December 2021 (Volume IX Issue 12).
Made in Brooklyn with love.​
Art Law Blast 3.
PS All puns are intended.
Looking Back & Looking Forward
Happy Holidays from all of us at the Center for Art Law!
 
Special thanks to Elizabeth Williams for visiting DUMBO and
making this colorful drawing of our headquarters!
Dear <<First Name>>,

December already?! Is it me or is everything becoming meta? A story of a criminal defendant drawing court room illustrators as the courtroom illustrators are documenting the trial, Facebook changing its name if not its motto, tokenization and minting of art for web 3.0. Second year of pandemic. Second Life getting a second chance. Wait a second! Before we go any further, let's take a metamoment to celebrate the wonderful work of the Center's ever-growing team and reach in the realm of art law. 

This year the Center was able to host over 25 online events, over 1700 visitors, and welcomed more than 50 artists at the Center's Visual Artists' Legal Clinic sessions this year. What's more? Well, even after doing all that the Center has new clinic  is in the works, thanks to your support and to the outstanding work of our inaugural Judith Bresler Fellow, Atreya Mathur (who is sending you her separate email before the end of the year!). You might think there is nothing to it, but we simply cannot do it alone!

Join me in thanking our 2021 alums, including the Fall interns - Kelsey Clifford, Alexis Redshaw and Marissa Hong, as well as our Executive Director Minelli Manoukian (stay tuned for Minelli's EOY message), my fellow Board members, and our Advisors for all that we have been able to do together this year. In 2022, the Center will welcome new directors and advisors and is already poised to host the Spring Class come January. Our team will further expand as we are hiring a webmaster, an accounting expert and a director of Membership. Candidates for these part-time positions are wanted.

Wishing all of the friends and fans of the Center for Art Law worldwide, a happy and healthy 2022!

Yours truly,

Irina Tarsis
Founder and Managing Director
BIRTHDAY PARTY: You are invited to participate in the 3rd annual IRINA-MAS Fundraiser to benefit the Center!
Be a Friend of the Center in FY2022
On Our Calendar
THE CHINESE UNIVERSITY OF HONG KONG Property Law Seminar Series – ‘The Scythian Treasure: Ukrainian State Property v. Crimean Private Property?
Jan. 12, 2021, 5 AM EST
Online
This seminar covers the Scythian Gold collection that was on view at the Allard Pierson Museum in the Netherlands and 2021 Amsterdam Court of Appeals ruling that the collection of Scythian gold should be returned to Ukraine. 

More information and RSVP >>>


CENTER FOR ART LAW What's In the Box: A Webinar on Art Storage
Jan. 11, 2021, 12 PM EST
Online

Art Storage…the home of a lot of the art in the world. But there is more to the topic than just a shelf or a box in a room where you keep the art. What do you do to protect your work from natural disasters? What does a contract look like between you and a storage facility? How in the world do you even transport that priceless work of art—because an Uber or the train certainly isn’t going to cut it. Join the Center for Art Law as we discuss the nuances behind art storage.

Register here
See the full calendar
Some Like it Hot...Some Like it Digital!
Help us pick our next art+tech topic! 
Let Us Know Today!
Art Law Digest

NFTs en Pointe. Bonhams recently unveiled one of its newest pieces for auction, the world's first NFT for ballet. Featuring the principal dancer at the Royal Ballet in London, Natalia Osipova, the NFT's are of three separate dance pieces. The first two come from the classic ballet Giselle while the remainder comes from the contemporary duet Left behind. These particular pieces were sold at Bonham's auction "Encore! Modern Art on Stage", which focuses on celebrating the creative intersections of visual art and the stage.

Homeward Bound. On December 15, 2021, Manhattan D.A. Cy Vance, Jr. announced the return of 200 antiquities valued at an estimated $10 million to the people of Italy. This total includes ten pieces seized from art collector Michael Steinhardt earlier this month. The Italian antiquities announced during the repatriation ceremony are included in the City’s return of more than 700 treasures to 14 countries since August 2020.

"Baby, Baby, Baby, No."Justin Bieber’s Lawyers Tried to Shut Down a Gallery Show by Artist, Brian Whiteley Impersonating Justin Bieber to Sell $100,000 Paintings.The “Justin Bieber” paintings are the work of Brooklyn artist Brian Whiteley, founder of the Satellite Art Show, who spent the last few months in character as Bieber. Whiteley stated: “As an artist who’s been trying to break through and make it, I thought it would be interesting to see the power of celebrity and the lure of the mega gallery. I’ve been told I kind of look like Justin, so it made sense to choose him.”

An Immersive Courtroom Experience. TeamLab, the immersive art sensation, has won a lawsuit against a Chinese company that imitated one of the group’s light shows and further used its name to promote it. The court recognized TeamLab’s copyright to the work, Forest of Resonating Lamps (2016), because it displayed “originality and aesthetic significance.”
 

Art in Far Off Places. In an attempt to share the wealth of artwork in its more famous galleries, Italy will be distributing 100 pieces of artwork from places like the Uffizi and other major galleries to more remote museums across the country. While traveling across Italy, some of these pieces will inevitably return back to trails or towns that their painters traveled to or worked in. 

Collector No More. In a recent court case, US Billionaire, Michael Steinhardt was ordered to return looted antiquities worth $70 Million. The collection of antiquities, after a lengthy investigation, were found to have been looted or illegally smuggled into the country. Further, Steinhardt is barred from purchasing any more antiquities for life. 

Fearless Girl in Flux. State Street secured a three-year permit for the "Fearless Girl" statute at the New York Stock Exchange piece from the city’s Landmarks Preservation Commission and Public Design Commission and as a result the work is now in jeopardy of being removed. That permit expired on November 29. Now, the corporation is applying to extend the agreement another three years. A report will be submitted to the Public Design Commission to make a final decision.

A Little More than Bargained For. A Constable painting has been placed up for auction with an estimate of £3-5million although it was originally sold as a copy for £40,000 Last year. The work, an oil painting by the English painter John Constable (1776-1837), sold in an auction in Cincinnati, Ohio, last year as a copy, making £40,000 against a pre-sale estimate of only $1,000-2,000. It has now been authenticated as being a genuine Constable. It will be sold in Sotheby’s Old Master Paintings December sale with an estimate of £3-5 million.
Students are eligible for a 50% discount on membership. Contact us for more info!
A Warhol Reprise. The Andy Warhol Foundation in New York is lobbying the Supreme Court to review the copyright infringement case involving a 1981 photograph of Prince by Lynn Goldsmith and a 1984 series of paintings by the artist based on it. The claim at hand is that the ruling by the Second Circuit contradicts Supreme Court precedent on the issue of fair use. 
 
Rijksmuseum Set To Acquire €175 Million Rembrandt Painting
One of the few portraits by Rembrandt left in private hands is likely to be purchased by the Rijksmuseum with assistance from the Dutch government. The total price of the painting is $198 million. The painting, a self portrait of Rembrandt and is said to have been created by the artist around the age of 30. 

