The outline of the case is as follows. The plaintiff was a copyright management
association for musical works and was in charge of managing the copyrights to the
musical compositions in dispute, of which management had been entrusted to the plaintiff
from the copyright holder. In the nightclub, performers gave live performances by
playing musical instruments and let customers sing to this music. In order to seek
damages for the copyright infringements that occurred at the nightclub, the plaintiff
applied for arbitration against the defendant and the company for which the defendant
served as the representative director. Since X showed up in the arbitration and identified
himself as the operator of the nightclub, the plaintiff withdrew the said application for
arbitration and started arbitration against X instead. The arbitration ended when X agreed
to pay compensation equivalent to the royalties for the use of the musical compositions
and to conclude a license agreement for the use of the musical works at the nightclub.
However, X made no payment to the plaintiff in violation of the said license agreement
as well as the above-mentioned arbitration agreement. The plaintiff argued that it was the
defendant that infringed the copyrights by operating the nightclub where a band
performed the musical compositions for customers to sing and demanded an injunction
against those infringing acts, the removal of the musical instruments, and payment of
damages. The court accepted the plaintiff’s claim by holding that it was the defendant
and not X that operated the nightclub, in consideration of the related facts such as the
name under which the nightclub obtained a permit for the operation of adult
entertainment business, the name under which the telephone was installed, the recognition
of the employees, and the fact that the act of X was unnatural as the operator of the
nightclub.