[IT Litigation] Key Points to Note When Entering Secondary Derivative Work Contracts for Webtoons and Web Novels
Article posted in 2025-03-19 15:14:38 | VEAT
Recently, the webtoon and web novel industries have grown rapidly, and secondary works (e.g., dramas, games, movies, etc.) based on these works are being actively utilized. Consequently, the number of legal disputes related to the ownership and transfer of copyrights and copyright property rights is increasing. A significant number of copyright disputes arise from contracts entered into between the original copyright holder and the business entity. This is because the distribution of copyright property rights and the resulting economic benefits is determined by the content of these contracts. Therefore, when entering into a contract regarding the ownership and use of copyright property rights for webtoons, web novels, etc., a thorough review of the specific terms of the contract is necessary.
Under the Copyright Act, copyright property rights mean the right of the copyright holder to exclusively utilize their creation, and unlike copyright of authorship, the copyright holder can assign or license their copyright property rights to others. The right to create secondary works is a type of copyright property right, so in the case of webtoons or web novels, the original copyright holder may hold the right to create secondary works, but they may also transfer this right to a specific entity through a contract with a publisher or platform. When a third party, such as a company, enters into a contract with the original copyright holder regarding the utilization of copyright property rights, such as the right to create secondary works, the scope of the contractual rights and obligations of the parties should be clearly defined to prevent future disputes.
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A typical example of a copyright property rights dispute is the dispute between the late artist Lee Woo-young, the artist of the “nation’s cartoon” <Black Rubber Shoes>, and the publisher. The cartoon <Black Rubber Shoes> was created with different writers and artists, so it was a case with multiple stakeholders in a single work. In such cases, when entering into a contract related to the use of the scope of copyright property rights, the amount of money, and the settlement method, it must be specified in detail. However, in the <Black Rubber Shoes> related business rights assignment contract entered into by the late artist Lee Woo-young and the publisher, the main content such as the scope of business, the amount of money, and the settlement method were not clearly stated, which seems to be the trigger for the dispute due to differences in the parties’ understanding of the contract interpretation.
Meanwhile, some argue that the business rights assignment contract and similar contracts do not adequately protect the rights of the original copyright holder, the late artist Lee Woo-young, with respect to the use of the characters and secondary works of <Black Rubber Shoes>, and therefore constitute unfair contracts.
During the lawsuit, the late artist Lee Woo-young argued that the contract with the publisher contained a clause assigning copyright and business rights for secondary works based on all works, including <Black Rubber Shoes>, to the publisher, and a provision requiring the payment of a penalty for breach of contract. This contract put the original copyright holder of <Black Rubber Shoes>, Mr. Lee Woo-young, in a situation where he could not exercise practical rights over his creation, ultimately leading to a legal dispute with the publisher. |
If a copyright property rights usage contract is entered into with unclear ownership or containing terms that can be interpreted as unfair to one party, the original copyright holder risks losing control over the utilization and profits of their creation. Therefore, it is important to include clauses that adequately guarantee the rights of the original copyright holder when entering into a copyright property rights contract.
- Clarifying the ownership of copyright property rights
The contract should clearly state who owns the copyright property rights. If copyright is assigned to a publisher or platform business, the scope of the assignment (entire or partial), usage conditions, and period should be specified in detail.
- Regulation of secondary work creation and usage rights
The authority to create and utilize secondary works should be clearly stipulated in the contract. Specifically, whether the original copyright holder will hold this right, or whether it will be permitted for a third party to utilize it, and if a third party is granted the right to create secondary works, what is the extent of that right, should be agreed upon in detail.
- Copyright usage fees and profit distribution
The method of payment and profit distribution structure for copyright usage fees should be included in detail and clearly in the contract. If the original work has the potential to be commercialized as an animation, movie, game, etc., the conditions for profit distribution and rights exercise should be specified in detail.
- Inclusion of clauses to address breach of contract
It is important to include clauses (e.g., contract termination, penalty, damages) to resolve the situation if the contract is not properly fulfilled. This plays an important role in protecting the rights of the original copyright holder in the event of a dispute.
- Expert review is essential
Copyright contracts require legal interpretation as an important element, therefore, a review by an expert is necessary. You should carefully check whether the contract clauses are written unfairly or contain elements that are disadvantageous to the original copyright holder.
As the webtoon and web novel industries, based on content, continue to develop rapidly, copyright and secondary work-related contracts are becoming increasingly important. As an original copyright holder, you should carefully review the contract before entering into it, and it is essential to seek the help of a legal expert to prevent copyright disputes.
Law firm Veat specializes in content copyright disputes and copyright contract reviews, and provides legal services that prioritize the protection of creators’ rights. If you need legal review regarding copyright content and IP disputes, please feel free to contact Law firm Veat.
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