SM Takes Legal Action Against INB100

[RussianRoulette]

It's apparently lawsuit season here in the kpop world.

There is currently legal battle starting between INB100 (EXO Chen, Xiumin, and Baekhyun), and SM Entertainment.

Yesterday IMB100 held a press conference talking about how they will file a complaint against SM Ent in court. Some main takeaways from their conference is:

• They were pressured into resigning while in the military
  • I believe Chen(?) even specifically said he was told the other members would get a raise if he resigned?
• They have not gotten paid yet for their recent EXO activities under SM
• They claim they agreed to give SM 5.5% of their earning, but they are now saying SM wants 10%
• They claim SM has not responded to them in 2 months

Here is the article about their press conference

SM is now counteracting their legal dispute by suing them as well.

The synopsis is:

• The exclusive contract between SM and the three exo members are still active. The members are allowed to have solo activities through a separate private company, but they all did discuss, agree upon, and sign the contract stating that they will pay the 10% royalty fee.
• This 10% royalty fee applies to all EXO members, not just the three of them, and started way back during the legal battles with the Chinese members of EXO. The number being 10% was decided in court.
• Trouble started after INB100 became a subsidiary of ONE HUNDRED. After the INB100 signed the contract with them they then told SM that the agreement they signed agreeing to the 10% is no longer needed for them and they refused to pay.
• This next part confused me, but it appears SM is angry at the members for revealing their settlement rate due to the fact that each artists negotiates a different number? This might be considered leaking private information so I don't know if SM can sue them for revealing this?

I also don't know how to summarize this next part in bullet points so here it goes:

Of what i'm understanding, that 10% number is a fee for SM to continue handling the member's distribution of their solo activity music and such. The members have released solo music after leaving SM and they claimed they handled all the distribution themselves, also with them now being under ONE HUNDRED i'm assuming they want them to handle distribution now? But the thing is, the distributors they are currently using have SM as their major shareholder and seem to be under the SM umbrella so even if they talk to the distributors directly and not have SM talk to them for them, they are still technically working with SM distributors if that makes sense? I believe this is why SM still wants to charge the fee, because they are still indirectly helping them distribute their music.

• This is a direct quote from SM in regards to the number not being 5.5%:
  • "We do not have the authority to determine the distribution commission rates of other distributors. In fact, during the process of signing the agreement, CBX asked to include the distribution commission rate as a condition of the agreement, but we deleted the provision, explaining that we do not have the authority to decide, so it cannot be included in the agreement".
  • Also: "CBX and INB100 signed a contract on good terms with another distribution company in which we are a major shareholder, and as a result, distribution of music and albums is proceeding smoothly, so there is no particular loss to CBX".
• Pretty much, the reason why the 5.5% number can't remain that % is because each distributor has a different rate, so that 5.5% number will change according to which distributor they use.
• SM also mentioned that while the members claim they no longer have any connections to SM for their solo activities, SM said they were forced to pay a cancelation fee on Baekhyun's behalf for some canceled Japanese solo promotions, IMB100 never paid a cent for these cancelation fees.

Other things I want to shout out:
- It seems IMB100 is treating things such as the member's solo activities are one contract, their EXO activities with SM are another contract. They are two separate things.
- SM is saying the members still have a contract with SM, their solo activities are just subcontracted to a different company, but SM is still their main company and they should be able to charge them a fee since overall they are still under them. SM is pissed that the members are saying they are no longer under SM and that is one of the main reasons for them countersuing them.

CBX's lawyer's response to this is:

CBX is 'an adult who can think for himself and take responsibility for his own decisions, and is a subject who thinks and judges independently".

And SM's final saying is:

CBX claiming that the exclusive contract and even the agreement are invalid in order to pursue their own personal interests. CBX's side is trying to justify their wrong actions through public opinion, but our company will respond calmly in accordance with laws and principles and hold CBX accountable through the court.

Here is a link to the full article

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This was a bit confusing, my brain hurts, but I hope I was able to summarize this decently?

What do all of you think about this lawsuit so far? Do you think CBX is in the right? or does SM have a point?

 

[hatmixx]

Kpop is so messy lately

 

[Beefy]

you did an amazing job with the summary, thanks for summarizing it in non-law people talk!

I honestly think SM is being petty as hell per usual, and I agree with IMB100 on thinking there was 2 different contracts. I wonder if this also affects other SM artists who have dipped but stuck around for group activities (like the SNSD girlies? SHINee too but that’s fresh), will they come out the woodworks now in support or something.

and I thought contracts would be a lot stricter and more concise. Like a lot of the issues are coming from people/groups interpreting things different and not clearly stating it. But regardless I will be rooting for CBX!!

 

[RussianRoulette]

Although I hate to say it, I think SM has a valid argument here.

SM caught them in the contract that they can charge a fee for album distributions and such, and the fact that INB100/ONE HUNDRED are using an SM distributor I think it makes sense that SM is charging them a fee for that.

The only way I can see them sneaking out of it is, if they are already paying the distributor a fee then I don’t think SM should charge an additional fee on top of that? Or if INB100 changes to using a non SM distributor then yes, they shouldn’t pay SM a fee.

I think they shot themselves in the foot signing that contract with an SM distributor…

 

[dnb]

Scandal! Scandal!

This is why Red Velvet is doing a comeback. Everyone look at Red Velvet.

 

[soozie]

i dont think cbx would have done this if they dont have a case so i hope they'll win down with sm entertainment!!

 

[Ddeona Oneul Bame]