Art Imitates Life - Copyright Works Created During Relationship are Relationship Property

In Palmer v Alalaakkola [2021] NZHC 2330 the Judge overturned a Family Court decision by holding that the copyright in paintings produced during a 20-year marriage by one of the parties thereto is relationship property under the Property (Relationships) Act 1976.

Ms Alalaakkola produced a number of original paintings during the marriage. Following separation Mr Palmer entered the former family home and removed a substantial number of the paintings. Ms Alalaakkola agreed that Mr Palmer could keep (or sell) the physical paintings, but objected to Mr Palmer also having the copyright in them.

The Family Court Judge held that copyright in the artworks was Ms Alalaakkola’s separate property as being the creator of the works she alone was the author of them, and as the owner of the copyright has the exclusive right to reproduce them. Further, Mr Palmer’s purchase of the raw materials for the paintings did not qualify him as a joint-author. The Family Court Judge found that in theory copyright falls within the ambit of property that is subject to the Property (Relationships) Act. However, while the paintings were created during the marriage, the Judge found that the creative skill necessary for their creation preceded the marriage and remains Ms Alalaakkola’s separate property. From this the Judge held that the physical paintings are relationship property, but the copyright solely belongs to Ms Alalaakkola.

If wrong in that respect the Family Court Judge noted that section 113(1)(c) of the Copyright Act 1994 allows copyright to be transferred by operation of law, but stated that he would have declined to exercise the Court’s discretion to do so for the following reasons:

• the sharing of copyright would create on-going copyright exploitation accountability obligations on each party which would be inconsistent with the clean break principle under the Property (Relationships) Act;
• if Ms Alalaakkola cannot control the number of prints that Mr Palmer produces, then that could adversely affect the prices she can charge as she would effectively be in competition with her own works;
• any issues that arise from the exploitation of the copyright could bring the parties into conflict which would be contrary to the clean break principle under the Property (Relationships) Act.

After noting that New Zealand courts do not seem to have previously considered the interaction of the Copyright Act and the Property (Relationships) Act and that each Act allocates property differently, the Judge outlined why the Family Court Judge fell into error in solely allocating the copyright to Ms Alalaakkola.

After finding that copyright falls within the scope of property within the Property (Relationships) Act, the High Court Judge found there to be no basis within the Copyright Act for finding that property rights allocated thereunder are beyond the reach of the Property (Relationships) Act. This finding was considered in-keeping with several other rights that historically have been recognised as relationship property. Consequently, copyright works created during the marriage are subject to the Property (Relationships) Act. While the skill that enabled the production of the works may have preceded the marriage, it is when the work was created that matters as copyright protects the expression not the skill or idea behind it. The possession of a skill prior to a relationship, whether or not that skill can create a copyright work (or other intangible asset), does not make the use of that skill during the relationship exempt from the Property (Relationships) Act.

The equal sharing presumption of that Act may only be displaced in extraordinary circumstances that make equal sharing repugnant to justice. The Judge considered equal sharing would not be repugnant to justice given the length of their marriage and that the possibility of an artist competing with their own works is a consequence that does not justify declining to transfer copyright. The Judge held that the equal sharing presumption of the Act means the paintings created during the relationship are to be shared equally by value rather than quantity. If the parties could not agree on a valuation, then independent expert opinion would be required. In referring the matter back to the Family Court the Judge noted that the Family Court has the discretion to vest some, none or all of the works in one party, with an adjustment to the division of the proceeds of sale of the family home in order to obtain overall equality of division.

Author: Quinn Miller

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