Despite international treaties, the copyright world remains divided on the fundamental basis and justification for copyright protection. It is perhaps most clearly illustrated by contrasting British and German copyright philosophy.
The former was established as an “economic right” for the benefit of copyright owners by using the rationale of property ownership, while the latter focused solely on the rights of creators and was manifested as an “author’s right”. Germany sees the author’s right as an undivided whole whereby the personal (or moral) rights and the economic rights are inseparably connected. This means that in Germany, personal and proprietary elements are “two sides of the same coin”.
In Alalääkkölä v Palmer, the New Zealand Court of Appeal had to address this very issue; determining how copyrights attached to artistic works created during a relationship, by a party to the relationship, should be treated under the Property (Relationships) Act 1976 (NZ) (the PRA) following the breakdown of the relationship. This was the first New Zealand case where copyrights have constituted subject matter to be assessed for division between marital partners in a terminated relationship, and as such, posed several novel questions for the Court.
The facts in Alalääkkölä v Palmer
Sirpa Alalääkkölä produced many paintings during her 20-year marriage to Paul Palmer, with the sales of the paintings and the licensing of the copyright in them providing the main source of income for their family. The issue before the Court of Appeal was who should own that copyright following the termination of the relationship.
The PRA essentially provides for equal sharing of “relationship property” in such instances, although some property may be considered “separate property”. But in this case the property in question was intangible property. How does the PRA deal with those rights? And was the copyright in the paintings relationship property to be jointly owned by Ms Alalääkkölä and Mr Palmer?
The PRA
The terms of PRA determine the division of a couple’s property when they separate or one of them dies. This applies whether they are married, in a de facto relationship, or a civil union. Under the PRA, property considered to be relationship property (as opposed to separate property) is divided equally between the parties.
Relationship property is defined in the PRA to include property acquired by either spouse or partner after their relationship began. The interpretation provisions in the PRA include a definition of “property”, but while this includes “any thing in action”, copyright (or any other intellectual property such as patents) is not specifically mentioned.
Family Court and High Court decisions in Alalääkkölä
The Family Court held that:
“Both parties were not involved in the creation of the artworks. They were created solely by Ms Alalääkkölä as the artist. The work created is relationship property, but her skill in the creation is not. It is her separate property.”
On appeal to the High Court this was rejected, and it was found that both the copyrights and the individual artworks were relationship property.
Court of Appeal decision
The Court of Appeal identified the legal issues to be considered as:
- are the copyrights “property” for the purposes of the PRA?
- if the copyrights are property, are they separate property or relationship property?
- if the copyrights are relationship property, how should they be treated under the PRA, to ensure an equal division of relationship property?
Is copyright “property” to which the PRA Applies?
The Court of Appeal held copyright fell within the PRA’s references to “property” because the Copyright Act s.14 expressly states that copyright is a “property right”.
Are the copyrights separate property or relationship property?
Ms Alalääkkölä submitted that the copyrights were separate property, because they were inextricably linked to her artistic skills and qualifications, both of which were personal and acquired prior to the relationship. The Court of Appeal rejected that argument, finding instead that “the Copyrights attach to the individual Artworks to which her skills were applied.”
The Court of Appeal emphasised that s.8 of the PRA provided that relationship property includes “all property acquired by either spouse or partner after their marriage, civil union or de facto relationship began.” As the artworks in question had been produced during the term of the marriage, the associated copyrights were relationship property.
Treatment of the copyrights to ensure equal division of relationship property
Having established that the copyrights were relationship property, the Court of Appeal had to determine whether those copyrights should be divided between Ms Alalääkkölä and Mr Palmer, or whether Ms Alalääkkölä should retain ownership of them, with a compensating adjustment being made from other relationship property to ensure an overall equal division of the total relationship property.
The Court took the view that as author of the artworks, Ms Alalääkkölä should be able to control the commercialisation of the copyrights, noting among other things that if Mr Palmer put cheap copies on the market, or printed his ex-wife’s work on tea towels or coffee mugs, it had the potential to damage her personal brand.
The Court of Appeal also recognised that if some of the copyrights were transferred to Mr Palmer, then under Ms Alalääkkölä’s inalienable moral rights, she would retain the right to object if he attempted to license uses of the copyrights which could be considered derogatory, thereby creating ongoing conflicts.
The Court concluded that the PRA does not require each specific item of property to be divided equally, but rather that the overall pool of relationship property must be.
Conclusion
The Court of Appeal’s decision can almost be seen as a “compromise” of the contrary decisions of the Family Court and the High Court by determining the copyrights to be relationship property, while simultaneously allowing all such rights to remain with the creator. German lawyers may be shocked by the reasoning given, because to them copyright in works such as artistic works is a very personal right which cannot be transferred by the author to a third party and can only be licensed.
While not suggesting New Zealand copyright law should be identical to German, the copyright philosophy of Germany and other civil law countries need not be totally ignored when interpreting the New Zealand statute.
The matter is by no means settled, as on 9 May 2024, the Supreme Court granted Ms Alalääkkölä leave to appeal the Court of Appeal’s judgment. We will continue to monitor the developments in this case with interest, and provide further updates on the final ruling.
Amongst AJ Park’s IP experts are teams of copyright and dispute resolution specialists. For help in protecting the copyright in your property, reach out to one of them today.