Blown out of Proportion. Jeff Koons has been accused of appropriating sculpture for the 1989 series featuring his ex-wife by Michael Hayden. Hayden claims that Koons incorporated a sculpture of a serpent and rock he created as a stage prop for Ilona Staller, the former-porn-star-turned-politician known as Cicciolina, who is Koons’s ex-wife. 

Hobby Lobby Stores in the News Again. Hobby Lobby Stores, Inc. filed a lawsuit against Christie’s Inc. in the U.S. District Court for the Eastern District of New York. The dispute concerns the ownership of an ancient Mesopotamian cuneiform tablet bearing part of the Epic of Gilgamesh, c. 1600 BC. Christie’s sold the Tablet to Hobby Lobby in a private sale in 2014.

Gallerist, Tristian Koenig Sued for Missing Artworks
Tristian Koenig, the force behind an eponymous gallery in Melbourne, has reportedly been missing-in-action since news broke that several artists are suing the gallerist through Melbourne Magistrates Court for artworks they say have gone missing.

KAWS files Trademark and Copyright Infringement Suit for Selling ‘Deliberate Fakes’ of His Work. KAWS has filed a lawsuit against Homeless Penthouse, the online art and luxury goods retailer, for selling “deliberate fakes” marketed under his name. The site has listed several works by KAWS priced from under $100 to around $3,500 for a sculpture it says he made for Dior.
 
 
Counterfeiting a Background. Artists have been charged with faking Native American identities to sell their wares in galleries. Claiming to be tribal members, the two Washington based artists separately sold masks, totem poles, and pendants at art galleries in downtown Seattle.  This act is in violation of the Indian Arts and Crafts Act, a law that prevents the sale of counterfeit Native American artifacts. 

Artist vs. The Vatican. In an unexpected turn of events, a street artist is suing the Vatican for copyright infringement. Alessia Babrow sued the Vatican alleging that the Philatelic and Numismatic Office of the Vatican City State copied her artwork without her permission and reprinted it as a stamp. Babrow is seeking approximately $160,000 in damages and reportedly turned down a private visit with the Pope in favor of continuing her lawsuit.

Around the World for £100,000. A carved wood and paper globe dating to the 1550s or 1560s sold at Hansons Auctioneers for £116,000 against a pre-sale estimate of £20,000-30,000, a huge sum considering the owner had purchased it recently for just £150. This globe has been noted to be one of the earliest created to ever be sold at auction, and is potentially one of the oldest in existence.

Supreme Court Intervention. On January 18, the Supreme Court will be the final voice heard in an over two decade long dispute over a painting by Camille Pissarro, sold during the second world war in exchange for money for visas to flee Nazi Germany. 

The EU Heightens Restrictions on Ivory Trade 
The European Union (EU) has brought in new measures set to go into effect on January 18, 2022, to outright ban the trading of all raw ivory in the Union. The policy is similar to those of China and the United States to protect endangered species, where strict prohibitions were put in place in the last five years.


 
Books
Hecker, Sharon and Peter J. Karol, Posthumous Art, Law and the Art Market (Available for pre-order. Item will ship after April 12, 2022)

This upcoming book discusses the world of art after the death of an artist. From casts of sculptures and etchings to the tricky world of artists' moral rights after death, this book covers the intricacies of what's slowly becoming a popular avenue for revenue after an artist's death. Order your copy.
Raicovich, Laura, Culture Strike: Art and Museums in an Age of Protest (June 15, 2021)

Written by the former Director of the Queens Museum, this book aims to examine what cultural institutions can do to address historical context for the current controversies. According to the publisher, the author "shows how art museums arose as colonial institutions bearing an ideology of neutrality that masks their role in upholding conservative, capitalist values." Whether Museums can or cannot reinvent themselves remains to be seen. Hardcover Available. Kindle Available.
Raicovich, Laura, Indie Artist Guide: Writing, Artist Development, Accounting, Contracts, Copyright and Royalties for the Music Entrepreneur (June 15, 2021)

Self-help or helpful? "This 'Indie Artist Guide' was made to give music entrepreneurs a complete understanding of the industry. While also empowering them to use what they learn to accomplish their goals. This book includes information on writing, publishing, marketing, copyright, royalties, and more. If you are building your career, team, or business in the music industry, this book is for you!" Came across our monitor so we thought we would share.  Hardcover Available. Paperback AvailableKindle Available.
Career Opportunities

NFT-Researcher - Internship Position 

Location:  Zurich, Switzerland (Remote)

Anthea Art Investments AG 


About the job

“Anthea Art Investments AG (www.anthea.art) a leading market player specialized in the provision of art advisory and collection management services to private and institutional collectors, is currently offering an NFT Researcher - Internship Position for an eager candidate to join its team.”

Read more

Case Law Corner
  • Est. of Kainer v. UBS AG, No. 76, 2021 WL 5927040 (N.Y. Dec. 16, 2021 
  • Glob. Art Exhibitions, Inc. v. Kuhn & Bulow Italia Versicherungsmakler GmbH, No. 20-CV-1395 (KMW), 2021 WL 5331678 (S.D.N.Y. Nov. 16, 2021). 
  • Cota v. Art Brand Studios, LLC, No. 21-CV-1519 (LJL), 2021 WL 4864588, at *13 (S.D.N.Y. Oct. 15, 2021).
  • Savannah Coll. of Art & Design, Inc. v. Sportswear, Inc., 983 F.3d 1273, 1279 (11th Cir. 2020), cert. denied, 142 S. Ct. 74, 211 L. Ed. 2d 12 (2021). 
  • Marano v. Metro. Museum of Art, 844 F. App’x 436, 437–38 (2d Cir.), cert. denied, 142 S. Ct. 213, 211 L. Ed. 2d 92 (2021).
Read the full Case Law Corner
On the Blog

Art-istic or Art-ificial? Ownership and copyright concerns in AI-generated artwork

By Atreya Mathur

Credit: DALL·E 2; text prompts (left to right): painting of a robot holding justice scales; painting of a robot-artist painting flowers; painting of a robot reading a law bookWhat does it take to be an artist in the 21st century? Can one create art with paint brushes, watercolors, or oil pastels? Or can one simply think art into existence? ‘AI’ artwork generators like DALL·E and Stable Diffusion, offer users the ability to quickly create detailed images based on prompts, which can be anything you think of— An astronaut surfing in Times Square? A lawyer relaxing on the beach? (one could dream!) or a robot learning the law… in the artistic style of Da Vinci? You got it. However, when the idea is realized and the masterpiece has been generated– who owns it? who is the maker? the ‘AI’ or a copyright holder that the artwork is based on? Who has a perfected (or any) claim of co-authorship? Who can commercialize these images? Can someone be sued for infringement if they use the image without permission?

