Thursday 30 May 2013

Copyright litigation in the PCC

The PCC has been making a splash,
particularly when it comes to copyright litigation
I have written a lot about the artistic copyright cases in the PCC, particularly those surrounding photographs (most recently here).  If you want to find out about copyright litigation in the PCC more generally, look no further than a recent article I wrote on that very subject, available here.

As always, thoughts, comments and suggestions for future blog posts are very welcome.

Wednesday 29 May 2013

The art of dodging

It appears that the law has finally caught up with a New York art dealer after a lengthy period of dodgy behaviour.

Glafira Rosales was charged this month with evading payment of millions of dollars in tax on income she earned from the sale of fake artworks.

A press release from the US Attorney's office for the Southern District of New York explains that:
[Rosales was arrested] for filing false tax returns and for failing to disclose a foreign bank account to the IRS. Rosales allegedly failed to report the receipt of at least $12.5 million in income from the sale of works purported to be by celebrated abstract expressionist artists. Most of the income was received in a bank account in Spain that Rosales hid from, and failed to disclose to, the IRS.
So not only did she manage to pull the wool over the IRS' eyes, but she managed to fool the art world with her forged artworks - and for a significant period of time. Indeed, Manhattan U.S. Attorney Preet Bharara said:
As alleged, Glafira Rosales gave new meaning to the phrase ‘artful dodger’ by avoiding taxes on millions of dollars in income from dealing in fake artworks for fake clients...”
A painting sold by Rosales as an original Pollack
According to the Complaint:
Rosales began selling several never before exhibited and previously unknown paintings in the 1990s, which she claimed to be by some of the most famous artists of the twentieth century, such as Jackson Pollock, Mark Rothko, and Willem de Kooning. From 2006 through 2008, the proceeds of her sales of such paintings to two prominent Manhattan galleries were over $14 million. In selling most of the paintings to the two galleries, Rosales purported to represent a client who had inherited the paintings and wanted to sell them, but who also wished to remain anonymous. For the remainder of the paintings, she purported to represent a Spanish collector. Rosales further claimed that a portion of the price paid by the Manhattan galleries was a commission to her for selling the paintings, and that the remainder would be passed along to her clients. 
However, the investigation revealed that:
  • experts in the fields of art, art history, and materials science concluded that at least several of the paintings sold by her are counterfeit;
  • the client on whose behalf she purported to sell most of the paintings to the Manhattan galleries never existed;
  • the Spanish collector on whose behalf she purported to sell the remainder of the paintings to the Manhattan galleries never owned the paintings;
  • instead of passing along a substantial portion of the proceeds of the sale of the various paintings, she kept all or substantially all of the proceeds, and transferred substantial portions of the proceeds to an account maintained by her then-boyfriend; and
  • Rosales then filed tax returns claiming that she had not kept all, or substantially all of the proceeds from the sale of the paintings. She also kept most of the proceeds in a foreign bank account that she hid from, and failed to report to, the IRS.
Unfortunately for Rosales, it seems the scheme was not fool proof after all. As IRS Special Agent-in-Charge Toni Weirauch explained: “The sale of a piece of art for profit is a taxable event and the seller is responsible for paying his or her fair share of tax, even if the art is counterfeit."

Rosales now faces some lengthy prison time if convicted on all counts.

See the full complaint here.

Mr Spoon reclaims Button Moon from ‘parody’ merchandise oblivion

This is an original button
Button Moon is a classic children’s TV show which ran throughout the 1980s in the UK. Its innocent characters recently became the subject of a UK copyright case (Allen v Redshaw).

Background 

In 2007, Mr Allen, the owner of the IP rights in the Button Moon series, refused to offer Mr Redshaw a licence to use the characters on various merchandise. Undeterred, shortly after this meeting Redshaw started to sell various items based on Button Moon. Redshaw mistakenly assumed that he could produce goods featuring the characters if he did not copy the original artwork or photographs. He sold a variety of mugs, T-shirts and sweatshirts bearing the Button Moon characters and distinguishing features such as the moon and rocket.

These sales eventually came to Allen’s attention and after several rounds of correspondence and an investigation from Trading Standards, legal proceedings were initiated in Norwich.  The case was subsequently transferred to the Patents County Court (PCC). Allen claimed for infringement of his artistic copyright and passing off.

