The Rise of NYC Art Fairs – NYSBA Event – Part 2


Are brick and mortar art galleries the loss leaders in an art world, potentially spiraling beyond viable limits? More than ninety art fairs now define the rhythm of globalized art business. This development has profoundly altered the relationships amongst artists, gallerists, and collectors.

This panel discussion explores and critiques the impacts and challenges – legal, ethical and business – of the rise of art fairs. This is part of an initiative to create dialogue amongst lawyers, artists and emerging and established art professionals working in the primary or secondary markets.

Moderator: , Chair, Committee on Fine Arts, New York State Bar Association, Entertainment, Arts and Sports Law (EASL) Section, Attorney and Faculty at Sotheby’s Institute of Art

Panel:
, Gallerist
Elizabeth Dee, Gallerist
, Attorney at Stropheus Art Law
, Litigation Partner at Sullivan & Worcester LLP

Here in Part 2, an audio/video recording of Richard Lehun’s PowerPoint presentation can be found in the section on his presentation below. A dedicated audio recording of Nicholas O’Donnell’s comments also precedes his text.

Judith B. Prowda, Moderator:


New York Art Law Attorney Judith B. Prowda In Part 1 we began with Gallerists Ed Winkleman and Elisabeth Dee. Ed offered an overview of the research on art fairs he is conducting, in preparation for his upcoming book, Selling Contemporary Art: How to Navigate the Evolving Market. Elizabeth reported on the chances and risks that art fairs impose from her perspective as a dealer and a founder of an art fair.

Here in Part 2 our speakers are attorneys Richard Lehun and Nicholas O’Donnell.

Richard M. Lehun is a founding member of Stropheus Art Law, New York’s pioneers in the provision of unbundled legal and business services to artists, gallerists, collectors and museums. Richard is one of the few to have completed a doctorate in fiduciary law, cross-appointed between McGill and Harvard Law School. He is responsible for gallery, museum and auction house ethics and fiduciary duties at Stropheus Art Law. He’ll be looking at the ethical problems that fairs raise.

Nicholas O’Donnell is a litigation lawyer at Sullivan & Worcester LLP and the practice group leader of the firm’s art and museum group. He has spoken frequently on the topic of WWII restitution litigation, including at a conference in Heidelberg last January about the Cornelius Gurlitt affair. Nick’s widely read Art Law Report offers commentary on legal issues affecting visual artists – the visual arts community. Nick will present on legal issues that art fairs carry with them.

I’m grate­ful for my employer, Sotheby’s Insti­tute of Art, for gra­ciously host­ing this event, as so many New York State Bar Association, Entertainment, Arts and Sports Law (EASL) Section events, in this beau­ti­ful space which is my sec­ond home. This pro­gram is part of an ini­tia­tive of EASL’s Fine Arts Com­mit­tee to cre­ate dia­logue amongst lawyers, artists, and emerg­ing and estab­lished art pro­fes­sion­als work­ing in the pri­mary and sec­ondary mar­ket. Two years ago we pio­neered a pro­gram on legal issues for artists and gal­leries dur­ing Bush­wick Open Stu­dios Week­end, geared to the pri­mary art com­mu­nity. Last Octo­ber we held a pro­gram on Gallery Ethics and have posted an audio pod­cast and transcript of that pro­gram on the Stro­pheus Art Law web­site, and we will do the same for tonight’s program.

Richard M. Lehun:


 

New York Art Law Attorney Richard LehunTo situate our discussion let me quote Michaela Neumeister de Pury: “Whenever I hear about a new art fair starting, it is almost physically painful for me. The art world is becoming a Gypsy circus.” And Jerry Saltz, who I’m sure many of you know, categorizes the situation like this: “The downside, the beloved linchpin of my viewing life is playing a diminished role in the life of art. And I fear that my knowledge of art, and along with it, the self-knowledge that comes from looking at art, is shrinking.”

We’re in a situation where there are significant contradictions. By looking at ethics in my presentation, I’m going to be looking at contradictions. And what is an ethical problem? An ethical problem is when you have to make a choice between outcomes. Both outcomes contain good and bad, and you’re in a situation where you have to resource that decision, and you have to carry with your stakeholders the consequences of those decisions. This is an area that I spend a great deal of time with in my practice; trying to figure out what burdens on decision-making mean when there is no clear answer.

Art fairs are unavoidable, and they are a contradictory phenomenon, and contradictions increase complexity. The main problem is, the more complex things become, the fewer people can typically do something, or do it well. Those who can master the complexities profit immensely. Those who can’t, as our past panelists have repeatedly underscored, may be threatened with extinction. With the rise in the complexity comes an increased risk of failure, and not only of a financial dimension. The art context is a web of relationships. Those relationships have always been difficult, fraught with idiosyncrasy, failure, and injustice. I don’t think that the art fairs themselves bring an entirely new dimension of dysfunctionality. What they do is bring a different dynamic of dysfunctionality that people may or may not be adequately prepared for. So how do the art fairs affect these relationships? That’s what I’m going to try to cover in very few minutes.

I’m an attorney and my special interest is conflicts of interest. I want to know how we can best deal with these types of situations. I’m concerned about how stakeholders – this means artists, gallerists, collectors and museums – succeed or fail when confronted with contradictory needs and conflicted obligations.

Let’s look at some of these contradictions that affect specific groups.

We have the contradiction, that on the one hand, collectors and visitors value accessibility. This means they get to see a lot, and you get to see it in one place, and it’s very efficient. We know that collectors and advisors are time-poor. They want to consolidate research, search, and purchase. As Don Thompson wrote in The $12 Million Stuffed Shark, comparison shopping at fairs is easy. A single dealer might with difficulty get three Gerhard Richters to show a client. Dealers at Art Basel can show twelve of these at the same time. There is the impact of the herding element; that the sheer number of people and the sold stickers alleviate collector uncertainty.

Fairs are playing to the experience economy. People don’t just want to go one place and have one kind of limited aesthetic experience; they want to interact with a globalized jet-setting world where they experience something. Fairs replace quiet sessions in the gallery with a shopping mall, blending art, fashion, parties in one place. Collectors buy impulsively. They may never visit the gallery of the dealer from whom they buy at the art fair. With each fair, collectors become more accustomed to purchasing art in a shopping mall.

Okay, so that’s good for the collectors somehow, one thinks. Previously, collectors had to consider the interests of the gallery to gain access to works, and indirectly or directly, the interests of the artist, because they had to go through the gallerist, and behind the gallerist one assumes, in most cases that there was an an artist. Collectors are now rendered significantly less conflicted by art fairs. They have simpler choices. If we want to analyze what’s going on at that level, it’s not just the efficiency, it’s also something beyond that. Ethical choices of collectors are diminished by art fairs. Their lives and relationships are simplified. They can spend more money easily. This decrease in transaction costs seems like a benefit, but it also means that their virtual, idealistic investment is discounted. There is significantly less incentive to invest in the dealer and the artist. Even as the gallerist makes more money, social and contextual capital is being lost. The structural degradation of social and contextual capital is a significant structural downside of the art fair.

The art fair has a structural bias toward undermining the threshold investment of the collector in the artist and gallery relationship. Being able to see works on what may appear to be a level playing field ignores the fact that art fair politics, as has astutely been pointed out here, is no less determinate at art fairs than it is at galleries. But there is a difference here, a very important difference in the frame of reference. In their own gallery, a gallerist answers to stakeholders like artists, collectors, and others. At an art fair gallerists must uphold the fair’s standards and interests. A fair does not represent anyone. It does not have an agency relationship to anyone. If anything, it survives on visitor interest. As we saw in the previous slide, attracting collectors by lowering the ideal threshold investment makes money for the art fair and gallerist. The art fair cultivates and depends on these organic relationships, but it is structurally conflicted and motivated to removing barriers to trade by undermining those relationships. The art fair piggybacks on relationships, while needing to undermine them in fact.

We’re still on the potential benefits of the art fairs in terms of accessibility. But there are other important potential conflicts. You might be able to see a work at the fair, but is it for sale? Or is it for sale to you? Very difficult to know at times. The incentive in the old system of galleries to hang works that were pre-sold, borrowed, or otherwise unavailable to build the feeding frenzy was negligible in comparison with that of the art fairs. There is an obvious moral hazard here. What a gallerist may or may not have done in the confines of the gallery, where their practices were under scrutiny over time by a group of often knowledgeable actors, shifts dramatically under the pressures and opportunities of an art fair cycle.

Thus the lessening of the investments by the collectors is mirrored by a weakening of obligations by the gallerist. And in the first law of thermodynamics we know that that energy is going to go somewhere. And that loyalty is going towards the art fairs themselves, at the expense of other stakeholders. The problem, however, is that gallerists can’t have the same kind of perspective as an art fair, which is a money making machine essentially. The gallerists, contrary to art fairs, are often agents, representatives, and in fact fiduciaries of their artists. More on that in a second. Let’s look a little more closely at the structure of the gallerist’s conflict with art fairs.

I invite the audience to read these two quotes. Now, I’m going to refer to Matthew Slotover a few times, not because I have anything against him, or believe that he is a pernicious agent in the art world. Simply, he’s representing a perspective that is clear and necessarily differs from that of gallerists like Ed Winkleman.

„And of course, galleries are not obliged to do art fairs. Art fairs really exist for the galleries—the galleries are our clients, and we’re there to serve them. It’s up to them whether art fairs exist; if they don’t want them to exist all they need to do is stop participating and art fairs would immediately not exist. So I think there are a lot of things being confused here.“ Matthew Slotover, Artspace Interview, 2013

„Because getting into the right art fairs (or not) can truly change the fate of a gallery, dealers are spending more and more of their time strategizing and networking other influential art dealers.“ Edward Winkleman, How to start and Run a Commercial Art Gallery

Slotover obviously knows a lot about art fairs. What makes his opinion so glib here? He is not actually responsible to anybody. He can make it up as he goes along. He does not owe a duty of loyalty, so he can be as self-interested as possible without moral ambivalence. Ed, on the other hand, is a gallerist. He has a duty of loyalty and absence of conflict of interest regarding his represented artists. But if a gallerist cannot fill demand without being at art fairs, then serving Matthew Slotover’s doublethink becomes increasingly important.

I’m not going to repeat the figures about the necessity of art fairs to the dealer’s life, we’ve had enough of that. I will sum up with a blog quote: “The most expensive booth at the Frieze Art fair will go for $80,000, but the greater risk for dealers lies in not participating.” In conclusion, the costs and economic advantage of being at an art fair will reduce the ability of mid-range galleries to remain viable. The gallerists have the choice of embracing the new paradigm and its hidden costs, or risk their existence. This conflict of interest is having a profound impact on the art world as we speak.

So then, let’s talk about what this does to our artists. Again we have quotes from Matthew Slotover and Jeff Poe:

„You know, artists can make one work a year or a thousand works a year, and they make that decision based on what they are comfortable with, what their public desires are, what their credibility desires are, and how many great ideas they have. But artists are extraordinarily strong personalities in most cases—they’re not going to let their galleries tell them what to do because of an art fair.“
Matthew Slotover, Artspace Interview, 2013

“If they are any good, they make art because they have to. They don’t do it to please the market. So for some artists, hanging out here can mess with their heads. Also, let’s face it, this is not the optimum place to exhibit work. The subtle notes in artworks are drowned out by the cacophony.”
Jeff Poe, Blum and Poe

The mythical notion that artists can exist on idealism alone, and that their personalities are immune from being affected by market forces, is an act of willful blindness, self-serving towards the art fair ideology. And let me be clear, I am not here to do a cultural critique of art fairs. I’m here to look at the ethical conflicts involved, so that we can discuss them, so that decision makers at the art fairs can respond to them, as well as all other the stakeholders in the process.

It is clear that gallerists are by law fiduciaries of the artists they represent. The investments that galleries are forced to make in the art fair model impoverish their brick-and-mortar galleries, lower the collector’s necessary ideal investment, and lower their necessary investment in the collectors. This means that their ability to represent artists changes. Their role becomes one to broker access to art fairs, but the art fairs do not represent the artist. So, on the way to adapting to the new reality, potentially surviving and making more money, the artist’s reliance on the gallery is also reduced. What’s the point of a solo show, or gallery representation, when the gallery does not bring the artist to the only game in town?

In fiduciary obligations, the key thing is loyalty. So all gallerists that represent artists are fiduciaries, and the primary responsibility they have by law to those relationships is loyalty. One of the very special things about the artist-gallerist relationship is now being shifted by the art fair ideology. And we need to be aware of what that means.

Those who are perhaps less familiar with the definition of the fiduciary relationship are invited to spend a moment on the text of this slide and I’ll come to my conclusion.

Fiduciary concept’s central rationale is “nurturing and enforcing commitments to act loyally toward the interest of others […]”
De Mott, Fiduciary Obligation Under Siege: Contemporary Challenges to the Duty to be Loyal, 1992

“The principle of altruism requires that any conflict of interests between the parties […] must be resolved in favour of the beneficiary, who is entitled to the ‘single-minded loyalty’ of the fiduciary.”
Hoyano, The Flight to the Fiduciary Haven, 2011

Loyalty, pre-art fair, could mean a vast spectrum of different responsibilities. Loyalty post-art fair may mean little more than more art fairs. Post-art fair could mean for the gallerist being nothing but a broker for the art fair ideology. This fundamentally reduces the scope of what a gallerist needs to provide, and in fact, they may fail as a fiduciary if they don’t produce this outcome. What used to be a fiduciary obligation in a broad sense to the potential of an artist’s career etc, shifts as gallerists become conflicted by the obligation to bring that represented artist to a fair, or they’re not doing their jobs, while the at the same time undermining their very relationship to that artist and their collectors.

This makes the gallerist’s life more complicated. It will become much harder to balance interests. At the same time, not chasing the money will not be an option. So there is no going back to the past practices. It’s a damned if you do, damned if you don’t situation.

And the artists are also not unaffected. They must be complicit to survive. This is why I say, those who care about what they do have to sit down and go through these questions carefully. The whole point of thinking of things in fiduciary terms is to treat certain ethical questions as more than just happenstance.

There’s no time like the present, and in fact there will be no time like the present, to take a moment to strengthen our capacities with these ethical issues. Thank you for your attention.

Nicholas O’Donnell:


 

Art Law Litigator Nick O’Donnell
Good evening everyone. First I want to start by thanking Judith and Richard for inviting me and to Ed and Elisabeth. It’s really great to be here, and for their thoughts. It’s really a privilege to participate. I’m going to talk little bit about relationships.

The interaction between a client and a dealer, whether at a brick and mortar gallery, or an art fair, is the commencement of a legal relationship. It might be a successful relationship, it might be strained, but that’s what it is. So what I want to talk about tonight are some of the ways that the formation of that relationship, and its rights and duties, might be affected by the fact that it is happening at an art fair. My focus is going to be on US and NY law given my practice, but hopefully we can issue spot on things that can arise around the world.

It seems obvious, but the starting point is to remember where you are. In the absence of an agreement, in most instances for the sale of art the place of the transaction will supply the law that governs that transaction. So New York law will govern Frieze, Dutch law will govern TEFAF, and Hong Long law will govern Art Basel Hong Kong.

The nature of an art fair also creates practical differences in the formation of that relationship. Consider: every art sale involves some sort of diligence, whether cursory on the spot or in depth, a negotiation of the essential terms of the transaction, and an actual exchange. A contract, after all, is an exchange of promises: I will do this if you do that. But every contract has explicit terms and implied terms, and the practical aspects of an art fair, and the law of the place where it is, will all go into what constitutes the resulting agreement.

Diligence and preparation. What does the buyer have time to investigate, and what are the consequences of proceeding with the transaction?