Introducing DALL·E 2

Artists build autonomous robots to collaborate with– they feed algorithms with data, and train machines to generate different kinds of visual works.[1] Creators, such as Google Arts & Culture Lab, work with computer programs that mimic the human mind to generate a never-ending stream of unique artworks. Artificial intelligence has therefore emerged as a desirable collaborator in artistic creation.[2] While AI-produced art has been around for some time, software released this year including, DALL·E 2Midjourney AI, and Stable Diffusion, has allowed even the most inexperienced artists to produce intricate, abstract, or photorealistic compositions by merely typing a few words into a text box.[3] DALL-E 2 is learned by an OpenAI model called CLIP (Contrastive Language-Image Pre-training) which functions as the main bridge between text and images. Through machine learning, AI is trained in data and is now able to create images and generate art by itself. The training data in this case is an aggregate of large datasets of images and tagged images labeled into a set of categories, across the internet,[4] out of which most images are likely protected by copyright. The output images that these tools can generate are figurative-looking — in that it is believable that the artwork could have been created by a real person or artist.[5]

OpenAI, an artificial intelligence research laboratory, was founded in San Francisco in late 2015 by Carlos Virella, Elon Musk, Greg Brockman, Ilya Sutskever, Sam Altman and Wojciech Zaremba, who collectively pledged one billion U.S dollars.[6] OpenAI released its text-to-image generation model based on transformers architecture called DALL·E. The name of this model is inspired by surrealist painter Salvador Dali and the robot from Wall-E.[7] OpenAI initially developed the GPT (Generative Pre-trained Transformer) model that its DALL·E software used in 2018, and just four years later the software is capable of generating imagery in myriad styles, manipulating and rearranging objects within its images and accurately designing novel compositions without explicit instruction.[8] It has even proven to be capable of solving Raven’s Matrices – visual tests used to measure human intelligence – showing that DALL·E can express both geographical and temporal knowledge, where it has an understanding of places, concepts and how they change over time.[9]

Credit: DALL·E 2; text prompt: Oil painting of an astronaut surfing in Times Square, glitter and wide angle

DALL·E 2 (2022) is the new version of DALL·E (first released in January 2021)and can make realistic and context-aware edits, including inserting, removing, or retouching specific sections of an image from a natural language description. It can also take an image and make novel and creative variations of it inspired by the original. DALL·E was trained by learning the relationship between images and the text used to describe them. It uses a process called “diffusion”, which starts with a pattern of random dots and gradually alters that pattern towards a final output.[10] DALL·E “trained” on approximately 650 million image-text pairs scraped from the internet, learning from that dataset the relationships between images and the words used to describe them.[11] But while OpenAI filtered out images for specific content, such as images that violate their content code including pornography and duplicates, and implemented additional filters at the API (application programming interface) level, for example for prominent public figures and likeness of individuals, the company admitted that the system can sometimes create works that include trademarked logos or characters.[12] In their Press release dated April 6, 2022, the company stated that “the model can generate known entities including trademarked logos and copyrighted characters. OpenAI will evaluate different approaches to handle potential copyright and trademark issues, which may include allowing such generations as part of “fair use” or similar concepts, filtering specific types of content, and working directly with copyright/trademark owners on these issues.”[13]

Copyright, Contracts and Commercialization

It is safe to state that artificial intelligence generated art is here to stay. The success of the model has been such that OpenAI also announced that it will be commercializing DALL.E 2 and its image generation platform.[14] Credits can be purchased to make prompts to generate art. So once an AI-generated masterpiece is created, what’s stopping someone from claiming it as their own and using it commercially or preventing others from using it? Who owns these DALL·E outputs? Is it OpenAI? The person who writes the prompts? Or is it nobody’s at all?

On top of existentially threatening the very concept of artists and creatives, AI-generated content raises several new legal issues.[15] Copyrights are a form of intellectual property protected by federal law.[16] Owning a copyright gives the owner the exclusive right to reproduce, publish, or sell an original work of authorship, such as a book, a painting, or a song.[17] Under current copyright law, artists using traditional mediums, such as paint, pen, or paper, are considered the authors of the work and generally hold copyright over their work by default. The fundamental question before addressing AI-created art is whether copyright can belong to anyone other than a human being. The Naruto Case throws some light in understanding the matter and answers this question.

David Slater, a British (and very much human) wildlife photographer, set a camera up on the island of Sulawesi and had left the camera unattended. A handsome and rather curious young gentleman (a monkey) named Naruto clicked the button while looking at the camera, capturing selfies showing off his photogenic side. Following this, Slater published a book featuring the selfie and other pictures that had been taken by Naruto. In response, the People for the Ethical Treatment of Animals (PETA) filed a complaint against him and the publisher, representing Naruto, and argued that he had “the right to own and benefit from the copyright in the Monkey Selfies in the same manner and to the same extent as any other author.”[18] Further, it was argued that while the claim of authorship by species other than homo sapiens may be novel, “authorship” under the Copyright Act, 17 U.S.C § 101 et seq., is sufficiently broad so as to permit the protection of the law to extend to any original work, including those created by Naruto. However, the US. Copyright Office stated that they “will refuse to register a claim if it determines that a human being did not create the work.[19] The office also said that it would exclude works “produced by machine or mere mechanical process that operates randomly or automatically without any creative input or intervention from a human author.[20]

Although copyright law doesn’t specifically address artificial intelligence, or even human authorship of original art, protection under the Copyright Act must meet the following requirements:[21]

  1. an original work of authorship;
  2. fixed in a tangible medium;
  3. that has a minimal amount of creativity.

If a work of art doesn’t meet all three of these requirements, then it does not qualify for copyright protection. Copyright cannot belong to the AI itself. Section 306 of The Copyright Act protects “original works of authorship,” which implies a human hand in the process.[22] The Act makes the human requirement clear: “The U.S. Copyright Office will register an original work of authorship, provided that the work was created by a human being.[23] This means that, under the current rules, AI-generated art has no owner.

Copyright protection in art is given as soon as the work is created, so the creator has exclusive right to decide the future use of the work. But since machine-created may not need the criteria for copyright protection, ownership may not be clearly distinguished.

Apart from ownership rights of the AI-generated artwork, there are additional copyright concerns that may arise. There may be infringement claims on the final image based on copyrighted artworks inputted into the AI at the time of machine learning which may infringe the rights of copyright holders.

Under the current U.S law, owners of the AI technology itself may be the ones with cause for concern – potentially being at risk of copyright infringement lawsuits.[24] AI usually reviews or even contains reproductions of other people’s artwork that it uses to create new artwork, that new artwork could be an unauthorized derivative, which is an infringement– if the AI also stores a reproduction of that artwork, that too is an infringement.[25] This concerns the owner of the AI who may ultimately be liable for infringement. But since copyright law does not protect AI-generated artwork, it is likely neither the AI nor the AI company has any rights in the image.

Analysis of terms of use

So, what does this mean for images generated by DALL·E 2? The first place to go to answer these questions is DALL·E’s own terms of use. It is important to note that when using the tool, creators have two options, to either upload an image to have it modified by the AI or inputting a prompt to generate an image. The terms of use state the following:

“Your Content. You may provide input to the Services (“Input”), and receive output generated and returned by the Services based on the Input (“Output”). Input and Output are collectively “Content.” As between the parties and to the extent permitted by applicable law, you own all Input, and subject to your compliance with these Terms, OpenAI hereby assigns to you all its right, title, and interest in and to Output…”

“Similarity of Content. Due to the nature of machine learning, Output may not be unique across users and the Services may generate the same or similar output for OpenAI or a third party…Responses that are requested by and generated for other users are not considered your Content.”

