This article was published on March 8, 2025, at 8:17 a.m. on the ChosunBiz RM Report site.
The Korea Music Copyright Association is expected to have a greater chance of ultimately winning the 'store music usage fee lawsuit' in which it can collect up to 10 billion won in royalties, according to legal circles on the 8th. This is because the Supreme Court has recently overturned the first and second trials in related lawsuits, continuously issuing rulings in favor of the association.
If the music copyright association ultimately wins, businesses that will have to pay store music usage fees include coffee shops, fast-food establishments, bakery chains, and even commercial banks. An official from the industry said, 'There are specialized companies providing store music, and we pay them to play music, but if we have to pay additional fees to the copyright association, wouldn't that be unfair?' Another official noted, 'There are businesses that have been charged amounts reaching the 2 billion won range, and that would make anyone tremble with fear.'
◇ Supreme Court: 'Even if music tracks are played from a service provider, royalties must be paid'
The music copyright association serves to collect royalties on behalf of composers and lyricists and to distribute them. The association has reportedly filed at least ten lawsuits against companies providing store music via real-time streaming through the internet. Generally, companies operating food and beverage franchise stores have become the targets of these lawsuits.
Up until last year, there were several instances where the music copyright association lost in both the first and second trials. However, a turnaround occurred in January of this year. The Supreme Court sided with the association in the appeal of the lawsuit for the return of unjust enrichment filed against Lotteria and Angel-in-us Coffee, operated by Lotteria GRS. It overturned the adverse rulings from the first and second trials and sent the case back to the Seoul High Court.
Previously, the music copyright association entered into contracts with store music service providers in 2008, allowing music to be played in real time through the internet. Subsequently, Lotteria GRS signed a contract with a store music service provider and played music at Lotteria and Angel-in-us Coffee locations. This prompted the association to file a lawsuit against Lotteria GRS.
In this case, Article 29, Paragraph 2 of the Copyright Act became a point of contention. This provision states that performing sold recordings to the public without compensation is not considered copyright infringement. Conversely, it means that if non-sold music tracks are played publicly, royalties must be paid.
The first and second trial judges stated, 'The music tracks received by Lotteria GRS through the store music service provider are the same as digital music files sold on the market, and therefore it constitutes the public performance of sold recordings.' In contrast, the Supreme Court held, 'Whether or not it is a sold recording should be judged based on the time the performer received the recording. Since the store operator receives music at the point of providing it, that recording is fixed for 'store music service' purposes and cannot be considered sold.' This implies that franchise companies must pay royalties separately to the music copyright association.
◇ More than 10 related lawsuits filed… 'Companies may bear a burden of 10 billion won'
A similar ruling from the Supreme Court was also issued in February. The music copyright association sued five companies including BGF Retail, which operates the convenience store CU, Korea Seven which operates Seven-Eleven, Paris Croissant, cafe brand Tom N Toms, and Shinhan Bank. The Supreme Court overturned the original ruling that had favored these companies.
If all the lawsuits filed by the music copyright association conclude in accordance with the recent Supreme Court ruling, the franchise industry could face massive financial burdens.
A legal expert noted, 'I understand that the music copyright association has billed royalty fees based on the size of the stores operated by franchise companies.' It was said that the fees could range from 500 million won to 600 million won, with some reaching 2.4 billion won to 2.5 billion won. Another legal expert added, 'If you add up all the amounts claimed by the association, it could reach the 10 billion won range.'