The renowned karate national athlete Wen Tzu-yun, widely loved for her outstanding achievements and refreshing image, had a dispute with her former agency 5 years ago over issues such as the termination of their contract, sponsorship revenue sharing, and the use of her likeness. The case went to court, attracting significant attention from both the sports and legal communities.
This article examines the Civil Judgement by the Taipei District Court Docket No. 109-Su-Zi-4589, where the plaintiff, Wen Tzu-yun, filed a lawsuit against her former agency, requesting the cessation of violations of her personal rights. The case explores three major legal issues faced by athletes: the termination of agency contracts and its legal grounds, the practice of athlete sponsorships and endorsements, and the boundaries and protection of reputation and publicity rights. Additionally, this article compares the similarities and differences between athletes and entertainers in similar disputes.
Case Background
Wen Tzu-yun and Xfitness Co., Ltd. (“Xfitness") signed an "Exclusive Commission Agreement" on May 15, 2015. Under the agreement, Wen Tzu-yun entrusted Xfitness to assist with securing brand exposure opportunities and sponsorship deals for her in Taiwan. However, as their cooperation philosophy began to diverge and the foundation of trust was shaken, Wen Tzu-yun, in order to focus on preparing for her competitions, sent a notice of termination in accordance with Article 549, Paragraph 1 of the Civil Code (served on April 24, 2020), to end the contract. Xfitness, however, argued that the termination was legally ineffective.
In 2020, Wen Tzu-yun filed a civil lawsuit in the Taipei District Court against Xfitness and its representative, Zhang Shihong (“Agent”), seeking for a judicial confirmation that their agency relationship no longer existed and the payment of overdue sponsorship funds and the sharing of licensing fee amounting to over NTD 360,000. Additionally, she requested the Agent to remove the statement "Karate Wen Tzu-yun’s Agent" from his personal Facebook profile, and claimed that the Agent's posts on Facebook, as well as his unauthorized use of her photos to promote sports courses, had violated her reputation and publicity rights. She sought compensation for emotional distress amounting to NTD 300,000 and demanded an apology to be published. In response, Xfitness counter-claimed Wen Tzu-yun for damages of over NTD 2 million.
Court Judgement
On September 22, 2021, the Taipei District Court rendered its first-instance judgment, with the following main conclusions:
- The agency contract was legally terminated;
- Xfitness must pay the overdue sponsorship funds and the sharing of licensing fee;
- The Agent is required to remove the statement "Karate Wen Tzu-yun's Agent" from his Facebook profile;
- Wen Tzu-yun's claims for compensation related to reputation and publicity rights violations were dismissed;
- Xfitness's counterclaim was rejected.
(Note: Neither party appealed the judgment, so the first-instance decision has become final.)
Legal Observations and Insights
From this judgment, the article aims to briefly share three observations: the termination of agency contracts and its legal grounds, the practice of athlete sponsorship and endorsements, and the boundaries and protection of reputation and publicity rights. Regarding the termination of agency contracts and its legal grounds:
the Nature of Athlete Agency Contracts and Termination Rights
The "Exclusive Commission Agreement" signed by both parties stipulates that Wen Tzu-yun entrusts Xfitness to handle matters related to brand activities and athlete sponsorships. Xfitness is responsible for liaising, mediating, and managing all related tasks. It will also receive a commission or request reimbursement for expenses based on the earnings from these activities. The court has determined that this agreement is a contract with a service provision nature, resembling a labor service contract with similar features of mandate, and should therefore be governed by the provisions of the Civil Code concerning mandate.
Therefore, according to Article 549, Paragraph 1 of the Civil Code: "either party to a contract of mandate may terminate it at any time," the court believes that in situations where the trust between the parties has been undermined, there is no need to compel the continuation of the relationship. Thus, under the aforementioned legal provision, the termination of the agency contract is deemed legally valid.
The court's determination that the athlete-agent contract is a "labor service contract with similar features of mandate, which should be governed by the provisions of the Civil Code concerning mandate" means that the contract is based on a relationship of trust between both parties. In the event that this trust is broken, either party may terminate the cooperation at any time (please note that it is important to pay attention to whether the contract contains provisions for penalties or damages, as well as the risks of compensation for termination). This court opinion is very similar to the common practice in entertainment contracts, where performing artists and their agencies sign talent management contracts. In both events, the nature of the contract and the grounds for termination are fundamentally the same.
(To be continued)
(The article is originally in Chinese which can be found here.)