Concealed defect and duty to give notice of defects: challenge of error after purchase of a forgery
Substantial misconception about authenticity
The later plaintiff, an art trading company, purchased an oil painting advertised as an original at an auction. The auctioneer (later sued for repayment of the purchase price) assumed that the painting was genuine and expressed this not only in the catalogue but also to the plaintiff. Had the plaintiff known that it was in fact a forgery, she would not have purchased the painting. According to the auctioneer's rules of procedure, complaints about the condition of the goods must be made at the time of acceptance; later complaints about the condition and state of the goods would not be taken into account. Immediately after the auction, the plaintiff sold the painting to a private customer who, about a year later, accused the plaintiff, citing the opinion of an expert, that the painting was not genuine. The plaintiff then had the painting examined several times herself and again learned reliably almost a year later that it was indeed a forgery. About a month passed before the plaintiff's representative challenged the purchase in writing. Finally, the plaintiff asked the court to find the auctioneer guilty of paying back the purchase price in exchange for the return of the oil painting. The plaintiff had been materially mistaken about the authenticity of the oil painting when she bought it and the mistake had been caused by the defendant because he had advertised the painting as an original.
Different view of the courts
The defendant contested the claim on the grounds that it would have been possible for the plaintiff to obtain an expert opinion immediately after purchasing the painting, which it had failed to do. Complaints about the condition of the goods had to be made at the time of acceptance. The court of first instance, however, granted the claim and held that the plaintiff had reported the hidden defect immediately after she had become aware of the expert opinion. The Court of Appeal changed the first judgement and ruled in favour of dismissing the claim. In commercial transactions on both sides, the buyer had to inspect the goods immediately after delivery by the seller, as far as this was possible in the ordinary course of business, and had to report a defect immediately. Even if, in the present case, the defect could not have been discovered immediately, even with expert examination, the plaintiff would still have been obliged to notify the defendant of the defect of authenticity at the latest immediately after receiving the complaint from its buyer. If the buyer remained inactive and waited to see whether the suspicion of a defect would become more certain over time, his complaint, which was only made then, was late. The plaintiff should not have taken a year to carry out the examination and even if one were to assume that she had been allowed to wait for the result of an examination that she had arranged, her complaint would be out of time approximately one month after she had learned from the expert who had carried out the examination that the picture was a forgery. The failure to give timely notice of defects not only led to the loss of warranty claims, but also deprived her of the right to challenge the mistake.
Lack of authenticity as a hidden defect
Contrary to the opinion of the Court of Appeal, the Supreme Court ruled, following an extraordinary appeal by the plaintiff, that the appeal to the Supreme Court was admissible and also justified due to the existence of a substantial legal question. The plaintiff was upheld and the auctioneer was finally obliged to refund the purchase price paid. The Supreme Court held that the case in question concerned a special purchase (i.e. the purchase of a very specific item that cannot be replaced by the seller on his own authority). The plaintiff had wanted to purchase precisely this picture that was offered in the catalogue, which was also delivered to her. There was no question that the authenticity of a painting was a promised quality, especially since reproductions were also available on the market. The delivery of a forged painting was to be understood as a bad delivery and was subject to § 377 HGB (now UGB, Unternehmensgesetzbuch, where the entrepreneurial obligation to give notice of defects is stipulated). It was undisputed that the present defect of authenticity was to be qualified as a hidden defect. A hidden defect was a defect that could not be detected in a proper inspection and that had not actually become known to the buyer at the time of delivery of the goods. Hidden defects had to be notified immediately after their discovery. After the discovery of the defect, the buyer was not allowed to subject the goods to an inspection and wait for the result if he wanted to avoid the loss of rights (the loss of the right to a refund of the purchase price). In any case, it was decisive for the legal protection of the plaintiff, who had intervened here, that she had actually complied with her obligation to give notice of defects. The present case was characterised by the fact that the lack of authenticity of the painting would have been so difficult to establish that this could only have been done by the expertise of a particularly suitable expert. Experts for the painter in question were rare and difficult to find. Even if the buyer, according to the Supreme Court, "If the buyer suspects a defect, he may not wait until this becomes certain before making a complaint, but the defect as such must at least be objectified on the basis of circumstantial evidence. A completely unsubstantiated suspicion brought to the buyer's attention does not trigger any obligation to give notice of a defect.
