UK to incentivise charitable donations the American way

LONDON. When UK public funding for the arts was cut by 30% last October, the question on everyone's mind was whether collectors would be able to make up the shortfall by increasing private donations such that the funding of cultural institutions would increasingly resemble that in the US. However, as this blog and many commentators pointed out, for this change in the funding structure to happen, the cut in public funding would have to be accompanied by the necessary tax incentives to induce charitable giving. The budget announced this week "unveiled several measures aimed at creating an incentive for would-be philanthropists to give more to culture" (more on the much-welcomed tax breaks from the FT.com).

As well as cutting inheritance tax by 10% for those who leave 10% of their estate to charity, the statement also "contained a long-called-for reform of Gift Aid." Gift Aid can now be claimed on small donations up to a total of £5,000 a year, per charity and much of the red tape surrounding Gift Aid has now disappeared (the government has created an online system as an alternative to filling out forms), cutting overhead costs for small organisations significantly.

"Deliver up for impounding, destruction, or other disposition, as Plaintiff determines, all infringing copies of the photographs"

 Left, a photo of a Rastafarian from Patrick Cariou's "Yes, Rasta"
and, right, a painting from Richard Prince's Canal Zone series

A US District judge has granted photographer Patrick Cariou's motion for summary judgment on the issue of copyright infringement by defendants Richard Prince, Larry Gagosian, Gagosian Gallery and Rizzoli books. Prince had admitted "to using at least 41 photographs from Yes, Rasta" but pleaded, unsuccessfully, "fair use." The doctrine of "fair use" is one of the more important limitations on copyright(developed through case law over the years and codified in § 107 of Title 17, U.S. Code). The section lists the various purposes for which a protected work may be reproduced without infringing the owner's copyright in such work. Uses considered "fair" include (the list is non-exhaustive) "criticism, comment, news reporting, teaching (including multiple copies for classroom use), scholarship, or research." Section 107 also sets out four factors to be considered in determining whether or not a particular use is fair: (i) the purpose and character of the use (including whether such use is commercial in nature or non-profit), (ii) the nature of the copyrighted work, (iii) the amount and substantiality of the portion used in relation to the copyrighted work as a whole and (iv) the effect of the use upon the potential market for, or value of, the copyrighted work.

There is no clear distinction between a use that is fair and one that constitutes copyright infringement but in this case, it's not hard to see why the defense didn't excuse Prince's use of Cariou's photographs. The use did not fall within any one of the purposes in § 107, the reproduction was hardly transformative (Cariou's photographs are easily recognizable in the Canal Zone Series photographs), it was purely commercial ("the less transformative a work, the more important its commerciality becomes") and the Canal Zone series was likely to have a direct impact on the market for the photographs comprising Yes, Rasta.  

Perhaps more interesting is the claim asserted against Larry Gagosian and his eponymous gallery. Intermediaries, though not using the copyrighted work directly, can nevertheless be found liable by distributing images that infringe copyright. All Gagosian defendants were held to be "vicarious and contributory infringers" after the judge ruled the they had "at the very least the right and ability (and perhaps even responsibility) to ensure Prince obtained licenses." The judge added: "the financial benefit of the infringing use to the Gagosian defendants is self-evident." A tough couple of weeks for Gagosian who just got sued by Robert Wylde for selling him a painting to which the seller did not have clear and unencumbered title (see here). Evidence is quickly mounting that Gagosian should adopt higher standards in the conduct of his gallery business (which we will undoubtedly learn more about in due course as the Wylde litigation proceeds).

UPDATE: Robert Wylde v. Gagosian Gallery, Inc.

"The Innocent Eye Test," by Mark Tansey (1981)

The FT.com has reported that the Metropolitan Museum's website listed the Mark Tansey painting the subject of the recently filed claim against Gagosian gallery as "Partial and Promised Gift of Jan Cowles and Charles Cowles." And indeed it does -- here is the direct link. Last week, a spokesperson for Gagosian made a statement saying the gallery would "vigorously" defend the action and that Charles Cowles had "represented that he had clear title to the painting."