This is as much a matter of risk management as it is a legal question. But whether you are a dealer at a show or a buyer, your starting point has to be the rules of the show. Is there anything in the materials in which a buyer agrees to a set of terms incorporated by reference? That is, when you attend or pay for something, do you end up signing a form that says something like “buyers agree to abide by the rules of the X show”? If so, those rules will be a part of your deal.

If you are a dealer, the same will hold true most likely at the application stage. Even without a single buyer, the dealer is probably setting foot more firmly in the location of the fair. Art Basel, for example has a choice of law provision in its application form in favor of the location of the particular show (Canton Basel, Florida, Hong Kong).

What is it? What representations and warranties are inherent to a sale, and how does the dynamic of an art fair complicate how you can rely on what you have been told?

If you’re in a Uniform Commercial Code (UCC) jurisdiction, like New York, the mere exchange of information will give rise to enforceable obligations related to that exchange if there is ultimately an agreement.

UCC 2-313 provides that

(1) Express warranties by the sellerare created as follows:

(a) Any affirmation of fact or promise made by the seller to the buyer which relates to the goodsand becomes part of the basis of the bargain creates an express warranty that the goods shall conform to the affirmation or promise.

(b) Any description of the goods which is made part of the basis of the bargain creates an express warranty that the goods shall conform to the description.

( c ) Any sample or model which is made part of the basis of the bargain creates an express warranty that the whole of the goods shall conform to the sample or model.

(2) It is not necessary to the creation of an express warranty that the seller use formal words such as “warrant” or “guarantee” or that he have a specific intention to make a warranty, but an affirmation merely of the value of the goodsor a statement purporting to be merely the seller’s opinion or commendation of the goods does not create a warranty.

We can well imagine how this will play at an art fair rather than a gallery. Hundreds of people are passing a booth each hour. Routinized conversations ensue. The sellers give a standard litany of descriptions-they think, if they can remember. Buyers have spoken to dozens of people that day. Was it this dealer, or another, that talked about the condition of the paining or the location of origin. Which conversation becomes “part of the bargain”? So where advance homework is wise in a storefront, some system for noting what you heard from whom—or what you told whom—may matter if and when a deal is struck.

To illustrate the point, imagine a buyer who attends a fair of rare cars on Long Island. He talks to several sellers at the fair, but he is taken with one conversation in particular. This Chrysler LeBaron, he is told, belonged to a certain specific individual. Because of that, he buys the car in a handshake deal. The handshake representation about who owned it? “John Voigt.” You may well laugh at the idea of being as senseless as George Costanza, but the larger point is that once you shake hands, exchange promises, make a deposit, or otherwise commit yourself, what happened in that one conversation among many could turn out to matter a great deal.

Consider a less ridiculous scenario. In a conversation at a booth, the buyer observes a signature at the lower portion of an etching that looks to her, a sophisticated buyer, to be Picasso’s. She asks the dealer, what is that? “That’s signed Picasso” he says. Or did he say “that’s signed BY Picasso?” or did he say “that SAYS Picasso”? Do either remember accurately. The buyer purchases it. In a way that is so much less likely with an auction catalogue, there is now an issue with WHAT 2-313 warranty was made. This scenario happened to a client of mine in a more old fashioned context, and the particulars were more easily sorted out, but the dynamic of the show makes it one to look out for.

Here too geography will matter of course, and whether a civil law or other jurisdiction implies warranties into a contract like this. Many don’t.

Before we leave this topic, remember that an expression of VALUE is considered an opinion, and not a statement of fact within 2-313 or other law. But a claim of comparable sales is an expression of fact.

Did you make an agreement?

Let’s take a step back and talk a little about the basics of contract formation in this context. With apologies to the lawyers in the room who have done their best to forget about first year of law school, it is worth repeating that an agreement does not consist of what you think it meant, it consists ordinarily of the objective manifestation of the parties’ respective intent to be bound.

The New York Statute of Frauds, Gen. Obligations Law § 5-701, like most, requires that any agreement must be in writing to be enforceable if “By its terms is not to be performed within one year from the making thereof or the performance of which is not to be completed before the end of a lifetime.”

The key thing to remember here is not whether it IS performed within a year, but whether it can be.

So contrast: a visitor from a civil law jurisdiction sees a contemporary work at Frieze. She has a structured payment coming to her own business, so she needs some time to make the full payment, but she is willing to commit. So she says I’ll give you 50% now, 30% in six months, and the rest a year from today, after which I’ll pick it up. The dealer, happy to obtain 80% within six months, agrees. She’s never heard of the Statute of Frauds. But six months later he’s heard nothing, and he sues. Strictly applying the statute of frauds, he should win, right? Strictly, no. a year from today is not within a year. Cases have gone to court over this issue, and the party seeking to enforce the agreement has not always prevailed. Good news for them recently, although addressing a different aspect of the Statute of Frauds concerning auctions (this is the Jenack case), the New York Court of Appeals reserved some choice words for relying on the SOL disingenuously:

It bears repeating in such a case as this that: The Statute of Frauds was not enacted to afford persons a means of evading just obligations; nor was it intended to supply a cloak of immunity to hedging litigants lacking integrity; nor was it adopted to enable defendants to interpose the Statute as a bar to a contract fairly, and admittedly, made.

But here, seller in particular, beware.

I started by teasing out some of the geographical implications on the choice of law that might apply to an art fair transaction. But, as I like to phrase the foundation of all legal questions: so what? Who cares where the fair is?

With regard to the most important aspect of any sale, title to the object, you will care a great deal. Consider again a pair of scenarios, different only in geography.

First, in New York at an art fair views a striking Max Beckmannn domestic scene on consignment from an identified and reputable seller. He views its condition, and notes its presence in the catalogue raisonné with approval. The provenance provided is orderly and has no gaps or suspicious activity. He buys the painting for $25 million, which is noted in the local and international press.

Two weeks later, he receives a letter from a lawyer. The painting, the lawyer argues, was sold at the auction at Galerie Fischer in Lucerne in 1939 after being looted from a Jewish family in Frankfurt. The provenance he was given was fictional; the catalogue raisonne confused this work with another version. The lawyer’s client wants the painting back. Oh, and the reputable and known seller has gone bankrupt and fled to Zimbabwe with our buyer’s money.

Now imagine the same scenario, but at Art Cologne. What happens, and why does it matter?

Assuming that the buyer really did not know of the painting’s history, the location will not only be important, it will probably be dispositive. In New York and elsewhere in the United States, a thief cannot pass good title. So purely as a matter of title, the buyer will lose the painting. He may have some defenses like laches if the true owners knew of the painting’s intermediate location and failed to act, but that is necessarily an uphill battle, and his burden to prove AFTER a trial.

In Cologne, or Maastricht? More than likely, as a good faith subsequent purchaser, he will keep it. Even within the western art market, an increasingly seamless one, different places make different judgments about who should bear the risk of loss in that situation.

World War II looting isn’t all that matters by location. Assume fairs in the same two locations, New York and Cologne, but for a Giorgio di Chirico. The same facts apply, but assume that in 1955, the true owner had located the painting in a Geneva gallery, sued for its restitution—and lost to a “good faith purchaser.” Now, even in New York, the seller is not passing a thief’s title, he is passing adjudicated good title. So the buyer may get the painting after all.

Lastly, assume the di Chirico hypothetical: but fair number two is in Rome, where just last week, a new government passed a law declaring all Italian metaphysical art to be the national patrimony of Italy.

The buyer in New York may now be better off. Unless it was imported to the US AFTER the patrimony designation (in which case there could be customs problems, and a visit from the Asset Forfeiture Unit of their friendly local U.S. Attorney office), it’s here and it’s probably not going back. But within the EU? That jurisdiction that favored good faith title may be out of luck.

So, to foster the discussion, remember: where you are will affect whether there is a relationship, and how it plays out in the short term, and if people ever disagree. Thank you very much.

© 2014 All Rights Reserved

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The Rise of NYC Art Fairs – NYSBA Event – Part 1


Are brick and mortar art galleries the loss leaders in an art world, potentially spiraling beyond viable limits? More than ninety art fairs now define the rhythm of globalized art business. This development has profoundly altered the relationships amongst artists, gallerists, and collectors.

This panel discussion explores and critiques the impacts and challenges – legal, ethical and business – of the rise of art fairs. This is part of an initiative to create dialogue amongst lawyers, artists and emerging and established art professionals working in the primary or secondary markets.

Moderator: , Chair, Committee on Fine Arts, New York State Bar Association, Entertainment, Arts and Sports Law (EASL) Section, Attorney and Faculty at Sotheby’s Institute of Art

Panel:
, Gallerist
Elizabeth Dee, Gallerist
, Attorney at Stropheus Art Law
, Litigation Partner at Sullivan & Worcester LLP

A video of Ed Winkleman’s PowerPoint presentation can be found in the section on his presentation below. A dedicated audio recording of Elizabeth Dee’s comments also precedes her text.

Judith B. Prowda


 

New York Art Law Attorney Judith B. Prowda More than 90 art fairs define the rhythm of globalized art business. There are dozens of NYC art fairs. In fact, when Richard and I were planning this program we made the strategic decision to schedule it between Frieze NY, and Art Basel in Switzerland. With the rise and rise of art fairs, sheer survival in the commercial art context now requires galleries to participate in a half a dozen or more art fairs a year – from New York to Maastricht to Dubai to Hong Kong to São Paolo – with stops along the way.

Some dealers make as much as two-thirds of their sale at fairs. Art fairs have indeed transformed the business of art and even the production of contemporary art. For serious collectors the international art fair circuit is an imperative, while visiting only a few of galleries in NY, London and Berlin seems – well – almost quaint. I recall arriving a few minutes before the opening at The Euro¬pean Fine Arts Fair (TEFAF) in Maastricht and being crushed by a crowd of eager collectors who gathered impatiently for the doors to burst open at 11AM on the dot. And TEFAF is perhaps the most subdued of fairs.

On the positive side, art fairs create a global art dialogue; galleries introduce works fresh from artists studios to the international stage. For the past three years Frieze has commissioned artists projects that have been curated by Cecelia Alemani. Frieze also offers a daily program of keynote lectures, panel debates, and discussions on diverse cultural topics. And let’s not forget the glitzy parties.

Fairs have also been criticized. Participation in an art fair is a very expensive proposition – from a highly selective application process, to fees for booths shipping, insurance and travel. Mid-tier galleries which can’t afford these costs are often left at the gate. Increasingly they are confronted with the financial unsustainability of their brick and mortar.

Also – and I leave this to our gallerists to address – is the question of art production and the responsibility of dealers who may have to pressure artists to turn out a high volume of new work in order to satisfy the demand¬ing art fair calendar.

Along with the rise of art fairs, is the emergence of complex legal and ethical issues. For example, and these are but a few on the legal side – how are relationships among the relevant actors distinct from traditional dealing? How are negotiations affected? When is the handshake deal an enforceable contract? When isn’t it? What about warranties of title and authenticity? Whose jurisdiction laws apply in title disputes if a work is stolen? That of the consigner, or the good faith purchaser, or the country from where the object was stolen? Suppose a work was shipped or looted abroad without an export license? Or it turns out to be a fake, or is seized by the bank as collateral on a loan? What are the consequences?These are but a few of the legal issues.

And there are ethical concerns as well. How are conflicts of interest addressed when dealers are evaluating other dealers in the application process? Are decisions about gallery placements at the fair – fair? Are rising costs making it impossible for some dealers to compete? How are a dealer’s fiduciary duties to their artist affected?

To parse all this out, we will begin with Ed Winkleman. Ed is co-owner of Winkleman Gallery and also co-founder of the Moving Image Art Fair. He is the author of the eponymous blog that demystifies the gallery system, and the book, How to Start and Run a Commercial Art Gallery, published in 2009. Ed will offer an overview of the research on art fairs he is conducting, in preparation for his upcoming book, Selling Contemporary art: How to Navigate the Evolving Market.

Our next speaker is Elisabeth Dee. Elisabeth is the owner of the Chelsea gallery, Elizabeth Dee, and is the co-founder of the art fair, Independent New York. She has produced a number of groundbreaking, first and international exhibitions of an impressive roster of artists. She was also included in Art + Auction Magazine’s list for the 100 most powerful figures in the art world. Elizabeth will report on the chances and risks that art fairs impose from her perspective as a dealer and a founder of an art fair.

Our next speaker is attorney Richard Lehun. Richard is one of the founding members of Stropheus Art Law, one of New York’s pioneers in the provision of unbundled legal and business services to artists, gallerists, collectors and museums. Richard is one of the few people in the US to have completed a doctorate in fiduciary law cross-appointed between McGill and Harvard Law School, and is responsible for gallery, museum and auction house ethics and fiduciary duties at Stropheus Art Law. He’ll be looking at the ethical problems that fairs raise and how their potential is impacted.

Our final speaker is Nick O’Donnell. Nick is a litigation lawyer at Sullivan & Worcester LLP and the practice group leader of the firm’s art and museum group. He has spoken frequently on the topic of WWII restitution litigation, including at a conference in Heidelberg last January about the Cornelius Gurlitt affair. Nick’s widely read art law report offers commentary on legal issues affecting visual artists – the visual arts community. Nick will present on legal issues that art fairs carry with them.

I’m grate­ful for my employer, Sotheby’s Insti­tute of Art, for gra­ciously host­ing this event, as so many New York State Bar Association, Entertainment, Arts and Sports Law (EASL) Section, events, in this beau­ti­ful space which is my sec­ond home. This pro­gram is part of an ini­tia­tive of EASL’s Fine Arts Com­mit­tee to cre­ate dia­logue amongst lawyers, artists, and emerg­ing and estab­lished art pro­fes­sion­als work­ing in the pri­mary and sec­ondary mar­ket. Two years ago we pio­neered a pro­gram on legal issues for artists and gal­leries dur­ing Bush­wick Open Stu­dios Week­end, geared to the pri­mary art com­mu­nity. Last Octo­ber we held a pro­gram on Gallery Ethics and have posted an audio pod­cast and tran­script of that pro­gram on the Stro­pheus Art Law web­site, and we will do the same for tonight’s program.

So please join me in welcoming our illustrious panel and our first speaker, Ed Winkleman.

Ed Winkleman


 

New York Gallerist Ed WinklemanGood evening everyone. I would first like to start off by saying thank you to Judith and Richard for organizing this panel and what I’m going to share with you, as the previous thing mentioned, is just some of the research from my upcoming book. Its title is self explanatory, but in the context of what we’re talking about today – going further and say it really does focus on contemporary art, but the discussion today will extend beyond just that. The book is designed to help dealers strategize with the changes of in the art markets since I wrote the first book, which was about the fundamentals of opening and running a commercial art gallery. One chapter in particular that defines a big part about what has changed since 2008, when I wrote the first book, is the chapter: The Rise of the Art Fair. I’ve read a lot of the literature as well as interviewed some of the directors of major art fairs in the world as preparation for the book, and this part is what I am going to share right now.

Since 2002, despite the quote you’ll see at the top sup­plied by Georgina Adams, the num­ber of art fairs in the world has exploded, and there’s a num­ber of quotes through­out the pre­sen­ta­tion that I won’t read out, because they’re really there for fla­vor. I think I do want to read this one just to set the tone. The num­bers here do tell the story. In 1970 there were just three main events – Cologne, Basel and the Brus­sels-based Art Actuel. The num­ber has mush­roomed in the past decade from 68 in 2005 to 189 in 2011. Georgina [Adams] wrote that in 2012. I’m cur­rently count­ing every art fair in the world, and among con­tem­po­rary fairs only – that’s fairs that show con­tem­po­rary art – I’m up to 220 and I know I haven’t counted them all. If I add in the fairs that I know that exist that don’t include con­tem­po­rary art, the num­ber is close to 300 at this point. So, even from the time that Georgina wrote that, the num­bers are con­tin­u­ing to rise. And they are show­ing no signs of stop­ping just yet. Why the explosion?

