[비즈한국] Companies sometimes make decisions that are difficult to explain solely in terms of money. Understanding the laws and systems hidden within those decisions can provide deeper insight into the details. The new series, 'Useful Business Law Tips,' introduces clues that help explain business trends.
To receive compensation for damages in a copyright dispute, both the copyright infringement and the amount of damages must be proven. The amount of damages is logically reviewed only after the copyright infringement has been proven. Therefore, if the court does not make any specific mention of damages during the trial, it is highly likely that the copyright infringement itself will be denied (the claim itself is likely to be dismissed). If the court recognizes the copyright infringement, it must then examine the damages, but since it has determined that the infringement is not recognized, it has no interest in the amount of damages.
According to the legal theory known as the 'Difference Theory' (Differtheorie) in copyright disputes, there is criticism that proving the amount of damages is nearly impossible and that courts are very conservative in recognizing such amounts. Against this background, copyright law includes special provisions to facilitate the calculation and proof of damages. Similar provisions also exist in patent law and design law.
First, the profit gained by the infringer is presumed to be the amount of damages suffered by the copyright holder. Furthermore, the amount that the copyright holder could typically receive through the exercise of their work becomes the standard for damages (Presumption of Damages System, Article 125, Paragraphs 1 and 2).
Even if the copyright holder does not prove the actual amount of damages, they may claim a reasonable amount within the range of up to 10 million KRW per work (up to 50 million KRW for intentional infringement for profit) (Statutory Damages System, Article 125-2, Paragraph 1).
However, the statutory damages clause (Article 125-2) tends to be avoided in practice because it feels alien compared to our legal system, where the principle is to compensate for actual damages. Moreover, since most cases are decided by the "reasonable amount of damages" clause (Article 126), which implies the court's judgment, there are not many cases where statutory damages have been applied.
Finally, if the court recognizes that damages occurred but finds it difficult to calculate the exact amount, it may recognize a reasonable amount of damages by synthesizing all the materials revealed during the trial (Recognition of Reasonable Damages, Article 126).
Under these provisions, the calculation of damages in a copyright dispute proceeds by first arguing that the profit gained by the infringer or the profit the copyright holder could have earned should be the amount of damages, and if that is not accepted, the court’s discretionary judgment is sought.
The presumption of damages clause presumes that the infringer's profit or the copyright holder's potential profit is the amount of damages. However, since these profits are merely hypothetical figures, it is difficult to specify them and even harder to convince the court.
For example, while the Seoul Western District Court acknowledged that 'Come Back to Busan Port' was a plagiarized version of 'Come Back to Chungmu Port' (the original song), it ruled that the infringer's profit could not be presumed as the amount of damages for the following reasons (2004Gahap4676):
① The copyright holder of the original song did not engage in any significant activities after its release, it was not well-known to the public, and there were almost no records of album sales.
② 'Come Back to Busan Port' became famous due to the historical context of the 1975 home visits by Korean residents in Japan and the strong, appealing performance of singer Jo OO, which brought the lyrics of the original song—which were in danger of being buried—to the spotlight.
In short, the court meant that because singer Jo OO contributed more to the masterpiece 'Come Back to Busan Port' than the author of the original song, the damages could not be set as high as the author demanded (178 million KRW). (Ultimately, 30 million KRW was recognized).
The Seoul Southern District Court even denied the damages altogether, reasoning that there was no possibility for the copyright holder to derive economic profit from the work in light of the following circumstances (2017Na4904):
① The copyright holder's novel was a homosexual novel, and its readership was limited to a small number of people with homosexual tendencies.
② The copyright holder did not distribute their novel through publishing companies or general bookstores, but sold it individually to website members, and even now, the novel is posted on the website so that members can read it.
In copyright disputes, copyright holders often present license fees and argue that damages should be calculated based on those fees. However, courts generally reject this argument, viewing the license fee as only valid for that specific license and not necessarily as the "profit the copyright holder could typically receive."
For this reason, most damages are calculated under the "reasonable amount of damages" clause (Article 126). This is where the court uses its discretion to determine damages by synthesizing various circumstances revealed during the trial.
Therefore, various factors such as the duration, nature, intent, purpose, and profit-making nature of the infringement are considered in the calculation of damages. In this process, the key is how effectively an attorney can uncover and present valid and appropriate circumstances related to the damages.
For instance, in a case involving the unauthorized exhibition of reproductions of a painting, the Seoul Central District Court recognized damages of 5 million to 8 million KRW after considering the following:
① The original work was appraised by the Korean Fine Arts Association to be worth over 1 billion KRW, and the defendant used the reproductions commercially by exhibiting them in a restaurant for several years.
② The Korean Visual Artists Copyright Association set an exhibition fee of 800,000 KRW per work/poster for art posters of Picasso's works. The painting in this case was not exhibited as a copy but appeared as an original, and its size was significantly larger than the aforementioned posters.
Publisher W published '49 Things You Must Do While You're Alive' and sold over a million copies over three years. However, publisher W only received permission from the Chinese publishing rights holder (Beijing) and not from the Chinese copyright holder (Shenyang Yuanliu).
In a lawsuit filed by the Chinese copyright holder, the Seoul High Court ordered Publisher W and others to pay 200 million KRW in damages. The following details show that the fact that Publisher W sought confirmation from the Chinese publishing rights holder (Beijing) acted as a reason to mitigate the damages:
① The total sales of the translated book were 11,139,217,015 KRW, and the royalty rate for domestic translation/publication contracts of foreign books is generally around 7%.
② Copyright infringement was recognized for 23 stories in the book, but only 6 of them pertain to the actual text of the stories. The portion of the translated book where infringement was recognized—the commentary—is relatively very small in both quantity and quality compared to the story text.
③ The translated book was produced and published using the Chinese book as the main material and translating it; the defendant published it after checking with the Beijing publisher; and other circumstances such as the context and degree of copyright infringement, the duration of the infringement, the defendant's profits, and the degree of originality and popularity of the Chinese book must be considered.
In current practice, the attorney's effort is crucial to securing an appropriate amount of damages. Depending on the type of work, they must be well-versed in the internal affairs of fields like art, music, or literature. They must also know how to select the right institutions when conducting fact-finding inquiries for appraisals or verification of usage fees and be able to anticipate the reply results.
If someone is naturally interested in the field or is a fan of the work, they can enjoy this process. However, if they are assigned a case without any particular interest and are forced to handle it, this work can be a burden. In copyright lawsuits, there is an extreme difference in results depending on whether one works diligently or superficially.