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ot9bias · 1 year

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[INFO] EXO-CBX lawyer files a complaint against SM with the FTC.

230605 Rough Papago translation of EXO-CBX’s third legal statement

On behalf of the client, the legal representative filed a complaint with the Fair Trade Commission (hereinafter referred to as the “Fair Trade Commission”) against SM Entertainment (hereinafter referred to as “SM”)’s “abuse of trading status” yesterday (June 4, 2023).

Through this complaint, we reported that unfair contractual activities that ignored the correction order have been carried out in SM, even though the FTC has already issued correction orders twice against SM in October 2007 and January 2011.

In addition, we asked the Fair Trade Commission for a strict investigation into SM’s violations and prompt corrective measures to correct them, and further requested a full investigation into the exclusive contracts of SM entertainers.

In fact, three of our client artists signed an unfair contract that did not reflect any corrective measures ordered by the FTC to SM in the past, and were continuously damaged by SM’s abuse of trading status.

Failure to correct it even after receiving a correction order from the Fair Trade Commission is also a criminal punishment subject to up to two years in prison or a fine of up to 150 million won as a “person who fails to comply with correction measures under Article 49 (1)” of the Monopoly Regulation and Fair Trade Act.

Below, the legal representative of the party will deliver the detailed position on the FTC’s complaint against SM.

1. Despite the FTC’s decision to ban SM twice in 2007 and 2011, SM did not correct it.

Until the FTC complaint, the artists made a really difficult decision after careful consideration.

This is not what happened yesterday or today.

Already in 2007 and 2011, SM, not any other company, has repeated the abuse of each trading position that the Fair Trade Commission has decided to ban the act to this day until 2023.

SM has already been judged to be unfair in terms of the FTC Resolution No. 2007-488 (2007 Seogyeong 0209) on October 8, 2007 (1) the starting point of the contract period of the exclusive contract as the debut date, and (2) the contract period provisions of other entertainment agencies in the same industry. (Refer to the decision sheet on pages 3 to 5 below

In addition, SM was also judged that the FTC’s Resolution No. 2011-002 (2009 Seogyeong2741) on January 13, 2011 should not again apply the extended contract period to trainees for reasons such as overseas expansion. (See the decision sheet on pages 6-7 below.)

However, SM completely ignored the FTC’s public judgment and repeated unfair tyranny again by signing exclusive contracts for Baekhyun, Xiumin, and Chen. This is an act that directly contradicts the Fair Trade Commission’s judgment made to SM itself, not anyone else, and is a mockery of national public power.

The practices and behaviors that SM has repeated so far will not only be a matter for the artists of Baekhyun, Xiumin, and Chen. Considering many other trainees and artists, the damage can be enormous. And considering the unfair behavior that will be repeated not only now but also in the future, we couldn’t help but step up for junior trainees and artists. In response, Baekhyun, Xiumin, and Chen artists decided to file a complaint with the FTC against SM’s abuse of trading status with the help of their legal representatives.

I hope our efforts and courage will be a small addition and hope for the protection of the rights and interests of juniors and the fair and sound development of the pop culture industry.

2. Although it has already been confirmed that calculating the end date of the exclusive contract from the time of the ‘entertainment activity debut’ (not from the date of the exclusive contract) is unfair to set a long-term exclusive contract at the agency’s will, SM still does not follow the FTC’s corrective measures.

As of October 8, 2007, FTC Resolution No. 2007-488 (2007 Seogyeong 0209) was ordered to prohibit SM from “excessively prolonging the contract period by setting the exclusive contract period to "end on the 5th year after the release of the first album” or “end on the 5th year from the date of cast of the supporting grade or higher.”

However, after receiving the FTC’s correction order in 2007, SM repeatedly presented and concluded exactly the same unfair provisions in exclusive contracts with Baekhyun, Xiumin, and Chen signed in 2010 and 2011. (Excerpt from exclusive contract of client Byun Baek-hyun below)

In this way, the expiration date of the exclusive contract can be set to “five years after the release date of the first album” or “five years after the debut date of the first work” if the artist debuts as an actor.

The Fair Trade Commission Resolution No. 2007-488 (2007 Seogyeong 0209) on October 8, 2007 also judged exactly that.

In this way, SM repeatedly presented and concluded the same unfair provisions even after receiving the FTC’s corrective order in 2007, which is a criminal punishment case that must be sentenced to up to two years in prison or fined up to 150 million won.

3. Even though the FTC’s decision in 2007 judged that the contract period of “five years from the debut date (not from the contract date) was excessively long, SM made a more unfair contract with a period of "7 years” in the main body of the exclusive contract and “3 years” in the annex agreement.