But shouldn't the gallery have done due diligence (granted, delicately) at the very least to confirm that its client had title to sell the consigned painting? Had they made even basic inquiries about the provenance of the painting the connection to the Met would have been revealed and a simple search of their website would have revealed the museum's interest in the painting. Surely the gallery doesn't just take representations of title made by prospective clients at face value (even if the seller is Charles Cowles)? The suit (which also comprises a claim over a cancelled sale of a Richard Prince nurse painting) will shed much-needed light on the inner workings of what is widely considered to be the most successful gallery in the world.

For background on the torts/property/fraud action brought by Robert Wylde against the Gagosian gallery see here.

UK round-up

• "UK art market loses out to "phenomenal" Chinese." FT.com reports on the European Art Foundation study revealing that the UK has lost its position as the second largest art market to China. According to the study "the UK's share of the global art market fell by 5 percentage points to 22 per cent in the four years to 2010." 
• The Bolton Crown Court having declared the Amarna Princess a fake Egyptian scultpure created by Susan Greenhalgh and awarded ownership to the Metropolitan Police, it is now set to return Bolton Museum. Bolton councillor Elaine Sherrington says that in deciding to display the fake, they did not wish to "condone criminal activity" or "glamourise crime" but rather wanted to show that "even the most artful of forgers is eventually brought to justice" -- hardly the message most viewers are going to take away with them after they visit the display. How can this not glamourise crime? Displaying the sculpture is a mistake: the appropriate fate of a fake is shredding, incineration or stamping "so that no one will be fooled again."
• "Any taxation that makes the wealthy feel less rich can have a chilling impact." Overview of recent tax changes in the UK and their potential impact on those who buy art.

UPDATED: If you don't ask, you definitely don't get

THE HAGUE. Louis Vuitton has filed its second lawsuit against Dutch artist Nadia Plesner, this time for using an image of the fashion house's Audra bag in her painting Darfurnica and continuing to display an image of the painting on her website. Although the latest suit can be distinguished from the 2008 suit filed in Paris in that Plesner is not currently using the image for merchandise (in 2008, she used the image on t-shirts and posters with 30% of proceeds going to charity), the use of the image still constitutes copyright infringement because Plesner did not obtain permission prior to its use.



Darfurnica, Nadia Plesner (2010)



According to New York Magazine, back in 2008, Plesner's failure to respond to the letter sent by Louis Vuitton prompted the company to go to court and seek injunctive relief, not damages (though I suspect that from Plesner's point of view, the latter would have preferable to restrictions on her freedom of expression). At the time, the plaintiff made two valid points: firstly, the need to uphold the rights of fellow artists Marc Jacobs and Takashi Murakami and secondly, the reality (both practical and legal) that if it didn't act to protect intellectual property rights, such rights would be jeopardised in the future. Whether these arguments were at the forefront of their actions is a different matter of course (there's little doubt that LVMH had, and still has, no interest in seeing its handbag portrayed in the context of the Darfur genocide).

The right to freedom of expression (a constitutionally protected right under the First Amendment of the US Constitution and a fundamental human right under Article 10 of the European Convention on Human Rights), is often mistaken for being an absolute right. Rather, it is a qualified right for not all speech is protected (think defamation, fighting words, obscene speech, fraudulent statements...) and the right in respect of that speech which is protected exists not in a vacuum but in a balancing act with other laws such as privacy, consumer protection and copyright, among others. In other words, Plesner's argument that her right to freedom of speech and expression and/or her charitable purposes should (or in fact do) trump any copyright infringement is inaccurate and misplaced. I wonder if what she meant to say is that there is/should be an exception to copyright infringement for artistic expression (as there is under US copyright laws). On the other hand, had she replied to Vuitton's letter in 2008 and requested permission to use the image in 2010 (probably also having to pay a fee for use of the image), each or both instances of litigation may have been avoided. What's clear is that ignoring the problem (and the law) is not the way to go.

UPDATE: for those that have suggested that I myself have engaged in copyright infringement by displaying the image, I would like to point out that I e-mailed the artist herself to request permission to display the image prior to publishing this post (something I do before every posting of an image of a work subject to copyright protection). Likewise, I would like to clarify that the references to privacy, consumer or other rights are merely illustrative -- they are not necessarily limiting the freedom of speech in this case. The intention was to show that the right was not absolute and that legal rights generally are in a constant state of balance and do not exist in insolation from each other.

