Artworks: Ownership versus possession as seen through three Italian Supreme Court decisions on movies and paintings

The importance of tangibility (and why you should keep track of your chain of title)

Thanks to Francesco Tognato for collaborating on this article

Paintings, like movies, are products of the finest human artistry. It is not uncommon to observe visual tributes to paintings in movies. However, when it comes to property law, movies and paintings differ. This is particularly true when it comes to the way judges apply rules of possession, in particular Section 1153 of the Italian Civil Code (c.c.). A recent Italian Supreme Court decision involving a Renoir painting[1] shed some light on the principles underlying claims of ownership of artworks—which are very different from those applying to intellectual works, as intellectual works are not tangible objects.

BACKGROUND OF THE OEDIPUS REX CASE: WHAT DO YOU NEED TO GET “YOUR” PAINTING BACK?

On April 2, 1981, the painting Oedipus Rex by Pierre-Auguste Renoir was acquired at an art auction by a company that later sold it to an anonymous buyer in Rome (although there are no records of this transaction). On April 28, 1984, the same painting was stolen, only to be found some twenty years later in the possession of an Italian architect based in Asolo, a small town about 100 kilometers north of Venice. Needless to say, the heirs of the original Roman buyer sued the architect in the Civil Court of Treviso, which ordered the latter to return the painting on the grounds that “beyond reasonable doubt, the stolen painting can be identified as the artwork in the architect’s possession.”[2] The Court of Appeals of Venice upheld the first ruling and rejected all the architect’s claims. Specifically, the judges in the second instance maintained that the plaintiffs were not required to prove their ownership of the painting because they brought an action in restitution and did not argue their case based on a claim of ownership. Under Italian law, the two actions serve different purposes and are granted on substantially different grounds—diverging especially widely when it comes to the burden of proof.

An action in restitution relies on the assumption that a claimant’s good has been passed to someone else and simply aims to have the person who holds it in their possession be ordered to return it. This is typically the case with certain contracts (e.g., lease, loan, safekeeping), but it may also occur upon termination of a contract (e.g., for breach or expiration). If the beneficiary does not voluntarily return the item in question, the claimant can seek to regain possession through a judicial request, solely relying on the contract as evidence to prove their personal right to restitution, irrespective of title and without the burden of proof of ownership. On the other hand, a claim of ownership is brought by the legitimate owner of the good and aims to re-establish legal title (which must be proven to belong to the original owner) in order to have the defendant return the disputed property.

THE RULING OF THE SUPREME COURT

In 2016, the architect challenged the decision before the Italian Supreme Court, which published its verdict on February 4, 2021. In its decision, the Supreme Court upheld one of the architect’s claims, thereby partially overturning the previous judgment.

The architect argued that the claim by the heirs should have been qualified as a claim of ownership, instead of an action in restitution. The Supreme Court upheld this argument and held that a claim for restitution of stolen property made against the person who is in possession of the property by someone who is not the former holder should be deemed to introduce a claim of ownership. Thus, the heirs of the Roman purchaser could not avoid the burden of proof by choosing to resort to the action in restitution. On the contrary, the Supreme Court held that the heirs should have brought a proper claim of ownership if they wanted to rightfully establish their title to the painting.

Indeed, when it comes to property rights to movable goods, Section 1153 c.c. plays a paramount role. This sets out that a buyer’s possession in good faith gives them ownership, even if their predecessor in title was not the legitimate owner. The provision is an exception to the general rule according to which ownership is either acquired originally (in a standard set of circumstances), or derivatively (by means of an uninterrupted so-called “chain of title,” that is to say a series of transfers from legitimate owners). However, to benefit from Section 1153 c.c. the buyer must be able to prove the existence of a contract theoretically suitable to transferring ownership.

In the case at hand, the Supreme Court stated that the heirs could rely on Section 1153 c.c. The mere possession of the painting at the time of the theft is not, in fact, sufficient to prove its ownership, because proof of the transfer of property (i.e., a contract that demonstrates the transfer of ownership of the painting from the company that won the bidding to the original Roman buyer) is needed. Thus, the dispute shall be re-examined before the Court of Appeals of Venice as a claim of ownership, with everything that goes along with that in terms of burden proof—meaning that the claim must be supported by a legitimate title.

Pierre-Auguste Renoir once said, “The pain passes, but the beauty remains.” Hopefully, the protagonists of this legal saga will bear that in mind as they endure litigation lasting more than ten years.

PROVING OWNERSHIP IN THE FILM INDUSTRY: EVIDENCE IS KEY

As the Oedipus Rex case shows, a legitimate title is essential when asserting a property right in court. This can often be difficult to prove, especially when parties are required to trace back all the decades-long transfers of ownership that old artworks may undergo. Something similar may also apply in the film industry. When talking about intellectual works—that is, intangible assets—two aspects coexist: moral rights and economic rights. The former are inalienable and belong to the author as creator of the work. On the other hand, economic rights can freely be transferred or licensed. However, if a producer or a distributor did not properly acquire the rights to a film, they cannot then rightfully transfer them to a third party.