I point back to what happened at the NADA Art Fair in Miami in 2002 as the beginning of this notion that the world needed more art fairs. If you were in Miami in 2002, you’ll know that Nada was a satellite to the Art Basel Miami Beach Fair, and a very roughly organized fair by a group of young dealers. It didn’t cost very much to participate but within the four days the fair that took place, those dealers generally sold their booth out one, two, or three times over, and brought in perhaps more money than they would see through their galleries in the space of the six months previous to that. So the perception, as word trickled out, that the galleries had just made boatloads of money at that one weekend in Miami, started to change about what an art fair could be, how much it would cost to produce one, who was qualified to organize one, and eventually more and more people started beginning their own fairs, because demand just exploded.

In 2002 roughly 48 to 60 galleries participated in the NADA in Miami. The applications for the 2003 fair were four or five hundred range. So many more galleries were immediately interested in participating in that fair. Another thing that happened, though, was in response to the recession in 2008. If you’d asked any dealer at the time when they were looking at how the financial crisis impacted their ability to participate in art fairs, they would have expected the number of fairs to start dwindling. We were already having a conversation similar to this one in 2007-2008. There were so many fairs and people expected the recession to start knocking them down.

But one of the inter­est­ing things that hap­pened was a shift in per­cep­tion of who was respon­si­ble for get­ting col­lec­tors to the fairs. One of the peo­ple I inter­viewed for my book is Annette Schön­holzer, the direc­tor for new ini­tia­tive for Art Basel, and she said it was a sur­prise for her, when in 2008 and 2009, gal­leries started to come to her say­ing: “Where are the big col­lec­tors that we’re used to? They’re not here. You have to bring them here.” And Basel was say­ing: “We pro­duce the fair, we put the best gal­leries and the best art in the fair, you’ve always been respon­si­ble for bring­ing the col­lec­tors.” So, being the fair that they are, Basel said: “Okay, this is what you want us to do we will go out, we’ll increase our VIP pro­gram. We will do what­ever it takes to find the new col­lec­tors that are avail­able, as well as make sure the exist­ing col­lec­tors you know and love come to the fair.”

One of things that started to happen, though, is when they would reach out, as they would increase their VIP programming, they would send every participating gallery a package of VIP cards, and those galleries would send their cards out to all of their VIPs. Not surprisingly, some collectors would receive twenty or more VIP cards in the mail. And because they had so many extras, they would distribute them to their friends, and their friends were very often not VIP collectors. So, what you would see in the VIP lounge or at the VIP events were some of the people that the program was targeting, and then a lot of people that it was really never designed for.

So, the fairs start telling the galleries: “You give us your list of collectors and we’ll send out the VIP cards so that they’re not all getting multiple copies. That practice, in and of itself, shifted a huge amount of the power to the fairs. The fairs now had the quintessential collectors list. They had every person who has gallery’s VIP list in the world. And rather than see art fairs start to dwindle, in response to the recession, we started to see their power grow, and their numbers grow.

The other thing that is critical is that during all this time, 2002-2014, we systematically as dealers started to train collectors – that you will see the very newest, the very best, the most exciting work by our artist at the fairs. And even if they were buying them in advance, collectors started getting accustomed to the idea that this is where I purchase art. And this is where I can get an overview of the best art in the world. So, why am I spending as much time going around to all the various galleries? Now some collectors of ours have been collecting for 30 years will willingly admit that they have gone more and more to fairs and less and less to galleries individually because of this.

So, that’s the longest I am going to spend on any one of these slides, but I think that’s important for the background here. So the bottom line in terms of money out, the TEFAF Art Market Report is generated once a year. It’s commissioned by TEFAF. It’s released in conjunction with their fair in Maastricht, and it’s perhaps the best accumulation of data and statistics on the market.

It is still considered somewhat controversial because its author, Dr. Clare McAndrew, doesn’t have what some people consider the strictest methodology. Her sample sizes aren’t necessarily what somebody coming from an industry that uses reports like this as part of their business would consider that significant. But it’s the best data available. So, it does still influence perceptions. And in 2013 she reports that the total amount of money galleries spent participating in art shows was 1.9 billion Euros, and that’s money that comes from the galleries only. So, if you continue to the money – the entire art market was estimated to be 47 billion Euros in 2013, and dealers reported that 33% of their total sales were made at fairs.

I’ve done the math and I hope its right. The total money that galleries sold at fairs, and that’s not the total profit, that’s just the money they made per se, that’s just sales, was close to 16 billion Euros. So it’s more or less 8 Euros per Euro they spend at fairs. I should note that doesn’t represent the money made by every gallery at every level.

The top-tier galleries are probably making much more than that, and the lower level galleries, especially in the mid level, are quite lucky very often if they even break even. So because galleries in the emerging market or in the contemporary market generally have a 50/50 split with their artists, a gallery is probably selling twice what they are paying to participate in the fair, but they’re only receiving half of that, so it’s a one to one. This chart is probably hard to read from the back of the room, but it breaks down the sources of sales for galleries as recorded in 2013, and you can see that 33% is attributable to fairs. The breakdown is 19% for local fairs and 14% for international fairs. This is a chart showing where the most galleries are located.

You can see cities like Paris, London, New York, Tokyo. That’s not surprising that they have the most galleries. This isn’t a finalized chart, but the idea is to show the number of galleries correlates to the number of fairs that these cities also produce. So, a city with a red star on it is a city that has either a lot of fairs – or high profile fairs, very influential fairs. A city with a blue star is a city that’s either going up or coming down in terms of the number of fairs, or the importance of the fairs they have. An example might be São Paolo is coming up, its fairs are coming up its fair are gaining in importance. Berlin is going down. It’s either losing its fairs, or they aren’t as important as they used to be.

Basel is at the bottom by itself. It doesn’t have as many galleries as other cities, but it has the most important fairs, arguably. Despite that geographic dispersion of where the fairs take place, where the sales take place is pretty isolated to the United States. The TEFAF report of 2014 found that 75% percent of sales at art fairs take place at art fairs in the United States. And if you ask – and they did – the dealers around the world, 91% of them said that they needed to participate in just as many or more fairs in the United States because of those sales. If you ask galleries in New York, most will report that everything else being equal they’ll do their best business in Miami.

There’s something psychological about it. It’s where sales happen. We cynically refer to it as it’s like shooting fish in a barrel. The impact of this fair culture, this rise of the art fair on dealers includes statistics of some galleries reporting going to 15 fairs a year, that’s more than one a month. The impact of that on their gallery practice – is they either need to bring on more staff or they themselves are on the road up to 90 days of the year. That’s 90 days they’re not in their gallery, they are not with their families, they’re not as close as they need to be with their artists.

It’s having both a financial and a personal impact on the dealers. And as this quote from a New York Times article about the life on the road of the art dealers illustrates, it’s shifting the culture from this genteel practice where you would wait for someone to come into your gallery or you would have this leisurely conversation with them, to one where you’re constantly on the road and everything is happening much more quickly.

The impact on artists is probably ten times worse in my opinion. At the fairs, the top metric of the success for any given artwork is whether it’s sold or not. And that starts to influence what artists give their galleries to take to the fairs. They want to be a success. They want the piece at the fair to sell. Also, for the galleries to get into the best fairs, and to please the collectors that come to those fairs, there’s an expectation that to every fair you’re bringing something new.

I’ve had a num­ber of col­lec­tors com­plain as they were walk­ing around one of the fairs we were par­tic­i­pat­ing in: “I saw that at this other fair” I saw that at that gallery, at a show they had.” And the per­cep­tion is that artists can’t be doing very well if a piece I saw in a gallery is now at a fair, or a piece that I saw at one fair is now at another fair. And so to cre­ate the impres­sion that all of your artists are very suc­cess­ful as well as to please the col­lec­tors that come to the fairs to see some­thing new, gal­leries are con­stantly say­ing: “I need some­thing new,” and by say­ing that the artists are respond­ing to it.

Even if an artist has a very clear head about it their still com­part­men­tal­iz­ing their prac­tice. They’re mak­ing some works specif­i­cally for the fairs and the other work that they’re com­pelled to make. So, the over­all impact of this is some­thing that peo­ple are now refer­ring to as “art fair fatigue.” And you’ll see a num­ber of arti­cles and the lit­er­a­ture about it.

There are even clever little articles on how to deal with art fair fatigue, what shoes to wear and what spot to be is forming around airports, etc. Despite art fair fatigue, though, 45% of dealer felt that they will still invest in more fairs internationally. I think it’s said that there is a cultural backlash, where more and more dealers are saying: “I want you the collector to come to my galleries, instead of just meeting me at the fair.” A lot of dealers are saying just that to their collectors: “Come visit me. You won’t see at the fairs what we’re doing at the galleries. It’s important for you to be involved in the dialogue that’s happening in the gallery, and for you to come to the gallery.”

And some galleries in Chelsea have enough in the gallery and they don’t see the need to increase the number of fairs they are participating in, but remember that 17% of the sales happening is local, and for New Yorkers, they’re local for US fairs that are selling the most anyway. So, and that is it. Thank you.

Elisabeth Dee


New York Gallerist Elizabeth DeeI didn’t prepare a formal presentation, because we have so many tonight, and I’m typically Ed’s sparring partner, someone to play that role. Ed, thank you so much for giving us your insightful analysis on the situation with fairs and what the risks, rewards, and consequences can be. I’m going to speak primarily from, or just engage a little bit, primarily, from the gallerist’s point of view, because we are the two gallerists and art fair founders.

I founded a fair called Independent, which takes place twice annually in March and November at the former DIA Center for the Arts. And I think it’s really critical to talk about the dynamic of fairs, vis-à-vis those that were founded by gallerists and run by gallerists, and those that have become more institutionalized, or more of their own private enterprises.

Art Basel was founded by Ernst Beyeler who was a very impor­tant noted gallerist, a his­tor­i­cal gal­lerist. And I think it’s impor­tant to think about gal­lerists com­ing together to col­lab­o­rate on the issues of the day and present them mutu­ally. What Ed said was so insight­ful. With the shift to a more cor­po­rate cul­ture of art fair man­age­ment, gal­lerists have lost cer­tain pro­tec­tions that they once enjoyed. I’m not say­ing that there have not been ben­e­fits in that things have become more of an open and trans­par­ent mar­ket for col­lec­tors and for other gal­lerists to see what’s truly going on.

When you have 180 gal­leries from all over the world one is able to get a great index – how­ever, I think there are cer­tain con­cerns that gal­lerists only know and cer­tain infor­ma­tion that gal­lerists only trade with each other, that can inform and develop fair cul­ture in a more mean­ing­ful and in some ways more pro­gres­sive way. And that is why Ed and I both have started fairs with our gallery col­leagues. Would you agree?

Ed Winkleman: Yeah. Elisabeth and I were on a panel all together at Art Basel last summer, and it was about the way that galleries who have been in business for a while aren’t necessarily surviving as well as the top-tier are. And the moderator said in response to what was talking about the number of fairs we were doing and the costs, and the personal costs: “But you both started fairs yourself, so aren’t you both responsible for this in some way?” To which our response was: “We started alternative fairs that are actually not only art driven, they are gallery-centric. Both of our fairs are trying to solve some of the issues that we see with some of the bigger fairs. I think that the fair model itself has a long way to go to even catch up what the galleries are able to do. I don’t even necessarily think that even the galleries are the quintessentially best context in which to view art. My favorite place to view art is in a collector’s home. But I think, through efforts like Independent and some of the fairs out there – pushing the model here and there, experimenting with it, trying to find a better way – because I don’t think the fairs are going away. But I think they have a long way ago.

Elisabeth Dee: I com­pletely agree. I also think that given the kind of econ­omy that we’ve cre­ated, as gal­lerists, doing gallery-cen­tric fairs, it’s allowed for more kinds of exper­i­men­ta­tion in the art fair model. When I first started in 2002, one of my first fairs I ever did was NADA. I think that my costs annu­ally in doing fairs, as an emerg­ing gallery, was prob­a­bly 25 or 30 thou­sand dollars. Now I spend over a quar­ter of a mil­lion dol­lars in fairs, and I’m not a large gallery. And I still want to develop artists and intro­duce artists and develop strate­gic, cura­to­r­ial sup­port for my artists – not just sales. And to me that bal­ance is crit­i­cal for the devel­op­ment of artists in a sus­tain­able way.

So, when you work with many fair organizations and their economies, which are very expensive, you can see your profit margins going all the way down to 50% or 30% of the revenue that you would normally have in the gallery. One has to really analyze and consider those factors. And I think that what we’ve been able to do with Moving Image, which is Ed’s fair – which is devoted to video art, and keeping costs to a place where gallerists can afford to take the risk of introducing new material – or Independent, which is also equally inexpensive, even for the emerging gallery in Europe that may be doing their first fairs of their gallery’s career and their artist’s career.

It’s really important to be able to think about new creative economies for gallerists that aren’t selling things that are a million dollars on the stand, and who want to develop a dialogue and a programmatic curatorial conversation around their program. I think it’s wonderful that we now have so many fairs to choose from, in terms of how we spend our time and our own personal research of galleries and their programs. And I think it offers a lot. I think these kinds of initiatives help the gallerist face the realities of the economy as they grow and develop as galleries.

Ed Winkleman: You have one thing there I’m going to read off of, because I think this is a really interesting point, in the context of this conversation would be great to talk about: the ethical question of galleries being the gatekeeper’s to these fairs. They’re so important and 33% percent of your sales and your competitors have a say whether or not you get in to better fares.

Elisabeth Dee: We switched topics, okay. Because that wasn’t a part of your talk, I didn’t want to introduce a new topic. But, as we know fairs impose certain challenges for the gallerist who is looking to enter a system that already exists; whether it’s Frieze at 180 galleries or art Basel at 200 galleries. Many of the galleries have been are there for many, many years, with very strong programs – and it’s very competitive.

Main­tain­ing a posi­tion in those fairs is also com­pet­i­tive, and the decision-making process of these fairs is extremely prob­lem­atic from my point of view. There’s no sys­tem for rat­ing your peers. When you’re invited to be on art fair selec­tion com­mit­tees, of which I have been on many, I have been pon­der­ing this ques­tion: how does one objec­tively ana­lyze a pro­gram wants to be part of a fair. What’s the eval­u­a­tion sys­tem? How do you eval­u­ate cura­to­r­ial pro­grams on a basis of merit against other gal­leries that may be of a dif­fer­ent gen­er­a­tion, but still work­ing with the pri­mary mar­ket? How do you han­dle aspects of their own rep­u­ta­tion in the field? What is their stand­ing with col­lec­tors? What is their stand­ing with artists? Have they sim­ply careers of artists and put them into the pro­gram, or have they actu­ally done strate­gic devel­op­ment for those artists? There are no clear fac­tors to address this.

And when gallerists get together, even really, really accomplished gallerists may be very unaware of certain programs in certain geographical regions or certain generational regions. I feel that the fair can be often at a disadvantage making decisions about its content and its participants based on a group of dealers that may not have the right tools in order to evaluate this properly. You also have factors of politics involved, because dealers do work together. They often share artists. There is often a long history of working together or competing with each other.

There can be a lot of political factors that are unfair in evaluating other galleries based on subjective experiences that people bring to the table when they have to vote. And this can be quite problematic for many galleries who can be part of these fairs and for the reason of one single committee member be eliminated from the fair for many years and have to deal with the issues that ensue once one was part of something and is now no longer able to participate – nominally for the artists they represent. But the financial impact can be often huge and sometimes extremely debilitating to certain galleries. This is something that I think this has not been clearly addressed in the fair system and I think deserves to be

Ed Winkleman: I totally agree. I don’t know what the answer could be. With Moving Image we have selection by a curatorial advising committee, so it’s not other galleries choosing the participants, it’s curators, but even that is far from a perfect system. I don’t know what would be the perfect system honestly.