According to the terms of use of DALL·E 2, OpenAI assigns the right, title, and interest in and to the final image to the creator, provided the terms have been complied with. Copyright assignment permits a third party to take ownership of the copyright from the owner, or assignor. This means that the creator, the person who inputs the text prompt, is the owner of the image and has the rights to the final image. The creator becomes the owner of the images, regardless of whether those images have copyright or not.

The second paragraph recognizes the possibility of other creators coming up with similar generated images based on similar prompts and attempts to bypass copyright concerns stating that any prompt generated by another user, which may be similar or the same due to the nature of the machine learning. But the terms simply state that the content would not belong to the creator if it has been generated by another user but provides no guidelines as to who the content then actually belongs to.

The sharing and publication policy[26] also states:

“Creators who wish to publish their first-party written content (e.g., a book, compendium of short stories) created in part with the OpenAI API are permitted to do so under the following conditions….The role of AI in formulating the content is clearly disclosed in a way that no reader could possibly miss, and that a typical reader would find sufficiently easy to understand… People should not represent API-generated content as being wholly generated by a human or wholly generated by an AI, and it is a human who must take ultimate responsibility for the content being published.”[27]

So, is there any possibility of copyright infringement while generating or using artwork generated by DALL·E 2? OpenAI precociously bypasses most copyright questions through contract and their carefully and cleverly worded terms of use, making rather evasive references to intellectual property ownership.[28] Additionally, OpenAI is taking measures to reduce potential infringement issues including:[29] Rejecting image uploads that include recognizable faces; Rejecting generation prompts that attempt to recreate the likeness of public figures including celebrities and politicians, or realistic photos of real individuals; Improving their filters to block users from creating harmful or restricted content, which includes violent, adult, or political content, and also removing corresponding data from the software’s training itself; Implementing a new technique that is said to improve 12x the generation of diverse images of people, to help reduce bias; Using both automated and human monitors to supervise the platform and avoid misuse.[30] These measures in totality may help filter copyrighted photos, or trademarks and logos or avoid right to publicity claims that are likely to cause intellectual property concerns among owners of the rights.

Below, find an image generated on a text prompt including the name brand “Gucci.” The software has likely been inputted with alternate images that circumvent any identifying trademark or brand name or logo, but still make for interesting and even amusing artworks when certain terms are inputted. In this case, with subtle inferences to luxe looking hand bags and spoiled pooches. Art in its own sense, perhaps?

Credit: DALL·E 2; text prompt: Oil painting of Gucci

OpenAI also gives users full usage rights to commercialize the images they create with DALL·E, including the “right to reprint, sell, and merchandise.”[31] To be clear, this doesn’t mean OpenAI is relinquishing its own right to commercialize images users create using DALL·E. Deeper into the terms of service, you will find that “OpenAI will not assert copyright over Content generated by the API for you or your end users.”[32] OpenAI is signaling to users that they are free to commercialize their DALL·E images without fear of receiving a cease-and-desist letter from a company that could sue them from profiting from the images created. This does not restrict a third party from suing the user of a DALL·E image or the sale of an AI-generated artwork. [33] However, the terms of service also put users on notice that OpenAI “may change these Terms or suspend or terminate your use of the Services at any time.[34] Which means that the legal concerns can become more pressing in time. With the inherent lack of paternity or authorship of the work by the AI itself and potentially infringing datasets that AI has learned, the creators may ultimately be liable for infringement of copyright when the images are used.

Conclusion

Ultimately humans are the ones that make the final decision to use art generated by a machine (to illustrate their articles for example); therefore, AI clearly cannot grant permission for use of the work or hold a copyright for the same.[35] The Naruto case was decided as it was for this reason. If there was substantial contribution from a team or a person who provided substantive inputs deemed creative enough for the ultimate output of the work, then they could potentially own copyright in the work. If the design, however, was significantly attributed mainly to the AI or the program, then the work would likely not be copyrighted and would possibly belong in the public domain. The future in terms of legal protection of these works is still questionable, as it is difficult to assess the full extent to which AI will be used in creative works.[36] For now, it seems likely that creators can continue to use DALL·E 2 and generate images that can be used commercially with no fear of being sued from OpenAI or DALL·E 2, provided all the terms and content policy of the software are complied with. However, it would be wise to proceed with caution, especially if commercializing the images, keeping in mind that the final images produced may still infringe on another’s copyright or the likeness of a subject in the AI-generated images.

In the meantime, any disputes arising from computer generated works by AI will need to be assessed on a case-by-case basis and will likely depend on the level of contribution of each of the parties in the creation of the work.[37] Stable Diffusion’s software allows for quite a range of user inputs and its creators have explained its functioning in detail.[38] While joint authorship or co-authorship claims due to a collaborative role may be an interesting claim, a court will rule in favor of ascribing ownership to a human creator (which can be the developer of the software so long as they say they are the authors), rather than to a software which is not a legal entity yet. It is interesting to note the carefully worded terms of use in the case of DALL·E 2, where the rights have been explicitly transferred to the creator through a contract. The terms allow the creator access to the code and the creator has the power to input text prompts and put ideas together to generate the work. However, ideas are not protected under copyright law and the sharing and publication policy provides for similarity in content generation, stating that the creator will have no right in an image that has been generated by another person. So while one can own an AI-generated image due to the contractual transfer of rights from DALL·E 2, the copyrights surrounding it and confusion in ownership of images generated using similar text prompts still leave things unclear.

In other intellectual property realms, the patent world is discussing whether an AI can be listed as an “inventor” on a patent application.[39] While not directly comparable, since the standards for “authorship” and “inventorship” are different, it is a notable step for understanding AI ownership rights, and as laws evolve with society, it isn’t beyond imagination that Artificial General Intelligence may find its way as a “legal person” or may have laws specifically drafted for its regulation and ownership in the near future.

Credit: DALL·E 2; text prompt: Painting of a lawyer trying to relax on a beach with books
Credit: DALL·E 2; text prompt: Painting of a lawyer trying to relax on a beach with books

The risks associated with using models like DALL·E to generate art are still largely unknown as they have not been contested or substantially tested in any courts. The usage of any of these software or programs do come with their own contracts, terms of service, license agreements and limitations. Such terms can impose restrictions on who owns the final output, what can be done with the generated art, the content permitted to be generated, commercialization of artwork and risk and liability of using the artwork. Being aware of what is expressly permitted and prohibited when using such tools becomes critical as one’s ability to use it may be rescinded or considered infringing if the terms are violated. It may be wise to consider not using any artist’s name or work in the generation of artwork, and explicitly mentioned the artwork was created by AI — especially in cases where the styles or similarities to artists is still under copyright protection.[40] It may be argued that regardless of initial images inputted in, the artwork is transformative enough to be fair use of the artwork, but this is a defense against infringement and may be challenging to prove depending on the case. Without knowing the specifics of the AI and the prompts used, it will be difficult to give a definitive answer on when the work would be infringing and who has ownership of the artwork when similar artworks based on similar, or the same prompts can be generated[41].

