This article was posted on the ChosunBiz RM Report site at 8:17 a.m. on March 8, 2025.
Legal circles said on the 8th that the Korea Music Copyright Association's chances of final victory in the "store music usage fee" lawsuit, which could allow it to collect up to 10 billion won in copyright fees, have increased. This is because the Supreme Court has recently issued successive rulings overturning the first and second instance decisions in related lawsuits and remanding the cases with a judgment favorable to the association.
If the Korea Music Copyright Association wins finally, the businesses required to pay store music usage fees would include not only coffee shops, fast-food outlets and bakery chains but also commercial banks, sources said. A representative from the industry said, "There are companies that provide store music and we paid them to play the music, so wouldn't it feel unfair if we had to pay additional money separately to the Copyright Association?" Another source said, "Some companies said they were billed as much as 2 billion won, and that amount would make your hands shake."
◇ Supreme Court: even if a store music service provider supplies the tracks, copyright fees must be paid
The Korea Music Copyright Association collects and distributes copyright fees on behalf of composers and lyricists. The association is reported to have filed at least 10 lawsuits against companies that provided store music via internet-based realtime playback, a "webcasting" method. Mostly, the defendants were companies that operate food and beverage franchise stores.
Until last year, the Korea Music Copyright Association suffered consecutive defeats in both the first and second instances. But a reversal occurred in January this year. The Supreme Court sided with the association in the appeal of an unjust enrichment suit the association filed against Lotte GRS, which operates Lotteria and ANGELINUS, overturning the first- and second-instance rulings against the association and remanding the case to the Seoul High Court.
The Korea Music Copyright Association earlier signed contracts with store music service providers in 2008. The contracts allowed music to be played in realtime over the internet. Afterward, Lotte GRS contracted with a store music service provider and played music in its stores such as Lotteria and ANGELINUS. The association then sued Lotte GRS.
Article 29, paragraph 2 of the Copyright Act became an issue in this case. The provision states that performing a recorded work sold for commercial distribution to the public without charge does not constitute copyright infringement. Conversely, it means that if a sound recording that is not a commercial release is played to the public, copyright fees must be paid.
The first- and second-instance courts said, "The tracks Lotte GRS received through the store music service provider are identical to digital music files sold on the market, so they are public performances of commercially sold recordings." The Supreme Court, however, said, "Whether a recording is a commercial release should be judged based on the time the performer received the recording. Because the recordings were fixed for 'store music service use' rather than for sale at the time the store operator received them, they cannot be regarded as commercial releases." The court's view was that franchise companies must separately pay copyright fees to the Korea Music Copyright Association. In this case the association was represented by the law firm Barun.
◇ More than 10 related lawsuits have been filed… "companies may face burdens in the 10 billion won range"
A Supreme Court ruling with the same intent came in February. The Supreme Court overturned and remanded the lower court rulings that had found against the association in lawsuits the association filed against five companies, including BGF Retail, which operates convenience store CU; Korea Seven, operator of 7-Eleven; Paris Croissant; the cafe brand TOM N TOMS COFFEE; and Shinhan Bank. In addition, lawsuits the association filed against five other companies are said to be at the second-instance level.
If all the lawsuits filed by the Korea Music Copyright Association conclude in line with the recent Supreme Court remand rulings, the franchise industry could face massive financial burdens.
A member of the legal community said, "I understand the Korea Music Copyright Association calculated fees based on the size of the stores operated by franchise companies," adding, "It is said to be as little as 500 million to 600 million won and as much as 2.4 billion to 2.5 billion won." Another legal professional said, "If you add up all the amounts the association claimed, it could reach the 10 billion won range."