Elisabeth Dee: And at Independent we’ve gone the totally opposite route, where no, it’s invitational process with one curatorial advisor, and we have no system for application because we don’t feel we have an adequate system at hand to evaluate those applications.

Ed Winkleman: But there’s no question the impact of certain galleries can be huge and politics plays into it. The chatter that goes around after the list comes out for any big fair…

Richard Lehun: But I think both of you are speaking to very key issue. that I’m also trying to give a structural analysis to, but I’ll wait to do that. I want to just underscore that I think often from a legal point of view, we often as lawyers are not necessarily paying enough attention to. I think the very fact of being able to bring the issues out into the open, to be able to frame them, and to bring stakeholders in and have stakeholders address those problems is very key to whatever a solution might be. The greatest difficulty is to have stakeholders feeling like they’re somehow affected by the process, for which there is no voice or language. And that’s one of the things that were trying to do with these outreach events is encourage a community that has been long entrenched in a kind of self-mythology, which is been both self-serving and also protective. But some of these protective strategies about information, about one’s own positioning, might be devastating bad in times of turbulent change – where the exchange of information and the building of mutual understandings about outcomes, desirable outcomes are necessary, and where those things can’t be done ad hoc anymore, independent of what powerful actors can do on their own. But a collective understanding can only be achieved by this type of bringing to language, bringing into the foreground the multiplicity of issues that you guys are speaking of. I’ll turn the word back to both of you.

Judith B. Prowda: Absolutely. Please Continue.

Elisabeth Dee: We talked about the position of protecting the gallerist. We talked about the need for a peer rating system and how the fairs are organized. One thing we touched on was the cost, but we didn’t really go into that in great detail. I think that also deserves a few minutes. Because, when one art fair raises their prices, the other art fairs that are competitive with that fair tend to follow suit.

We’ve seen that before, especially in recent years the cost that has increased, particularly in New York and London. Galleries fight very hard to sell over these costs, to make their enterprises worthwhile there. The question that I keep asking myself and as gallerists, I think we ask together is – what rights the galleries have and what responsibilities do fairs have to the galleries with regards to these costs.

Clearly a light bulb doesn’t cost $2000 an outlet doesn’t cost $1000, even a Swiss one. As a gallerist, you start to feel like you’re not the client. And we are the clients of these fairs. We generate the revenue for the fair, and we also generate the revenue for all the artists, for all the creators of the works in the fair and that is our unique responsibility. But we do not have leverage over how these costs are allocated. We don’t have a clear system for addressing them with the fair organizers, which clearly have to make a profit as a sound business, but to what degree? I don’t know about the statistics, maybe you do, but I have heard that the application to Art Basel … just the fee alone … I can’t remember how much we paid for that.

Ed Winkleman: Four to six hundred dollars …

Elisabeth Dee: … four to six hundred dollar application fee. And given the level of applications they have, because of their stature, they do well over one million dollars on application fees alone. Now is that being given back to the project, and in what form? And how does one responsibly handle that. This is something that I’d like to see addressed in a more systematized way.

Ed Winkleman: I think I can flesh this out a lit­tle bit. From talk­ing to some of the director’s of the fairs for the book, they col­lec­tively report not mak­ing as much money as it looks like they’re mak­ing, and that may not be sur­pris­ing but the details are. There is a build­ing where an art fair takes place in a major city. I won’t give too much away, that I think, 10 years ago, cost $70,000 to rent for the week, or week and a half. It now costs over $400,000 in 10 years. So, it’s not the fair that is just always rais­ing their prices. It’s every­body around them know­ing peo­ple are com­ing for this fair. I’ve got a cap­tive audience.

If you try to get a hotel in Miami during Basel on Miami Beach, you know that everybody’s caught on. The costs are through the roof, across the board. And if you’re working with union workers to assemble or produce your fair, you’ve got a bunch of extra costs and things there. I don’t want to give any names but almost to a person, each Art Fair organizer has a long list, from their point of view, of rising costs which would make it impossible for them to lower their prices that they charge the galleries.

Elisabeth Dee: I still believe that fairs are a place to exhibits innovation in the field and when fairs cost this level of money to participate – how can one afford the risk of introducing new ideas? New ideas and new artists become risk factors for gallerists, and so that’s what you’re not seeing, innovation. One could be seeing it if there was some way to have a forum where some of these conversations could be discussed and responded to with art fair organizers. I think we’d be in a better position, I think we have the better content.

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Online Legal Clinic on Fair Use and Appropriation Art


Uncomfortable about not knowing how copyright infringement can impact on your work, or is uncertainty preventing you from appropriating things you would like to transform?

Stropheus Art Law is hosting an Online Legal Clinic on fair use and appropriation art on
Wed, July 23rd 1-3 PM EST.

Attorneys Richard Lehun and Judith Prowda will be available live via video and audio feed to respond to your questions. You can participate in this discussion from anywhere by telephone, or by using a multimedia capable computer. More information here.

There is no cost for this event, but pre-registration is requested HERE.


For context, Judith Prowda has prepared a two-part presentation on copyright and fair use for artists and gallerists:




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15 Minutes on Infringement and Fair Use


 

I’m . This is the second of my two-part talk on Art and Copyright. In Part I, I provided a background on basic copyright principles in the U.S. In Part II, I will discuss copyright infringement and fair use, with a particular focus on appropriation art.

What is copyright infringement?

Copyright infringement occurs when there is an unauthorized exercise of any of the exclusive rights (“bundle of rights”) protected by copyright. As I discussed in Part I of my talk, the copyright owner (in the case of artworks, this is generally the artist), is entitled to a bundle of exclusive rights listed here.

Copyright infringement occurs when one violates any of these rights:

Right to reproduce;

Right to prepare derivative works;

Right to distribute copies;

Right to perform; and Right to display

What is fair use?

The fair use doctrine, which is codified in Section 107 of the 1976 Copyright Act, is an affirmative defense against an action of copyright infringement. Fair use protects secondary creativity as a legitimate concern of copyright. It allows a sort of breathing space for the use of copyrighted material without the copyright owner’s consent in a reasonable manner for certain purposes. Although the statute does not define fair use, the “preamble” of Section 107 of the 1976 Copyright Act recognizes fair use “for purposes such as criticism, comment, news reporting, teaching, scholarship, or research.” These categories serve as a guide and are not a requirement. The inquiry, however, does not end here. A court must still consider the four fair use factors to make a final determination as to whether the use is fair use in light of the underlying purpose of copyright “[t]o promote the Progress of Science and the useful Arts, as set forth in the United States Constitution, Article 1, Section 8, Clause 8.

I’ve listed the factors here, and will discuss them in more detail in a moment:

1. The purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes;

2. The nature of the copyrighted work;

3. The amount and substantiality of the portion used in relation to the copyrighted work as a whole; and

4. The effect of the use upon the potential market for or value of the copyrighted work.

First Factor

The first fair use factor, purpose and character of the use, considers:

  1. Whether such use is of commercial nature or is for nonprofit educational purposes
  2. Whether the work is transformative (a mere photocopy is not transformative)
  3. Sometimes courts also consider whether the defendant acted in good faith or bad faith.

Influential law review article on Fair Use, by Judge Pierre Leval

In 1990, Judge Pierre Leval published a groundbreaking article in the Harvard Law Review entitled “Toward a Fair Use Standard.” Judge Leval wrote that the first copyright factor looks to whether use “merely repackages or republishes the original,” or whether it “adds value to the original – if the quoted matter is used as raw material, transformed in the creation of new information, new aesthetics, new insights and understandings.” The latter situation “is the very type of activity that the fair use doctrine intends to protect for the enrichment of society.” In Judge Leval’s mind, “Factor One is the soul of fair use.”

Second Factor

The second factor instructs us to consider the nature of the copyrighted work.

  1. One element is whether the work is published or unpublished.

An unpublished work will be subject to a higher degree of protection than a published work, and a defense of fair use is less likely to stand. The Second factor also looks to whether the work is factual or fictional. Factual works are subject to less copyright protection than fictional works (of the imagination).

Third Factor

The third factor – the amount and substantiality of the portion used in relation to the copyrighted work as a whole – looks to the quantitative amount and qualitative value of the original work used in relation to the justification of that use. An allegedly infringing work that copies little of the original is likely to be fair use.

Fourth Factor

The fourth factor – the effect of the use upon the potential market for or value of the copyrighted work – considers:

(a)the extent of market harm caused by the defendant’s actions, and

(b)whether conduct of this sort would have a substantially adverse impact on the potential market for the original. Campbell v. Acuff-Rose Music, Inc., 510 U.S. 569, 590 (1994).

Where the allegedly infringing use does not substitute for the original and serves a “different market function,” this factor will weigh in favor of fair use.

Rogers v. Koons

Let’s look at some leading copyright fair use cases. One of the most well-known cases concerning fine art is the 1992 Second Circuit case, Rogers v. Koons. The case involved Koons’s creation of a sculpture (on the right) based on a black and white photograph by Art Rogers (on the left).

In 1986, in the course of preparing for an exhibition at the Sonnabend Gallery in New York on the theme of “Banality,” Koons came across a Museum Graphics reproduction of Rogers’s photograph, “Puppies,” and decided to use that image as a possible reference for a sculpture. The photograph depicted a scene of a couple holding a new litter of eight German Shepard puppies, which Koons found to be “typical, commonplace and familiar” – in other words, banal. Koons tore the copyright notice off the card and sent it to Italy to be copied. He visited the studio and directed the artisans to use the same angles, poses, and expression as in the photograph. He altered the work by making the couple appear vacant, with daisies adorning their hair, and painted the puppies a garish blue color. The polychromed larger than life-size sculpture was fabricated in a limited edition of four, and sold three copies for a total of $367,000.

Rogers brought a copyright infringement action in a New York federal district court against Koons and the Sonnabend Gallery, and won in 1991. On appeal, the Second Circuit upheld the copyright infringement decision and addressed each of the four fair use factors. With respect to the first fair use factor, purpose and character of the use, in addition to arguing that the sculpture was a parody, Koons emphasized that his artistic practice drew upon the movements of Cubism and Dadaism, and was especially influenced by Marcel Duchamp and his incorporation of manufactured objects (ready-mades) into works of art.

While the court acknowledged this artistic tradition, it nevertheless rejected Koons’s parody argument, observing that a parody “must be, at least in part, an object of the parody.” Instead, the court asked “whether the original was copied in good faith to benefit the public or primarily for the commercial interests of the infringer.” In particular, the court noted that Koons’s action in tearing the copyright notice off Rogers’s card suggested “bad faith” and militated against a finding of fair use.

As to the second factor, the nature of the copyrighted work, the court noted that fictional works receive greater protection than factual works. In the court’s view, Rogers’s photograph had more in common with fiction than with a work based on fact, such as a biography or telephone book. It signified an investment of time and effort in anticipation of financial return, a factor that also precluded a finding of fair use.

The third factor, the amount and substantiality of work used, also tilted in favor of Rogers. The court found that “the essence of Rogers’s photograph was copied nearly in toto, much more than would have been necessary even if the sculpture had been a parody of the plaintiff’s work. “In short, it is not really the parody flag that [the defendants] are sailing under, but rather the flag of piracy.”

Finally, on the fourth factor, the effect of the use on the market value of the original, the court stated that this was “the most important, and indeed, central fair use factor.” The Second Circuit found that because Koons’s String of Puppies was “primarily commercial in nature” and sold as “high-priced art,” the likelihood of future harm was presumed as a matter of law. Therefore, weighing the four factors and applying the prevailing fair use analysis at the time, the Second Circuit upheld the copyright infringement decision.

Campbell v. Acuff-Rose Music, Inc.

Two years later, in 1994, the U.S. Supreme Court decided Campbell v. Acuff-Rose Music, Inc., clarifying important guidelines that have since formed a basis of analysis for lower courts deciding fair use cases, including those involving visual art. This landmark case is the Supreme Court’s latest pronouncement on fair use. In Campbell, a rap group, 2 Live Crew, recorded a rap version of Roy Orbison’s 1964 rock ballade, Oh Pretty Woman, after having been denied permission by the copyright holder, Acuff-Rose Music, Inc., to license the work. The resulting rap song, titled Pretty Woman, borrowed from Orbison’s distinctive opening guitar phrase and bass riff, mimicking each line of Orbison’s song, and replacing the original words with raunchy lyrics. In a unanimous decision by Justice Souter, the Supreme Court reversed the Sixth Circuit’s ruling against 2 Live Crew’s commercial parody, holding that parody is a form of “criticism or comment” enumerated in the preamble of Section 107. The Court emphasized that the four fair use factors are to be weighed together, in an equitable rule of reason analysis, “not in isolation from one another, in light of the purposes of copyright.”

In a sharp departure from precedent, the Supreme Court held in Campbell that commercial use is not dispositive of fair use. Campbell was also important in its clarification of the first factor of the fair use analysis (the purpose and character of the use, including whether such use is of a commercial nature or is for non-profit educational purposes), and recognized that transformative works are the “fair use doctrine’s guarantee of breathing space within the confines of copyright,” drawing from Judge Leval’s 1990 law review article. Addressing the unique issues present in copyright parody for the first time, the Court held that “parody, like other comment and criticism, may claim fair use,” as the central investigation is to see “whether the new work merely supercede[s] the objects of the original creation, or instead adds something new, with a further purpose or different character, altering the first with new expression, meaning, or message.” In other words, is the second work transformative?

Blanch v. Koons

Cases decided after Campbell v. Acuff-Rose reflect the Supreme Court’s emphasis on a case-by-case analysis of fair use claims and the interactive nature of fair use factors. In particular, tranformativeness has gained significance in copyright fair use cases, whereas pre-Campbell, the fourth factor, “the effect of the use upon the potential market for or value of the copyrighted work” was given the most weight.

Blanch v. Koons involved the use by Koons of a copyrighted photograph, Silk Sandals, which was taken by professional fashion photographer Andrea Blanch for a spread in the August 2000 issue of Allure magazine. The photograph, which was taken at close range, featured a woman’s lower legs and feet adorned with bronze nail polish and glittery Gucci sandals, resting on a man’s lap in a first-class airplane cabin.

The Second Circuit determined that the goals of the two works were divergent – Blanch’s work was a “shoot” organized by Conde Nast Publications, while Koons’s collage was a work of fine art.

1. The court found that Koons’s work was clearly transformative and relied on Koons’s explanation of the meaning behind his art. Since the work was transformative, the commercial exploitation was deemed less significant.

2. Also, the transformative nature of the work made the second factor, the nature of the work, of “limited usefulness.”

3. Additionally, it reasoned that the amount and substantiality of Koons’s copying – the third factor – was reasonable considering Koons’s use for commentary.

4. Finally, as to the fourth factor, the court found that Koons’s painting had no deleterious effect on the potential market for or value of Blanch’s photo.

While the court in Blanch v. Koons ultimately held that there was a proper fair use defense for the use of the appropriated images, fair use analysis remains ambiguous and uncertain, as demonstrated in Cariou v. Prince, which I will discuss next.

Patrick Cariou v. Richard Prince, Gagosian Gallery, Inc., Lawrence Gagosian

Turning now to Cariou v. Prince. This highly significant case, which settled in March 2014, will no doubt have an impact on artists as well as dealers and exhibitors of art. First, some background. The plaintiff, Patrick Cariou, is a professional photographer who spent over six years photographing Rastafarians in Jamaica. In 2000, he published a book, entitled Yes Rasta that included portraits of Rastafarian individuals and the Jamaican landscape. Richard Prince is a highly successful artist, whose works have been exhibited at a number of museums. He is known for his re-photography of advertising and appropriating images from other artists’ works. From 2005 to 2008, Prince created a series of paintings, 29 of which incorporated partial or whole images from Yes Rasta. To create the series, Prince cut out pages from Cariou’s book, and scanned, enlarged, cropped, and covered them with heavy brush strokes and various other painterly elements.