Somewhat unusually, but appropriately given the value of the claim, liability, quantum and costs were all dealt with in the same judgment.

In relation to copyright infringement, Redshaw argued that:

• the mugs etc were intended to create a parody;
• they were his own drawings, not reproductions of original images;
• the fact that his drawing were 2D and the originals were 3D meant that there was only a passing resemblance;
• some features of Button Moon, such as the moon, were not original; and
• He didn’t copy Mr Spoon’s wooden spoons used as arms.

The recorder, Amanda Michaels, was having none of it.

Whether or not he intended to create a parody is irrelevant as this is not (currently) a defence under UK law.  Further, the fact that they were Redshaw’s own drawings and in 2D rather than 3D did not avoid the fact that they were clearly copies of the Button Moon artwork.  There was a low test for originality, which the moon passed, and the fact that the wooden spoons had not been copied did not avoid a finding that Redshaw had copied a substantial part of the Button Moon artwork.

Passing off

Redshaw claimed that he hadn’t used the name Button Moon so as not to mislead and that he had used a disclaimer.

Although the packaging did not refer to Button Moon, some of the online advertising, particularly on eBay, did refer to Button Moon and many third party resellers sold them as Button Moon merchandise so clearly there was a degree of confusion surrounding the issue.

In terms of the disclaimer, Michaels accepted that a disclaimer may prevent misrepresentation if it is sufficiently clear. In this case, the disclaimers were in small print and in many cases hard to read as it was written in black lettering and printed on a black background. She also held that whilst the words “100% unofficial” might prevent misrepresentation, this was offset by the reference to "produced from original artwork and photographs" which suggested some sort of link to the owner of the original artwork. The claim of passing off was therefore established.

Damages

Unfortunately, neither party filed evidence on damages.  In view of the costs and level of damages, the hearing was not postponed and Michaels was forced to assess the damages based on the limited information available. For the copyright infringement, based on the limited available evidence, Michaels awarded damages of £2,818 plus a further £3,250 to reflect the flagrancy of Redshaw’s use. She also awarded interest at an average of 1.5% for the 4 ½ years of use.

For the claim of passing off, Michaels could only make a nominal additional reward of £250 plus £16.87 interest as Allen could not substantiate his claim to have lost a licensing deal because of Redshaw’s sales of the infringing mugs. She noted that the items were not of such poor quality to have ‘significantly damaged [Allen’s] goodwill’.

Costs

Somewhat unusually, Mr Allen was also awarded his full costs of £3,421.88 (because they were low and well within the PCC costs cap).

Tuesday 28 May 2013

Dark Days for Detroit

Many may be familiar with Detroit's financial woes which continue to spiral. Now, as the city stuggles to come to terms with its position, it has a new issue to grapple with.

It seems that the emergency financial manager for Detroit, Kevyn Orr, is contemplating compelling the Detroit Institute of Arts to sell some of its masterpieces to help pay down the city's massive debt.

USA Today reports:
"It is an existential drama of a kind that no city has ever faced, a combination of a high-stakes poker game and morality play in front of a worldwide audience. On the one hand, it has the potential to turn into a messy legal thicket with the courts ultimately deciding whether emergency manager Kevyn Orr can compel the museum to sell off some of its treasures to help pay the city's debts. On the other hand, many who oppose the suggestion to sell art see this as an emotional battle for the soul of the city.

Should Orr decide to move ahead on a sale of DIA artwork, these two fronts — the cultural and emotional on one hand and the legal side on the other — are likely to produce a clash that could take months or years to resolve. The toll could be monumental, permanently diminishing a museum widely recognized as one of the country's best. 
...
With the city of Detroit facing possible bankruptcy, Orr and his representatives have put the DIA on notice that its multibillion-dollar art collection is a city asset and could be sold as part of a broad-based resolution of the city's massive debt, estimated at $15 billion to $17 billion. The DIA has hired a bankruptcy lawyer to advise it. 
Nothing about the case is typical. The DIA is unusual among major civic museums in that the city retains ownership of the building and collection while daily operations and fund-raising are overseen by a nonprofit institution. The forced sale of art from a major American museum would be without precedent — and likely extraordinarily complicated and controversial. 
Orr has not yet decided whether to sell art, though a final decision is expected within weeks. The possibility that the DIA might be forced to liquidate treasures by van Gogh, Matisse, Bruegel or other masterpieces under its care has sent shock waves of disbelief among the museum's supporters and the wider art world."
It is a difficult time for the city, its residents and institutions. It is unlikely that Orr's decision, whatever it ultimately is, will satisfy anyone.