LINKS

• NEW YORK. "Collector sues Gagosian Gallery for selling him a painting partially owned by Met." Previous owner Charles Cowles (former publisher of Artforum and longtime dealer) thought he "could use the money" and "now it's a big mess"!
• NEW YORK. The latest case of double standards in the deaccessioning debate, as Donn Zaretsky rightfully points out.
• LONDON. Christie's chief operating officer Lisa King resigns after 15 years at the company. This is the second major shake-up in the management of the auction house since it named (not uncontroversially) former publishing exec Steven Murphy as the new CEO last September.
• PARIS. "He was not saying that the footage was taken from my films; he was calling it his own work of art.” Court awards Marina Abramovic €75,000 in damages and names her co-author of the film Balkan Baroque (1998). Contrast with the outcome in the Dutch litigation where contract governed the relationship between the parties.
• BENTOVILLE, AR. Judith H. Dobrzynski  on the latest plans for Crystal Bridges' galleries. [Cf. Fisk litigation and last update here].
• Amusing: art fair heaven and hell.

Agency revisited

 LONDON. Relationships between art market participants can be complex and in some cases, governed by principles of agency. [Refresher: an agent is a fiduciary of his principal owing him the highest standards at law, including the duties of utmost good faith, candor and loyalty.]



Leonardo's "Madonna and Child with St Anne and a Lamb"

 Agency will be at the core of the impending litigation between two of London's "most powerful dealers" when Simon C. Dickinson Ltd. seeks an indemnity from Luxembourg Art Ltd. for losses suffered as a result of the judgment awarded to Accidia (the original owner of the drawing attributed to da Vinci) in the suit instituted against him in 2010 for commissions relating to the failed sale of such artwork. Luxembourg Art Ltd. was Accidia's agent and as such, should have disclosed to its principal the fact that Dickinson stood to earn a commission and the amount of the commission. In the judgment Judge Vos stated that he was "sure" Ms. Luxembourg did not disclose these matters to Accidia, which is the claim Dickinson will now mount to get an indemnity.

On the question of the attribution of the drawing to Leonardo da Vinci, see here. 

The return of the auction guarantee suggests we're in a boom market (for now)

NEW YORK/LONDON. The return of the auction guarantee has prompted The Art Newspaper to report on the history of this feature of the auction sale (first introduced by Sotheby's in 1971), its complexities, the possible legal ramifications and the mixed feelings of the market towards it (is it insurance for the seller or a form of market manipulation?). An empirical look at guarantees over the past forty years revealed that their resurgence coincided each time with an upturn in the market (e.g., in the 80s and then again after 9/11 with Sotheby’s issuing $902m-worth of guarantees in 2007, double the 2006 amount and up from $131m in 2005, according to Noah Horowitz’s book "Art of the Deal"). And so their return (together with irrevocable bids) at the London impressionist, modern and contemporary art evening sales last month to the level of £34.2m must mean that we are, once again, in a boom market.

But as with so many comebacks, what was once familiar re-emerges in a modified form. In this case, "rather than playing with their own money," auction houses are increasingly selling off the risk to third parties, who, according to Emmanuel Di Donna (of gallery Blain Di Donna and formerly of Sotheby's), are either collectors who want to own the work or "to play a little bit on the market." A shift away from the auction-backed guarantee towards the third-party guarantee would be a good thing for it would reduce the risk of auction houses breaching the fiduciary duties (in particular, the duty of loyalty) they owe their clients (i.e., those consigning art for sale at auction). The risk of breach lies in an auction house favoring (e.g., in terms of promoting) the guaranteed work over the non-guaranteed work as a result of its financial stake in the first but not the second sale. Were this to happen, it would likely adversely affect the sale of the unguaranteed work and constitute a breach of the duty of loyalty owed to that consignor.