Prince never sought or received permission from Cariou to use Cariou’s photographs. In some works, Prince used portions of torn pages onto which he had drawn masks “in the style of Picasso” and digitally scanned them directly onto canvas, and affixed collage elements to other images for scanning. The portions of Yes Rasta photographs used and the amount of each Prince artwork they constituted, varied significantly. Here are some examples. Certain of Prince’s works, such as Graduation, were altered but not to the same degree as others. In Djuana Barnes, Natalie Barney, Renee Vivien and Romaine Brooks take over at the Guanahani, for example, the entire photo is used but also “heavily obscured and altered.” From November 8 through December 20, 2008, the Gagosian Gallery in New York put on a show featuring 22 of Prince’s Canal Zone artworks, and published an exhibition catalog, which included reproductions of many of the Canal Zone artworks exhibited and others that were not shown at the Gallery.

Appellate Court Decision

Cariou filed a lawsuit in a New York federal district court, alleging copyright infringement, and Prince and Gagosian moved for summary judgment, asserting a fair use defense. In 2011, the court held in favor of Cariou. On appeal, in April 2013, the Second Circuit reversed in part, vacated in part and remanded, concluding that 25 of Prince’s artworks made fair use of Cariou’s copyrighted photos. The court began its analysis by considering at the purpose of copyright to stimulate the progress in the arts and found that copyright’s goal “would be better served by allowing the use than preventing it.”

First Factor

With regard to the first fair use factor, the Second Circuit chose not to focus on Prince’s explanation of his artwork or whether he was commenting or intending to comment on an original work or on culture. Instead, the court focused on Prince’s artworks themselves and how they might “reasonably be perceived.” Whereas Cariou presented “serene and deliberately composed portraits and landscape photographs depict[ing] the natural beauty of Rastafarians and their surrounding environs,” Prince’s offered “crude and jarring works” that were “hectic and provocative.”

Fourth Factor

Turning next to the fourth factor, the appellate court was concerned “not with whether the use suppresses or even destroys the market for the original work or its potential derivatives, but whether the secondary use usurps the market of the original work.” The court reasoned that the audiences for the two artists were very different. Moreover, there was no evidence that Prince’s work had any impact on Cariou’s work or that Cariou would ever develop or license secondary uses of his work in the vein of Prince’s work.

Second Factor

Concerning the second fair use factor, the court reasoned that while Cariou’s work is creative and published, weighing against fair use, that factor was of limited use where, as here, the secondary use was for a transformative purpose.

Third Factor

Finally, evaluating the third factor, the court found that Prince’s use of Cariou’s work varied from work to work. Here are a few examples of Canal Zone works that the Second Circuit deemed “transformative as a matter of law.”

Five Remanded Works

Five of Prince’s works, however – Graduation, Meditation, Canal Zone (2007), Canal Zone (2008) andCharlie Company – did not differ sufficiently for the Second Circuit to make a determination about their transformative use as a matter of law, and were remanded back to the district court for determination under the proper standard. Judge Wallace (9th Circuit by designation) concurred in part and dissented in part, agreeing with the majority on the law, but finding that the majority should have left the determination for all 30 works to the district court on remand. Moreover, citing precedent, Judge Wallace would have allowed the court to consider Prince’s statements, consisting of “his view of the purpose and effect of each of the individual [p]aintings” – as relevant to the transformativeness.

Further Proceedings

In May 2013, Cariou filed a petition for rehearing, which the Second Circuit denied. Cariou then petitioned the U.S. Supreme Court for certiorari, or discretionary review, hoping that the high court would hear the case. The Supreme Court denied cert. in November 2013. Ultimately, the parties reached a confidential settlement in March 2014 as to the five remanded works.

Conclusion

As the fair use doctrine indicates, and as the Supreme Court and lower courts have recognized, the fair use determination is an open-ended and context-sensitive inquiry. Therefore, it is impossible to predict with any degree of confidence the outcome of an individual case. No doubt one of the greatest challenges in art law in the coming years will be adapting copyright law to protect and encourage creativity in a culture of ever increasing referencing and appropriation.

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Art Fairs: Panel Discussion on May 27th at Sotheby’s Institute of Art


Art Fairs: An Irresistible Force in the Art World?

Tuesday May, 27th 2014

Panel Discussion and Q & A: 6.30-8PM

Wine and Cheese Reception: 8-9 PM

Sotheby’s Institute of Art, 570 Lexington Ave, New York, NY

Register here.

Are brick and mortar art galleries the loss leaders in an art world potentially spiraling beyond viable limits? More than ninety art fairs now define the rhythm of globalized art business. This development has profoundly altered the relationships of artists, gallerists, and collectors.

The Entertainment, Arts and Sports Law Section of the New York State Bar Association is holding a panel on the impacts and challenges – legal, ethical and business – of the rise of art fairs. This program is part of an initiative to create dialogue amongst lawyers and emerging and established art professionals working in the primary or secondary markets.

Gallerist Elizabeth Dee will report on the chances and risks that the art fairs impose, in light of the ambitious expansion that her gallery has recently embraced and her perspective as Co-Founder of the art fair, Independent, New York.

Attorney Richard M. Lehun of Stropheus Art Law will examine the plethora of ethical and business issues that art fair participants confront.

Attorney Nicholas M. O’Donnell, a litigation partner at Sullivan & Worcester LLP, will present on the legal issues that art fairs carry with them.

Gallerist Edward Winkleman will offer an overview of the research he is conducting on art fairs in preparation for his upcoming book “Selling Contemporary Art: How to Navigate the Evolving Market” (Allworth Press).

The panel will be moderated by attorney, educator, mediator, and arbitrator Judith B. Prowda, Faculty at Sotheby’s Institute of Art and author of Visual Arts and the Law: A Handbook for Professionals (Lund Humphries 2013).

 

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15 Minutes on Copyright for Visual Artists & Gallerists


 

I’m I will be giving a 2-part talk on Art and Copyright.

One of the most difficult challenges for courts today is drawing the line between legal appropriation and copyright infringement. This is especially important in today’s digital environment, where the possibilities for artists to appropriate have increased dramatically in recent years.

Part I of my talk will focus on Copyright Basics.

Part II on Copyright Infringement and examples of leading court cases.

The purpose of these presentations is to give you some background on basic copyright principles in the U.S.

First, what is copyright?

Copyright is a form of intellectual property, that is, a creation of the mind, that protects materialized forms of artistic expression for a specified period of time. Copyright applies to works in tangible objects and works in digital form.

How long does copyright last?

The copyright term for works created on or after January 1, 1978 is subject to the 1976 Copyright Act.

For works by a known individual author, the copyright runs form the date of creation, and lasts the life of the author plus 70 years.  17 U.S.C. § 302(a).  The copyright for joint works – that is, works created by two or more authors – lasts the life of the longest living co-author.

If the work is a “work for hire,” copyright lasts the shorter of 95 years from publication or 120 years from creation.  I will not be discussing works for hire in this presentation.

For works created before January 1, 1978, I suggest you consult a chart at www.copyright.cornell.edu.

At

the end of the copyright term, the work is ejected into the public domain and is available for anyone to use without the author’s permission.

What is the public domain?

When a work is no longer protected by copyright.  The copyright has expired.And anyone can use it without any legal repercussion.

Whereas copyright in the U.S. is based on economic incentive, by contrast, copyright law in civil law countries, including Continental Europe, emphasizes authors’ rights and generally affords greater protection to authors, with a strong emphasis on moral rights. Moral rights protect the non-economic and personal aspects of an author’s creation. The artwork embodies the artist’s personality, since the artist, in the process of creation, injects some of his spirit into the art.

Copyright a Constitutional Right

The basis of copyright law in the U.S. is embedded in Article I, section 8, clause 8 of the U.S. Constitution:

The Congress shall have Power … To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.

Copyright has an Economic Purpose

The purpose behind copyright in the U.S. is economic. The goal is to motivate people to create works that will enrich the public domain. Copyright does this by giving the creator a sort of monopoly over their works of genius for a limited period of time. This economic quid pro quo gives an author an incentive to create and is at the very core of Anglo-American copyright philosophy. Copyright is perhaps an artist’s most valuable economic right and it persists in a work even after the work is sold. What the artist retains is a bundle of exclusive rights, which I will be discussing in a moment.

Formalities

Until fairly recently, there were a number of formalities that had to be satisfied in order to obtain copyright protection. For example, placement of the word “copyright” or symbol © on a published work; registration with the Copyright Office; and deposit of copies with the Library of Congress. Unpublished works were protected under state law, but not federal law.

Under the 1976 Act, which went into effect January 1, 1978, a work was automatically protected as long as it met the substantive requirements (copyrightable subject matter, originality and fixation). Also, the 1976 Act replaced the dual state/federal system, and now unpublished works were protected as well.

With U.S. accession to the Berne Convention in 1988, notice of copyright became permissive (rather than required) for works created on or after March 1, 1989. However, registration with the Copyright Office is a prerequisite for filing a lawsuit.

Requirements

As I mentioned, under the U.S. Copyright Act of 1976, a work that satisfies the substantive requirements of copyright (copyrightable subject matter, originality, and fixation) automatically receives copyright protection.

Works Protected

In the U.S., copyright protects the following categories of works, as enumerated in Section 102 of the 1976 Act, and further defined in Section 101.  These are:

  • Literary work
  • Musical works, including lyrics
  • Dramatic works, including any accompanying music
  • Pantomimes and choreographic works
  • PICTORIAL, GRAPHIC, AND SCULPTURAL WORKS (the topic of our discussion)
  • Motion pictures and other audiovisual works
  • Sound recordings
  • Architectural works
  • Software

If the work does not fall within any of these categories, it will not be afforded copyright protection.

Pictorial graphic and sculptural works are defined as: two-dimensional and three-dimensional works of fine, graphic, and applied art, photographs, prints and art reproductions, maps, globes, charts, diagrams, models and technical drawings, including architectural plans.

Useful Articles not Protected

They do not include designs of “useful articles” unless the designs are physically or conceptually separable from the utilitarian aspects of the object.

An example of a useful article that was deemed copyrightable is a lamp base. In 1954, the U.S. Supreme Court held in Mazer v. Stein that a decorative mass-produced lamp base could stand alone as a copyrightable work of art and was therefore eligible for copyright protection, notwithstanding that it served a utilitarian purpose as a lamp base.

Artistic elements that are conceptually separable from the utilitarian aspects of the work may also be copyrightable in some cases. Kieselstein-Cord v. Accessories by Pearl, Inc. involved a high-end jeweler’s design of two belt buckles that featured ornate sculptured designs cast in precious metals. The Second Circuit found that the conceptually separable elements were protected under copyright.

Ideas are not Protected

Copyright law protects the expression of an idea, but not the idea itself, no matter how original. No one can copyright the idea of a haystack or even a series of paintings of haystacks at different times of day. What is protected is the artist’s particular rendering of the scene – in other words, the expression. If someone copied the particular details of color, brush strokes, light, shadow, overall perspective, they may have crossed the infringement line.

How close is too close? The challenge of distinguishing between idea and expression is perhaps no more evident than in the case of visual arts. Frequently, the line between idea and expression is subtle and open to interpretation. For example, in Steinberg v. Columbia Pictures, a NY District Court considered Steinberg’s 1975 iconic map of the world representing an “egocentrically myopic perspective” of New Yorkers an idea.

However, certain details of the defendant’s movie poster, including generally “New Yorkish structures” were substantially similar to those in Steinberg’s drawings. Pushing the boundaries even further, the court found that even “style is one ingredient of ‘expression,’” and that the “sketchy, whimsical style” of Steinberg’s map with New York at the center was protectable.There are situations, however, where idea and expression are so intertwined that there is only one, or very few, ways of expressing an idea.  In such cases, the idea and expression are said to merge. To allow copyright protection would essentially grant a monopoly on the idea.

Merger Doctrine

Courts have therefore developed the merger doctrine, which provides that when the idea and expression merge, the expression is not protected by copyright. Courts often apply the merger doctrine when a work is representational of an animal or natural phenomenon.  If a work is lifelike, a copyright protection may prevent others from representing a creation of nature. In Dyer v. Napier, a mother mountain lion carrying a cub in her mouth is an idea first expressed in nature.  Therefore, a photographer’s work to achieve this “ideal pose” was not copyrightable since the pose was one that naturally occurred and was instinctive in nature.

Originality

The second requirement of copyright, after appropriate subject matter,  is originality. In the U.S., originality does not mean novelty.  It simply means that a work was created independently by the author, not copied from someone else. Therefore, if two artists independently produced identical or substantially similar images, both would satisfy the originality requirement.

In one early twentieth century case, the U.S. Supreme Court upheld the copyright in the reproduction of posters of a traveling circus. The Court held that the plaintiffs’ posters were copyrightable, stating, “Others are free to copy the original [subject matter depicted].  They are not free to copy the copy . . . The copy is the personal reaction of an individual upon nature.”

Fixation

In the U.S., there is a third requirement for copyright protection – fixation.  A work must be fixed in a tangible means of expression for a period of more than a transitory duration. How long is that? The copyright statute does not say. Certain artworks, especially conceptual works, may fall outside the purview of copyright protection. What is protected is the physical or digital manifestation of the work.

Bundle of Exclusive Rights

The copyright owner (in the case of artworks, this is generally the artist), is entitled to a bundle of exclusive rights listed here.

  • Right to reproduce
  • Right to prepare derivative works
  • Right to distribute copies (subject to the First Sale Doctrine)
  • Right to perform
  • Right to display (subject to the First Sale Doctrine)

Copyright infringement occurs when one violates any of these rights.

Right to Reproduce

The right to reproduce is perhaps the most basic of the exclusive rights. It is the exclusive right to reproduce the copyrighted work by any means, even within the temporary memory of a computer. This right protects against copying in any medium, including uploading of files to the Internet, and downloading attachments and files and graphics from websites. The reproduction right may apply when works of art are broadcast, even for a few seconds, subject only to a fair use defense.

Right to make Derivative Works

The exclusive right to make derivative works, that is, adaptations, of the copyrighted work is the second of the exclusive rights This right overlaps with the right to reproduce, but is broader because reproduction requires fixation in copies, whereas the preparation of a derivative work, such as a dance or performance, may be an infringement even though nothing is ever fixed in a tangible form. Examples include a photograph of a painting protected by copyright, a translation, or screenplay based on a novel.

Right to Distribute

The right to distribute is the exclusive right to distribute copies of the copyrighted work to the public by sale or other transfer of ownership, or by rental, lease or lending. Under this provision, the copyright owner has the right to control the first public release and distribution of an authorized copy – either in physical or digital format.

First Sale Doctrine

However, an important limitation exists under the First Sale Doctrine. The First Sale Doctrine provides that the owner of a particular lawfully made copy or any person authorized by the owner, may, without the authority of the copyright owner, sell, display, or otherwise dispose of the possession of that copy. Once the copyright owner of a particular item has parted with ownership of it, the copyright owner’s right to distribute ceases. Therefore, the purchaser of a painting has the right to resell, donate or otherwise distribute the painting (subject to any contract terms, of course) without the copyright owner’s authorization.

