VARET PRÈS KILLY > Paris, France > Firm Profile

VARET PRÈS KILLY > Firm Profile

VARET PRÈS KILLY, law firm dedicated to immaterial and digital
A law firm dedicated to immaterial assets, digital and sport.
Thinking outside the box so that your projects stay within the framework

Know-how: The three founding partners of VARET PRÈS KILLY provide advice and litigation services.

Vincent Varet intervenes more specifically in the sectors of publishing, luxury, music, graphic arts, web, computer science and artificial intelligence.

Xavier Près assists and represents public and private operators in the art, culture, cultural heritage, publishing, audiovisual, cinema, IT, events, sports and tourism sectors.

Born in a sports environment, Rhadamès Killy naturally became a sports lawyer.

Key clients: Lanvin, Interparfums, Musée du Louvre ; Philharmonie des enfants; Musée Guimet, Etablissement public Notre-Dame de Paris, Editis, la Centrale, Groupe Pasteur Mutualité, Ville de Vichy, etc.

More details : www.vpk-avocats.com

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Photo	Name	Position	Profile
	Xavier PRES		View Profile
	Vincent VARET	Lawyer, associate professor, doctor of law, Vincent has been passionate for 25…	View Profile

Focus On

Book publishers

In France, for book publishers as for the rest of society, 2020 was marked by the Covid-19 health crisis. Bookstores, considered non-essential businesses, were closed during the first lockdown in spring 2020 as well as during the second lockdown in November, for a total of almost three months. Thus, there were fears of a strong negative impact on the sector’s economy. Nevertheless, readers flocked to bookstores in June 2020 after the first lockdown, as well as in December after the second one, with the result that, in the end, the decrease in book sales over the year 2020 would only be of minus 2% (GFK estimate for the Syndicat National de l’Edition – “SNE”) to 4.5% (Livres Hebdo figures), with an intermediate estimate of 3.3% (Syndicat de la Librairie française), on a market whose total volume in 2019 was of 2806 million euros. This relatively small decline given the context (by comparison, the book market in Russia has suffered a decline of 20% in 2020) hides strong disparities between the various editorial sectors: while sales of extracurricular books and comics have increased (respectively by more than 4% and more than 6%), those of literature are almost stable (- 0.4%) while those of travel guides, quite logically, have collapsed (between – 40% and – 50%).

These figures do not take into account the sales of digital books, which are estimated to have increased by 30% during the first lockdown, and by 25% during the second one. So that, ultimately, according to the SNE, the overall revenue of the sector could remain stable compared to 2019.

Alongside this rise of digital books, the year was marked by the growth of audio books sales as well (+11% during the first lockdown compared to the figures of January 2020). Following the saying that crises are also opportunities, 2020 could therefore be for the French publishing industry the year of a welcome diversification in the modes of reading, in which the development of digital and audio books would no longer appear as a threat to printed ones, but as their positive complement, suited to new usages. Especially since available studies show that the biggest readers of digital books are also the biggest consumers of printed ones.

In other words, the French publishing industry, which until now has been very cautious towards digital books (whose market share remains much smaller than in the United States, for example), is likely to reinforce its confidence in the commercialization of dematerialised books and to find there a welcome boost to its growth. Thus, publishers who bet on “transmedia” earlier have even experienced growth in 2020, like the publisher of children’s books Auzou (+5%).

Witnessing this evolution in times of pandemic also shows that the law of 26 May 2011 on the price of digital books, despite its complexity, is not an obstacle to the development of this mode of reading: from now on, books “mutate” into various forms to suit the different needs and desires of readers (reading at home, in public transport, in the car, etc.) and also according to the subject matter of the books in question.

On the legislative front, the year 2020 was marked by a decree of 28 August 2020, which puts an end to nearly two years of uncertainty caused by the unilateral decision of the French administration managing social contributions on copyrights (AGESSA), to refuse the remuneration of collection directors in the form of copyright royalties. The decree contradicts that administration and validates this method of remuneration – which was widely used by publishers until AGESSA’s controversial decision – provided that the collections meet the condition of originality, to which copyright protection is subject.

