EXO members sue SM Entertainment over financial disputes, alleging unpaid IP usage fees and unfulfilled promises.
June/26/2024 13:17
EXO's Baekhyun, Xiumin, and Chen (EXO-CBX) have filed a lawsuit against SM Entertainment's current co-CEO Tak Youngjoon and current CAO Lee Seongsu. Today (26th), according to the legal and music industry, Baekhyun, Xiumin, Chen, and their agency INB100 filed a lawsuit on the 25th against CEO Tak Youngjoon and Lee Seongsu for suspicion of law violations (fraud) related to specific economic crimes. Prior to this, CBX publicly released a phone call record between Chairman Cha Gawon, who established ONE HUNDRED, the parent company of INB100, and Lee Seongsu on June 14th last year. SM did not fulfill the promise regarding album distribution fees. Last year in June, at the time of signing the agreement, Lee Seongsu promised to reduce the normal 15% distribution fee to 5.5%, but did not keep this promise. However, such promises were not officially stated in the agreement and were known as verbally agreed upon matters. CBX claimed that "the guarantee of the distribution fee rate was a prerequisite for signing the agreement. We have additional evidence," and "despite the past negotiations being settled, SM did not fulfill the promised album distribution fee rate of 5.5% and made unfair demands for 10% of the artists' personal album sales, advertising revenue, etc. Despite SM breaking the agreement conditions first last year, they demand 10% of the sales from the artists." They have not paid the IP (EXO's sound sources owned by SM) usage fees to SM from January to June this year. They were obligated to pay SM the sales including the IP usage fees for the first quarter of 2024 by early March, but have not fulfilled this. The agreement signed by CBX in the presence of legal representatives clearly states that CBX must provide 10% of their personal activity sales to SM every quarter. Despite there still being time left in the re-contract period with CBX, Baekhyun was allowed to establish a personal corporation and engage in personal activities through it. According to Newsen, the 10% sales include IP usage fees related to EXO. In connection with this, INB100, CBX's agency, explained to Newsen on the 14th that "there was no content in the agreement last June that allowed us to use IP and give something in return. Therefore, it is an unreasonable situation to claim that we did not pay the IP usage fees when we were not asked by SM to pay them." They further stated, "We proposed in the press conference that we are willing to pay the IP usage fees to SM," and added, "However, SM has not responded to our position and is using the media to portray us as non-payers of IP fees." SM is expected to continue to respond in accordance with the law and principles rather than issuing additional official comments regarding the management being sued. Prior to this, on the 12th, SM filed a lawsuit against CBX at the Seoul Eastern District Court for breach of contract. The complaint submitted by SM stated that they could not tolerate CBX's unreasonable behavior any longer and filed a lawsuit seeking the fulfillment of the agreement temporarily. SM revealed to Newsen on the 13th that they will respond in accordance with the law and principles.
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