Right to Perform

The right to perform typically applies to musical, dramatic, choreographic, motion pictures, and audiovisual works. It does not usually apply to pictorial, graphic, or sculptural works, although, in theory, it may apply to performance art. The right to display provision is the first explicit statutory recognition in U.S. copyright law of an exclusive right to show a copyrighted work, or an image of it, to the public. “To display” is “to show a copy . . . either directly or by means of a film, slide, television image, or any other device or process.” The right to display is also subject to the First Sale Doctrine limitation. Therefore, a lawful owner of a copy of a work may display it to viewers present in the place where the work is located (for example, a museum or gallery), but not online, without the consent of the copyright owner.

This concludes Art and Copyright, Part I.

Next I will discuss Copyright Infringement and Fair Use, focusing on appropriation art cases.

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College Art Association Report on Copyright and Fair Use


The College Art Association (with a membership of 13 000 practitioners) is the principal professional association in the United States for practitioners and scholars of art, art history, and art criticism. Members consists of  academics, professors, and graduate students who study and/or teach art practice, history, or theory, including visual arts, visual culture, and aesthetics. The CAA represented through

• Patricia Aufderheide, professor, School of Communication, and director, Center for Media & Social Impact, American University
• Peter Jaszi, professor, Washington College of Law, American University
• Bryan Bello, graduate fellow, Center for Media & Social Impact, School of Communication, American University
• Tijana Milosevic, graduate fellow, Center for Media & Social Impact, School of Communication, American University

released the following report as part one of a  four-phase plan to develop a Code of Best Practices for Fair Use in the Creation and Curation of Artworks and Scholarly Publishing in the Visual Arts:

(Excerpt)

The visual arts communities of practice share a common problem in their confusion about and misunderstanding of the nature of copyright law and the availability of fair use. Their work is constrained and censored, most powerfully by themselves, because of that confusion and the resulting fear and anxiety.

The visual arts field is pervaded with a “permissions culture,” the widespread acceptance that all new uses of copyrighted material must be expressly authorized. This assumption has taken its toll on practice in every area of the visual arts field, adversely affecting the work of art historians, museums, publishers, and artists. As digital opportunities emerge, old frustrations with this permissions culture have taken on a new urgency.

The permissions culture is expensive in terms of both money and time, but artists and other professionals in this field rarely embrace the copyright doctrine of fair use: the right, under certain circumstances, to use copyrighted material without permission.

The reasons why visual arts professionals ignore fair use include:
• an exaggerated assessment of risk, because of a lack of clarity around interpretation of fair use, lack of copyright knowledge generally, and excessive fear of litigation
• the importance attached to maintaining good relationships with individuals and entities who hold, or claim, rights
• a determination to honor artistic creativity, the generative force for the entire field

But many in the field need to access copyrighted work without permission in order to accomplish their professional missions.

In the absence of confidence regarding how to take advantage of the right of fair use, professionals cope by overspending on permissions; delaying projects for months, years, or even decades to negotiate permissions; compromising projects by doing without important material; and even abandoning some projects altogether.

In fact, while permissions may be required for some kinds of artistic and scholarly projects, in many cases they are not. The pervasive permissions culture, exercised as if fair use were not available to the visual arts communities, changes and even deforms the work produced. These losses affect future generations and the future of the field itself.

Uncertainty about copyright and fair use within the visual arts communities is a problem that the communities themselves can address. The biggest single issue for professionals is understanding their rights as new users of existing copyrighted material. This can be remedied not only by educational projects but by the formation of a consensus within the communities of practice about the shape of a code of best practices in fair use for the visual arts. Such codes have vastly improved access to fair use for other communities of practice.

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NYSBA Art Gallery Ethics Panel


Everything You Wanted to Know About Art Gallery Ethics (But Were Afraid to Ask)

Monday, October 21, 2013 from 5:30 PM – 7:30 PM

A slew of cases involving some of the art world’s most prolific figures have raised the ever-growing specter of fiduciary obligations of gallerists and dealers. Gallerists are by definition fiduciaries on a number of levels, often without being aware of this. What most art context actors don’t know is that fiduciary duties trump contracts or oral agreements, and are imposed by courts. In fact, the core of gallery ethics cannot be understood without knowing what fiduciary obligations are.

This interactive panel discussion will present cutting edge insights into best practices for gallerists and dealers and how they can limit their professional exposure. It will also explore many other ethical issues that gallerists, dealers, and artists need to understand now more than ever.

Panelists:

, Andrea Crane Fine Art

, Stropheus Art Law

, Marianne Boesky Gallery

, Sotheby’s Institute of Art

Judith:       We’ve organized questions into three categories.

The first category is Artist Representation.

The second category is Client (Collector) – Gallery Relations.

The third category is Due diligence (provenance and authenticity).

Let’s assume you are the principal of a gallery in New York. You work predominantly in the primary market and you represent several artists in the early part of their careers. An artist whose career is on the rise, approaches you and says she is contemplating leaving her current gallery and would like to be represented by you. Describe your discussions and negotiations with her and the types of arrangements you would consider between you and the artist.

Serra:        I think the initial question that this brings up is when an artist is represented by another gallery. The correct response is that you ask the artist whether they would like to terminate the relationship with the first gallery. Then you can engage in a discussion afterwards. To do otherwise is basically poaching and bad business practice, and elicits a lot of negative feelings with your colleagues as well. That’s just a basic practice.

I think you’ll find most galleries don’t actually have written contracts with their artists, even though I think the legal community would like to encourage that to change. In general, it may be about as informal as a follow up letter agreement encompassing the things you’ve discussed. It might just be completely done orally.

For most primary market artists the commission is 50%, and as an artist gets further along in their career it might be 60/40 and can even be something as little as 10-15% depending on [the artist’s leverage].  An artist whose primary prices are well over a million dollars can make those sorts of determinations in their agreements. But the norm is 50%.

You might also discuss the percentage an artist will share for discounts. There are also the gallery’s responsibilities, which generally include transport, framing, crating and certain basics such as photography, and insurance.

If you are the primary gallery you’re likely going to be the one who is also responsible for maintaining the artist’s archive – and there’s a lot of responsibility with that. You want to keep a good record of who is buying the artwork because later on, assuming the artist’s career grows to museum shows, you want to be able to borrow pieces from collectors.

If you are the primary gallery – and if the artist also has a gallery, let’s say in London – you might be the one for the first few years who consigns the work to the other gallery, which very often entails a 60/40 to the other gallery. So that would still be 50% to the artist, 10% to you just for managing these little extra things.

Judith:       This discussion also includes duration and early termination.

Serra:        In general, I think this is one of those conversations that probably doesn’t get covered too much with the artist. It is just assumed the agreement goes on until one person decides that it doesn’t work.

I think fundamentally from the gallery point of view, we like really to think about it as a partnership. And the partnership is only going to work as long as you both want to be doing it together. I think that’s one of the arguments against locking people into all of these binding terms. That being said, I know some galleries liken it being an indentured servant if you have these locked-in terms. I don’t think the norm for a gallery is to dictate how many paintings it is expecting every month, but I think it would be helpful to have some of these other terms outlined more fully.

Region tends to be another conversation. So if you are at the New York gallery, and the artist has a Los Angeles gallery and a German gallery – you might have discussions about not selling to the other markets.

Andrea:     Actually it’s more of a question to the panel in terms of what are the artist’s obligations to the gallery. For instance, you have an artist who is working in a particular style and has created a certain number of pictures in this style and they are well known for that style and say “I’m not going to do any more of these, that’s it.”

And you go to your collector and you say this is it, there’s no more of this particular kind of painting coming out and then you find out six months later that the artist has changed their mind. Indeed, they are creating more of this particular kind of artwork. So what is the obligation – maybe this is a question for you Richard, what is the obligation of the artist in that case?

Richard:   This is a thing traditionally – as has been succinctly described here – the artist gallery-relation is one perceived as being flowing like the gallery chooses in a very complex dance and there is a mythical space in which the gallery takes on a kind of paternalistic role, the artist gives themself over to this role in the hopes of being freed of a lot of suffering and uncertainty.

The difficulty is that from a legal standpoint, the gallery is an agent, which means that the artist technically speaking – and I’m not saying ethically, morally, or otherwise – the artist can simply say, “I want other agency.” There is no real legal basis for the relationship as it organically has evolved over time.  Now why is that a problem?  Because if that legal regime starts to surface like Atlantis rising out of the sea – then lot of artists confronting situations or difficulties with their galleries are going to say, “well, wait a second, according to the law you are an agent and I have the absolute, unlimited and unfettered right to chose different representation.” So that’s actually just a build-up what I’m about to say, It has traditionally been very useful for galleries to move in a mythical space of undefined relationships.

My message moving forward is that we may be in a historical period of time where it may be a very significant thing to sit down and say, “what are the artists’ obligations?” and to create a minimal or threshold of transparency and professionalism, so that you do have to give up certain mythical real estate. I’m arguing that gallerists may stand to lose a significant amount if they don’t embrace that, until there is recognition of that level of exposure.

Judith:       But specifically to Andrea’s question, you know the promise made by an artist not to create any of such-and-such a style, and turning around and doing that, I mean how would you explain that to your collector, to your buyer that had previously bought something assuming that it was rare?

Richard:   The complexity of the relationships we are talking about is a difficult question to answer. People are motivated by a variety of indicators in their lives. Do they have an emotional tie, and do they have a material tie, do they have a character that has evolved in a certain way? What I am saying is centrifugal forces are increasing such that we need to be cognizant of the fact that we are not talking about 1990 or 1980. We are talking about 2013 we are talking about a rapidly changing, almost unrecognizable market.

Let me just throw another thing to think about – if it has been the mythical space that the gallerist is the one who is producing the structuring, we can’t anticipate artists going out and seeking counsel and trying to legally structure the relationship in a sophisticated way with the gallerist.

So there is a noblesse oblige question for the gallerists, even if they are not interested in saving their own skin. The  initiative has to come from the gallerists in order to produce the kinds of obligations because your question is this – “How do I get a good commitment from individuals that involves both legal and ethical dimensions to work?”

And in the past there are all kinds of informal discipline and methods that are exercised. Ostracism is the most popular one in the art world [laughter], to control anti-social or asocial elements. It’s a big world now, and I don’t know that ostracism is that efficient any more in lot of cases.

So, what I’m saying is that if you actually want a trusting relationship, you may actually have to give up some mythical real estate. You don’t have to give it all up, right?  But you may have to give up some of it. Otherwise you may not have leverage of the kind necessary to maintain that mythical space. If mythical spaces produce enchantment and magical relationships – and I’m not making fun of that – I think there is an enormous amount of emotional energy required for these life paths.

Serra:        Just one other thing is that part of the same conversation and is one of the big problems for a gallery – to find out one of your artist is selling directly from the studio. And that’s a real violation to what your relationship is and supposed to be, but as Richard is saying, I mean, I don’t think ultimately there’s too much a gallery can do other than say I won’t…

Richard:   Unless you have something on paper and the artist understands, that’s actually a really significant part of the relationship.

Judith:       Well it’s possible to construct the agreement so that it’s the exclusive power to sell. It’s similar to a real estate brokerage contract, so if the artist does sell from his or her studio in violation of that agreement, then that artist would owe the commission to the dealer even though the dealer had nothing to do with that particular sale.

However, in your experience I don’t know either of you has ever constructed a contract where you are the exclusive seller of an artist or whether it’s an exclusive agency where you might have a regional exclusivity or a exclusivity in terms of medium – for example, you sell the artist’s works on paper and someone else will sell paintings or sculptures.

Andrea:     Well what I found in terms of representing artists, or certainly in my case, estates of artists, is with the increasingly global nature of the business, fewer and fewer artists and estates want to enter into that exclusive arrangement, because if they meet a collector from Rio for instance and they strike up a relationship with them, they may wish to just transact themselves. I’m finding more and more, that people just don’t want exclusivity; they just don’t want to lock them selves into a relationship. Again, whether it’s an artist or whether it’s an artist’s estate.

Judith:       Maybe we can move to the next question, which is whether you as a dealer purchase works of art from the artist you represent.  What kinds of legal and ethical considerations are at play?

Suppose you buy works of art from an artist – and this happens quite frequently – in the early part of that artist’s career when the works are not very expensive and then later on, due to your work as a gallery, the artist’s works become very valuable and at some point you may decide to sell. What would you do? Do you owe any obligation to the artist?

Serra:        If you look at the gallery relationship coming out of historical patronage, I think it’s a very normal part of the process. It’s an artist you represent, so you do invest your own funds, and I think it’s a very normal expectation – it benefits the gallery as well as the artist.

And, again, you would let the artist know that you are the owner of the work – it’s that sort of maintaining the archive and keeping that information available – and this is where we go back to Richard in terms of fiduciary duties. If you are purchasing an artist’s work that you have a fiduciary relationship with. I think I think that’s the main obligation

Richard:   Going back to what we’ve been discussing, the thing is we have a big confrontation between the informal and formal. An agent is somebody who has to account for every profit. That means, if your agent gets a dime for every apple that person sells, if that person keeps an apple and sells that apple for fifty cents then I say the forty cents are actually due to the beneficiary, the entrustor – that’s the law. So again, these are gray zones. That’s the legal side of that,

The other side of that is the question of self-interest.  If you are holding onto a work because you believe that work is exceptional and there is probably no other reason to hold on to the work, you are already in sense depriving a good faith buyer, or a third party, from transacting with your beneficiary as an agent. That’s a first order conflict of interest.

So what is the problem with the conflict of interest if you are a statutory fiduciary actor?  That means that a court can come in at any time and find a self-interested breach, which means whatever benefit that accrued – let’s say you legitimately as a gallerist have factored that into your proper dealings with the artist so that the legitimate profit that you want to achieve from representing the artist is achieved through that type of transaction. If the court later finds that it’s a self-interested transaction, you may be deprived of your legitimate gains.

The problem with fiduciary obligations is that they are court determined. But a great measure of security would be created, if at that specific transaction, the artists recognized that this was part of your agreement set forth in a document signed by the artist – two paragraphs saying yes, whatever the value that accrues to this particular work I consider part of the equitable compensation on the part of the gallerist. That won’t necessarily save you entirely, but it will be a huge barrier to uncomfortable surprises in the future.

Serra:        I think in most situations, I don’t know that most galleries or people go back and give the artist a percentage when you’re later selling the work if you bought a work in 2003 for forty thousand it’s now worth two million and you sell it, I can’t think in most situations where somebody goes back to the artist and gives the percentage. It sounds like…

[interjection]:  Well in California, you have to – it’s [or at least, was] the law.

Andrea:     Yes, in California you do, but I mean it sounds like the resale laws.

Judith:       But that’s a different percentage according to the resale royalty, this is not the commission. And actually there’s a case that is presently on appeal in which a federal district court of California [Estate of Robert Graham et al. v. Sotheby’s, Inc., Sam Francis Foundation et al. v. Christie’s, Inc., 2012 U.S. Dist. LEXIS 77262 (D.C. CA., May 17, 2012)} found that the California resale royalty right law is unconstitutional because it violates the Commerce Clause of the United States. But that remains to be seen, that’s a very good comment.

Richard:   Well, Judith is right to make this distinction – one is the statutory resale right provision- there’s nothing to do with the fiduciary obligations, this is why I am saying I am using the “F” word as many time as possible today so that it gets rooted firmly in your minds: the fiduciary obligations are not to be confused with anything to do with contract at all. Or statutory rules.

Female voice:    Why did this come up in the first place? Because lots of things were being sold at profit and the fiduciary responsibility wasn’t being taken care of, if you will.

Serra:        I think though in that situation as well with the resale rights and what happens in Europe as well, is you’re also not just looking at your primary dealer making a profit, it’s any of the concurrent secondary market trading of the work.

Female voice:    If you buy something and you hold on to it as an entity, then it’s no difference than if you are an individual.

Richard:   I will beg to differ only because if a good faith third party buyer buys it he doesn’t have any fiduciary duties. Therefore a questionable resale from a good faith buyer cannot be mapped onto a fiduciary breach – and I really caution trying to keep these concepts clear in your minds because otherwise you’ll be disabled from understanding the risk and exposure.

