The New Zealand Supreme Court has for the first time considered whether copyright constitutes "property" and "relationship property" under the broad definitions of the Property (Relationships) Act 1976 (PRA) in the context of settling the assets from a former relationship, namely artwork.
Sirpa Alalääkkölä (Alalääkkölä) and Paul Palmer (Palmer) were married in 1997 and separated in 2017. At separation there was a stock of unsold paintings (artworks) Alalääkkölä, a highly regarded artist, had created during the relationship. Palmer made a claim as to the ownership and value of copyright for the artworks.
This issue has been hotly contested with litigation starting in the Family Court back in 2017 and then progressing all the way to the highest New Zealand Court with a decision issued on 7 March 2025 (Alalääkkölä v Palmer [2025] NZSC 9).
Background
In the Family Court, it was held that while copyright is "property" for the purposes of the PRA, it is the separate property of the creator and not available for division between former partners.
The High Court and the Court of Appeal disagreed with the Family Court. Both courts held that copyright is "property" and is capable of becoming relationship property if created during the course of the relationship. However, the High Court and Court of Appeal differed in opinions as to how copyright should be treated for the purpose of division.
Supreme Court decision
The Supreme Court agreed with the High Court and Court of Appeal and held that copyright, which is a right that subsists in original works (and can include artistic and literary works, music, performers rights, film, communication works and computer databases) under the Copyright Act 1994 will form part of the relationship property and is available for division between the parties. The Supreme Court dismissed Alalääkkölä's appeal and directed the Family Court to make a decision as to the value and division of artworks and the underlying copyright.
In making its decision, the Supreme Court recognised the duality of copyright by drawing a distinction between the economic rights (the right to buy, sell, transfer and license copyright works) and moral rights (the right of attribution and non-derogatory treatment), which is a personal right of the copyright author. This meant that the economic rights aspect of copyright was recognised as "property" and "relationship property" under the PRA, which could be valued and divided between the parties like any relationship property dispute and at the same time the rights of the artist to the moral rights connected to the artworks, which cannot be transferred, should reside with the artist.
In short, the Supreme Court recognised that the copyright was owned by Palmer and Alalääkkölä on one hand for the purpose of valuing and dividing the relationship assets and on another, that of Alalääkkölä. The Family Court now must make a determination about the value and division of artworks and the underlying copyright, which can be a difficult task, as valuing intellectual property is in itself part science, math and a dash of art.
What do we think?
It appears the Supreme Court's decision is largely sound, because like other forms of intellectual property, copyright is a property right that can be bought, sold, transferred and licensed as can any other property assets. The situation should be no different in the context of deciding what is and what is not relationship property.
The Supreme Court's decision and the rationale applied in reaching its decision appears to follow on from similar decisions issued in the United Kingdom and Australia, which considered similar issues, albeit under their local laws. Given the international aspect of intellectual property, which drives trade and commerce, it is pleasing that our laws align with our key trading partners.
Implications
Intellectual property, which includes copyright is often assumed to be a personal right tied to the creator given the individual attributes, expertise and skill required to create such legal rights. However, the Supreme Court's decision reminds us that while intellectual property rights are intangible rights, they are fundamentally property rights that can be bought, sold, transferred and commercialised and should be treated as such, irrespective of the context. At the same time, the decision preserves the personal rights that a creator enjoys by maintaining the underlying moral rights.
We are able to assist with and advise on past, present or future creation of Intellectual property rights, including copyright works, as well as the protection of rights arising out of such works (whether in a relationship context, third parties, or otherwise). If you would like to discuss how best to approach any intellectual property matters, please reach out to one of our experts below.
This article was co-authored by Cora Morrison (senior associate), Hamish Selby (partner), Sherridan Cook (partner), Sophie Thoreau (special counsel) and Hannah jacobsen (solicitor).