Suggested Readings and Videos:

About the Author:

Atreya Mathur is the Director of Legal Research at the Center for Art Law. She was the inaugural Judith Bresler Fellow at the Center (2021-22) and earned her Master of Laws Graduate from New York University School of Law where she specialized in Competition, Innovation, and Information Laws, with a focus on copyright, intellectual property, and art law.

Sources:

  1. Adam Hencz, Agents Of Change: Artificial Intelligence – AI Art and How Machines Have Expanded Human Creativity, Artland Magazine, available at https://magazine.artland.com/ai-art/
  2. Id.
  3. Eray Eliacik, AI Art Generator Wars: Newcomer Stable Diffusion is the Free Alternative to Dall-E and Midjourney, Dataconomy (2022), available at https://dataconomy.com/2022/09/stable-diffusion-ai-art-generator/
  4. Learn about how CLIP works here https://medium.com/augmented-startups/how-does-dall-e-2-work-e6d492a2667f
  5. Arthur Roberts, et.al., Who owns the copyright in AI-generated art?, Murgitroyd Blog (2022), available at https://www.murgitroyd.com/en-us/blog/who-owns-the-copyright-in-ai-generated-art/
  6. See OpenAI, Crunchbase, available at https://www.crunchbase.com/organization/openai
  7. Aishwarya Verma, Comprehensive Guide to DALL-E By OpenAI: Creating Images from Text, Analytics India Magazine (2021), available at https://analyticsindiamag.com/comprehensive-guide-to-dall-e-by-openai-creating-images-from-text/
  8. Who Owns AI-Generated Art?, LBB (2022), available at https://www.lbbonline.com/news/who-owns-ai-generated-art
  9. Id.
  10. See DALL·E 2, available at https://openai.com/dall-e-2/
  11. Kyle Wiggers, Commercial image-generating AI raises all sorts of thorny legal issues, TechCrunch (2022), available at https://techcrunch.com/2022/07/22/commercial-image-generating-ai-raises-all-sorts-of-thorny-legal-issues/
  12. Id.
  13. P. Mishkin, et al., DALL·E 2 Preview — Risks and Limitations (2022), available at https://github.com/openai/dalle-2-preview/blob/main/system-card.md#copyright-and-trademarks
  14. Andres Guadamuz, DALL·E goes commercial, but what about copyright?, TechnoLlama (2022), available at https://www.technollama.co.uk/dall%C2%B7e-goes-commercial-but-what-about-copyright
  15. Who Owns AI-Generated Art?, LBB (2022), available at https://www.lbbonline.com/news/who-owns-ai-generated-art
  16. What is Copyright, U.S Copyright Office, available at https://www.copyright.gov/what-is-copyright/
  17. Id.
  18. Naruto v. Slater, No. 16-15469 (9th Cir. 2018).
  19. Id.
  20. Id.
  21. The Compendium of the U.S. Copyright Office Practices (3d.), available at https://www.copyright.gov/comp3/chap300/ch300-copyrightable-authorship.pdf
  22. 17 U.S.C. § 102(a); See also Burrow-Giles Lithographic Co. v. Sarony, 111 U.S. 53, 58 (1884) and The Compendium of the U.S. Copyright Office Practices (3d.), available at https://www.copyright.gov/comp3/chap300/ch300-copyrightable-authorship.pdf
  23. The Compendium of the U.S. Copyright Office Practices (3d.), available at https://www.copyright.gov/comp3/chap300/ch300-copyrightable-authorship.pdf
  24. Who Owns AI-Generated Art?, LBB (2022), available at https://www.lbbonline.com/news/who-owns-ai-generated-art
  25. Id.
  26. See DALL·E 2, Sharing & Publication Policy, available at https://openai.com/api/policies/sharing-publication/
  27. Stock language suggested in the terms to describe the creative process, provided it is accurate:“The author generated this text in part with GPT-3, OpenAI’s large-scale language-generation model. Upon generating draft language, the author reviewed, edited, and revised the language to their own liking and takes ultimate responsibility for the content of this publication.”
  28. Andres Guadamuz, DALL·E goes commercial, but what about copyright?, TechnoLlama (2022), available at https://www.technollama.co.uk/dall%C2%B7e-goes-commercial-but-what-about-copyright
  29. Id.
  30. Ivanna Attie, DALL-E Opens with Commercial Use- What Does This Mean for Stock Photos, Stock Photos Secrets (2022), available at https://www.stockphotosecrets.com/news/dall-e-ai-free-for-commercial-use.html
  31. See DALL·E 2, Terms of Use, available at https://openai.com/api/policies/terms/
  32. Id.
  33. Jessica Rizzo, Who Will Own the Art of the Future?, Wired (2022), available at https://www.wired.com/story/openai-dalle-copyright-intellectual-property-art/
  34. See DALL·E 2, Terms of Use, available at https://openai.com/api/policies/terms/
  35. Who owns artificial intelligence-created art? The Copyright, Sybaris, available at https://www.sybariscollection.com/owns-artificial-intelligence-created-art-copyright/
  36. Id.
  37. Arthur Roberts, et.al., Who owns the copyright in AI-generated art?, Murgitroyd Blog (2022), available at https://www.murgitroyd.com/en-us/blog/who-owns-the-copyright-in-ai-generated-art/
  38. Id.
  39. Id.
  40. Id.
  41. Id.
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Degrees of Transformation: Andy Warhol’s 102 minutes of fame before the Supreme Court

By James Parker

The Supreme Court waited 27 years after deciding the 1994 landmark case of Cambell v. Acuff Rose to revisit the issue of fair use in Google LLC v. Oracle America Inc. Decided in 2021, the court took an expansive view of the doctrine of fair use, agreeing that Google “reimplemented,” technology in a new context.[1] Now, less than two years later, the Court in Warhol Foundation v. Goldsmith is again considering the scope of the fair use doctrine in copyright law. Center for Art Law has followed the case with great interest, written at great length on the issue of fair use,[2][3][4] and has covered the oral arguments made by both sides of the Warhol v. Goldsmith controversy; this article revisits the facts of the matter as well as attempts to explore the possible ramifications ahead of the Supreme Court’s decision.[5]

Following three years of litigation, the Andy Warhol Foundation (AWF) successfully petitioned the Supreme Court to review a copyright infringement case that has garnered the attention of the public as it made its way from trial to the court of appeals. At its center is a decades-old photograph of the pop star Prince, a series of pieces by Andy Warhol based on that same image, and the doctrine of fair use.