Judith:      I think what [Serra] is observing is that this is where the first buyer (the gallery) is also selling it.

Richard:    The real caveat here is that this really requires deep, deep focus. The problem again with fiduciary duties, is that when there is a breach, everything that fiduciary has done – not just the things related to the breach – are subject to review.

This is something that really needs to be fundamentally understood, so if you done 99 ethically perfect transactions and one transaction involves an egregious breach of fiduciary obligations, all of those 99 transactions could be subject to something even called the worst word beyond the “F” word, is that it was a equitable tracing, which means that good faith buyers in the chain that acquired works, their works may be pulled away from them, because the person who disposed of the work didn’t have the right to do it.

So what I’m saying is, once the “F” word is there, one is on a different territory entirely.

Judith:       (To the audience) Are there any questions about the artist representation?

Male voice: If you buy a work from your own beneficiary, is there any third party process to protect the beneficiary in terms of the price being set?

Richard:    We just have to see what can be done once you get onto the fiduciary terrain, it’s very open to litigation and court interpretation, but what you can do is produce transparency about benefits that are transferred.

Judith:       In the contract.

Richard:    Yes, the contract won’t eliminate a potential for a fiduciary review, but if an artist says, “I willingly give up the added value that will accrue over time to this work because the gallerist is doing xyz, and that is for me an equitable deal. That is from a fiduciary standpoint miles away from an interested fiduciary simply acquiring the work, nothing on paper, no open discussion about the accrual of any benefit in the future – these things are miles of miles apart in the fiduciary analysis.

Did I answer your question?

Male voice:        I was more focused on… I actually came out of estate work where anyone who is a fiduciary always has the court protection.

Andrea:     The gallery world is pretty informal.

Female voice:    I want to ask about situations where a gallery repurchases work from a third party buyer, either during the representation or immediately thereafter and turns around and sells it after representation terminates. I want to know what you think about what the gallery’s obligations are to the artist that turns around and then resells that work at a higher rate whether that gallery owes the artist that 50% of the appreciated value on the resale treated – is it ethically a re-consignment under those circumstances?

Serra:        We treat it just as a normal secondary market transaction.  Most galleries, if you represent an artist, part of what you do is also manage their secondary market as well, so ultimately an artist benefits – and this gets back into the resale question – but ultimately as the overall market for an artist increases through the secondary market, that will ultimately push up the primary market.

Female voice:    My question was necessarily directed at a gallery’s activities in supporting the secondary market or repurchasing that work at auction or in some other ways – I’m talking at a slightly lower echelon on where there the artists have a little bit less power and protection.

Serra:        I can’t think of a specific situation where at that point you would give the artist another [commission] if you are purchasing the work [on the secondary market]?

Richard:    Now we’re into this really murky territory where we have to collectively discuss our experiences. Going back to what I was saying about proscriptive and prescriptive. [If a fiduciary has merely the duty from refraining from things like self-dealing, then the standard of care is largely proscriptive. If on the other hand, a fiduciary must be pro-active in producing outcomes for a beneficiary, then the duties are more prescriptive in nature.]

If you have a very strong representation relationship with an artist, it could be understood that everything you are doing is for the benefit of the artist’s good, then that transaction might be subject to scrutiny. Otherwise if you are buying on an open market, acquiring a good and reselling it – barring the existence of a statute to the contrary – there is not a clear cut obligation there, there is no proscriptive obligation, nothing on the list it says you can’t do that.

But for example there are certainly going to be cases in the real world, where there is a particular artwork whose disposition in some way might have a fundamental market effect on an artist’s career standing or pricing, and if some how a gallerist were to dispose of work for a personal gain, and that causes an impact on the artist’s career, certainly that goes back to the fiduciary corner.

Andrea:     There are certain scenarios where a collector who might have purchased a particular work would come back to a gallery, ask the gallery to repurchase it – if one were to repurchase every single piece of artwork, they would have to have very deep pockets, and then what might happen is that someone would sell something at auction That does create a bit of a problem between the gallery and the artist, and certainly for the collector. So what are the obligations there?  If the gallery says ok I’m not going to buy this back because I would be broke – and then it shows up at auction. That relationship becomes somewhat tenuous, as you probably know.

Judith:       And one more and we’ll go to the next topic.

Male voice:  It seems underlying this whole discussion is this informal relationship that the galleries have with the artists, and I wonder – speaking from the legal perspective – if being so informal is really a sustainable model. If you look at the Knoedler Gallery situation, the forgeries, and galleries by and large not having in-house counsel, maintaining this comfort level of being informal, whether this is something that is really sustainable going forward?

Serra:         Richard would say no. [laughter]

Richard:      I would say [Richard add this]

Judith:       Well traditionally, the relationships between galleries and artists have been quite informal and it appears to be crass if you sign a contract. It looks like a deal, but that’s really what it is. And it’s good for the artist and dealers to recognize that this is actually a business, and I’m really a proponent of putting these contracts in writing. I think that everybody benefits. Not necessarily a long, written document with a lot of legal terms. It can be just a simple email or a letter memorializing the understanding that you’ve reached.

I think that can lend a lot of clarity to the relationship and get the parties to really identify what the terms are and what their understanding is, before something goes wrong because this is the point where they really want the deal to work. Later on, if there is some misunderstanding, they are upset with each other and it will be more difficult for them to agree to anything.

Richard:    Let me describe why what Judith said is exactly on point.

Ninety-nine percent of contractual breaches are not litigated, which means they never makes it to court, but what happens if people are in a breach of contract situation and they’re pissed off – they won’t want to work together again, or they will be in a long, drawn out, emotional conflict.

The fascinating thing is that there is a common misperception that legal documents are somehow going to be pulled out, and you are going to be whacked over the head with them. In the vast majority of cases, nothing like that ever happens. So this deep-rooted fear of having some type of piece of paper with some type of guidelines about the relationship – even if it was just structure: these type of fiduciary duties, for example – when you say, “Listen I’m your dealer but I’m not representing you. This is not part of my business model or the opposite.” So you get some kind of basic agreement about what people are expecting from each other. That would actually reduce the aggravation and a lot of the loss of productivity and the animosity created in this informal business, because these informal relations only work as long as everything is going fine.

The problem is if you had some kind of anchoring document that you could go back to, if there’s a conflict you could go back to your common ground. You can go back to your overlap, and then use that as a bridge to try and negotiate your conflicts.

If you have nothing, then there are just spiraling irrationalities, and that in the art world is the problem that we deal with.

All I’m saying is spiraling irrationalities plus the fiduciary exposure we’re talking about – that’s a very explosive mixture.

Judith:       Moving to the next topic – collector relations with the gallery, a segue from our previous discussion.

Let’s say one of your clients acquires a primary market work, and by primary market, I mean the artist’s or estate of the artist’s first sale of a work (the resale would be the secondary market). One of your clients acquires the primary market work from the gallery with the understanding that he will not resell for five years and then if he does the resell, he’ll go back through the gallery and not at auction. You discover that a work you sold to a client is up for an auction, and featured prominently in the auction catalogue. The artist is upset at the gallery and the collector. How do you handle this?

Serra:        As a preliminary matter, sometimes you will see on invoices, there will be a statement where that will be written at the end of it where you sign. From what I understand, it’s not actually an enforceable clause, even though people include it with some frequency.

Andrea:     Well I think something that we have discussed as a panel before is sometimes the word of the law, or what is appropriate goes against what you believed to be appropriate business practice. So I have been in situations where I sold a collector a piece, which ends up in an auction catalogue.

Yes, you get into somewhat interesting situations where you really are making your best decision about the people with whom you are working and you want very much to place something in the good collection and then all of a sudden it does appear in an auction catalogue and the artist is probably not that pleased – so again how you resolve it? I think it’s really dependent upon your relationship with the buyer and your relationship with the artist and I think every case is very different. I mean you can ostracize and not work with that person again, but that’s not necessarily realistic all the time.

Judith:       Yes, of course. But the art world is quite small and it’s possible that word may get around.

Serra:        And we’ve had situations where we’ve been able to get a client and get something pulled from auction, or we might work out a private sale with the auction house before hand; or, we’ll jump in and protect it, if that becomes necessary.

Andrea:     I would like to pose another scenario that actually has been eating away at me for some months. Let’s say you have inherited a 1936 Picasso from your grandmother, it is the only asset you have. You go to the auction houses, you negotiate a price. You are very excited, it’s going to be in the upcoming Impressionist and Modern sales in November.

At the preview, hanging beautifully, lit beautifully – Mr. Smith comes in from Park Avenue and he says “I like this 1936 Picasso.” A specialist says to Mr. Smith, “I’m glad you do like this.  I have something in private sale for you, also a 1936 Picasso. Come to the back room and let me show it to you.” That specialist gets a commission from his private sale but not from the auction. What is his fiduciary responsibility in that case?

Richard:    Well this is an easy question because the auction house is also in an agency relationship, and therefore they are obligated to have only the best interests of the seller at heart, and if they are conflicted, and that conflict is made visible, they owe you any damage that you suffered, and the loss you suffered, by virtue of the duties that are owed to you by the agent. And it could be probably be vicarious responsibility, because that person is not acting on his or her own, they are acting under the umbrella of the auction house. The auction house is without question a 100% liable on any loss of income to you derived from that type of self-dealing. No question.

Andrea:     But do the specialists understand this?

Richard:    The problem is this. We’ve had events here, and we’ve had auction people here as well, and we go through this same fiduciary analysis and chins drop. The question that you are posing, again, flies in the face of custom, as we understand it. There are a lot of murky practices and these murky practices have been cleaned up somewhat in the course of time.

The auction houses have gone through enough litigations in regards to some of these fiduciary duties that they are aware of it, but the short answer to your question is, no. There are a lot of things that are almost impossible to detect and there are lot of things that, in addition to being impossible to detect, are political. So as we all know – some sellers, some buyers are going to be treated one way, and others another way within the business model of both galleries and auction houses – and all of this is subject to fiduciary review.

Now I’ll try and come to a useful closure on that. All of that won’t matter for ten thousand dollars, or even fifty thousand dollars. But once we start moving up into the territory where the lost value is such that – and the actors are sophisticated enough – it can definitely, definitely be an increasing issue.

And the last bit of an answer to that is the auction houses will tend to historically wait for the bomb to explode before they build the bomb shelter.

Judith:       So many auction regulations have taken place because of a lawsuit; in the past 25 years I would say almost every new regulation in the auction house practice has been the result of a lawsuit.

Richard:    I mean just to add that you as the seller – again it’s one of these mythical relationships, you don’t want to be ostracized, blacklisted, or put on the third tier. The legal situation is that the auction house is your agent. You would have a right to go and look at the books; you would have a significant review if you pursued it by law. You would have to litigate or whatever, but there’s a very interesting disparity between the informal relationships as they are practiced and the legal regime underlying them, trying to give balance to these inequitable power relationships.

Judith:       Turning to the next question in the client category, you have a weekend house in the Hamptons and you socialize with some of your collector clients, and one of your clients wants you to advise her in developing her art collection. She purchases art from your art gallery as well as from others. What obligations do you have to this client and are there conflicts of interest between your client’s natural desire to acquire art at the best price and your obligation to obtain the best price for the artists that you represent?

Serra:        I think this is actually a pretty common occurrence within everything we all do. In general on the primary market, I think most galleries will more or less stick to a 10-15% discount.

In other cases, you could work out a retainer situation and so it doesn’t matter what you are negotiating. You already have your retainer. I find this to be one of the cleaner ways to do things if you are not being from the advisor side but from the gallery. I know a lot of times when we have an advisor come back to us after the fact and ask for both the discount and the commission.

Sometimes someone just thinks their friend is taking them around. In general for primary we try to say it’s either the discount or your commission.  We cant usually accommodate both.

Andrea:     I think it’s less straightforward in the secondary market and that many of the prices are owner-driven in many ways. That is, a particular collector might say “well I would sell it if I got X price for it.” So you are representing them to a certain extent and saying ok I’ll represent you to sell it but then with the buyer I think you have to be very clear that this is a full price and here are the market comparable, and I certainly don’t know how low he really would go, but you need to know that this is an aggressive price because you are looking for a Max Ernst for a certain period and he is got it. And the rules are pretty different for secondary and primary.

Serra:        There are sometimes more people involved in the equation than just the gallery, collector, and artist. I have a situation I’m dealing with. A gallery sells a work of art to the collector, an art advisor is involved, and the gallery represents the artist. A few months later, in my role as collections manager for the buyer, I look at this sculpture and say, “hmm, I see condition issues.”  So now we want to resolve these issues, and of course we go back to the gallery, and we go back to the living artist to see how we can resolve it. But the client’s unhappy, because they don’t want to have to pay to resolve these condition problems.

So I guess I’m asking about this in terms of fiduciary responsibility. Who’s responsible in this case, if there’s an art advisor  involved? Is it the advisor’s job to have checked condition issues? I wasn’t involved in the transaction at all, I came along later.

Serra:        Excellent question thank you, I’m glad you got to ask it!

Judith:       The layers of responsibilities of an art advisor. Do you want to start?

Richard:    OK I’ll do my two cents and then…

Very briefly. The consigner, or the person selling the artwork, and the person representing that person, be it an auction house or gallery, they have a fiduciary relationship to that seller. The art advisor also has an agency relationship, but we have to go back to the sliding scale between prospective and prescriptive. How dependent is the buyer on the art advisor? Is it a sophisticated buyer, or is it a non-sophisticated buyer? And, something that art advisors are very well advised to consider their agreements so that they really circumscribe what it is, what duties they are taking on.

So in the case of damage to the work, let’s say the person buying the work is unsophisticated, then the art advisor could have significant fiduciary exposure because the art advisor is holding out to be an expert, the buyer client is reasonably relying on that opinion and as a result of the negligence of that person there’s damage to the buyer.

Most advisors are going to try and structure the relationship such that they don’t have too high a burden of diligence, because it’s going to destroy the business model, and you can’t be responsible for everything. The

Andrea:     Have they asked for condition report? The art advisor?

Serra:        I don’t believe so. I saw nothing in the record that I have seen.

Andrea:     It is just my opinion that if this person was, had retained or was involved with an art advisor that one of the most basic things that you do is to ask for condition report. And whether again it’s a contemporary piece or it was something painted in 1740, one of the most basic things to do is to check condition. It is paramount. It’s just what you do. I think that does show a little bit of negligence.

Serra:        With a living artist, do we consider repair or do we remake, which can be done as well. There are costs involved.  Whose responsibility should that be?

Richard:    Let’s just go back to the schematics. The person who would litigate is the person who suffers the damage, here the buyer. It is the buyer who suffers the damage. So did the buyer act independently or did they depend on somebody’s judgment?

In this case, typically, we have to argue that if the art work came to the person through the art advisor. “But for” the activity of the art advisor, “but for” the negligence of the art advisor, the person wouldn’t have acquired the work, on the face of it, without expressing any legal opinion here, the art advisor is going to talk to the insurance company, if they have insurance, because this is a clear case of what you would call “professional” malpractice. It doesn’t mean that anybody consciously made an error, or maybe they just didn’t exercise appropriate diligence and involvement. Remember these are exponential scales.

Do you need to go to the ends the earth with an electron microscope and encyclopedic knowledge of all chemical composition of paints? There is a limit to what an individual can do. I’m not commenting on particular facts in the case.

The artist is not relevant. If the work is open for inspection and nobody requested it. Now, there is a legal regime that says that if the defect was invisible, entirely invisible, or requires significant effort to discover, that may say that the seller was not forthright, or the seller was aware of or should have been, of such defect. We are getting into some specific commercial terms for the sales of goods.