This is why keeping track of all the documents that relate to the origins and later transfers of the titles to any property used in the making of a film, aka the “chains of title,” is vital. According to the general principles of civil law, chains of title are essential to prove the legitimate and uninterrupted series of transfers necessary to prove ownership of an asset. They define ownership (and license) rights to a certain film from the current holder stretching back to the original one: if a dispute arises, the owner should easily be able to demonstrate their right to the work and dispel any doubt.

However, especially when old films are involved, assignments, licenses, and even distribution agreements may be missing or not easy to prove to the necessary degree of certainty. In those circumstances, should controversies arise where different subjects claim ownership of the same works, alleging different titles, it can become nearly impossible to prove legitimate ownership if the chain of title is partial or broken.

So, what if Section 1153 c.c. applied? Clearly, the provision could provide a shortcut to avoid uncertainties, cure patchy chains of title, and dismiss claims of ownership. But can parties really invoke the notion of possession—and the principle known as “possession serves as title” set out in Section 1153 c.c.—when disputing the ownership of intangible assets? In at least two case precedents, the Italian Supreme Court answered that question in the negative.

DISPUTED OWNERSHIP OF LICENSED CINEMATOGRAPHIC WORKS

On December 7, 1987, an American multimedia company allegedly acquired the exclusive rights to globally exploit several works. However, the same rights to the same works were granted— at least for their exploitation within the European Union—to an Italian movie company. The latter further transferred the rights to exploit those works to the Italian national public broadcasting company (RAI). Faced with this situation, the American multimedia company decided to sue all the other companies involved before the Civil Court of Rome, seeking to have the court declare that it held exclusive rights to exploit the works and issue an injunction preventing the other companies from exploiting them any further. The American company also sought compensation for damages. The Civil Court rejected all of plaintiff’s claims. However, the Court of Appeals quashed the first ruling and in 2006 ascertained plaintiff’s exclusive rights to 38 of the 39 disputed film works and ordered the defendants to pay damages. After that, RAI appealed the judgment before the Supreme Court, which published its decision on December 29, 2011.[3]

THE RULING OF THE SUPREME COURT

The Supreme Court rejected all of RAI’s claims, but one dismissal is worthy of particular attention. RAI claimed in the Court of Appeals that it acquired the right to exploit the cinematographic works pursuant to Section 1153 c.c. However, the court declared that said provision was not applicable, as RAI lacked a physical object over which to exercise possession (i.e., the reels of the films). The Supreme Court upheld this conclusion yet decided to analyze whether Section 1153 c.c. could apply to copyright.

Overall, the Supreme Court did not rule out the notion of possession of intangible assets. Nevertheless, it maintained that not all the provisions governing possession can apply; specifically, Section 1153 c.c. cannot be invoked. The Supreme Court explained its argument by relying on the specific nature of copyright, “which is based solely on the creative act of the idea, followed by its manifestation.”[4] Thus, apart from the creation of the work, copyright cannot be obtained by third parties (as opposed to the author) in an original way, but only through a derivative acquisition. As the acquisition of ownership under Section 1153 c.c. is an original one, this provision does not apply to copyright.

Moreover, according to the Supreme Court, the rationale of Section 1153 c.c. rests on the exclusive character of possession of an asset, which is “well recognizable by third parties and therefore able to guarantee certainty.” It would be difficult to find the same recognizability in the traffic of rights to intangible assets, “because the delivery, even when it occurs, refers to the object in which the work of intellectual ingenuity is expressed, which never identifies with the related copyright.” This is particularly true when such rights are not subject to mandatory recording in public registries, as is the case with copyright in Italy.

THE CURRENT STATE OF THE ART

The Supreme Court reiterated its view on this subject in 2017.[5] In this case, a claimant identified as K.O. and the production company that acquired the copyright to a movie from her sued a colleague of the movie’s director who happened to possess the film and claimed to be the legitimate owner under Section 1153 c.c. The Civil Court and the Court of Appeals of Rome sided with the movie director and established his exclusive right to exploit the work, as well as the legitimate transfer of that right to the production company. The defendant challenged the decision before of the Supreme Court, which published its decision on January 3, 2017. In the judgment, the Supreme Court once again stated that Section 1153 c.c. does not apply to ownership disputes over film works and dismissed the appeal.

CONCLUSIONS

This comparison shows that, when talking about paintings, there is room to claim ownership even when the assignor was not, in fact, the legitimate owner. On the other hand, in film-related disputes (as in others involving intangible assets), a clean chain of title really is key when it comes to demonstrating ownership, as there is no other viable way to prove it.

[1] Supreme Court, decision of February 4, 2021, No. 2612.

[2] Ibid., p. 2.

[3] Supreme Court, decision of December 29, 2011, No. 30082.

[4] Ibid., p. 10.

[5] Supreme Court, decision of January 3, 2017, No. 39.

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