The Art of Division: Copyright as Relationship Property
This recent New Zealand Supreme Court decision in Alalääkkölä v Palmer NZSC 9, is a landmark case that addresses whether copyright should be classified as relationship property under New Zealand’s property law.
Key Questions in the Case:
- Whether copyright constitutes “property” for the purposes of the Property (Relationships) Act 1976 (PRA); and
- whether copyright in artworks created during a marriage qualifies as “relationship property”.
The Supreme Court’s affirmative answers to both these questions have significant implications for the division of assets upon the dissolution of a relationship, especially where one or both parties have created intellectual property.
Background of the Case:
The case arose from the separation of Sirpa Alalääkkölä, an artist, and Paul Palmer, who were married in 1997 and separated in 2017. During her 20-year marriage with Mr Palmer, Ms Alalääkkölä created several original works. Ms Alalääkkölä’s paintings were the family’s primary source of income, resulting in a substantial stock of unsold artworks created during the marriage.
Although the classification of the physical artwork as relationship property was relatively clear-cut under the PRA, the crux of the appeal lay in the status of the copyrights inherent in these artworks.
Ms Alalääkkölä argued that copyright is not “property” under the PRA, or alternatively, it constitutes her separate property. Mr Palmer initially sought to exploit these copyrights but later contended that Ms Alalääkkölä should retain them, with him receiving a compensatory share of their value from other relationship property. Ms Alalääkkölä wished to retain the copyrights without being required to provide compensation.
Key Questions raised:
- Whether copyright constitutes “property” for the purposes of the Property (Relationships) Act 1976 (PRA); and if so
Copyright is distinct from moral rights: The Supreme Court, delivering the judgment of the court authored by Miller J, decisively held that copyrights are indeed “property” for the purposes of the PRA and can be classified as relationship property. They also confirmed that a creator’s moral rights exist separately from the copyright in a work, noting that:
“The Act carefully distinguishes the rights which together comprise copyright from moral rights, providing that the former are assignable and the latter not.”
The Court highlighted that the Copyright Act 1994 explicitly defines copyright as a property right that exists in original works, including artistic works. It also noted that the Copyright Act allows for copyright to be “transmissible, as personal or moveable property” through assignment, testamentary disposition, or operation of law. The Act provides remedies for copyright infringement similar to those for other property rights.
The Court emphasised the distinction made in the Copyright Act between economic rights (copyright), which can be assigned or sold, and moral rights, which remain with the author during their lifetime and cannot be assigned. The Court reasoned that the economic rights inherent in copyright give it a realisable monetary value, making it fit the definition of “property” under the PRA.
The PRA defines “property” broadly, including “(b) personal property” and “(c) any estate or interest in any real property or personal property”. The Supreme Court concluded that there is no reason to exclude intangible personal property like copyright from this definition. They further noted that if copyright were considered an interest fixed in the physical artworks, it would still fall under the definition as “any estate or interest in any … personal property”.
- Whether copyright in artworks created during a marriage qualifies as “relationship property”.
Turning to the second issue, the Court rejected the argument that even if copyright is property, it was not “acquired” during the marriage and thus should be considered separate property due to its grounding in skills acquired before the relationship. The Court interpreted the term “acquired” in section 8(1)(e) of the PRA broadly, consistent with the PRA’s expansive definition of property…. It noted that “acquire” in ordinary usage can mean “to get or obtain by any means” encompassing things created by the owner.
The Court highlighted section 18(1)(d) of the PRA. This. includes “the acquisition or creation of relationship property” as a contribution to the relationship, suggesting that property “created” during the relationship can indeed be relationship property. The Court further clarified that the creative effort lies in the artwork itself, while copyright is fixed in the work by operation of law upon creation, and the bundle of rights comprising copyright can naturally be said to have been acquired when the work was created.
The Court also refuted the argument that copyright should be separate property because it stems from personal attributes and skills predating the relationship. It underscored the distinction between these personal attributes, which are not property themselves, and their utilisation during the marriage to produce an artefact in which copyright subsists. The Court observed that the creation of these artworks, which generated the copyrights, was intertwined with the dynamics of the marital relationship, where Ms Alalääkkölä was the primary income earner, potentially painting in quantity to support the family. This contribution of both spouses to the circumstances enabling the creation of the copyright-protected works further supported their classification as relationship property.
Key Takeaways
By clearly classifying copyright as property under the PRA and affirming that copyright in works created during a relationship can be considered relationship property, the Court has brought intellectual property firmly within the realm of relationship property asset division.
The judgment highlights the significant economic value of copyright and the contributions, both direct and indirect, of both partners to the creation of such assets during a relationship. Understandably, given the deeply personal connection many artists have with their works, this outcome may be particularly confronting.
This decision reinforces the principle of equal sharing of relationship property. It also offers a pathway to consider the specific nuances of intangible assets like copyright, particularly in cases where artists may be concerned about the exploitation of work after separation.
This case is now returning to the Family Court for the division of the property to be resolved. We await the Court’s approach to resolving these issues.
Special thanks to Associate Samera Roberts for preparing this article.
If you have any questions about this case or would like to discuss what this means for you, please get in touch with a member of our Intellectual Property team.
Disclaimer: The content of this article is general in nature and not intended as a substitute for specific professional advice on any matter and should not be relied upon for that purpose.
