(May 19, 2010) The European Union Court of Justice recently considered the issue of resale rights of the works of the painter Salvador Dali. Resale right is an intellectual property right permitting the creator and those entitled under the terms of his will to receive a royalty based on the sales price received for any resale of one of his works after the first transfer of the work. The creator of the work receives benefits while alive; after his death, those entitled to inherit from him receive benefits for the next 70 years.
The mandatory resale right was established as EU legislation in Directive 2001/84/EC, which was subsequently transposed into national legislation in the EU Member States. In the French legislation, beneficiaries of the resale right after the death of an author are limited to heirs only, not all legatees. As a result, in France the artist cannot bequeath this right through a will.
Salvator Dali died in Spain in 1989 and left five family members as heirs by law; he appointed Spain in his will as sole legatee of his intellectual property rights. Administration of these rights is governed by a foundation established by Dali in 1983. In 1997, the foundation granted a Spanish society, VEGAP, the exclusive right to manage the copyrights for the works of the painter. VEGAP concluded a contract with a French company, ADAGP, which is in charge of managing the copyright of Dali's works in France. The copyright royalties received by ADAGP were forwarded by VEGAP to the Dali foundation, except the amount received through the resale right, which was paid directly by ADAGP to Dali's heirs.
Subsequently, the Dali foundation and VEGAP brought a suit in France against ADAGP for payment of royalties. The French court asked the Court of Justice whether Directive 2001/84/EC prohibits the national law from limiting the resale right to only the artist's heirs and not to legatees.
The Court of Justice began its analysis by looking into the two objectives of the Directive: a) to ensure that authors of works of art receive economic benefits from the sale of their works; and b) to eliminate distortion of competition in art markets, especially in markets where the resale right is not applied. With regard to the first objective, the Court stated that the transfer of resale right to certain people after the death of the artist does not deprive the artist of benefiting financially from his work.
Concerning the second objective, the Court noted that the EU, by adopting the Directive on the resale right, intended to avoid situations where works of art were primarily sold in the markets of Member States that did not apply the Directive, or where sales were at a lower rate. The Court held that the intention of the EU legislature was to ensure that the heirs of the artist benefit from the resale right after the artist's death; however, it was left to each Member State's discretion, based on the subsidiarity principle, to determine which persons are entitled to receive the resale benefits.
In this specific case, the Court held that the French court has to determine, based on the principles of conflict of laws of inheritance, which law governs the succession of Dali's resale right and who is an actual successor on the basis of national law provisions. (Press Release No. 34/10, Court of Justice of the EU, Member States Can Determine the Categories of Persons Capable of Benefiting from the Resale Right After the Death of the Author of a Work of Art(Apr. 15, 2010), available at http://curia.europa.eu/jcms/upload/docs/application/pdf/2010-04/cp100034