“Let the little things that would ordinarily bore you suddenly thrill you,” said Andy Warhol, visual artist and champion of the pop art movement.[6] Beginning his career at a time when beauty embraced realism and elevation, Warhol couched his philosophy in the exact opposite by finding beauty in the mundane and the ordinary.[7] Warhol’s musings remind us of the axiomatic, that inspiration can be found anywhere, and could even allude to a cornerstone of copyright law that receives all that which has been sufficiently transformed as artistic creation.

The controversy stems back to 1984 when Vanity Fair decided to publish an article about Prince in a magazine.[8] Vanity Fair reached out to a licensing agency that managed Lynn Goldsmith, a celebrated rock photographer, in search of a photograph of Prince.[9] The agency, on a one time basis, granted the use of a particular photograph.[10] Vanity Fair then commissioned Andy Warhol, just three years before he died, to create a piece to accompany the article based on the licensed photo.[11] Warhol made a number of screen prints, though only one was selected for the Vanity Fair article.[12]

Prince died in 2016 and Vanity Fair decided to publish a special article about his legacy as an artist.[13] Vanity Fair then contacted the Andy Warhol Foundation, a New York nonprofit that licenses the artist’s works.[14] It was during this exchange that Vanity Fair learned that Warhol had created multiple prints based on the Goldsmith photo of Prince provided in 1984 for the original article.[15] Vanity Fair then chose a different screen print of the selection to use in their special article.[16] Goldsmith saw the special issue and contacted the Andy Warhol Foundation about her copyright claim and immediately registered the photo of Prince as an unpublished work (VAU001277562 / 2016-11-17).[17]

Preemptively, the Andy Warhol Foundation sued for declaratory judgment, confident that the work selected had been sufficiently transformed and was not substantially similar, thus avoiding infringement of Goldsmith’s copyright.[18] The trial court granted the foundation’s motion for summary judgment claiming fair use and denied Goldsmith’s cross motion for summary judgment claiming copyright infringement.[19] The trial court reasoned that Warhol’s treatment of the Prince image conveyed new meaning and message noting numerous artistic differences, particularly Warhol taking no more than what was necessary for his transformation.[20]

Goldsmith appealed the trial court’s ruling and brought their reasoning before a panel.[21] Contrary to the trial court’s decision, the panel found that the photograph was not transformative and concluded, in addition, that judges are ill-suited to decide “the meaning or message” of art works.[22] The panel provided that, in assessing the degree of transformation a piece has undergone, judges must compare the pieces side by side and consider, if outside of the artist’s intent, whether the resulting work is fundamentally different and new.[23]

Using the test enumerated above, the panel concluded that Warhol’s Prince Series still retained essential elements of its source material and the Goldsmith photo, despite the artist’s attempts to imbue it with new meaning, remains the recognizable foundation of the piece.[24] The panel further reasoned that while the pieces occupy different markets, Warhol’s rendition still harms Goldsmith’s ability to license the photo to publications and to other artists so that they might create derivative works.[25]

Individuals and organizations alike wrote amicus briefs ahead of the case’s arrival to the Supreme Court. Most notably, the Copyright Office, based in Washington D.C., has aligned itself with the National Press Photographers Association and the American Society of Media Photographers backing Goldsmith and urging the court to rule in her favor. Collectively, they advance that “the fair use defense was never meant to give infringers a pass so long as they claim some new subjective ‘meaning or message’ in their derivative use regardless of how it is used … [AWF’s] argument that a derivative use of a copyrighted work should be found ‘transformative’ so long as it adds any cognizable echo of ‘new meaning or message’ ignores the plain language of the Act and invites the fair use exception to swallow the derivative use rule.”[26]

Conversely, museums, professors of art and law, and organizations such as the Robert Rauschenberg Foundation and the Roy Lichtenstein Foundation have drafted amicus briefs in favor of AWF. Overwhelmingly, they emphasize the importance of copying to visual art and its link to creativity.[27] Those siding with AWF argue that they intend to protect artistic progress, and by consequence, they recognize that artists must have room to build on, be inspired by, and transform works that came before them.[28]

At present, Chapter 17 of the United States Code provides that copyright protection “subsists, in … original works of authorship fixed in any tangible medium of expression.”[29] The standard for originality is not expressly provided for in Chapter 17. The court in Bleistein v. Donaldson, however, ruled that original meant “created organically by an author [with] some degree of creativity.”[30] 17 USC 102(a) define works of authorship as literary works, musical works, dramatic works, pantomimes and choreographic works, pictorial graphic and sculptural works, motion pictures, audiovisual works, sound recordings, and architectural works.[31] Finally, fixed, according to 17 USC 101, means “perm[inence] or [the ability] to be perceived, reproduced, or otherwise communicated for a period of more than transitory duration.”[32]

The fair use provision, Section 107 of the Copyright Act, states:

Notwithstanding the provisions of section 106 and 106a, the fair use of a copyrighted work, including such use by reproduction in copies or phonorecords or by any other means specified by that section, purposed such as criticism, comment, news reporting, teaching (including multiple copies for classroom use), scholarship, or research, is not an infringement of copyright. In determining whether the use made of a work in any particular case is a fair use the factors to be considered shall include – (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.[33]

Whether you find yourself siding with Goldsmith or AWF, it is important to acknowledge the implications of the Supreme Court should it decide against adhering to its own standard. Primarily, a decision contrary to precedent puts the onus on judges to inspect the similarity of two works of art. Should the judge be unable to look past visual similarities then the argument is moot, regardless of training or expertise.[34] Historically, art is filled with pieces that are similar since aspiring artists naturally study the works of masters and those they look up to. What is more insidious and harrowing, however, is the sudden triumph of copyright over the right to free speech, where the Supreme Court has made it clear time and again that it is inviolable.[35] A ruling in favor of Goldsmith allows copyright to overreach, thus chilling the rights of artists who express themselves through image. The doctrine of fair use is just as germane to copyright as it is to free speech.

It is important to understand that while AWF has raised fair use as a defense to copyright infringement, it is more than an affirmative defense. Fair use is the crux of copyright. If the purpose of the copyright clause in our constitution is to encourage the continued proliferation of creative works then fair use ensures that artists can create new works that continuously build on the works of their predecessors and draw inspiration from the world around them – this is the essence of creativity and the goal of copyright law itself. As the Supreme Court has enunciated in the past, fair use is a first amendment “safeguard,” functioning to ensure that copyright is an engine to freedom of expression, not a hindrance.[36]

About the Author:

James Parker is a recent graduate of New York Law School, class of 2022. While in law school most of his studies orbited Intellectual Property law drawing a particular interest in copyright. Parker recently sat for and passed the July 2022 administration of the Bar and is Center for Art Law’s current Judith Bresler Fellow.