Essential are disclosure of the fact that a work is guaranteed (already market practise) and auction houses not favoring guaranteed works at the expense of those that are not (clearly, third-party guarantees are preferable to auction house ones); otherwise, guarantees provide flexibility, increased liquidity and insurance for the seller. But what about disclosure of the actual value of a guarantee? Failure to disclose the exact value does, to some extent, make the reserve price and high estimate somewhat artificial. Plus, the highest bidder at auction could be left empty-handed if his bid is less than the amount guaranteed. At the very least, such bidders should be given an opportunity following the auction to increase their winning bids to a price exceeding the value of the guarantee so that the work does ultimately go to the highest "bidder" (question- does this occur?). The counterargument of course is that the person bidding at auction could have made a guarantee himself if he had really wanted the work. One final remark: the article makes a reference to the fact that much of the disclosure materials are "buried" at the back of auction catalogues but this is not something I am sympathetic to. Just like an investor should read not only the "description of notes" but also the indenture, so too a prospective buyer of an artwork should read the entire catalogue for the relevant lot. The art market is, contrary to popular opinion, a sophisticated, complex and highly competitive market and it is up to the buyer to do his homework before he decides to place a bid (in case this helps, here are the lot symbols for Sotheby's). The burden cannot be placed entirely on the intermediary.

UPDATE: An article by Art Market Monitor says Sotheby's has a "self-imposed" ban on giving guarantees themselves.

Holding the Warhol Authentication Board accountable

WASHINGTON, DC. The Joe Simon litigation against the Warhol Foundation and Art Authentication Board (see here and here) underscored the impact the Board's determinations can have on the value of a purported Warhol. Although, as previously stated, such determinations on authenticity are not conclusive and binding on the market, in practice, where the Board holds that a work is unauthentic, it is tainted to the point of being virtually unsaleable (Sotheby's and Christie's, for example, will not sell a "Warhol" without Board authentication).

Joe Simon's Red Self Portrait

But with such power must come accountability, which requires establishing the legal basis of a claim against the authentication Board. Following this blog's coverage of the Joe Simon litigation, the Washington Journal of Law, Technology & Arts drew my attention to an article they had written about how this particular suit potentially provided "a framework for pleading antitrust claims against authentication boards" since it was the first to overcome the defendant's motion to dismiss. The article discusses the "potential liability under the Sherman Antitrust Act for art professionals who render opinions on the authenticity of artworks" and the standard that may apply at trial. Resorting to anti-trust principles to plead claims of this kind makes sense if you think about it because these boards have the power, through determinations of authenticity, to manipulate supply and the market for a given artist. The article can be found on the Journal's website or accessed directly by clicking here.

ART PICK OF THE MONTH (Feb. '11)

Rubell Family Art Collection, Miami

The Story of Jason, Keith Haring (1987)

Having heard all about the Rubells and their audacious, cutting-edge art collection, I was excited to take a break from sunbathing and make my way to the nondescript warehouse once serving as a Drug Enforcement Administration storage facility for cocaine and cash and now home to one of the greatest collections in the country. Given how off the beaten tourist path the collection is, I was expecting an unusually serene viewing experience but I was delighted to discover on arrival that I was actually the only one there (the Foundation purportedly receives an average pf 200 visitors a week). A private  viewing of a unique collection -- doesn't get much better than this right?

Well sort of. There were two exhibits on: "Time Capsule" and "How Soon Now." The first was the re-installation of Jason Rubell's senior curatorial project exhibited at Duke University Museum of Art in 1991, a collection of artworks he built-up from 1982 (when he was only 13 years old) right up to the inaugural date of the exhibition. The mini-collection, which included the nine black and white photo collages by Keith Haring captured in the photo above, was so intriguing and had some fantastic pieces. As I walked through the eclectic mix of artistic styles, mediums and subject matter, I tried to imagine what could have motivated a teenage Jason Rubell to sell his tennis rackets and golf clubs (true story) to be able to acquire another artwork to add to his growing collection now hanging before me decades later. The works themselves varied in quality but there were a few outstanding pieces such as an Andreas Gursky photograph of a public swimming pool, three Richard Prince "jokes," an architecturally-inspired lineal drawing by Sol LeWitt and a stunning Cindy Sherman photograph. But what did it mean that I had just-so-happened to pick out the works by the "big names?" Was it a natural consequence of these artists' superior talents or was it that my viewing of Time Capsule (and any art for that matter) was subconsciously pre-conditioned by my knowledge of these notorious artists, their styles and their works? I approached the works with a completely open mind and although for one reason or another I was drawn to the more well known artists, that is not to say that the lesser known works did not warrant attention or the mini-collection taken as a whole (it would have been interesting to view the works chronologically to see the progression but that was not the curatorial approach adopted (it was unclear what it was)).

