France can control inheritance of IP right, says EU court

Salvador Dali left his intellectual property rights to the Spanish state in his will when he died in 1989. He had five heirs who inherited the rest of his estate.

French law, though, stipulates that only heirs can benefit from the resale of an artist's work after their death and that the benefits cannot be left to others in a will.

Spain sued a collections agency in France because it passed the resale income to Dali's heirs, not it. The case was referred to the CJEU, which said that France was entitled to have the law restricting who can benefit from the right.

The right itself was created by a 2001 EU Directive and means that a royalty payment is due to the original creator of a work when it is sold on after its first sale by that creator. The right lasts the author's lifetime and for 70 years after that date.

The rule was created because works of visual art are often sold by creators for small sums and subsequently become hugely valuable when sold on by collectors and dealers, who make large profits on the sale.

"The resale right is intended to ensure that authors of graphic and plastic works of art share in the economic success of their original works of art," says the preamble to the Directive. "It helps to redress the balance between the economic situation of authors of graphic and plastic works of art and that of other creators who benefit from successive exploitations of their works."

The Court said that it was important that the law in EU member states was harmonised because if it was not in force in one country art sales would flock to that country at the expense of others.

But it said that that harmonisation did not need to extend to the issue of who can inherit the benefits of the resale right.

"There is no need to eliminate differences between national laws which cannot be expected to affect the functioning of the internal market and, in order to leave as much scope for national decision as possible, it is sufficient to limit the harmonisation exercise to those domestic provisions that have the most direct impact on the functioning of the internal market," it said in its ruling.

The judgment said that it was not appropriate for a question about a resale right to interfere with national laws of succession.

"While the Union legislature wanted those entitled under the author to benefit fully from the resale right after his death, it did not, in accordance with the principle of subsidiarity, consider it appropriate to take action through that directive in relation to Member States’ laws of succession, thus leaving to each Member State the task of defining the categories of persons capable of being considered, under national law, as those entitled," said the CJEU.

"It is permissible for Member States to make their own legislative choice in determining the categories of persons capable of benefiting from the resale right after the death of the author of a work of art," it said.

The Court said, though, that it was up to the French court that referred the issue to it to decide whether French or Spanish law should apply to the dispute.

The UK only operates a resale right for living artists under special exceptions made in the Directive for countries that did not previously have a resale right. Those countries could delay the extension of the right to dead artists.

The Government has delayed that right, saying that it feared that introducing it would dampen the art market at a time of economic difficulty for art sales.