In the cooperative relationship between anchors and MCN institutions, operational support is usually one of the important services provided by MCN institutions to their anchors. If the MCN institution is unable to fulfill the operational support commitment in the contract, can the anchor terminate the contract?
1. Brief facts of the case
On October 22, 2018, Huang signed the "IP Incubation Cooperation Agreement" with the maker company, agreeing to operate an online account in the name of the maker company and jointly incubate the IP. In addition to the platform account confirmed by both parties, Huang does not have any other undisclosed accounts, otherwise the account should be transferred to the maker company. As the exclusive and only person in the world, the maker company is responsible for Huang's exclusive brokerage business.
In June 2019 and April 2020, supplementary agreements were signed to change the income distribution ratio, and the company: Huang's distribution ratio was changed from the original 7:3 to 6:4 and then to 5:5.
The court confirmed that both parties recognized that the registered accounts were registered by Huang, and the content was created and published by Huang. However, there is a dispute between the two parties over the contribution value of the account on the whole platform.
Huang requested the court to 1) determine that the terms of the "IP Incubation Cooperation Agreement" are invalid for account attribution; 2. Terminate the "IP Incubation Cooperation Agreement" and supplementary agreement signed by both parties; 3. The maker company compensated Huang for liquidated damages of 100,000 yuan.
The maker company filed a counterclaim 1, requiring Huang to cooperate in changing the account involved in the case; 2. Huang compensated the maker company for 800,000 liquidated damages.
2. The Court's decision
Court of First Instance
1. It is confirmed that the "IP Incubation Cooperation Agreement" and related supplementary agreements signed by Huang and Beijing Maker Interactive Technology *** on October 22, 2018 will be terminated on the effective date of the judgment.
2. Huang shall pay Beijing Maker Interactive Technology *** 200,000 yuan for breach of contract within seven days from the effective date of the judgment.
3. Reject Huang's other litigation claims.
4. Reject other counterclaims of Beijing Maker Interactive Technology. If the obligation to pay money is not fulfilled within the period specified in the judgment, the interest on the debt for the period of delayed performance shall be doubled in accordance with the provisions of Article 253 of the Civil Procedure Law of the People's Republic of China.
Court of Second Instance:The appeal was dismissed and the original ruling was upheld.
3. The court held that
The focus of the dispute in this case is: is it a cooperative contract relationship or an employment relationship between Weixiu Company and Chen?
The court held that, with respect to Huang's first claim, whether Huang's ownership of the account constituted a disposition of no right did not affect the validity of the disputed contract, and Huang's claim that the clause was invalid on this basis was not supported by the court. In the section on standard clauses, standard clauses refer to clauses that are pre-drafted by the parties for reuse and not negotiated with the other party at the time of conclusion of the contract. In this case, Huang's act of transferring the ownership, right to use, and content copyright of his account to the maker company as the subject matter of the contract was the result of the consensus between the two parties, and was an expression of Huang's true intention, which obviously did not belong to the standard clause, and Huang's claim that the clause was invalid on this basis was difficult for the court to support. The "IP Incubation Cooperation Agreement" and related supplementary agreements signed by Huang and the maker company on October 22, 2018 are the true expression of the intentions of both parties, and do not violate the mandatory provisions of laws and administrative regulations, are legal and valid, and both parties shall perform according to the agreement.
With respect to Huang's second claim, the parties shall provide evidence to prove the facts on which their claims are based or the facts on which they refute the other party's claims, except as otherwise provided by law. Where a party fails to provide evidence or the evidence is insufficient to prove its factual assertion before a judgment is rendered, the party who bears the burden of proof shall bear the adverse consequences. In this case, the maker company submitted evidence to prove that it had fulfilled its obligation to incubate and promote the account involved in the case, although Huang objected to the effect of the maker company's performanceHowever, it did not reach the level of fundamental breach of contract, and Huang's claim for statutory rescission was difficult for the court to support. Regarding the payment of the share payment, according to the contract, Huang "did not defend within 3 working days after receiving the payment, and it was deemed that he had no objection to Party A's previous payment". Huang now asserts that the maker company has concealed and defaulted on payment, but has not fully adduced evidence in this regard, and it is difficult for the court to accept this. Based on the above determination, Huang's claim for breach of contract by the maker company entitled to the right of rescission was difficult for the court to support. However, considering that the performance of the subject matter of the contract involved in the case required Huang to create and update the content of the account, Huang now clearly stated that he did not agree to continue to perform the contract, and the contract could not be performed objectively, and Huang advocated the termination of the contract, and the court supported it, and it was appropriate to rule that the contract should be terminated on the date when the judgment took effect. With regard to Huang's third claim, based on the above determination, Huang demanded that the maker company pay liquidated damages, but the court did not support it.
Regarding the first counterclaim of the maker company, during the trial, the maker company recognized that the account was registered by Huang, that is, Huang was the initial registrant and initial user of the account. Because Huang and the maker company signed the agreement involved in the case, Huang transferred the relevant rights to the maker company, and now the contract is terminated, and the maker company should return the relevant rights to Huang. Based on the above determination, it is difficult for the court to support the claim of the maker company.
With regard to the second counterclaim of the maker company, Huang now proposed to terminate the contract within the validity period of the contract, resulting in the termination of the contract, and Huang should bear the liability for breach of contract in accordance with the contract. However, the contract stipulated that the liquidated damages were too high, and Huang also applied for a discretionary reduction, and comprehensively considering Huang's breach of contract and the losses of the maker company, the court decided that Huang should pay 200,000 yuan in liquidated damages, but the litigation costs were still borne by Huang.
Fourth, case analysis
The termination of the contract is divided into statutory termination and contract termination, and Huang did not provide sufficient evidence for the fact that the maker company breached the contract during the trial, and the maker company did not reach the level of fundamental breach of contract, so it was difficult for Huang to support the use of the statutory termination power by the court. During the trial, Huang's refusal to continue to perform led to the failure to achieve the purpose of the contract, and the court ruled that the contract was terminated, and finally Huang needed to bear the responsibility for breach of contract and pay 200,000 liquidated damages to the maker company.
The court also did not support the maker company's claim that Huang cooperated with the transfer of the account, and the court held that during the agreement, Huang had transferred the relevant rights to the maker company, and should return them after the contract was terminated. Since this case did not expand too much on the account issue, although the author does not agree with the discussion of account ownership, I guess that the court may have taken into account the facts such as the higher personal dependence between the account and Huang, so it ultimately did not support the claim of the maker company.
Conclusion
The cooperative relationship between MCN and its influencers is also facing continuous adjustment and optimization. Although this termination event marks the end of a period of cooperation, both MCN companies and Internet celebrities can continue to cooperate in the new cooperation model and market environment.