Should you have to share the value of your copyright with your ex? The New Zealand Court of Appeal says yes, you do.
The decision on the copyright of the divorced painter will no doubt cause some consternation among the creative community in New Zealand. This is because the court decides that not only are paintings relationship property, but so is the copyright (right to commercialise those works).
From the perspective of an intellectual property lawyer who advises on relationship property, this makes absolute sense. Copyright in a painting which is created during the course of a relationship is no different from the goodwill which is built up in a business, even where only one party is working in that business. It is logical that the rights to commercialise that painting, which can also be licensed to multiple third parties or sold, is also a property right which forms part of the relationship property pool.
The painter Sirpa Alalääkkölä is an established artist who is known for large colourful artworks encapsulating New Zealand life.
Her current original works sell for $5000 or more and lend themselves to the sale of prints and other forms of the art work. She was married for 20 years to Paul Palmer, until 2017, when they separated.
When it came to agreement as to how they would divide their relationship property, Mr Palmer was adamant that he wished to earn a living from the business of publishing prints and art cards of Ms Alalääkkölä’s art.
He claimed he had been doing this during the course of their marriage so he wanted to own the copyright, not just the painting. This disagreement led the couple to the Family Court to seek a division of relationship property. While the parties had agreed that Mr Palmer could keep certain paintings, the sticking point was the copyright in those paintings, in other words his ability to make and sell prints from them, and stop others doing that.
In the Family Court, the judge found that the copyright was property for the purposes of the Property (Relationships) Act but rather than being relationship property (which could be divided between the parties) the copyrights were Ms Alalääkkölä’s separate property.
On appeal to the High Court, the High Court agreed that the copyrights were property but disagreed that they were separate property and found that they should be classified as relationship property. Had the court proceedings stopped there, the matter would have been referred back to the Family Court to decide how the artworks and the copyrights should be divided.
In this case, Ms Alalääkkölä appealed to the Court of Appeal, which essentially reached the same legal conclusion as the High Court in relation to copyright.
Given there was no previous case in New Zealand which considered the issue, it looked to international precedent and in particular, two cases in the United States which had addressed similar principles. They also analysed the New Zealand statutory framework of the Copyright Act and the Property (Relationships) Act and concluded that there was nothing in either legislation to suggest that Parliament intended to remove intellectual property from the reach of the Property (Relationships) Act and that it should not be treated any differently from any other sort of property produced or acquired by a partner or a spouse during the course of a relationship.
What is interesting is that the Court of Appeal went on to consider how the copyrights should be divided under the Property (Relationships) Act. Should they be divided between the parties or should Ms Alalääkkölä retain ownership of the copyrights, with a compensating adjustment being made from other relationship property to ensure an overall equal division of relationship property? The court decided that while the immediate effect of copyright law is to secure a fair return for the author’s creative effort, the ultimate aim is to stimulate artistic creativity for the general public good.
Based on this, the Court took the view that, where possible, the division of relationship property under the Property (Relationships) Act should reflect the unique and personal nature of copyright. They found that Ms Alalääkkölä should be able to continue to control the commercialisation of the copyrights and that it would be inappropriate and unfair for her to transfer ownership to Mr Palmer.
The reasoning for this was:
— As the sole creator of the artworks Ms Alalääkkölä should be able to choose if and when and how to commercialise the copyrights associated with them.
— Ms Alalääkkölä intended to continue to paint and support herself through her art business. If some of the copyrights were transferred to Mr Palmer, she could potentially find herself in competition with copies of her own work as reproduced by Mr Palmer.
— Ms Alalääkkölä’s reputation and personal brand as an artist could be negatively impacted by Mr Palmer’s actions, for example if he were to flood the market with cheap copies.
— Ms Alalääkkölä will always hold the moral rights in respect of the artwork, for example the right to object if a copyright owner used copyright in a way in which she believes to be derogatory. This could be a further source of potential conflict that is contrary to the clean break principle of the Property (Relationships) Act.
Accordingly, the Court ruled that the ownership of the copyright should remain with Ms Alalääkkölä and for Mr Palmer to receive a compensatory adjustment from other relationship property to ensure an equal division.
While the creative community may see this as undermining their right to exploit their own work, in fact it just acknowledges the value of intellectual property rights in the same way as other property rights, while still allowing the creator to retain those rights.
— Sally Peart is a specialist intellectual property lawyer and a Director at Marks & Worth Lawyers, and also advises on a wide variety of commercial trust and relationship property matters.