In the 2007 FTC resolution above, SM’s exclusive contract and other entertainment agencies’ exclusive contract terms were compared, and the FTC judged that SM had set an overly unfavorable contract period clause.

As shown below, according to the FTC investigation at the time, (1) other agencies in the same industry did not set the starting date of the contract as “debut date” like SM, but as from “the date of signing the contract,” and (2) the exclusive contract period was three to five years below the contract period set by SM.

As a result of this investigation, the Fair Trade Commission issued an order prohibiting excessive prolongation of the contract period by setting the exclusive contract period as “5th year after the release of the first album” or “5th year from the date of cast of the supporting grade or higher.”

Nevertheless, SM did not correct this and signed the contract under unfair contract conditions, which is an act that did not comply with the Fair Trade Commission’s corrective measures and is a criminal punishment issue as mentioned earlier.

4. SM is violating the Fair Trade Commission’s corrective order by using the expedient to apply the extended contract period uniformly for reasons such as overseas expansion that has not been confirmed at the time of signing the contract.

According to FTC Resolution No. 2011-002 (2009 Seogyeong2741), SM is not ordered to correct the other party by applying the extended contract period to all trainees without considering their individual circumstances using their trading status.

In addition, the FTC pointed out the annex agreement of Table 3 as below in the above resolution in 2011, and SM uniformly concluded the annex agreement in this form, which was judged to be an unfair contract condition.

Upon receipt of such a corrective action order, SM should no longer enter into a contract that violates the corrective action order, and even if the contract is already signed, it should be revised to suit the purpose of the corrective action order. However, SM repeatedly presented and signed exactly the same unfair subsidiary agreement provisions in exclusive contracts with Baekhyun, Xiumin, and Chen in 2010 and 2011, before and after receiving the FTC’s correction order in 2011. (Excerpt from exclusive contract of client Byun Baek-hyun below)

And as far as the client artists know, SM has been signing an annex agreement to extend the three-year contract period for other artists due to preparations for overseas expansion.

In this way, SM repeatedly presented and concluded the same unfair provisions even after receiving the FTC’s correction order in 2011, which is a criminal punishment of up to two years in prison or a fine of up to KRW 150 million as defined in Article 125 (1) of the Monopoly Regulation and Fair Trade Act.

5. The follow-up exclusive contract, which is automatically extended until the album release volume is filled, is extremely unfair as it has not even set a minimum limit on the period.

As you can see, the artist decided to calculate the contract period from the debut date, and the trainee period was added to the exclusive contract period, extended by 3 years, and the military service period was added to the exclusive contract for more than 12 to 13 years.

This is too different from the standard exclusive contract for pop culture artists (singer-centered) announced by the Fair Trade Commission based on 7 years of contract period, and SM claims at least 17 or 18 years of contract period by signing 12 to 13 years of exclusive contract.

It is pointed out again that such subsequent signing of an exclusive contract constitutes “an act of unfairly using the status of the transaction” in Article 45 (1) 6 of the Monopoly Regulation and Fair Trade Act. In other words, the long-term compulsion using a subsequent exclusive contract is considered to correspond separately to the “compulsory provision of profits” or “unprofitable provision of transaction conditions” in attached Table 2 of the Enforcement Decree of the same Act.

And Article 5, Paragraph 1 of the subsequent exclusive contract says, 'This contract is… for five years from. However, if the minimum number of albums specified in Article 4 (4) is not released within the same period, the contract period shall be automatically extended until the time of implementation.’ There is no upper limit to the period of automatic extension.

In this way, the clause that the contract period is automatically extended without a cap is clearly a slave contract, and the legal representative pointed out that it is an act of “unfairly exploiting the trading position to deal with the other party,” and the artists agree.

And with more than a year left of the existing exclusive contract, it is not justifiable to “tie” the artists by signing a follow-up exclusive contract without a limit on the period. SM has never paid artists a down payment for subsequent exclusive contracts.

ccording to Article 3, Paragraph 2 of the “Popular Culture Artist (Singer-centered) Standard Exclusive Contract” announced by the Minister of Culture, Sports and Tourism, the singer can notify the planner of the termination of the contract at any time after seven years. However, SM has signed a very long-term contract and is tying up the artists again a year or so before the contract ends.

6. We have filed a complaint with the Fair Trade Commission with the hope that our small courage will be helpful for the establishment of fair pop culture and junior artists.

Despite corrective action by the Fair Trade Commission in 2007 and 2011, SM has repeatedly engaged in unfair contract practices.

