A recent High Court decision has identified a potential issue for professionals with works that are copyrightable that do not want the copyright to said works to be deemed relationship property. In Palmer v Alalaakkola  NZHC 2330, the High Court held that copyright in an artistic work is relationship property and therefore subject to the Property Relationship Act’s equal sharing presumption.
Alalaakkola is a painter who created a number of original works during her 20-year marriage to Palmer. Following their separation, Palmer entered the former family home and removed a substantial number of her artwork. The parties agreed that he could keep these paintings however he wanted to have the copyright in them transferred so that he could sell them, giving him an income stream. Alalaakkola objected to this due to the lack of control she would have over how many prints could be made and the cost at which they would be sold.
Family Court decision
While the Copyright Act 1994 identifies copyright a property right, the Family Court found that this property right vested in Alalaakkola alone because she was the “author” of the works. Therefore, it found that the copyright was separate property. The Court found further that even if the copyright was relationship property, it would not have ordered a transfer of the copyright as this would be contrary to the clean break principle which is at the heart of the PRA, and furthermore, she could potentially find herself in competition with copies of her own artwork.
High Court decision
On appeal, however, the High Court overturned the Family Court’s decision and held that the copyright was relationship property. The High Court reasoned that because the artwork was created during the course of the relationship, the copyright that accompanied this became relationship property as it also came into existence during the relationship.
The key takeaway from this decision is that if you are married or in a de facto relationship/civil union and have work that is subject to copyright then this will be classified as relationship property. If you are a professional with copyrighted works and wish to protect the copyright, it will be important to enter into a contacting out agreement that protects your interest in the copyright. Failure to do so can unnecessarily complicate things for the parties and increase their costs, as even valuing the copyright may itself be difficult and expensive.
Feel free to get in touch with someone from our team if you have any questions or if you want advice about drafting a contracting out agreement.