In terms of jurisprudence, the year started and ended with two opposing decisions in a saga concerning the quotations of the lyrics of Jean Ferrat’s songs in books dedicated to this singer, composer and songwriter: while in a decision of 19 November 2019, the Court of appeal of Versailles ruled that in principle these quotations violated J. Ferrat’s moral rights because the lyrics were inseparable from the music, and were therefore illicit, the Court of appeal of Paris, in a decision of 12 January 2021 declared that texts and music belong to different genres and are therefore separable; consequently, songs lyrics can, fortunately, be the subject of quotations in a book dedicated to their author, without the authorisation of the latter or his successors, provided, of course, that the requirements governing the exception of quotation are met.

Looking ahead, 2021 should see the transposition into French law of the European directive dated 17 April 2019 on copyright and related rights in the digital single market, which will have implications for the publishing market as well as for the ones of other cultural goods protected by these rights. Indeed, this transposition will require, among other things, the adaptation of certain exceptions to copyright (the so-called “data mining” exception, the exception in favour of digital education, etc.), the revision of the unavailable works regime, the dissemination of works on online platforms and the strengthening of a common copyright contracts regime, which are likely to affect book publishers. The collective work edited by Professor Nicolas Binctin and Xavier Près provides insights into this transposition: “Directives 2019/790 and 2019/789 on Copyright in the Digital Single Market, Article-by-Article Commentary“, Bruylant, 2021.

NFT ART: 3 letters for the art sector

Not a day goes by without news of a new ecosystem linked to blockchain¹ that impacts the art market. In particular, the sale of NFT at record prices, or the association of NFT² with metaverse³, whose market, it should be noted, is estimated in 2024 between 800 billion dollars and 8,000 billion dollars⁴. Since the record sale, on March 11, 2021, of the digital work of the artist Beeple (alias Mike Winkelmann) “Everyday: the First 5,000 days” sold for $69.3 million at an online sale organized by Christie’s, the third highest price for a living artist, after Jeff Koons and David Hockney, and this while the artist was unknown to the general public, NFTs have burst into the mainstream news. Since then, NFT Art is everywhere: the biggest names are getting involved, as well as galleries and museums, although French public cultural institutions are still reluctant to take the plunge, since NFT transactions are not carried out in fiat currencies, but with the help of crypto-currencies (or “crypto-assets” according to the current terminology attesting to the reticence that still exists in this field).

To date, no specific regulation exists, neither in France nor in the European Union: NFTs are neither regulated nor even defined. A few scattered texts have intervened in the world of digital assets, but none of them expressly deals with NFTs. This is the case of Law 2022-267 of February 28, 2022, which amended Article L. 320-1 of the Commercial Code to allow for the sale of intangible movable assets by public auction, which should include NFTs, even though NFTs are not mentioned either in the text of the law or in its preparatory work⁵. Furthermore, the PACTE Law of May 22, 2019 defines digital tokens, in Article 552-2 of the Financial Monetary Code, as “any intangible asset representing, in digital form, one or more rights that may be issued, registered, retained or transferred by means of a shared electronic recording device that makes it possible to identify, directly or indirectly, the owner of said asset“, a definition that lacks clarity⁶. In any case, these tokens are “digital assets” according to article 54-10-1 of the same code. Although the text is intended to apply to NFTs, it does not expressly refer to them. The same is true at the European level with the European Commission’s draft Regulation on crypto-assets (the so-called “MiCA” Regulation for Market in Crypo Assets), which lays the foundations for European regulation of cryptocurrency markets but which, at this stage of discussions, does not cover NFTs⁷.