Unsubstantiated suspicion does not require a notice of defects
According to the findings of the court of first instance, the accusation of forgery had been made in a completely unsubstantiated manner with reference to an expert opinion that had not been submitted to the plaintiff. However, without an expert opinion by a specific art expert, it had not been possible to obtain any information about the authenticity of the painting. In this specific individual case, the buyer was therefore only obliged to give notice of defects when he had the written expert opinion in his hands and was thus only able to have a substantiated suspicion of the defect. In such a difficult case, the buyer did not need to rely on oral statements, so that the plaintiff was not harmed by the fact that she did not give notice of the defect immediately after being informed orally of the expert opinion. The notice of defect given by the buyer of the forgery therefore proved to be timely in this specific individual case. The plaintiff was thus entitled to contest the mistake, the contract was retroactively (ex tunc) cancelled and the defendant auctioneer was obliged to repay the purchase price concurrently with the handing over of the painting.
Loan contracts: Fair risk distribution in contract design
Careless handling of loans
Even large museums and other professionally run collections are all too often quite careless about loaning art objects. Conversely, it is often the case in exhibition projects that risks are taken with regard to loans received that should actually be borne by the lender or the insurer. This can result in considerable damage. A well thought-out arrangement of the loan relationship is strongly recommended. The loan is a so-called real contract. Only with the actual handing over of the loaned object does the loan contract come into effect. The mere promise to lend something is only a preliminary contract. If the circumstances change, it is easy to unilaterally withdraw from the promise to lend. Contrary to the wording of the law, a loan for an indefinite period is also permissible, which requires termination. The loan agreement is by definition gratuitous. However, the term "loan" is repeatedly used incorrectly, when in reality it means rent against payment. However, a small fee does not deprive the loan of its character of gratuitousness. The use of the borrowed object must be carried out with care. The borrower may not lend the object of the loan without permission; this would constitute unlawful use of the object. The agreed use may not be extended, rather the agreed use must be adhered to. The borrowed object must be returned as agreed, i.e. after expiry of the agreed loan period or after termination in the case of a loan for an indefinite period.
Fault liability and burden of proof
The borrower is liable for the damage caused by his fault. The borrower is liable for slight negligence. The borrower is not liable for accidental damage (through no fault of his/her own), e.g. the picture is destroyed by a fire through no fault of his/her own despite having the appropriate fire protection equipment. The risk of (accidental) damage to the item through no fault of the borrower is still borne by the lender as owner. According to the law, the owner bears the risk of accidental damage. With regard to the contractual relationship existing between the borrower and the lender, the so-called reversal of the burden of proof applies in the case of damage to the borrowed item. Accordingly, the borrower must prove his or her own blamelessness in order to escape liability, which can sometimes be very difficult or even impossible. Ordinary expenses for the use of the borrowed item are borne by the borrower, e.g. electricity costs are part of ordinary use and are to be borne by the borrower. This does not constitute remuneration. Careful use also includes the duty of normal maintenance of the item, such as cleaning exhibited works of art. In the absence of an agreement to the contrary, the borrower shall not be liable for extraordinary maintenance costs, such as restoration. At the end of the loan period, the borrower must return the same item, in principle in the condition in which it was handed over. The lender does not have the right to demand the return of the loaned item before the expiry of the agreed period, i.e. earlier, even if he urgently needs it himself. The borrower, on the other hand, is entitled to return the borrowed item even before a certain time, but not if this is burdensome for the lender.
30-day period for claiming damages
The duration of the loan is determined by the agreement, which is often only conclusive. It is agreed for a certain time or for a certain purpose, for an exhibition for its duration. In the absence of such an agreement, the loan is for an indefinite period of time, which may be terminated unilaterally by notice in the absence of agreement. The lender has a right of early reclaim in case of use contrary to the agreement. Any claims of the lender and the borrower after the return of the object of the loan (e.g. of the lender due to misuse or excessive wear and tear or any claims for remuneration of the borrower due to extraordinary expenses incurred) must be asserted within 30 days. The law also recognises the so-called "Prekarium" as a special form of loan. Precarium exists if the lender can reclaim the object at any time at will according to the agreement. However, the free revocability does not have to be expressly agreed and can also result from the circumstances. Depending on the (explicit or conclusive) agreements, so-called "permanent loans" may have the character of a terminable loan contract for an indefinite period of time, or they may also be a gift subject to a condition or, as the case may be, subject to revocation.