Suggested Readings :

  1. Campbell v. Acuff-Rose Music, Inc., 510 U.S. 569, 114 S. Ct. 1164, 127 L. Ed. 2d 500 (1994).
  2. Kaiser, Laura M. “Case Review: Rock’n’Roll, Museums, and Copyright Law (2020).” Center for Art Law, Center for Art Law , 19 Mar. 2021, https://itsartlaw.org/2021/03/19/case-review-rocknroll-museums-and-copyright-law-2020/#post-57033-footnote-3.
  3. Campbell, Sekou. “Artists, Not Judges, Should Decide Fair Use: Select Implications of the Cariou-Sconnie Nation Deviation.” Center for Art Law, Center for Art Law , 5 Dec. 2019, https://itsartlaw.org/2015/04/02/fair-use-implications-cariou-sconnie-nation-division/.
  4. “Green Day Wins Fair Use Claim.” Center for Art Law, Center for Art Law, 5 Dec. 2019, https://itsartlaw.org/2013/08/09/greenday-wins-fair-use-claim/.
  5. Farmer, Jana S, et al. “Appropriation Art on Trial: Oral Arguments before the Supreme Court in Warhol v. Goldsmith.Center for Art Law, Center for Art Law , 22 Oct. 2022, https://itsartlaw.org/2022/10/22/warhol-v-goldstein-ussupct/.
  6. Rise Art. “Andy Warhol Quotes.” Rise Art, Rise Art, 29 Oct. 2020, https://www.riseart.com/guide/2396/andy-warhol-quotes.
  7. Acocella, Joan. “Untangling Andy Warhol.” The New Yorker, The New Yorker, 1 June 2020, https://www.newyorker.com/magazine/2020/06/08/untangling-andy-warhol.
  8. Andy Warhol Foundation v. Goldsmith, 11 F.4th 26 (2d Cir. 2021).
  9. Id at 34.
  10. Id.
  11. Id.
  12. Id.
  13. Id at 35.
  14. Id.
  15. Id.
  16. Id.
  17. Rutledge, Virginia. “The Stakes of a Copyright Case Being Heard by the US Supreme Court Go Way Beyond Andy Warhol.” The Art Newspaper – International Art News and Events, The Art Newspaper , 6 May 2022, https://www.theartnewspaper.com/2022/05/06/its-not-all-about-andy-warhol-its-about-you.
  18. Id.
  19. Andy Warhol Foundation v. Goldsmith, 382 F. Supp. 3d 312 (S.D.N.Y. 2019).
  20. Id at 326.
  21. Andy Warhol Foundation v. Goldsmith, 11 F.4th 26 (2d Cir. 2021).
  22. Id. at 37.
  23. Id. at 42.
  24. Id. at 43.
  25. Id at 50.
  26. Brief for the American Society of Media Photographers et al. as Amicus Curiae Supporting Respondents, Andy Warhol Foundation for the Visual Arts, Inc. v. Goldsmith, No. 21-869 (2nd Cir. Oct. 12, 2022).
  27. Rutledge, supra, note 17.
  28. Id.
  29. 17 U.S.C. §102 (1976).
  30. Bleistein v. Donaldson Lithographing Co., 188 U.S. 239.
  31. 17 U.S.C. §102(a) (1976).
  32. 17 U.S.C. §101 (1976).
  33. 17 U.S.C. §107 (1976).
  34. Rutledge, supra, note 17.
  35. Id.
  36. Harper & Row, Publishers, Inc. v. Nation Enterprises, 471 U.S. 539, 105 S. Ct. 2218, 85 L. Ed. 2d 588 (1985).

 

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Meet Our Newest Board Members

Rakhel Milstein

Please join us in welcoming Hon. Barbara Jaffe (ret.) and Rakhel Milstein!

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From Kiev to Kiev

Dear Center for Art Law Visitors and Friends,

Over the last few days you might have noticed that our site has been undergoing some changes. We have a “new look” which we are pleased to share with you, and we are troubleshooting some of the development issues. Our super talented designers and developers are working from Ukraine. They have done their very best to reorganize our decade+ of content while dealing with blackouts and rocket strikes. During our call today, Ukraine was attacked by numerous Russian air strikes and part of the team was left without power.

While we are working to get the site in a perfect working order, please feel free to reach out to us if you have questions, and we thank you for your patience and understanding.

Very sincerely yours,

Irina Tarsis, Founder & Managing Director

Photo: Banksy’s work in Borodyanka, Ukraine

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“Outsider Artists” and Inheritance Law: What Happens to an Artist’s Work When They Die Without a Will?

By Wenni Iben

Introduction

Today, Henry Darger (1892-1973) is known to the world as an artist celebrated for vibrant and vividly-colored drawings that now command up to $800,000. During his lifetime, however, Darger’s talents were unknown to the world; a custodian by day, Darger kept his art to himself. In 1972, Darger moved out of the Chicago, IL apartment he’d rented from Nathan and Kiyoko Lerner for over a decade, leaving behind thousands of pages of drawings, paintings, and collages. Darger passed away one year later in a Chicago nursing home, with no known family or close friends, but his work soon took on a new life in the public eye. 

Darger is often referred to as an ‘outsider artist:’ an artist with little formal training in the arts and little or no contact with the professional art world. Only upon Darger’s death were his works published, promoted, and ultimately celebrated thanks to the efforts of Kiyoko and Nathan Lerner, who salvaged and promoted Darger’s works in lieu of disposing of them with the other items Darger left in the apartment. Since Darger’s death, the Darger works have been shown at the Museum of American Folk Art, The Center for Intuitive and Outsider Art, and various other museums and galleries. The Darger works now command hundreds of thousands of dollars and have been sold through auction houses like Sotheby’s and Christie’s for hundreds of thousands of dollars.

In recent years, however, the legality of the Lerners’ handling of the Darger works has been challenged. Darger died intestate, meaning he did not bequeath his artworks or their copyrights by will to anyone, including the Lerners. In the state of Illinois, when an individual dies intestate with no known kin, the contents of the deceased’s estate go to the state. However, two factors have complicated the matter of who legally owns the Darger estate. First, Kiyoko Lerner maintains that Darger transferred the ownership of his artwork to her during his lifetime, though no written record of this transfer exists. Secondly, several distant relatives of Darger have emerged through the forensic genealogy company HeirSearch. These relatives filed a lawsuit against Kiyoko Lerner (Nathan Lerner passed away in 1997) this past July, seeking compensation for what they allege is unlawful exploitation of Henry Darger’s artwork.

Walkthrough

On September 30, 2020, lawyers representing a group claiming to be Darger’s relatives emailed Kiyoko Lerner to inform her of their intentions to recover the physical Darger artworks, the associated intellectual property, and any revenue generated by Kiyoko and Nathan Lerner through what they allege is “misappropriation and unlawful exploitation of the Darger artwork.” 

The email alleges that Lerner has no valid right, title, or interest in any physical embodiment of or copyright to the Darger artworks. Furthermore, the email alleges, any claim Lerner makes that Darger gifted his artworks to her husband is “questionable at best–given his deteriorating mental state and conflicting contemporaneous accounts.” Even if Darger did gift his artwork to the Lerners, the email continues, “any such gift would have excluded any intellectual property rights.”