Source: USA Today, 26 May 2013

Monday 27 May 2013

How much is a photograph worth? The UK courts give more guidance

A photograph which hasn't been litigated in the PCC
Photography cases have arguably occupied the revamped Patents County Court (PCC) more than any other type of case.  Recent examples include Temple Island v New English Teas (the red bus case, discussed extensively on this blog here, here and here), Hoffman v D.A.R.E (discussed here), Delves Broughton v House of Harlot (shamefully neglected by this blog…), Celebrity Pictures v B Hannah (discussed here) and now we have another example to add to this illustrious list – Sheldon v Daybrook.

This case is relatively unusual in the world of UK jurisprudence because it is a judgment on a preliminary issue – the quantum of damages. Further, it was a decision made on the papers (i.e. without oral evidence).  These were all sensible case management decisions which avoided the costs spiralling out of control in what should probably have been a small claims track case.

The facts 

Daybrook House Promotions Ltd used Jason Sheldon’s photograph of Ke$ha and LMFAO on its posters, website, facebook pages and flyers to promote a series of events at Rock City (a Nottingham music venue).  Daybrook downloaded the image from Tumblr and, because it was available online, assumed that it was free to use.  Sheldon became aware of some of the use of his photograph and wrote to Daybrook to stop using the image. He also asked for £1,351 based on the use he was aware of at the time.  Daybrook only offered £150 in compensation so Sheldon started a claim via Money Claim Online which was transferred to the PCC.

The case management conference (CMC) identified two issues in the case (1) extent of use of the image by Rock City and (2) the level of a reasonable licence for the image.

Extent of use 

There was very limited disclosure provided by Daybrook so it was difficult for Sheldon to ascertain the extent of use.  The issue of disclosure is a significant problem in the PCC (and even more so in the small claims track). The standard of reasonable or diligent search is arguably lower where the claim is lower value but, more significantly, it is difficult and expensive to show that full disclosure has not been provided.  Whilst search and seizure orders are possible in the PCC (see Suh v Ryu) they are expensive and subject to the costs cap so a large part of the legal costs are unlikely to be recoverable.

Without the benefit of any disclosure documents, Sheldon had to do quite a bit of independent research regarding what the extent of online use and had to estimate the numbers of posters produced based on information elicited in correspondence. The arguments regarding the appropriate level of licence fee can be summarised as follows.

Daybrook, the defendant, argued:

  • Low quotations from other photographers they usually use based on the sort of image in dispute;
  • Only local use around Nottingham; and
  • It wouldn’t have paid more than £100.

Sheldon, the claimant, argued:

  • Famous subjects; 
  • Paid for exclusive access; and
  • Based on the information available, there was extensive use by Daybrook, including online. 

HHJ Birss QC (as he then was) held:

  • The fact Daybrook would not have paid more is not a critical issue.
  • The famous subject matter was important in determining the appropriate licence fee. 
  • The exclusive access was even more critical in increasing the value of the photograph. 
  • The more detailed photography quotation (based on the actual use) was preferable to the defendant’s examples. 

In particular, he noted that it would not be worth obtaining exclusive access if only licence photo for a small amount of money.

Damages were awarded of £5,682.37 plus VAT and interest at 1%.

Sometimes, navigating the law can get a little prickly
The future of photography claims

All of the cases where quantum was decided came in at the current small claims cap (£10,000, for Hoffman v D.A.R.E) or significantly under.  All of these claims would, in theory, have been suitable for the small claims track.  This suggests that the large number of reported claims for infringement of artistic copyright in photographs in the PCC may well decrease as the PCC small claims track for becomes more established.  However, none of the photography cases has been completely straightforward and given the choice between negotiating the legal and procedural complexities of their claim without legal assistance or obtaining legal advice but not being able to recover the costs of that advice, photographers may prefer to use the regular PCC procedure.