Checklist for "Art Contracts
The following points should be included in a good art loan contract:
I. Preamble (Background and objectives of the agreement)
II. contracting parties(Parties and their representatives, powers of attorney, excerpt from the commercial register, excerpt from the register of associations, articles of association, appointment decree for public function, contact person)
III Subject matter of the contract (Performance and consideration, description of the art object)
IV. Contractual services and settlement (Preparatory obligations, main services, execution provisions, control rights, reporting obligation, contribution of third parties to the fulfilment of the contract, place of fulfilment of the contract, etc.).
V. Granting the use of intellectual property rights and personal rights (Copyrights and rights of use, merchandising rights)
VI. dates
VII. Legal and material warranty, guarantee commitments (Freedom from third party rights, quality assurance in factual terms, handover and acceptance rules, inspection and notification obligations, withdrawal clauses, right to rectify defects, etc.).
VIII. Compensation for services (Payment dates, advance payment, payment on account, settlement modalities, consequences of default if the contract is not fulfilled on time)
IX. Information and control rights (disposal of data, retention obligations)
X. Prohibition of competition (possibly with penalty)
XI. Confidentiality agreement
XII. Liability/proof of insurance
XIII Term of the contract (Contract duration, termination modalities, termination without notice, options for contract extension)
XIV Final Provisions (Written form, contractual enclosures, ineffectiveness clause, place of performance, place of jurisdiction and applicable law, possible arbitration agreement)
XV Signatures
Compensation for lost art: OGH decides fundamental issues
"Egon Schiele", "Drawing", "Couple
In a recent landmark decision obtained by our law firm, the Supreme Court deals with the question of what information must be available about a lost work of art in order for the entitled party to claim damages from the loser or otherwise responsible party. Regarding 6 Ob 249/09z, the Supreme Court states that "in the event of an occasion, the naming of the artist, the genre of the work, the subject of the work and the achievable sales proceeds". suffices. The case in question concerns four works of art by Egon Schiele and Gustav Klimt (1 oil painting, 1 watercolour, 2 drawings), which were loaned to a museum in Linz in the 1950s and can no longer be found there today. The heirs of the lender at the time have takeover confirmations issued by the museum at the time, which contain only brief information about the paintings. This is probably also because Klimt and Schiele works represented only a fraction of today's values in those days. In a quasi pilot case concerning one of the works, the Supreme Court, contrary to the opinion of the Linz Higher Regional Court, now allows the cursory description to suffice for the museum's obligation to pay compensation. The almost 60-year-old confirmation contains the following information "Egon Schiele", "Drawing" and "Couple. A private expert arrived at a current market value for a drawing by Schiele of EUR 150,000 to EUR 250,000.
Higher Regional Court disagrees
The court of first instance was satisfied with the description for Schiele's "Couple" satisfied and sentenced the provincial capital of Linz, as the responsible body of the museum, to pay damages. The borrower had to take proper care of the loaned items and keep appropriate records. The burden of proof with regard to a possible loss through no fault of the borrower was on the borrower, and the City of Linz had not succeeded in proving this. The Linz Higher Regional Court (Oberlandesgericht Linz), as the court of appeal, saw the matter differently and dismissed the lender's claim. The information "Egon Schiele", "Drawing"and "Couple" were too insufficient. The inadequate description of the drawing not only caused a claim for restitution to fail due to a lack of certainty, but also caused the claim for payment to be inconclusive. A necessary prerequisite for determining the value of the drawing was complete information on the factors determining the value. Their determination required an exact description of the object. Only if there was clarity about the nature and characteristics of the drawing was its valuation possible. This clarity was lacking in the case at hand. According to their own assertions, the plaintiffs could not describe the drawing in more detail. On the basis of their description, the matter could not be individualised. This incompleteness of the submissions justified the inconclusiveness of the claim for compensation.
