ongoing, there does not yet seem to be any clear consensus on the types of policies that should be implemented to manage these businesses.
The KCC has announced that it will prepare a network use guideline by the end of 2019 to obligate CPs to pay network fees. However, a notable lower court decision was recently rendered that held that the management and regulation of the quality of internet-connected services must be conducted by ISPs and not CPs, and that CPs have no obligation under current law to ensure a certain level of network connection quality. While this case is still pending, this decision is expected to have an effect on the network usage fee guideline and the overall regulation of OTT businesses.
In addition, with major changes in the market, such as the KFTC’s conditional approval of the business combination of the OTT business run by the three largest domestic terrestrial broadcaster and SKB’s OTT business, it is hard to predict how the regulatory scheme of OTT businesses will develop in the future.
Another big issue of 2019 was fake news. While the Korean government expressed at the end of 2018 its intent to prevent fake news from spreading through the media and the internet, it has not yet taken any particular measures. The main reason behind the lack of initiative is growing concerns over the potential infringements of the freedom of expression, which is considered a fundamental right. As national elections are planned in 2020, fake news will likely remain a hot issue in the upcoming year.
i Expansion of copyright protection
The number of disputes involving different broadcast programmes, films, games, webtoons and songs has increased significantly in 2019, and copyright holders have become more active in protecting their rights. In light of this, the courts have slowly been expanding the scope of copyright protection by recognising, for instance, that television programme formats can be protected under copyright law and that game rules can be considered as a factor for determining the creativity of a game. We predict that the number of copyright-related disputes will increase.
ii Regulations involving net neutrality, hate speech and fake news
In line with global trends, discussions on net neutrality, hate speech and fake news will likely continue in Korea. Despite this trend, it is likely that it will take some time until any significant relevant laws or regulations are passed due to the complexity of issues and the conflicting interests of major players in the media and entertainment industry.
iii Increase of M&A transactions in the entertainment industry
In addition to the two mergers and acquisitions described in Section I, M&A transactions in the media and entertainment industry appear to be on the rise. We believe that one of the reasons behind this trend is an increase in content production costs, which have made it more difficult for small to medium-sized production companies to survive. As such, the ecosystem of the Korean media and entertainment sector has developed in a way that makes it beneficial for businesses with more resources (i.e., content, intellectual property and entertainers) to thrive. We predict that the number of M&A transactions in the media and entertainment industry will continue to increase.
1 Hyun Ho Eun is a senior attorney and Sung Uk Park is a senior foreign attorney at Kim & Chang.
2 ‘Webtoon’ is a combination of the words ‘web’ and ‘cartoon’, and refers to cartoons published on web media platforms.
3 Constitutional Court decision, 29 January 2004, 2001 Heon-Ma 894.
4 National Assembly Research Service, Global Trends on Regulations on Hate Speech and Legislative Agendas.
5 Uijeongbu District Court, 20 October 2011, 2011 Na 6848.
6 Seoul Central District Court, 10 July 2019, 2018 Na 68478.
7 Son, Hyun-Soo, ‘[Decision] Documents Made During the 7 Hours of Sewol Held Presidential Archives … Lower Court Decision Reversed’, Law Times, 21 February 2019.
8 Supreme Court decision, 23 August 1996, 94 Do 3191.
9 Supreme Court decision, 8 May 1998, 97 Da 34563.
10 Constitutional Court decision, 24 June 1999, 97 Heon-Ma 265; Supreme Court decision, 27 February 2004, 2001 Da 53387.
11 Korean Supreme Court, 11 November 2017, Case Ref. 2014Da49180.
12 Korean Supreme Court, 21 June 2019, Case Ref. 2017Da212095.
13 Korean Supreme Court, 14 September 2009, Case Ref. 2004Do5350.
14 See KFTC media publication, 17 March 2017.
15 See KFTC media publication, 28 March 2018.
16 Sungsoon Park, A Study on the Contract-Related Disputes of the Media Entertainment Industry (2016).