Have any of our readers used the PCC, including the small claims track?  Would you consider using it?

Monday 20 May 2013

Mandela, daughters -- and lawyers -- tussle over art collection

From the Sowetan Life, "Mandela daughters sue father" (here), it appears that iconic former South African President's Nelson Mandela's daughters are suing him "for the rights to his artworks and control of his millions". Citing The Star, Sowetan Live reports that
" Zenani and Makaziwe Mandela intend fighting an April 2004 Johannesburg High Court order which gave Mandela the right to instruct Ismail Ayob, his then lawyer, to stop managing his financial, personal and legal affairs. The court order barred Ayob from selling any of Mandela's artworks.

The Star reported that Mandela's current lawyer, Bally Chuene, filed an affidavit last week in response to a lawsuit brought by the sisters, who are represented by Ayob.

Last month the sisters filed papers asking for Chuene, George Bizos SC and Human Settlements Minister Tokyo Sexwale to remove themselves as directors and trustees of the Mandela Trust and as directors of Harmonieux and Magnifique (Pty) Ltd with immediate effect.

In his replying affidavit, Chuene reportedly said he, Bizos and Sexwale had, in 2011, refused to release the trust's money to the daughters without a legal justification.

The Star reported that Chuene was adamant Ayob was behind the women's court action".
The precise legal basis upon which the rights in the former President's artwork are contested is not spelled out, but a post on Public News Hub adds that
"The affidavit also exposes the fact that Ismail Ayob is yet to respond to the ailing leader’s request for complete information about his art collection. Madiba requested this information for the first time in 2004 but it has yet to land at his desk".
Art & Artifice hopes to report on this matter in greater detail when more information about the legal issues is available.

Art by Nelson Mandela here

Sunday 19 May 2013

A Dictionary of Intellectual Property Law (A review)


Peter Groves recently* published the Dictionary of Intellectual Property Law. This book is an extremely useful compendium of all the mysterious IP terms which are commonly used by lawyers, in contracts, in judgments and in government consultations in the UK, Europe and USA. Each concept has a pithy description including cross references to other terms where this would be useful.

The dictionary even covers things you might not, at first glance, associate with IP law such as AdWords and zoetropes. Naturally, the IPKat gets a special mention!

 If you want a second opinion here are some of the (publisher selected) comments on the book when it was first published:

‘Confused between community patent review and community patents? Lost in a thicket of dockets, rocket or otherwise? Let Peter Groves’ Dictionary of Intellectual Property Law be your guide. Filling almost 500 often lighthearted, occasionally acerbic, but invariably fact-packed pages, the book takes you from the ActionAid Chip and the Air Pirates case through BIRPI, Cognating, Dockets, Evergreening; Jepson, Pedrick’s cat and Simkins; PHOSITA, Trundlehumpers, the verb “to Uncopyright” and X-Patents, all the way to Zwart maken. Essential reading.’ – David Musker, Partner, RGC Jenkins & Co.

 ‘Do not be put off by the word “dictionary”. This is a fascinating, witty and erudite little volume, packed with interesting and useful information on the whole gamut of intellectual property. It leaves one (this one anyway) hungering for more and wanting to delve more deeply into fields that have nothing to do with earning one’s daily bread.’ – Tony McStea, Senior Patent Attorney, Global Patents, Givaudan Schweiz AG

If you bought the book and it’s missing a key term or the definition hasn't helped to untangle to confusion, fear not. New definitions are suggested and refined on the IP Dictionary blawg (www.dictionaryofiplaw.blogspot.co.uk) where users can even suggest new terms for inclusion in the next edition.

This book should be of use for everyone interested in the world of IP law from the aspiring student, to the lawyer. It is written so clearly and comprehensively that it is hopefully also useful for artists seeking to better understand and enforce their rights.

The paperback edition is available online for around £20. The author, Peter Groves, amongst many other things, writes for the Ipso Jure blog (www.ipsojure.co.uk).

 *OK, so not that recently, Feb 2011. But the paperback edition is much more recent!

