BREAKING NEWS: CJEU says that Member States are free to determine who must pay droit de suite royalty

Copyright has increasingly become linked to de-materialisation of both works and their exploitation channels, so it is kind of re-assuring to find cases that are still about the analogue world. 

This morning the Court of Justice of the European Union (CJEU) issued in fact its decision [not yet available on the Curia website] in Case C-41/14 Christie's France, a reference for a preliminary ruling from France seeking clarification as regards that peculiar creature of EU copyright known as artist's resale right, or droit de suite [Merpel explains that this phrase does not mean right to a (hotel) suite, but rather the "right to follow" the sale of one's own artwork] within Directive 2001/84/EC (the Resale Right Directive)

As this very blog reported a few months ago, despite its appearance as a case concerned with a specialist (and possibly pretty niche) area of copyright, Christie's France is yet another CJEU decision dealing with the relationship between IP rights and contract law [to this end readers will promptly recall the very recent judgment in Ryanair, here].

Background

Article 1 of the Resale Right Directive sets an obligation for Member States to provide for the benefit of the author of an original work of art an inalienable, unwaivable resale right. This consists of the right to receive a royalty based on the sale price obtained for any resale of the work, subsequent to the first transfer of the work by the author. 

It's not droit to a suite ...

Article 1(4) further states that:

"The royalty shall be payable by the seller. Member States may provide that one of the natural or legal persons referred to in paragraph 2 [sellers, buyers or intermediaries art market professionals, such as salesrooms, art galleries and, in general, any dealers in works of art] other than [that's the important bit] the seller shall alone be liable or shall share liability with the seller for payment of the royalty."

Christie's France decided to change its terms and conditions so that the buyer, and not the seller, became liable to pay the royalty. The issue thus became: can a contract derogate from the seller’s obligation to pay the royalty as is enshrined in the Directive? 

The Syndicat National des Antiquaires (SNA) did not think so: it actually took the view that, in placing the onus of the resale royalty on the buyer, Christie’s France’s general conditions amounted to unfair competition. 

Thus litigation ensued, and the Court of Cassation decided to stay the proceedings and seek guidance from the CJEU.

The following is the question that the French court referred to the CJEU:

"Must the rule laid down by Article 1(4) of Directive 2001/84/EC ... on the resale right for the benefit of the author of an original work of art, which makes the seller responsible for payment of the royalty, be interpreted as meaning that the seller is required definitively to bear the cost thereof without any derogation by agreement's being possible?"

The CJEU decision

As stated in the relevant press release, this morning the CJEU held that "[t]he cost of the royalty that has to be paid to the author on any resale of a work of art by an art market professional may be borne, definitively, by the seller or the buyer".

.... but rather the droit
to follow resale of artworks

According to the Court,

"[T]he Member States alone may determine the person liable for the royalty. Although Directive 2001/84 provides that the person by whom the royalty is payable is, in principle, the seller, it none the less allows for a derogation from that rule and thus leaves the Member States at liberty to specify another person from among the professional persons referred to in the Directive who, alone or with the seller, will assume liability for the payment of the royalty. The person who has been designated in that way by national law as the person by whom the royalty is payable may agree with any other person, including the buyer, that that other person will definitively bear, in whole or in part, the cost of the royalty, provided that acontractual arrangement of that kind does not affect the obligations and liability which the person by whom the royalty is payable has towards the author ... [S]uch a derogation is in keeping with the Directive’s objective of bringing to an end distortions of competition in the art market, since the harmonisation concerned is limited to those domestic provisions which have the most direct impact on the functioning of the internal market. For the purpose of achieving that objective, thus circumscribed, it is necessary to make provision as to the person liable for payment of the royalty and as to the rules for establishing the amount of the royalty. However, such provision is not necessary with regard to the question as to who, definitively, will bear the cost of the royalty.

The Court does not exclude the possibility that such a derogation may to some extent have a distorting effect on the functioning of the internal market. However, such an effect is only indirect since it arises as a result of contractual arrangements that are independent of the payment of the royalty to the author, for which the person by whom the royalty is payable remains liable."

A more detailed analysis will follow as soon as the judgment becomes available, so: stay tuned!