Over 1,100 Unfair Clauses: Korea FTC Names 23 Major Webtoon & Web Novel Companies Engaging in Contract Exploitation

On May 18, Korea’s Fair Trade Commission announced that 23 webtoon and web novel content providers, publishers, and platforms inserted exploitative clauses into their terms and conditions (T&Cs)/contract provisions. 1,112 such clauses were identified and grouped into 21 types. 141 T&Cs/contract templates were examined. The webtoon and web novel companies flagged were:

1. Golem Factory
2. Daon Creative
3. Daewon C.I.
4. DCCENT
5. D&C Media
6. REDICE STUDIO
7. RIDI
8. Munpia
9. Millie’s Library
10. Samyang
11. Seoul Media Comics
12. Somy Media
13. Storywiz
14. CNC Revolution
15. MStoryHub
16. YLAB
17. Jaedam
18. Joara
19. KW Books
20. Kidari Studio
21. Toyou’s Dream
22. Finger Story
23. Haksan Publishing

Korea’s FTC gave a sense of how widespread these unfair clauses were by pairing them with the number of companies that had inserted them. The FTC then specifically identifies which companies inserted those clauses. You can see both below.

Types of unfair contract terms (out of 23 companies):

1. Clauses that unilaterally grant a business operator the right to create derivative works without the copyright holder’s permission (17 companies)
2. Clauses that may unfairly allow a business operator to expand the scope of its rights (12 companies)
3. Clauses that restrict the exercise of rights, such as copyright ownership rights (8 companies)
4. Clauses that impose excessive liability for damages on the copyright holder or shift responsibility to them (21 companies)
5. Clauses that impose excessive penalty charges on the copyright holder (6 companies)
6. Clauses that infringe on the author’s moral rights (right of attribution, right to integrity) (13 companies)
7. Clauses that assign copyright to a business operator who is not the author, or designate the business operator as the exclusive representative for exercising the copyright (8 companies)
8. Clauses that allow the business operator to unilaterally determine or change the content of its obligations (18 companies)
9. Unfair dispute resolution and jurisdiction clauses (19 companies)
10. Clauses that unfairly extend the contract period (7 companies)
11. Clauses that require consent from the publisher, exclusive publisher, etc., when transferring copyright ownership (9 companies)
    • Not having clear grounds for when a copyright can be transferred may lock the copyright holder into an unfair power dynamic with a business, for example.
12. Clauses that allow continued use of the work or maintain the contract’s effect even after its termination (14 companies)
13. Clauses that unfairly prohibit objections or complaints (4 companies)
14. Clauses that allow the business operator to license or transfer contractual rights to a third party without the copyright holder’s consent (11 companies)
15. Clauses with unfair payment terms (2 companies)
16. Clauses with unfair termination conditions (13 companies)
17. Clauses that presume a declaration of intent (2 companies)
    • For example, a clause can say that if you don’t respond within a certain time period, this is the same as giving consent to something.
18. Clauses that raise concerns about insincere or incomplete provision of settlement data and other important information (2 companies)
    • Clauses that create a risk that a business operator would fail to provide important data needed for accounting.
19. Clauses where the inspection period for the work may be unfairly prolonged (1 company)
    • This might delay an author from being paid, and/or it may stunt their career.
20. Clauses that impose excessive confidentiality obligations (4 companies)
21. Clauses stipulating that the rest of the contract remains unaffected even if some provisions are deemed invalid (1 company)

Webtoon and web novel companies that inserted unfair clauses:

The FTC explains that the background to these latest findings began in 2018 with an investigation into webtoon serialization contracts between 26 webtoon platform operators and their authors. It instructed these companies on where corrections were necessary. However, further investigations still revealed that there were unfavorable contracts in regards to creating derivative works, overseas distribution rights, and the provision of data for accounting purposes, meaning continued investigations were necessary.

Some of the flagged companies may be particularly recognizable. D&C Media is the publisher of the Solo Leveling webtoon and web novel. REDICE STUDIO handled the art for the Solo Leveling and Omniscient Reader’s Viewpoint (ORV) webtoon adaptations. Munpia published the original ORV web novel. RIDI operates the global Manta platform. Kidari Studio operates Lezhin Comics as of 2020. Several may also be known for their overseas copyright enforcement activities. Some most recently authorized DMCA takedown notices to Google around the same time MangaDex deleted approximately 7,000 titles, citing similar DMCA action.

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In response to the FTC’s instructions to fix these clauses, DCCENT announced that it will completely revise its contracts for new writers. It did so by adopting pre-approved contracts published by the FTC. DCCENT says that by taking this step, it aims to support a transparent and sustainable webtoon industry (Gyeongsang Ilbo, via Michael Song).

Platform operator Kidari Studio, which was flagged by the FTC for imposing excessive penalty charges on copyright holders, made headlines this week for the rare decision to award authors and webtoon content providers the full settlement fee from a successful webtoon copyright infringement lawsuit in China. It deducted no fees for its legal expenses. No Cut News reported that the ruling marked the “first case in which criminal punishment has actually been carried out in China, where K-webtoons were illegally distributed.” Last year, Japan similarly saw its own landmark legal case following the conviction of the operators of the B9GOOD website in March 2024. According to anti-piracy organization CODA, it was the first case of criminal penalties being imposed on an operator of an overseas anime piracy site as a result of a Japanese criminal complaint.

Japan’s FTC is also undertaking investigations into problematic transactions between anime production companies and creators (IT Media).

Source: Korea FTC website, Full Report (PDF)
Featured image © DUBU(REDICE STUDIO), Chugong, h-goon 2018 / D&C MEDIA