Admissibility of the appeal for reasons of legal certainty
The Court of Appeal did not allow an ordinary appeal to the Supreme Court because there were no questions beyond the individual case. In contrast, the Supreme Court already saw a question of principle, declared the plaintiff's extraordinary appeal admissible and overturned the judgement of the Linz Higher Regional Court. The information "Egon Schiele", "Drawing", and "Couple" are sufficient for the valuation of the loss piece. The Linz Higher Regional Court must now deal with the matter again and address the further grounds of appeal set out in the defendant's appeal. The defendant city of Linz had argued, among other things, that the museum's confirmation of takeover should have been signed by the mayor and two members of the municipal council in order to be valid. This was stated in the municipal statute of the provincial capital Linz. Moreover, the paintings had never been received and if they had been received, they were to be regarded as donations to the city! As soon as the Court of Appeal has made a new decision and any further appeal proceedings before the Supreme Court have been settled, the proceedings concerning the other three pictures, which are already pending before the Linz Regional Court, will be continued. The lower courts will have to follow the basic decision of the Supreme Court described above when assessing the claims for damages.
OGH landmark ruling decisive for many lost works of art
The present Supreme Court decision will probably not only have significance for "usually" lost or stolen art objects. The topic of Nazi art theft and restitution (which is certainly far from over) may thus gain additional explosiveness. In a number of cases, the heirs of Nazi victims have only very scarce clues regarding lost or looted art objects. Often, existing documents are unclear and incomplete. Or there are only very fragmentary memories of elderly emigrants. If, however, a current sales value can be determined on the basis of the artist, the genre of work and the subject, claims for damages against public institutions or even private individuals are not excluded even if the pieces have not been there for a long time, but an originally given obligation to surrender or restitution comes into consideration. After all, the absolute statute of limitations for asserting claims for damages is 30 years, which means that, for example, sales of art in the 1980s can lead to obligations to pay damages if the seller had to have doubts about the impeccable origin of his piece. Of course, a claimant would still have to prove that a contract or a relationship similar to a contract existed with the former owner or his legal predecessors. To illustrate a typical example: In the early 1940s, a painting was extorted from an emigrant, i.e. the plight was abused for a purchase far below its value. The purchase appears to be immoral and invalid. The grandson of the emigrant, who lives in the USA, now learns that the painting was sold on to an unknown person in 1981 or that it was otherwise removed. He only knows the artist, genre and subject from stories told by his late grandfather.
Right to expression: European Court of Human Rights on the exhibition ban
Fundamental rights review of judgments in the field of art
Little has been known (even among lawyers) that questionable decisions of the highest courts can still be reviewed by the European Court of Human Rights (ECtHR) by individual appeal. The Austrian Supreme Court, too, has to be reproached by the Strasbourg-based European Court of Human Rights for having violated a fundamental right enshrined in the European Convention on Human Rights (ECHR) with this or that decision. The only recently established right of appeal against national decisions after exhaustion of the appeal process may become more important in the future, especially in the field of art. In view of the international nature of the art trade and the growing international activities of museums, there is a need for uniform standards, at least as far as European human rights guarantees are concerned. The references to the ruling of the ECtHR described below should encourage artists and art institutions, but also those otherwise affected in the field of art, not to resign themselves so easily to court decisions that are problematic in terms of fundamental rights.
Exhibition ban for "Apocalypse
The Association of Visual Artists Vienna Secession had organised an exhibition at the Secession on the occasion of its 100th anniversary, where among the works on display was the painting "Apocalypse" by Otto Mühl. The painting showed various public figures such as Mother Theresa, Cardinal Hermann Groer or Jörg Haider in sexual positions. The painted naked bodies were accompanied by enlargements of photos cut out of newspapers. Former FPÖ politician Walter Meischberger was also among the people depicted in this way. During the exhibition, Martin Humer, known as a so-called "porno hunter", had poured red paint over part of the painting (which is another story discussed earlier in Vernissage). This covered the painted body and part of Mr Meischberger's face with paint and thus made them unrecognisable. It was only after this incident that Mr Meischberger sought a ban on the exhibition and publication of the work as well as the payment of compensation, which the first instance dismissed. According to the court of first instance, it could be ruled out that legitimate interests of the plaintiff had been violated or details of his private life had been revealed, since the painting obviously did not depict a real situation. However, the Vienna Higher Regional Court upheld the appeal and prohibited the exhibition of the painting and ordered the Association of Visual Artists to pay the requested compensation. The Supreme Court rejected the appeal. Due to the use of the portrait in a degrading and defamatory manner, the plaintiff's personal rights had to be considered as having priority over the freedom of art.
