THE GRIP OF AN ARTIST ESTATE ON THE SECONDARY MARKET: MORAL RIGHTS AND THE IMPORTANCE OF ARCHIVES.
| Author | Lenaerts, Oliver |
ABSTRACT
The world of 'artist estates' is a fairly recent niche market within the art world. It is a domain where copyright, contract law and inheritance law intersect. It is a business model that is reserved for the more famous artists whose oeuvre, even after their death, requires active management and preservation. The conflict between the (alleged) owner of a work of art who wants to put it on the market and the 'artist estate 'which refuses to consent to a sale on the basis of the moral rights of the deceased artist, is a dispute that often materialises in the world of 'artist estates'. The answer to this question requires an insight into the demarcation line between copyright and property law (often also interwoven with inheritance law aspects). The contribution attempts to analyse the degree of market control that can be exercised by artist estates, paying attention to the right of disclosure and the importance of archiving the oeuvre of an artist.
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INTRODUCTION
The world of 'artist estates' is a fairly recent niche market within the art world. It is a domain where copyright, contract law and inheritance law intersect. Artist estates do not occur in large numbers. It is a business model reserved for the most well- known artists whose works require active management and preservation after their death. (1) It is, therefore, rare that disputes relating to 'estates' materialise. But, when such disputes do arise, they usually involve interesting legal issues at the intersection of copyright, contract law and inheritance law. The disputes that may arise can be divided into two categories. The first category includes disputes relating to the authenticity of artworks. The sale of inauthentic artworks is a scourge that not infrequently plagues 'artist estates'. This involves counterfeiting. The second category of dispute includes the conflict between the (alleged) owner of a work of art who wants to put a work on the market and the 'artist estate' which opposes this on the basis of the right of disclosure of the deceased artist.
This latter conflict is the subject of analysis in this article. Such disputes occur mainly on the secondary market where sales are primarily effected through auction houses and art dealers. It is quite a task for artist estates to keep an eye on this market and to screen it for copyright infringements and, in particular, for attempts to sell works of art that the artist never intended to be divulged. In the following sections, I frame the latter issue in its broader legal context.
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BALANCING BETWEEN COPYRIGHT AND OWNERSHIP
The question of whether an artist or his heirs can prevent the sale of an artwork is intertwined with the legal position of the artist-author and the alleged owner of an artwork. This interaction is characteristic of the degree of market control it allows. After all, when an artist completes a work of art, two legal moments coincide. Firstly, the artist becomes the creator of the work and, without having to meet any further formal requirements, holds the copyright. Secondly, he becomes the owner of the artwork. He can transfer ownership without automatically transferring copyright in the process. The practice in the current art trade is that those copyrights are usually never transferred in the context of a sale to an art collector. Not transferring copyrights can create a potential conflict between the owner and the copyright holders. Usually these problems arise after the death of the artist. The first question that needs to be answered is therefore whether the heirs to the artist can exercise those copyrights. Pursuant to Article XI. 171 of the Belgian Economic Code ('WER'), in principle, only the property rights are exercised by the heirs of the author. However, the most authoritative doctrine assumes that not only the property rights but also the moral rights are transferred to the heirs and this in accordance with the civil devolution rules. (2) Neither the WER nor the Belgian Civil Code contains a sufficient legal basis to justify a deviation from this rule, according to doctrine. Rather than emphasising the distinction between property rights and moral rights, it is necessary, in the context of the law of succession, to emphasise the coherence between the two categories of rights and to accept the unity of copyright. (3)
The next question is what powers the owner of an artwork may exercise independently, without the consent of the artist-author or his heirs. The answer to this can only be determined in the negative: the owner may only do independently with the artwork that which is not covered by copyright. The boundary between copyright and ownership can be roughly summarised in one key word: 'exhaustion'. In Belgian law, the doctrine of exhaustion is contained in Article XI. 165 of the WER:
The first sale or other transfer of ownership in the European Union of the original or a copy of a literary or artistic work by the author or with his consent shall exhaust the distribution right of that original or copy in the European Union.
This exhaustion is in fact the result of a delimitation of copyright based on competition regulation. One may not use copyright to restrict free competition. The copyright holder's authority over an artwork does not extend so far that if an original artwork has been put into circulation with his permission, he can have market control over its further distribution. A resale by the person to whom the artist sells is not an act that can be put on hold on the basis of copyright--it is not part of the author-artist's prerogatives.
A closer look at the exhaustion doctrine reveals that the concept is closely linked to the artist's distribution right. The distribution right means that the artist or his heirs, as the first ones, have the right to put a work of art on the market. This right is deemed to have been exercised by the artist or his heirs if (i) there was a transfer of ownership to the new owner and (ii) that transfer was of a public nature. (4) These two elements are included in Article XI. 165, [section] 1, of the Economic Code, which defines the distribution right as follows:
only the author of a literary or artistic work has the right to authorise the distribution among the public, by sale or otherwise, of the original of the work or copies thereof. Exhaustion indicates a limit to the right of distribution. It is a limitation on the artist's power that comes into effect when the distribution right is in fact exercised. Legal doctrine is unanimous in concluding that only acts of distribution can lead to exhaustion (5) Thus, any act that leads to exhaustion is, by itself, also an act of exhaustion.
The contours of the artist's and owner's freedom of movement of an artwork are therefore determined by the existence of (i) a transfer of ownership and (ii) a transfer of ownership that took place to a public. Below, we analyse each of these conditions in sections (III) and (IV).
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OWNER, POSSESSOR OR 'DETENTOR': (6) WHAT'S IN A NAME?
The question of the impact of an intellectual property right on the right of the holder of a right 'in rem' to resell a work of art on the secondary market has a long history. The well-known French affair 'Rouault' in the 1960s marked the starting point. (7) In that case it was held that the artist could seek the restitution of works of art that had not been disclosed by the artist, even if this happened in the hands of an owner in good faith. This case law was (rightly) criticised by legal doctrine, (8) based on the argument that a work of art could not escape the application of the civil law principle of 'possession counts as title' (In Belgium: former articles 2279 and 2280 of the Civil Code; now article 3.18 et seq. of the new Civil Code 'NCC'), even if it has not been 'divulged' or disclosed to the public. In other words, it is perfectly possible to have a valid title to a work of art, but this does not mean that the alleged owner automatically has the right to sell...
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