Such an act ignores the legitimate act of state government power, and the damage caused by it has occurred repeatedly to trainees and artists.

In response, Baekhyun, Xiumin, and Chen artists decided to file a complaint with the FTC against SM’s abuse of trading status with the help of their legal representatives.

I hope our efforts and courage will be a small addition and hope for the protection of the rights and interests of juniors and the fair and sound development of the pop culture industry.“

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#so incredibly brave of them #nothing but respect for my boys

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ot9bias · 1 year

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[INFO] EXO Chen, Baekhyun, and Xiumin express intention to continue with EXO activities even if their exclusive contracts are terminated.

230602 Rough Papago translation of EXO-CBX’s second legal statement

“This is Lee Jae-hak, a lawyer for Lin, a law firm that acted as legal representatives for Baekhyun, Xiumin, and Chen (Byun Baek-hyun, Kim Min-seok, Kim Jong-dae, hereinafter referred to as "artists”). In the following, the legal representative of this party would like to share the artists’ position on SM Entertainment’s claim on June 1.

1. SM’s claim to intervene in external forces is merely a false fact to evade the essence of artists’ legitimate exercise of rights and further mislead public opinion.

The feelings of the artists who heard the official data of SM, which calls for a third external force, are very miserable. I feel even more miserable because SM’s perspective on artists seems to have been revealed.

Is it the third force again?

Our artists are definitely adults who can think for themselves and take responsibility for their decisions. And it’s an independent thinker and judge. I had doubts for decades, and I had to ask questions that I didn’t dare to bring up when I was a rookie, so I had the courage to be so scared and difficult.

Our artists asked and listened to many people around them what was the right thing to do and how to come up with a wise solution. There were family members and acquaintances around him, seniors and juniors in the music industry, colleagues, and even staff members who worked with us.

Some gave us worried stories, some gave us warm encouragement, and some gave us support and support. I have to ask you again whether all of these people are the third forces, the impure forces, the evil forces.

Our artists are strictly personal, able to judge and act on their own.

The decision to find their rights, such as asking for settlement data, was made by our artists themselves after a long period of thinking and agonizing, not by any means intervening.

Furthermore, SM claims that it has signed or attempted a double contract with our artists, and Baekhyun, Chen, and Xiumin have not signed or attempted any other exclusive contracts other than the existing exclusive contracts currently signed with SM. SM should refrain from making false claims.

SM said it would only allow “reading” without “providing” the settlement data because it was feared to be provided to external forces. However, even if artists receive settlement data and receive advice from their legal representatives as well as other accountants around them, it is a legitimate exercise of their rights. In the exclusive contract, there is no provision that the artist must not show the material provided to the artist to others, and therefore must review it alone. Rather, there is only a clause in the contract that requires artists to review the materials received from SM for 30 days and raise objections if necessary.

SM, which does not even provide settlement data, and party legal representatives and entertainers around them who advise of the unfairness of such a situation. I can’t help but question who is pointing out the fault to whom.

Again, the artist and his legal representative have consistently requested the provision of settlement data, but SM finally refused to do so, resulting in the cancellation of the exclusive contract.

2. The settlement data is supposed to be “provided” under the exclusive contract, so it cannot be considered that the obligation has been fulfilled by “reading.”

The premise of SM’s claim is that SM fulfills its obligations by giving it the opportunity to ‘read’ the settlement data. However, under the exclusive contract, the settlement data is agreed to be 'provided’. Therefore, it cannot be considered that the obligation has been fulfilled simply by “reading.”

Article 14 (5) of the exclusive contract signed by SM and artists states, “A (SM) shall provide the following settlement data to B (Artist) at the same time as the payment of the settlement amount. Within 30 days of receiving the settlement data, Party B may object to Party A, such as over-estimated expenses or under-estimated income of Party B, and Party A shall faithfully provide the basis for the settlement. Therefore, the data should be 'provided’ rather than 'read’, and the objection period of 30 days is also calculated from the date of 'receiving’ the data. It doesn’t count from the date of 'reading’.

In addition, SM and the artists signed an additional 'agreement’ around 2014, Article 4 stipulated that 'A shall provide evidence when paying the settlement amount under Articles 2 and 3 to B (paragraph 1), and 'A shall provide detailed settlement data to B once every June according to the exclusive contract (paragraph 2). It also stipulated that evidence or detailed settlement data should be 'provided’.