Strasbourg Court v. Austrian Courts
The European Court of Human Rights, however, took a different view. Accordingly, the Republic of Austria was guilty of a violation of the right to freedom of expression through the ban on exhibition and publication. The Strasbourg Court recalled that the freedom of expression guaranteed by Article 10 ECHR is one of the fundamental pillars of a democratic society. In principle, it also applies to information or ideas that offend, shock or disturb. Those who create, distribute or exhibit works of art contribute to the exchange of opinions and ideas, which is essential for a democratic society. As a result, the state has an obligation not to unreasonably interfere with their freedom of expression. Conversely, the artist exercising this freedom assumed duties and responsibilities, the scope of which depended on his or her situation and the means he or she used. § Section 78 UrhG provided a legal remedy against the publication of a person's likeness if his or her legitimate interests were thereby infringed. It should be emphasised, however, that in the case of the painting "Apocalypse" only photographs of the heads of the persons concerned were used. Their eyes had been hidden behind black bars and their bodies had been painted in an unrealistic and exaggerated manner. It was not disputed by the national courts of all instances that the painting was obviously not aimed at reproducing or suggesting real events. In the opinion of the ECtHR, such portraits were a caricature of the persons concerned, which used satirical elements. Satire is a form of artistic expression and social commentary which, by its inherent exaggeration and distortion of reality, naturally aims to provoke and agitate. Any interference with an artist's right to express such an opinion must therefore be examined with particular care. The painting by Otto Mühl could hardly have been understood as a depiction of details from Mr Meischberger's private life, but rather referred to his public reputation as a politician of the FPÖ. In this capacity, he had to show greater tolerance towards criticism. TheEuGHMR considered the view of the court of first instance to be comprehensible, according to which the scene, which also included the portrait of Mr Meischberger, could be understood as a kind of counter-attack against the FPÖ, whose members had strongly criticised the artist's work.
Not necessary in a democratic society
Furthermore, according to the Strasbourg Court, the painting showed 33 other persons in addition to Mr Meischberger in the same way, some of whom had been very well known to the Austrian public. Mr Meischberger, who at the time of the events had been an ordinary member of the National Council, had certainly been one of the lesser-known persons depicted in the painting, and before the action was brought the part of the painting depicting Mr Meischberger had been damaged so that the offensive depiction of his body was completely covered with red paint. From this point on, at the latest, the portrait had been displaced, if not completely eclipsed, by the portraits of all the other, mostly more prominent persons who were still entirely visible in the painting. The exhibition ban was neither limited in time nor in space and left no possibility to exhibit the painting. In conclusion, the ECtHR found that the prohibition of the exhibition by the Austrian courts was disproportionate and not necessary in a democratic society.
Immunity of Art under International Law: No Safe Conduct for "Portrait of Wally
The Mona Lisa in America
In the first days of 1963, American-French relations were to find expression through a spectacular loan: Encouraged by the personal contact between Jacqueline Kennedy and the French Minister of Culture André Malraux, the Mona Lisa, Leonardo da Vinci's masterpiece, was successfully shown in America. In December 1962, the painting arrived in the USA by ship and from 8 January 1963 it was on display at the Washington National Gallery. A month later it was presented at the Metropolitan Museum in New York. It was an unprecedented operation and there were many questions to consider: How should the Mona Lisa be packed for the journey, how should the transport be handled? How was the painting to be secured, especially that in the event of a shipwreck in international waters and rescue by a third party, France would not lose its property in accordance with maritime law? On the other hand, there were no considerations regarding protection against seizure by the authorities in the USA. No one seemed to be concerned that the painting could be taken into execution for alleged or real claims against the French state.
Restitution and safe conduct for art
However, only a few years later, in 1965, the USA saw fit to introduce immunity rules (so-called "free" passage) for cultural objects of foreign states on temporary loan. France was the first European country to follow suit in 1994, and since then the number of states granting legal protection against confiscation to foreign lenders has increased (Austria since 2003). The question of immunity for travelling art objects has become an important issue for states and museums. The main reason for this is the increasing number of legal disputes resulting from claims by Holocaust victims and their heirs, but also from the expropriations of communist regimes in Eastern Europe. The case of the now famous "Bildnis Wally" has strongly promoted both restitution and confiscation protection, whereby (as a result of invoking the criminal investigation) the civil law instrument of the immunity pledge proved ineffective here. Disputes over ownership are not the only risk, however. Likewise, loans could be seized in order to pursue claims (unrelated to the object) against the lender that would not be enforceable in the lender's home country.