Still with an open  mind, I wandered to the other temporary exhibit (the gallery changes exhibitions twice yearly). It was a complete contrast to "Time Capsule" and not in a good way. There seemed to be no curatorial theme whatsoever linking the works, most of which were very recent acquisitions. And while I have no problem with erotic, hugely graphic art, several of the works felt like provocation for the sake of provocation. "How Soon Now" was neither interesting nor enjoyable to view and some of the works were frankly laughable -- a piece of purple cloth pinned to a wall is art? Really? The fabric had barely, if at all, been worked; it could have been a kitchen towel pinned to any wall (I have no sympathy for this kind of art - I felt the same way when I saw Gabriel Orozco's Yogurt Caps, which consisted of one blue Dannon lid attached to each of the four walls of an otherwise empty room. At the time, it received mixed reviews with Art in America calling the show "yet another tedious effort to wed neo-conceptualism to commodity critique;" Frieze went with "disarming articulation of emptiness"). But beyond trying to draw the line between what constitutes art and what does not, the exhibit was lifeless (ironic really with all that sex) and lacked any concept (also ironic given the likely strong influence of conceptualism on these artists). I would only make an exception for the two Cecily Brown paintings which, like most of her outstanding work, were so dramatic with those decisive, thick, colorful paint strokes. Thankfully, "Time Capsule" alone made the trip to the out-of-the-way warehouse worthwhile and I didn't feel too bad about giving-up a couple of hours of beach time.

A natural pairing: restitution and the jurisdictional question, this time with a twist

WASHINGTON, DC. In virtually every restitution claim filed in federal court against a defendant foreign nation, the defendant challenges the basis of the court's jurisdiction. In December it was Spain and now it's Hungary who claims that neither the "expropriation" or the "commercial" exceptions to the Foreign Sovereign Immunities Act (the "FSIA") apply to give the federal district court in DC jurisdiction to hear and adjudicate the suit instituted by Baron Herzog's heirs against Hungary and four state-owned museums for the restitution of "at least 40 works" looted by the government and its Nazi collaborators in 1944. From a litigation strategy perspective, it's not surprising that, where the defendant is a foreign sovereign nation, the initial response is to seek dismissal on the grounds of lack of jurisdiction. This is because if successful, it avoids having to mount a defense on the merits of the claim. However, the "jurisdictional question" in this particular case is unique due to the 1973 US-Hungarian Claims Settlement Agreement which, according to Hungary, overrides the FSIA exceptions should these even apply to give jurisdiction (Hungary says they do not). 

Modeled on the Rumanian and Bulgarian lump sum agreements of 1960 and 1963, respectively, the US-Hungarian Agreement was aimed at the "preadjudication" of claims of the United States and its nationals against Hungary for property claims arising out of the Hungarian government's actions during WWII. By its terms, the Agreement was "in full and final settlement" of claims against Hungary in respect of which the United States received a lump sum of $18.9 million (as settlement for claims allegedly worth $80,296,047), payable in 20 equal installments starting June 30, 1973. In return, the United States agreed to waive all claims against Hungary upon full payment, whether on its behalf or on behalf of its nationals, existing or prospective. The distribution of the funds received fell within the exclusive competence of the United States with Hungary incurring no liability whatsoever in respect thereof and US nationals looking to their own government for compensation.

Aside from contesting jurisdiction, Hungary has also argued that plaintiff De Csepel's relatives already received compensation under a US 1955 programme constituting another possible ground for dismissal. Counsel for the plaintiffs has "urged the court to reach an independent decision on the merits of the family’s claim and disregard the technical roadblocks once more being raised by Hungary." But this is not a winning argument in favor of invoking the court's jurisdiction: the court cannot legitimately find jurisdiction based on its own view that the plaintiffs deserve adjudication of their claim. Likewise, emphasising Hungary's current Presidency of the EU and its obligations under the Washington Principles and the Terezin Declaration may put pressure on Hungary to compensate the plaintiffs but it has nothing to do with resolving the jurisdictional question. The plaintiffs' response is due April 1.