There is a huge difference between "providing” the material and “reading” it, which is difficult to compare in terms of the right to know and protect property rights of artists. In particular, the settlement data is in SM’s control area, and I would like to ask you again how you can check whether the details are correct or not by simply coming and looking. In addition, Article 14 (5) of the exclusive contract gives a 30-day review period from the date of receipt of the data, and the content of the exclusive contract is that the artist sufficiently reviews the data for this 30-day period and raises objections if there is any objection.

It is the settlement data that we agreed to take a close look for 30 days, but asking them to come and see it with their eyes is only a justification for SM’s claim that “we have shown the data, so we have done what we have to do.” And because we could guess what SM meant, we couldn’t compromise by giving up on being “provided” and responding to “reading.”

For this reason, the standard contract announced by the Fair Trade Commission also stipulated that “A will provide settlement data to B at the same time as the settlement payment” and stipulated that “A will provide it.”

Essentially, refusing to provide data while calling for infringement of trade secrets regarding the performance of the artists themselves cannot justify breaking the exclusive contract.

3. Artists and their legal representatives have consistently requested the provision of settlement data. It is the core and substance of the case that SM finally rejected this and reached a notice of termination of the exclusive contract.

SM claims that it was sufficient to “read” the settlement data, but that the artists did not raise any problems with the data before, but suddenly asked for the provision of settlement data when appointing a legal representative, and then suddenly notified the contract to be terminated.

It is the legitimate right of artists to request the provision of settlement data under the exclusive contract. And SM’s claim that “the artists suddenly began to make claims as the legal representative changed” is nothing more than an argument not to exercise their legitimate rights for a long time. Above all, the artists’ claim as if they were swayed by someone and demanded the provision of settlement data is a disregard for the artists’ own high sense of rights and knowledge. During the consultation process, the legal representative confirmed the artists’ high sense of rights and high insight into the realization of the right to know.

And just as the records requested by the content certification remain objectively, the artists and their legal representatives consistently requested the “provide” of settlement data from the beginning. And SM maintained its position that 'reading’ the settlement data is not enough. However, as you saw earlier, SM’s claim was not acceptable to us as it did not meet the exclusive contract, and the positions of both sides were not narrowed, so the artists and their legal representatives ended the exclusive contract according to the precedent.

In other words, the exclusive contract is based on a high degree of trust, and if the agency fails to provide settlement data, the entertainer will not be properly guaranteed the right to review and dispute the profit settlement.

This is the progress between SM and the artists involved in the settlement data, but it is not true to claim that the artist or his legal representative has changed his or her position, distorting and misleading the core and substance of the case.

4. The problem of the long-term exclusive contract period that is unilaterally disadvantageous to artists beyond the minimum reasonable degree

As I already said in today’s first press release, artists have previously signed exclusive contracts with SM for more than 12 to 13 years. This is too different from the standard contract for pop culture artists (singer-centered) announced by the Fair Trade Commission based on the seven-year contract period, and it is unilaterally disadvantageous to artists beyond the minimum reasonable extent.

In addition, SM is trying to claim a minimum contract period of 17 years or 18 years, respectively, by having artists sign a follow-up exclusive contract again, not even enough to sign an exclusive contract for 12 to 13 years as above.

In response, SM argues that when artists signed a follow-up exclusive contract, there was an agent who was a lawyer for a large law firm, but when the agent changed, it is not reasonable to suddenly claim the unfairness of the follow-up exclusive contract.

However, to claim that the appointment of a legal representative is problematic in claiming that an objectively unfair contract is unfair is a blur of the nature of the issue.

Article 5 (1) of the subsequent exclusive contract states, “This contract is… for five years from. However, if the minimum number of albums specified in Article 4 (4) is not released within the same period, the contract period shall be automatically extended until the time of implementation.’ There is no upper limit to the period of automatic extension.

In this way, the clause that the contract period is automatically extended without a cap is clearly a slave contract, and the legal representative pointed out that it is an act of "unfairly exploiting the trading position to deal with the other party,” and the artists agree.

Baekhyun, Xiumin, and Chen are seriously considering filing a complaint with the Fair Trade Commission against the long-term existing exclusive contract and unfair subsequent exclusive contract signing.

5. About EXO’s future activities

Our artists are looking to continue their EXO activities faithfully with other EXO members even if they terminate their exclusive contract with SM. In fact, the artist preemptively suggested a negotiation plan to work with EXO even if Baekhyun, Chen, and Xiumin leave SM.

Apart from solving the legal relationship with SM, the artists are deeply grateful for the great love and support that fans have sent to EXO for a long time. And no matter what form of legal issues are resolved in the future, we will continue to work hard and faithfully as a team called EXO.“

Source

#ooooooh a good read and a good look into the unethical practices that sm promotes even after being caught multiple times

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