Protection against confiscation as customary international law
The motives for granting immunity are twofold: on the one hand, states shy away from the risk that the willingness of potential lenders to loan art will be permanently impaired as a result of seizures. On the other hand, the legal initiatives regarding immunity for art also seem to be motivated by the assumption of a more or less existing obligation under international law. At the very least, explanatory reports on proposed legislation and state declarations point in the direction of customary international law that is to be implemented domestically in this way. In 2004, the UN General Assembly adopted Resolution A/Res/59/38 on the interpretation of the long-standing UN Convention on Immunities of States and their Property, which obliges states to protect the cultural property referred to in the Convention. ("property forming part of an exhibition of objects of scientific, cultural or historical interest and not placed or intended to be placed on sale") are by definition entitled to immunity from seizure or attachment. Although the Convention itself has not yet entered into force, there are strong voices from authoritative institutions and states that the protection against seizure alone exists as a mandatory obligation under customary international law. For the time being, however, this protection derived from state immunity is likely to benefit only state, but not private lenders. For the benefit of private borrowers, explicit domestic regulations are still required.
Legally binding immunity pledge in Austria
To a limited extent, in Austria the "Federal Act on the Temporary Material Immunity of Gifts of Cultural Property on Loan for the Purpose of Public Exhibition". protection against confiscation. The protection covers art objects of foreign lenders temporarily exhibited in federal or provincial museums. Furthermore, the law requires a public interest in the exhibition. Accordingly, loans to private museums or for other private projects are not protected. The Austrian regulation reads:
"If foreign cultural property is to be temporarily loaned to an exhibition of the federal museums, which is in the public interest, on the territory of the Republic of Austria, the Federal Ministry of Education, Science and Culture may, at the request of the federal museum concerned, give the lender a legally binding assurance of the temporary immunity of the cultural property. A public interest also exists in particular if the cultural property in question is an important part of the exhibition and if it could not be exhibited in Austria without this assurance or only at disproportionate cost.
§ 2. this undertaking shall be given in writing before the importation of the cultural object for the time required in connection with the exhibition, for a maximum of one year, using the words "legally binding immunity undertaking". It may neither be withdrawn nor revoked.
§ The effect of the undertaking is that the lender's claim for restitution cannot be opposed by any rights asserted by third parties in respect of the cultural property.
§ 4. court actions for restitution, seizures and execution measures of any kind are inadmissible until the property is returned to the lender.
§ 5. §§ 3 and 4 shall also apply if a Land law provides for a regulation corresponding mutatis mutandis to §§ 1 and 2 in the version of this Federal Act, Federal Law Gazette I No. 65/2006, for exhibitions that do not take place in federal museums, as well as a possibility for third parties who credibly demonstrate a legal interest in the cultural property to obtain information. The total duration of all immunity assurances granted for a specific cultural property may effectively amount to a maximum of one year from the date of import."
The restriction to exhibitions of public museums and the requirement of public interest are questionable. Since the law gives the ministerial discretion wide latitude, the "legally binding grant of immunity" appears neither predictable nor is its refusal really legally reviewable.
Paintings in hotels: No copyright protection for reproduction on hotel homepage
Essential creative traits
In a recent decision, the Supreme Court held that only if the viewer has the "sensual impression of the original work in its essential creative features". the artist could assert copyright claims as a result of the unauthorised reproduction. In the case in question, the artist had allowed a hotel to hold a temporary sales exhibition of her works, including the painting "Mozart Symphony No 41", on its premises. The hotel was to receive a commission, but no sale was made. It was then agreed that the paintings could remain on display in exchange for a monthly payment. When the hotel defaulted on the second monthly instalment, the artist had taken down her paintings and taken them with her. During the exhibition, photographs of the hotel's premises were taken and subsequently posted on the hotel's website without the artist's consent. In two out of ten of these photographs, the painting "Mozart Symphony No 41" can be seen hanging on the wall in the background. In order to secure her claim for injunctive relief with the same content, the plaintiff artist applied for an interim injunction ordering the hotel management GmbH to refrain from reproducing or disseminating the work, in particular by posting pictures of the work on the hotel's homepage, until the judgment on the application had become final. The hotel was using photographs of the painting for its own advertising purposes without the plaintiff's consent and was thus encroaching on the rights of exploitation to which the author alone was entitled.
