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Mr. Fred Einbinder International Business Law AUP Spring 2003 Lesion/Artistic Property Ted Bates S.A. v. James Sugar COURT OF APPEALS OF VERSAILLES (First Chamber, Chief Judge M. Remy) (June 9, 1986) The Court Sitting on appeal from the iudgment of the Commercial Court of Nanterre rendered the 27'h of November 1984. Appellant-Ted Bates S.A. Facts and Procedure: Ted Bates S.A., an advertising firm, under contract from one of its client to conceive and show a spot announce, obtained from the Black Star company, acting as Mr. Sugar's agent and whose French correspondent is the Socit Rapho, the assignment of the reproduction rights for a photograph taken by Mr. Sugar for a fixed sum of $1,000. Believing himself to have suffered a loss as a result of this assignment of more than 7/12ths amounting to either a lesion or an inadequate forecast of the gains to be realized from his work, Mr. Sugar having based his case on the provisions of Article 37 of the Law of March 11, 1957 on intellectual and artistic property brought an action against the Ted Bates company before the Commercial Court of Nanterre for the sum of 67,980 francs plus interest; By a iudgment rendered the 27'h of November 1984, the commercial court: - reiected the motion to dismiss the claim on the ground that no legal relation between the litigants existed; - ordered the said company to pay Mr. Sugar the sum of 67,980 francs, exclusive of taxes, with legal interest as of 16 April 1984 The Court also awarded costs of 5,000 francs pursuant to Article 700 of the New Code of Civil Procedure. The Ted Bates company, appellant, requests the Court to reverse the lower court's decision and to declare Mr. Sugar's claim invalid and to order him to pay the sum of 50,000 francs as damages for abuse of process and to award cost in the sum of 10,000 francs pursuant to Article 700 of the New Code of Civil Procedure. Mr. Sugar requests the Court: - to declare and iudge that independent of the legal relationship created between the Ted Bates company and Mr. Sugar by the intermediary of the firms, agents of Mr. Sugar, he has the right, pursuant to article 37 of the Law of 11 March 1957 to request the assignee of the reproduction rights, that is to say, the user of the protected work, in the present case, the Ted Bates company, the modication of the agreed upon fixed sum for the assignment of the reproduction rights with a view to using the protected works; - to declare and judge that pursuant to article 37 of the law of 11 March 1957, Mr. Sugar having established that he suffered a loss of more than 7/12ths, has a right to require the modification of the contractual prices; to declare and iudge that in accordance with the rates generally used, the sum owed to Mr. Sugar is 67,980 francs (exclusive of taxes); Therefo re: - to order the Ted Bates company to pay him the principal sum of 67,980 francs, exclusive of taxes, plus legal interest from the 16'" of April 1984, the date of the service of process in the lower court action,- - to order the Ted Bates company to pay him the sum of 7,000 francs pursuant to article 700 New Code of Civil Procedure in addition to the sum of 5,000 francs awarded to him by the lower court iudgment; - to order the Ted Bates company to pay all costs. Discussion Considering that the Ted Bates company wrongly contends that James Sugar cannot bring an action in contract against it because it never dealt with him, but only with the Black Star and Rapho companiest Considering that in reality, as correctly underlined by the lower court, these two companies only acted as agents of James Sugar; that under these conditions, by these intermediaries, a legal relationship was created between Ted Bates and the appellant and the action was therefore properly brought; Considering, on the merits, that by a letter of 4 October 1983, the Black Star company accepted on behalf of James Sugar to assign to the Ted Bates company the reproduction rights to a photograph taken from an airplane for the price of $1,000 "for the use of a photo (in double page and three photos to use in an advertisement"); that agreement existed on the obied and price; that James Sugar does not contest this point since he limits himself to bringing an action requesting rescission on the grounds of lsion. Considering that as concerns literary and artistic property, the law of March 11, 1957 provides that whenever the remuneration provided for is in the form of a fixed sum as in the present case, \"in the case of the assignment of a right to exploit a work whenever the author suffers a loss of over 7/12ths as a result of a \"lesion\" or an inadequate forecast of the profits to be made from the work, he may demand the modification of the contractual price",- that the argument of the Ted Bates company that rescission is not possible in the advertising field because \"the profits from the work cannot be determined because the work is incorporated into the advertising campaign from which it cannot be dissociated; that such an increase would only be relevant within the framework of an action based on an inadequate forecast of the gains to be made from the work whereas in the present case James Sugar's sole request is for rescission due to lesion,- that the above cited article 37 does not require the courts to refer to the profits of the work in the latter hypothesis that on the contrary article 37 draws a clear distinction between the two possibilities for modifying the price, the loss of more than 7/12ths may result from a \"lesion\" or an inadequate forecast of the profits to be made from the work\"; that the last line of this article does in fact state \"the lsion will be determined by taking into consideration the totality of the use by the assignee of the work of the author claiming lsion, but as properly noted by the lower court iudges, this determination can only be undertaken by viewing the matter as at the moment of the contract's conclusion and therefore independently of the profits effectively realised later by the assignee; that to hold otherwise would distort the notion of lsion; that an action in rescission for lsion is therefore well founded in the present case and that it is necessary to determine, by referring to the usages of the profession and in accordance with the modalities of the exploitation of James Sugar's work if a loss of over 7/12"1 had been suffered that in this respect, the appellee (Sugar) produced a number or schedules which showed that a lsion had indeed occurred,- that these schedules were widely divergent, that one provided for an average increase of 100% whenever the photograph was aerial whereas another limited this increase to 75%, that consequently before making a determination of the iust price (prix iuste) and loss suffered it is necessary to appoint an expert. Upon these reasons accepts the appeal of the Ted Bates company. Affirms the decision of the lower court as concerns the existence of a legal relationship between J. Sugar and the Ted Bates company and accepts the action for rescission based on lesion. Before determining the amount of the lsion, appoints Mr. Boinet, 18 rue Duphot, 75001 Paris, to carry out a mission to furnish the court with any information which will permit it to determine, based on the usages of the profession and the type of exploitation contractually provided for, what was the iuste prix on 4 October 1983 of the assignment by J. Sugar to T. Bates of his exploitation rights with respect to an aerial photograph showing airplanes in flight that was to be used in an advertising campaign; declare that the expert must file his report with the court clerk (greffier) before 15 December 1986 and that J. Sugar must post with the court clerk the sum of 4,000 francs as an advance for the fees of the expert before 15 July 1986