So that may play a role but, let’s say the seller says nothing to the art advisor, who has no indications as to the defect in the work, to the extent that their knowledge extends, and they understood the work to be intact and complete as it was, and they made no statements beyond that.

Judith:       Absolutely, it depends also on whether the seller has asked the buyer to examine it and the buyer either refused or didn’t take advantage of that opportunity. It would also depend on how visible the damage is.  If there is a slit down the canvas . . .

Andrea:     Then it’s a Fontana! [laughter]

Serra:        What if the artist knew because she has one that these things will fall apart, which does the artist have responsibilities?

Richard:    Artist has no obligation. The artist is not party to the sale.

Judith:       Moving to the final topic is the one that everybody has been waiting for. . .

What are your due diligence obligations to purchasers when selling works consigned to you by a collector with respect to authenticity and provenance? What questions should you ask an intermediary who would like to provide you with artworks new it to the market, for example, but the intermediary refuses to disclose the origin of the work, and explains that the seller insists on remaining anonymous.

Serra:        You call an insurance company and see if you are covered. (Audience laughs)

Andrea:     The first thing you really have to do is go through checklists, is it in any catalogues, is it in the catalogue raisonné? Has it been any shows, are there any label on the back, in any literature, is it signed, what’s the condition? There are very simple things you can do. If you have been in this business for a while, I know the questions to ask under certain circumstances. If something comes up, and you are a little bit unsure about it, I might be tempted not to touch it. If there’s a gap, for instance, in provenance, you do everything you possibly can to figure out where it’s been. With restituted works, and with German pictures and Austrian pictures, where there might be a gap in provenance from 1938 and 1945, you do everything you can and to make sure this that there isn’t a claim. This in relation to things that just appear out of nowhere.

Judith:       What are those types of things you would do?

Andrea:     Well you contact the Art Loss Registry, you make sure that there is an Art Loss Registry certificate. If you can’t do the due diligence, and if you can’t prove that it’s been in these hands, and when, I think you just have to figure out a way to not transact. That’s my opinion.

Serra:        It’s not unusual to request anonymity, that’s normal. You have to do your research, and part of that is exhibition history, literature, and provenance. It’s not good enough if they just want to be anonymous.

Judith:       How much due diligence do you do if the consignor is new to you?

Serra:        I had situations where you see things that look really off. I had a situation where somebody came in and said they bought a David Hockney at some random gallery that I had never heard. I looked at the picture and it did not look like Hockney to me. But I didn’t want to say “oh, I don’t think you have a Hockney.” At that point, I just said, unfortunately we are not interested. That ends up being the statement we use, if it is something that we do not think is authentic, to protect against liability. I never comment or disparage the work itself. I don’t just don’t take it on consignment.

Andrea:     I think that there are other red flags as well. Someone who comes to a gallery with a major picture, and you ask them whether they spoke to the auction houses as well. And they respond, no, they want to be really discrete. Well that’s a red flag. It could be a divorce situation. I’ve certainly been in situations where someone is trying to sell something and it’s co-owned. So you rely on your own experience and own brain to assess out a situation. Divorce is certainly a red flag, and you just want to make sure there are no liens or encumbrances on a piece.

Judith:       Why would some desire to deal privately, as opposed to through auction?  There could be a debt, or they may not want people to know that they are deaccessioning from their collection.

Andrea:     Absolutely, discretion. There are good, there are very good things about selling privately, as opposed to the auction houses. Again, discretion. It can happen much faster than the auctions because there is a cycle with the auctions. And also personal relationships. I have a number of people with whom I have worked for twenty years, and they will say, Andrea, I want you to handle this for me, because I know you, and I know how you are going to do business. So there is a number of reasons why you go private, and there are also a number of off reasons why you would, and there are a lot of people who will turn a blind eye to those.

Judith:       What advice can you give to a mature artist who is not yet represented?

Serra:        One of the things that happens quite frequently is the rejuvenating of a career. It has to be a situation where there is a desire on both sides, that it is a good fit.

There have been some amazing examples of artists who have almost fallen into obscurity, or their market are much below what it should be. It’s always really wonderful if it happens while the artist is still alive, as opposed to the estate being rediscovered. I[JP1]  don’t know that it is that different from other situations. In general, when we take on representation, one of the places where it usually comes from is our own interest, but also when another artist we work with or respect recommends an artist. Maybe one of our collectors recommends an artist, or a curator that you respect. Those are the sorts of references that you take most seriously. Unfortunately, the worst one is the person who walks in and drops off their portfolio.

In terms of a mature artist, let’s say a curator who always had an interest in an artist who had a major career and now doesn’t. Sometimes they look at what you are doing in the program and they think that you should really take a look at this person.

Judith:       Unfortunately the opposite occurs, where an artist you represented for a long time is in decline. How would you handle that type of situation?

Serra:        In a couple different ways. Sometimes, it just becomes an obvious situation in your relationship. You are not making sales for them, and/or they are not making it on to the calendar. We work off a three-year calendar. So you should expect to get your solo show in the main space every three years. If you are not, that is a sign that things are not going great.

We have negotiated things for an artist that doesn’t make sense for our program any more by speaking with another gallery, and making a nice easy transition. That is the most amicable and nice way to work. But the straight dropping of an artist, it does happen, but one of the bigger questions there becomes the responsibilities to your collectors. If you placed a lot of the artist’s works and now you don’t want to work with that artist any more also sends a signal out. You’ve advised a lot of people to invest on an artist. So lot of times it’s a very tricky, delicate situation. It looks like you have lost the faith as well.

Judith:       Thank you all for your participation. We can continue our discussion at the reception.

 

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Five Art Law Facts that Art Business Professionals Need to Know


In this series of brief overviews, will distill important art law issues that are often overlooked or misunderstood.  Today’s installment will cover the following five topics:  (i) Protection of artists under New York’s amended consignment law; (ii) Commercial laws that protect collectors who buy art from a dealer; (iii) Importance of written contracts; (iv) Statute of limitations for breach of warranty of authenticity; (v) and Conflict of laws concerning ownership of stolen art.

I.  New Precautions Under New York’s Amended Consignment Statute

Dealers doing business in New York are on notice that breach of the New York Arts and Cultural Affairs Law (NYACAL) consignment provisions can now lead to severe penalties, including criminal sanctions.

Effective November 6, 2012, a New York law protects artists and their heirs who consign works of fine art to dealers by strengthening existing trust property and fund provisions of the NYACAL.

The purpose of the consignment laws is to protect artists in cases where a dealer refuses to return an artist’s work or deliver sales proceeds to the artist.  The law also shields artists against claims by the dealer’s creditors, that is, those people to whom the dealer owes money.

Before the law was amended, there was nothing that prevented unscrupulous dealers, such as Salander-O’Reilly (which filed for bankruptcy in 2007), from comingling sales proceeds with their own funds.  The gallery’s creditors attempted to claim the consigned artworks as assets of the bankruptcy estate.  As a result, many clients, including artists’ children, had to buy back their artwork from the bankruptcy estate.

In response to these egregious problems, the law was amended to provide that works of art (and their proceeds) consigned by artists or their heirs to art dealers are deemed property held in “statutory trust.”  As such, the works (and their proceeds) do not become the property of the dealer or the dealer’s.creditors, or subordinate to “claims, liens or security interests” of a dealer’s creditors.  In certain circumstances, the artist may waive the trust fund protection, but the waiver must be clear and conspicuous and in a signed writing.

In addition, dealers are subject to the fiduciary requirements under New York’s Estates, Powers and Trusts Law with respect to consigned works.  These provisions require the dealer to segregate and hold sales proceeds in trust for the artist.  A dealer who violates this provision may be criminally sanctioned and required to pay attorneys’ fees to artists in civil suits.

II.  Commercial Laws Protecting Reasonable Expectations of Buyers

One of the most important questions to ask when purchasing art is whether the work is free and clear of liens or other encumbrances now and in the future.

In the U.S., the Uniform Commercial Code (U.C.C.), enacted in every state including New York, regulates the transfer of art.  Under the U.C.C., purchasers of art acquire all title (that is, ownership rights) to which his transferor had or had power to transfer.  However, two prominent exceptions exist to protect reasonable expectations of buyers: voidable title and entrustment.

Under the voidable title rule, if the original owner has delivered an artwork to a merchant (for example a dealer), who sells the property to a good faith purchaser for value, that purchaser has acquired good title to the artwork, even if it turns out that the transaction was a result of fraud or deceit.  The key is that the original owner voluntarily relinquished possession and intended to transfer title.  For example, suppose A delivers a painting to Dealer to sell to B, who pays with a bad check.  Or Dealer sells to C instead of B.  In either instance, the buyer keeps the work free and clear and A must seek compensation from Dealer.

Similarly, under the entrustment rule, if a person entrusts (voluntarily transfers) possession of an artwork to a merchant (for example, a dealer), and that merchant sells the work to a “buyer in the ordinary course of business,” the buyer can acquire good title (ownership rights) to the artwork.  The entrustment exception applies only to purchasers who are buyers in the ordinary course of business, that is, persons who (i) purchase in good faith, (ii) without knowledge that the sale violates another’s interest, and (iii) in the ordinary course of business from a person (other than a pawnbroker) in the business of selling goods of that kind.

To illustrate entrustment, let’s say A delivers a painting to Dealer, not intending to consign it, but for another purpose, such as to have it restored, framed, or lent to a museum.  Without obtaining A’s permission, Dealer sells the painting to B, a buyer in the ordinary course of business, who is innocent of any wrongdoing.  B can acquire good title to the painting, even though A never intended to sell the painting.

Buyers of art should exercise caution before purchasing significant works of art even when purchasing through a dealer who represents and warrants that the art is free and clear of all liens and will remain so in the future.  Taking precautions, such as checking with the Art Loss Register, searching the U.C.C. databases, and doing a Google search, can often screen for the most likely claims from prior owners, secured creditors, or gifts promised to institutions.

III.  Oral vs. Written Contracts

Since the art world’s culture is based on trust, agreements between artists and dealers are often sealed with a handshake. However, without the benefit of a written document, there is no record of their arrangement, and even a minor problem can sometimes escalate to a major dispute.

Simply put, oral contracts work well until they don’t.  The possibility of misunderstanding over responsibilities and expectations becomes fuel for discord and may cause the relationship to unravel.  An additional consideration is the statute of frauds, which requires that contracts for promises that cannot be fully performed within one year and for sales of goods (not services) of $500 or more be in writing to be enforceable.

The importance of a written contract is illustrated in cases where artists or dealers have tried to enforce terms of an alleged oral agreement.  Because of the statute of frauds and other obstacles, parties to an alleged oral agreement have encountered difficulties in enforcing the agreement’s terms.

An example of an oral contract that went awry concerned an agreement between the legendary American artist Georgia O’Keeffe (1887-1987) and her long-time sales agent Doris Bry, for the return of artworks and photographs by her late husband, photographer Alfred Stieglitz, as well as an accounting of any monies due on sales.  Bry counterclaimed that O’Keeffe had made a number of oral promises, including the promise to make Bry the exclusive sales agent during O’Keeffe’s lifetime and after her death and to appoint Bry as executor of O’Keeffe’s estate.

O’Keeffe sought dismissal of Bry’s counterclaims, alleging they were barred by the statute of frauds.  The court agreed with O’Keeffe, holding that the alleged promises were unenforceable absent a written agreement. O’Keeffe v. Bry, 456 F. Supp. 822 (S.D.N.Y. 1978)

IV.  Statute of Limitations for Breach of Warranty of Authenticity

When a purchaser of an artwork later discovers that the work is not authentic, the statute of limitations under the U.C.C. for a suit against the seller is four years after the breach of authenticity occurs.  (Major auction houses warrant authorship for five years from the date of sale.)

The problem is that few buyers question the authenticity of a work they have acquired until they are preparing to sell it, exhibit it publicly, have it examined by an expert to be included in a catalogue raisonné or for another purpose – which may occur many years after the statute of limitations has expired.  The key question becomes the date that the statute of limitations begins to run – on the date of the seller delivers the work to the buyer, or at the time the buyer discovers the breach of warranty?  In the majority of states, including New York, the breach of warranty begins to run when the seller delivers the work to the purchaser, unless the warranty explicitly extends to “future performance.”

This principle is well illustrated in Rosen v. Spanierman, 894 F.2d 28 (1990), one of the leading cases on warranty of authenticity involving the statute of limitations.  Here, the plaintiffs purchased a painting entitled The Misses Wertheimer from the Spanierman Gallery in New York for $15,000 in 1968.  The gallery provided them with a full warranty on the painting as an original Jean Singer Sargent, and mailed certificates of appraisal for insurance purposes on five occasions between 1975 and 1986.  In 1987, the plaintiffs decided to sell the painting, then valued between $175,000 and $250,000.  Upon consigning the painting to Christie’s, the plaintiffs were informed that it was a fake.

The plaintiffs commenced an action against Spanierman in 1987 for breach of warranty arguing, among other claims, that the repeatedly issued certificates extended the warranty to future performance.  The court rigorously applied the four-year statute of limitations, holding that the warranty did not extend to future performance, and noted that the plaintiffs could have discovered the defect just as easily immediately after the sale as later.  Requiring a purchaser to obtain an appraisal from an expert other than the seller “is not an onerous burden.”

At present, the District Court of Hawaii is the only court in the U.S. to allow a breach of express warranty of authenticity claim beyond the four-year statute of limitations, which tolls the date “until such time as the defect […] was, or reasonably should have been discovered.”  Balog v. Center Art Gallery-Hawaii, Inc., 745 F.Supp. 1556 (D. Haw. 1990).

Therefore, buyers of works of art in the U.S. should assume they must bring any authenticity claim within the four-year limitations period.

V.  Stolen Art

In an increasingly global art market, one of the most problematic areas of concern is whether a collector has unwittingly acquired a work that was previously stolen. Courts have vastly different approaches to disputes over ownership to stolen property, and cases may (and often do) depend on technical defenses available in different jurisdictions.

In the U.S., a basic principle is that a thief cannot pass good title, not even to a good faith purchaser, nor can anyone further down the chain of ownership.  Therefore, a good faith purchaser can be forced to surrender an artwork without any compensation to the original owner, absent a valid defense, such as the expiration of the statute of limitations.

By contrast, the civil codes in most continental European countries are more favorable to good faith purchasers, who may acquire good title to stolen artwork after a prescriptive period, that is, the passage of time, which can be a short period.

Therefore, as art owners and their heirs (including claimants of art looted during the Nazi era) come forward, sometimes after many decades, to claim property from good faith purchasers, courts are confronted with difficult questions that are complicated by choice of law and statutes of limitation, and must decide legal title to the work as between the original owner and heir on one hand, and a good faith purchaser on the other.

Because there is no central registry to record title to art, independently verifying the provenance and including strong representations and warranties from the seller with regard to ownership are imperative.  As mentioned above, Art Loss Register is one prominent database.  Others include the FBI and Interpol.  To be sure that a work was not stolen during the Nazi era, buyers should check databases, such as http://www.lostart.de/Webs/DE/Start/Index.html, http://www.lootedart.com/ and http://www.artrecovery.com/. Another database, http://icom.museum/spoliation.html, provides links to databases of individual countries for the identification and return of looted or stolen Jewish property.  Another way for collectors to reduce risk is to obtain title insurance, which is now available for fine art and other important collectibles.

 

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Decision: Calder Estate Lawsuit against Klaus Perls


Calder Estate Lawsuit dismissed by Judge Kornreich: “In other words, plaintiffs are attempting to litigate issues that necessarily stretch back decades without any personal knowledge or contemporaneous records, where nearly all of the people who had personal knowledge of the facts are dead. Rarely has the court encountered a better justification for the statute of limitations.”

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