No protection for unformed thoughts
The defendant requested that the application for security be dismissed. The plaintiff had suffered neither a legal nor an economic disadvantage, but it was even in her interest if her works became known to a larger circle of people. The court of first instance granted the application for security. The court held that the digitalised photograph's placement on the website infringed the rights of reproduction and dissemination. The appellate court amended this decision by dismissing the application for a protective order. It held that there was no unauthorised reproduction because the photographs did not constitute a commercially exploitable copy of the original work. The Supreme Court confirmed the dismissal and held that in order to obtain copyright protection, the result of the creation of a certain conceptual content had to become perceptible to the senses. The object of copyright protection was not the still unformed idea underlying the work as such, but only the personal physical shaping and definition of a creative idea. In the case at hand, the plaintiff claimed infringements in the form of unauthorised reproductions as well as interference with the right of distribution and the right to make available.
Making available on the Internet
Furthermore, the Supreme Court sets out the basic ideas of copyright law, according to which the author has the exclusive right to reproduce the work - regardless of the method and quantity. A single copy of a work in physical form could only be perceived by a relatively small circle of readers, listeners or viewers. This circle increases if the work is reproduced and numerous copies reach the public. This also increased the author's possibility of deriving income from the work. The reproduction right was intended to secure him a share in this income. The Introductory Remarks to the Copyright Act explain the term "Duplicate" in more detail: "To reproduce a work means to fix it in surface or space in such a way that the fixation piece is capable of making the work directly or indirectly perceptible to the human senses". According to the Supreme Court, it is correct to conclude from this that a work can only be said to be a copy if it has been embodied in a concrete form that makes the original work directly or at least indirectly perceptible. The author had the exclusive right to make the work available to the public by wire or wireless means in such a way that it was accessible to members of the public from places and at times of their choice ("making available right"). This right of exploitation is relevant to the Internet and other network technologies. Anyone who unauthorisedly incorporates spoken works, photographs or films into an internet site for interactive retrieval infringes the right of exploitation.
Intervention only if recognisable
Whether there was an infringement had to be assessed on the basis of a comparison between the original work on the one hand and the work in the reproduced/distributed/provided form on the other. The plaintiff claimed as an infringement of rights that the defendant had integrated two photographs of hotel rooms into its website, on which an abstract painting created by the plaintiff was visible as wall decoration in the background of the rooms depicted. The possibly infringed right of exploitation was thus the right to make available, which reserved the right holder the exploitation of his work in the form of offering it for interactive retrieval. When the relevant website of the defendant was called up, the plaintiff's painting was at most visible in the background of the room in a size of 1.1 cm x 1.5 cm - i.e. less than one hundredth of the original size. Under these circumstances, the viewer could just about recognise from the photograph that a picture was hanging on the back wall of the room depicted. However, the work as reproduced did not even come close to conveying the sensual impression of the original work in its essential creative features, let alone in the details of the representation. Even a viewer who knew the original work would not be able to distinguish it from other pictures by the plaintiff or another abstract artist due to the tiny reproduction on the photograph as part of the website. Under these circumstances, there could be no question of an infringing use of another's work. What mattered was the basic recognisability of the work in its concrete exploited form. However, this was lacking in the case at hand.
Return no longer possible: ownership is not subject to the statute of limitations, but claims for compensation are
Problems of proof for the heirs
In a recent decision, the Supreme Court stated that it was not unaware of the problems of proof with which the legal successors of those persons whose property was seized during the "Nazi regime" were confronted. In the case at hand, however, the reference to the fact that the property was not time-barred had to fail (in any case), because the plaintiff was using a claim for damages, which had already been established in 1954, as the basis for her claim for payment. Unlike a claim for restitution, the claim for payment had to be dismissed because the 30-year limitation period for claims for damages had expired. The plaintiff's legal predecessor was the owner of a collection of paintings. Among them was a painting by Moretto, which was confiscated by the Secret State Police (Gestapo) in Vienna in 1944. The owner himself emigrated to Mexico in 1942 as a racially persecuted person. After his emigration, he tried to regain his property. He arranged for photos of the paintings in his collection to be sent to the Federal Police Headquarters in Vienna. In 1954, the police published a list of lost objects. This contained photographs of individual paintings together with details of the title, painter and size of the painting. It also included Moretto's picture. Furthermore, it was pointed out that the acquisition of the objects listed in the list had criminal consequences. At the beginning of 2001, the applicant's spouse learned that the painting had been in the possession of a doctor and painting collector living in Vienna and Italy and was currently in the museum of an Italian municipality. The painting had been donated to the municipality in 1972.