Saturday 18 May 2013

Street Art Conference in Gaeta

Today and tomorrow will take place in Gaeta a Street Art Conference where art bloggers, art critics, art historians, curators and I as art lawyer will discuss on street art. The Conference is part of Memorie Urbane street art festival that for the second year is invading two beautiful cities as Gaeta and Terracina.

Street artists as Lucamaleonte, Martina Merlini,Sam3, Faith47 and Daleast, just to name few, are realizing their amazing works in many points of the cities on the coast near Rome.

You can find more information here

Friday 10 May 2013

New book coming out on legal dimensions of art collecting

The Art Collecting Legal Handbook, edited by Bruno Boesch and Massimo Sterpi, has just been published by Sweet & Maxwell.  Art & Artifice looks forward to reviewing this title in due course, not least since this blogger is a great admirer of Jacobacci Avvocati partner Massimo Sterpi -- a tireless visionary and enthusiast who currently serves on the Council of MARQUES, the European trade mark organisation. In this venture Massimo teams up with Bruno Boesch, a partner in the Swiss law practice of Froriep Renggli and an expert in the highly specialist area of long-term art collection care. The editors have put together an impressive team spanning the best part of 30 countries, including both those in which famous collections are built up and those from which many collectables originate.

This is what the publishers say about this work, which is published at the end of May:
Collecting, preserving and promoting cultural goods, whether fine art, archaeological objects or decorative arts, is now global. Oddly, rules and practices have remained very local, save for ICOM’s efforts at the institutional level and UNESCO’s endeavours to help preserve national cultural heritage and combat illicit trafficking.

This book is designed to help the collector and their advisers navigate the maze on an international level. Each chapter of The Art Collecting Manual addresses a number of issues from the perspective of a different jurisdiction to help collectors making errors that could be potenitally illegal. The format of the chapters follow a question and answer style thus enabling readers to make quick and accurate comparisons in multiple jurisdictions covering property law, insurance, customs, tax, inheritance, intellectual property and more.

A collectable in itself, this title crosses the line between highly functional and aesthetically pleasing, the perfect addition for anyone who works in international art dealings".
Apart from this, there's some further information as to what the book covers:
• Cultural Heritage and Art Market: regulations; legislation features and treaties; data about art and cultural property market: trade volume; dealers 
• Purchase and Export: due diligence, local law features; remedies in case of fake, forgery or counterfeit; VAT/sales tax; artist’s resale right; export restrictions; “free ports” 
• Peaceful Enjoyment: import customs; protection against claims; restitution assistance; repatriation of illegally exported cultural property; anti-seizure guarantee 
• Sale: due diligence; temporary import for sale; remedies against a defaulting buyer 
• Art Philanthropy: rules and practices; private foundations and museums 
• Tax: wealth tax; capital gain tax; inheritance tax; tax breaks; taxation of private foundations and private museums 
• Practical information/references
Bibliographic details: hardback, ISBN 9780414026933.  Price: £80. Book's web page here.

Exciting news: our very own Angela Saltarelli has co-authored the Italian chapter of this book together with Massimo Sterpi.

Monday 6 May 2013

Did Doig do it?

A claim has been filed in the US Federal Court against Scottish artist Peter Doig, Doig's art dealer and Doig's lawyers seeking a declaration attributing this painting to Doig.
 
The Plaintiff, Robert Fletcher, claims that this painting, that he owns, is an early Doig painting worth millions, but that Doig refuses to acknowledge it as his work.

The Complaint explains that Fletcher was a correctional officer at Thunder Bay Correctional Facilities in Ontario in the 1970s. At this time, an individual called Pete Doige became an inmate. Fletcher became friends with Pete Doige who then sold him the painting which he had painted in his art class at Thunder Bay.

The Courthouse News Service reports that it is also alleged that:
Fletcher claims he helped Doig apply for parole, and was assigned as his parole officer.
Fletcher helped Doig in his search for employment, and helped him to obtain employment through the Seafarers Union in Thunder Bay...
Fletcher also encouraged Doig to pursue his artistic talent, and accepted Doig's offer to sell the work to Fletcher for $100.
Since that day in or about 1976 and to the present, Fletcher has owned the work.  
He claims that "many years later, a friend staying with Fletcher commented on the work hanging in Fletcher's home, mentioned that it might be by Peter Doig, and began doing research on the artist and the painting, which was later continued by Bartlow [the Second Plaintiff] on Fletcher's behalf."  
But VeneKlasen, on behalf of Doig, denied that the painting was by Doig, and denied that Doig had ever been to Thunder Bay. 
Back in November 2012, a HuffPost article on the dispute noted that Fletcher just wanted to establish the truth. Seeing as he is now seeking punitive damages for interference with prospective economic advantage, it seems that he now has his eyes on a greater truth.