Despite the silence of the texts, NFTs are not outside the law. There is no such thing as a legal vacuum, any more than there was a legal vacuum at the beginning of the Internet. The upheavals induced by these technologies are however of the same order. In the art sector, the main change concerns the possibility for creators of digital works to identify, thanks to the NFT, the “original” medium of the work. In the digital world, the medium of the work has no specific value in that it is infinitely reproducible, identical and inexpensive; it is perfectly interchangeable. To (re)give it a value, it must be made unique. This is precisely the purpose of the NFT. A non-fungible thing is a good that is defined by its own characteristics and is therefore not interchangeable; it is unique, as is, for example, a work of art in the physical world (for example, the Mona Lisa). Technically, the NFT is an identifier (an encrypted code, a sequence of alpha-numeric characters) associated with a smart contract⁸ encoded in a blockchain and stored in the digital wallet of the person who issued it or who bought it via his account on a platform dedicated to NFT trading. The NFT is therefore the token and not the digital file to which it is associated: for an NFT Art, the NFT is not the work itself, it is the title that identifies the person who issued the NFT and the thing it represents (the certificate of authenticity or ownership of the work and not the work itself).

Under this important consideration, copyright will naturally apply. The “NFTized” digital work will thus be likely to be protected under copyright as soon as it meets the conditions, namely if it is a creation of original form, originality and form being the only two conditions of access to this protection. The author of the digital work associated with an NFT will thus benefit from the moral prerogatives (right of disclosure, right to paternity, right to respect and right to withdraw and repent) and economic prerogatives (in particular the right of reproduction and representation or communication to the public, right of distribution) recognized by the law to the authors of works of the mind. From the point of view of copyright, the only specificity of the association of the work with an NFT is that the latter will facilitate the proof of its ownership. So there is nothing new, except to mention, on the one hand, that NFTs do not always identify a copyrighted intellectual work (the token may relate to trivial or commonplace elements, i.e. unprotectable) and, on the other hand, that a digital work may itself infringe the rights of a third party, in the case where, for example, it would be an infringement. The creation of a digital work associated with an NFT cannot therefore lead its author to free himself from the applicable rules, and in particular from copyright, simply because of its immaterial nature and its circulation on the blockchain. Unless one learns this the hard way, since in the same way that the NFT makes it possible to identify the author of a work, it also makes it possible to identify the author of the infringement if the work does infringe somebody’s right. From creation to infringement, there is only one step. Litigation is coming; regulation should follow.

Another question raised by the meeting between NFT Art and copyright is of particular interest to the art market: whether the resale of NFT Art can be subject to the resale right provided for by law in favor of authors of graphic and plastic works and their beneficiaries, and allowing them to receive a percentage of the resale price of the original medium of the work (the painting, the sculpture) when an art market’s professional is involved in this sale. Insofar as, as we have seen, the NFT makes it possible to recreate a uniqueness (or a series) in the digital universe, one can imagine that the resale of an NFT identifying a digital graphic or plastic work of art and associated with it would be subjected to this right, if the legal conditions are met of course. In any case, we do not see any obstacle in principle and, once again, we will be watching carefully, in the coming months, the organization of the first sales of this type by art market professionals and the position adopted on this subject by the various operators (auction houses, auctioneers, artists and rights holders, ADAGP).

1. Decentralized registry, distributed identically on a multitude of computers, without hierarchy between them, in a manner that is in principle immutable and inviolable.
2. Non-fungible token that represents a digital asset (also called a digital asset) certified by a Blockchain. It thus benefits from the properties of the Blockchain
3. Immersive and persistent virtual world in which the user can freely interact, particularly in the form of an avatar.
4. Sources: Morgan Stanley and Bloomberg Intelligence
5. Law n° 2022-267 of February 28, 2022 aimed at modernizing the regulation of the art market
6.  Law n° 2019-486 of May 22, 2019 on the growth and transformation of companies
7. Proposal for a Regulation of the European Parliament and of the Council on markets in crypto-assets, and amending Directive (EU) 2019/1937
8. This term refers to a set of rules contained in a computer program that runs automatically (If… , then…).