Failure to surrender
In the complaint filed in 2002, the plaintiff argued that there was a claim for damages in connection with the seizure of the painting, which belonged to the estate of the heir of the original owner of the painting. On the basis of a settlement agreement and as heiress after her husband, 25 % of the claim would be due to the applicant. The value of the painting was 250,000 US dollars. 25 % of this is the equivalent of EUR 68,000. At the time, the Gestapo had handed over Moretto's painting to the doctor and art collector. The latter and his wife had known since 1954 at the latest that the painting originally came from Jewish property and had been taken from its rightful owner during the National Socialist era. Already at that time, the couple would have had to return the painting, but failed to do so. The municipality in Italy, which now owned the painting, had refused to hand it over, referring to the Italian legal situation. The liability for damages against the couple in 1954 had passed to the defendant as the legal successor. The defendant objected to the lack of capacity to sue and the statute of limitations. The court of first instance dismissed the claim. The plaintiff was not entitled to sue because her spouse had not been an heir, but merely a legatee.
Second instance for non-limitation
As a result of the plaintiff's appeal, the second instance set aside the first judgment for a new decision after supplementing the proceedings and allowed an appeal to the Supreme Court. The Court of Appeal dealt in more detail with the defendant's objection of the statute of limitations and held that it was not a "simple" claim for damages, which was already time-barred after 30 years. Rather, it was a claim for restitution of property, in the form of an action in interest (action for payment) due to the alleged impossibility of regaining ownership of the painting. It was sufficient to prove that the object had not been restituted. The heirs of those persons who had been victims of a seizure of property during the National Socialist era were entitled to a claim for restitution of property against the person who had obtained custody of the property, which was not time-barred pursuant to § 1459 of the General Civil Code, provided that the property had not been lost through an acquisition in good faith by a third party. In any case, it had to be clarified when and under what circumstances the Moretto painting had been acquired after the seizure and whether the restitution of the painting was not only factually refused. For this purpose, the Italian legal situation had to be ascertained. The idea that a claim for restitution is not time-barred also applies to a claim for compensation in the case of aryanised property.
Claim for damages accrued, but time-barred
In its decision, the Supreme Court states that the doctrine is of the opinion that claims for restitution of objects that were either seized by a null and void sovereign act of the "National Socialist state" or by de facto force (robbery, extortion) cannot be held against the statute of limitations despite the limitation period according to the restitution laws (enacted after the war). This was justified by the fact that the owner's claim for restitution under § 1459 of the General Civil Code was not time-barred. The enforcement of this claim, however, presupposed that the property still existed and had not been lost through original, e.g. bona fide, acquisition of property. In the specific case, however, the plaintiff would not derive her claim for payment from the fact that a claim for restitution based on ownership - which, according to the cited doctrine, was in principle not subject to a statute of limitations - had passed to the defendant as the legal successor of the collector couple. A claim for restitution had no longer existed at the time of the legal succession and could therefore not have been transferred because the painting had already been donated and handed over to a municipality in Italy in 1972. On the contrary, the plaintiff had asserted that the collector couple had already failed to return the painting to the rightful owner, who was still alive at the time, in 1954, in the knowledge of the painting's origin. This claim for damages - which had already been established at that time on the basis of the violation of an obligation to return the painting - had passed to the defendant as the legal successor of the tortfeasors. According to § 1489 sentence 2 ABGB, every claim for damages was subject to an absolute limitation period of 30 years. Therefore, if the damaging conduct had been committed in 1954 and the damage had occurred at the same time due to the breach of the obligation to make restitution, the claim for damages had in any case been time-barred at the time the action was brought in 2002. The 30-year limitation period applied irrespective of the knowledge of the then owner and injured party of the person of the unlawfully acting acquirer and tortfeasor.