Read more here and here.

See some Doig paintings here.

Source: Courthouse News Service, 2 May 2013. Photo of painting by Peter Bartlow.

Thursday 2 May 2013

US Court of Appeals reverses the previous decision on Prince v. Cariou. A victory for appropriation art?

Richard Prince "Graduation" (2008)

The Court of Appeals for the Second Circuit on April 25 reversed the decision on the Prince v. Cariou case in favour of fair use. 

As already exposed here, in 2011 Cariou sued Prince and the Gagosian Gallery alleging that Prince's works and exhibition catalog infringed his copyright. Indeed, the famous appropriation artist Richard Prince altered and incorporated the Cariou's Yes Rasta photographs, creating a series of paintings and collages called Canal Zone, that he exhibited in 2007 and 2008 first at the Eden Rock Hotel in St. Barth's and later at the New York's Gagosian Gallery. 

In the first instance, the US District Court for the Southern District of New York held Prince's works infringed Cariou's copyright, not recognizing any fair use. In order to be qualified as transformative, the Court required a new work of art  in some way  to comment on, to relate to the historical context of, or to critically refer back to the original work. Since Prince did not intend to appropriate the photos for the required puposes, the Court rejected the defendant's fair use defense.

But the Court of Appeals reversed the previous decision finding that "the law does not require that a secondary use comments on the original artist or work, or popular culture" to be considered transformative and may constitute fair use even if it serves other purposes than those included in the Statute preamble of the 1976 US Copyright Act (criticism, comment, news, reporting, teaching, scholarship and research). The Court affirmed that copyrighted images can be used as raw materials for new works of art, even when the artist has nothing to say about the images he altered.

The Court held that twenty-five out thirty Prince's artworks constituted fair use of Cariou's copyrighted photographs, while the remaining five works presenting closer questions will be judged again by the district court according  to the four fair use standards, as interpretated by the Court, and namely:

 (i) the purpose and the character of the use

This first factor requires considering whether the allegedly infringing work has a commercial or non profit purpose and, usally, only the latter purpose is considered as fair use. But the Court, though commercial, found Prince's artworks much transformative, then it held that the other factors should be considered more important in determining fair use than this one.

(ii) the nature of the copyrighted work

The Court found that the Prince's creative works of art had a substantially transformative purpose and, therefore, a different nature when compared to Cariou's ones.

(iii) the amount and sustantiability of the portion used in relation to the copyrighted work as a whole

This factor involves considering whether the quantity and the value of the original artwork are reasonable in relation to the purpose of copying. The Court interpreted such third factor saying that the inquiry must take into account that the extent of permissible copying varies with the purpose and character of the use.

The peculiarity was that many Prince's works copied the entire source photograph. Contrary to the District Court - which affirmed that Prince's taking was substantially greater than necessary - the Court concluded that the law does not require that the secondary artist may take no more than is necessary, affirming that Prince transformed those photographs into something new and different in twenty-five works out thirty.

(iv) the effect of the use upon the potential market for the value of the copyrighted work.

Contrary to the District Court, the Court of Appeals affirmed that the question does not focus on the damage to Cariou's derivative market, but rather whether the secondary use usurps the market of the original work or not. The more transformative the secondary use is, the less likelihood that the secondary use substitutes for the original. Since the Prince's works are very transformative, the Court found that they did not usurp the market of Cariou's works.

***
Only one Judge of the Court expressed a dissenting opinion arguing that all works,  and not only  the five ones which were too aesthetically simalar to Cariou's ones, should be turned back over to the district court admitting that " I am not an art critic or expert, I fail to see how the majority in its appellate role can "confidently" draw a distinction between the twenty-five works that it has been identified as constituting fair use and the five works that do not readily lend themselves to a fair use determination".