In January 2022, the claimants petitioned the court for probate of the Darger estate. In May 2022, Christen Sadowski, one of the claimants, was named Supervised Administrator of the Henry Darger Estate. The claimants, known as the Estate of Henry Darger, then promptly filed a complaint with the district court against Kiyoko Lerner for the following infractions: 

  1. copyright infringement;
  2. unfair competition and false or misleading description or representation of fact;
  3. a declaratory judgment under the Declaratory Judgment Act;
  4. unfair competition under Illinois common law;
  5. deceptive trade practices;
  6. unjust enrichment under Illinois common law; 
  7. an equitable easement; and 
  8. conversion under Illinois law.

A Closer Look: Does Kiyoko Lerner Legally Own the Darger Works and Copyrights? 

In the United States, laws concerning the transfer of property from a deceased person to their heirs is subject to state law and thus varies depending on the state in which the deceased person resided upon their death. As Darger died intestate in Chicago, the question of who lawfully owns the physical Darger artwork is determined by the state of Illinois. 

According to Kiyoko Lerner, when Henry Darger moved out of the Lerners’ Chicago apartment in 1972, he “said they could do whatever they wanted” with the contents he left behind in the room. By the Illinois Lifetime Transfer of Property Act, as long as Lerner’s recollection of Darger’s statement that she and her husband ‘could do whatever they wanted’ with the contents of the room constitutes a valid transfer of property, she legally owns the artwork Darger left in his room.  

Without any known written evidence of this exchange between Darger and the Lerners, the plaintiffs contend that this interaction between Darger and the Lerners does not constitute a valid transfer of property. The plaintiffs question the accuracy of Lerner’s claim that Darger gifted his artwork to her and her husband and furthermore question Darger’s soundness of mind at the time Lerner alleges Darger gifted his artwork to her husband. Unless Kiyoko Lerner can find a way to corroborate her claim that Darger, in sound mind, transferred ownership rights of his artwork to her or her husband, it will be difficult for her to prove that Darger transferred his artworks to her.

However, there is another avenue Lerner can take to show that she rightfully owns the physical Darger artworks. In the city of Chicago, when a tenant moves out of a rented property and leaves items behind on the premises, the landlord is required to store the property for seven days after the tenant leaves the property. After seven days, the landlord is free to dispose of the property as they please, including through sale of the property. As Darger lived for another year after moving out of the Lerners’ Chicago apartment and did not pick up his artwork within seven days of moving out of the apartment, the Lerners have a strong case that they had the right to do what they wished with the physical Darger artworks. 

Aside from the question of who owns the physical Darger works, there remains a separate question as to whether Kiyoko Lerner owns the copyrights to Darger’s art. In the United States, copyright ownership does not transfer with the ownership of the physical object. Furthermore, under federal law, a transfer of copyright ownership is not valid, other than by operation of law, unless an instrument of conveyance, a note, or a memorandum of the transfer is in writing and signed by the owner of the rights conveyed or such owner’s duly authorized agent. The plaintiffs contend that Lerner is not the valid copyright owner of Darger’s artwork. The law is on the side of the plaintiffs, in this case: since Darger did not transfer the ownership of the copyrights to his artworks to the Lerners, and since the Lerners are not kin to Darger, Kiyoko Lerner likely has no claim to the copyrights of the Darger artworks. 

If not Kiyoko Lerner, Who Owns the Darger Copyrights? 

While he was alive, Darger, as the creator of his artworks, owned the copyrights to the Darger works. The copyrights to any work exist for 70 years after the death of the creator and may be inherited by the creator’s heirs. Because Darger died intestate, Illinois state statutes determine who lawfully inherited his work upon his death. By 755 ILCS 5/2-1, since Darger died without a spouse, living parents, siblings, or children, the estate goes to the descendants of any kindred to Darger. 

It appears that Christen Sadowski, the plaintiff who was named supervised administrator of the Darger estate this past May, is one of these descendants. According to court papers, upon being granted this role, Sadowski was authorized to take possession of the physical Darger artworks and their associated copyrights. The plaintiffs seek relief in actual damages, the actual amount of which, they have specified, they want to be determined at trial.

Conclusion

Kiyoko Lerner has held that, while Darger was alive, she and her husband often checked in on him to ensure that he had sufficient food and proper living arrangements. Despite pressure from neighbors to cease renting to Darger due to his disheveled appearance, the couple continued renting to Darger, even lowering his monthly rent from $40 to $30 so that he could afford to stay. With no kin to care for Darger, it was the Lerners who arranged for Darger to move into a charity nursing home in 1972, after which time Kiyoko Lerner claims they approached Darger to see what he wanted done with his materials, including his artworks. 

And yet, without a will to communicate Darger’s wishes, the ownership of Henry Darger’s artworks and their copyrights has gone to Christen Sadowski and other relatives who Darger never knew. These relatives, contending that Lerner unlawfully exploited Darger’s artworks, seek to be awarded with all profits the Lerners made in managing the Darger artworks as well as punitive and statutory damages and other forms of relief for the Lerners’ alleged wrongdoings. 

Since the Estate of Henry Darger seeks a jury trial to determine the actual amount of damages they receive, the outcomes of this case are not easily predictable. It may be possible that Lerner’s description of her personal connection to Darger will be a more significant factor to the jury in determining the amount of damages owed to the Darger Estate than it was for the judge who granted Sadowski supervised administrator of the Darger Estate. Perhaps this trial will be an opportunity for Darger’s wishes concerning the inheritance and use of his work to be considered.

Select Sources: 

About the Author:

Wenni Iben (Columbia University, B.A. 2023 expected) is a student of Economics and Philosophy. She is the Fall 2022 Undergraduate Intern at the Center for Art Law. 

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Case Review: US v. Philbrick (2022)

By Nikki Vafai

At only 33, Inigo Philbrick managed to quickly rise in the art world and become an extremely prominent blue-chip art dealer, specializing in postwar and contemporary art. He not only owned two art galleries in Miami and London, he also dealt with some of the most sophisticated collectors in the world. However, unbeknownst to those dealing with him, the young dealer had sprinted to his position in the art world by masterminding a scheme that defrauded countless collectors, investors, and lenders. Just as quickly as he rose to prominence, his scheme unraveled. By 34, he was already sentenced to seven years in prison.

Philbrick’s scheme thrived with the help of others, such as his business partner Robert Newland, who pleaded guilty to a count of conspiracy to commit wire fraud.[1] The case heard in the Southern District of New York left many wondering how a young dealer could deceive individuals who were experts in their own right and how lasting the damage of the Philbrick machinations would be.

FACTS

In 2013, Philbrick decided to launch his independent career in the art world. Philbrick built his business by operating in the secondary market, collateralizing and reselling fractional shares in contemporary art.[2] From about 2016 to 2019, according to the Department of Justice, Philbrick is alleged to have made material misrepresentations and omissions to art collectors, investors, and lenders.[3] His actions include selling more than one-hundred percent ownership in an artwork to multiple parties without their knowledge and selling or using artworks as collateral on loans without the knowledge of the co-owners or disclosing the ownership interests to the buyers and lenders.[4] Philbrick also presented fraudulent contracts and records to investors in order to inflate the artwork’s value and fraudulently used the identification of others.[5]

Over the years, to which he pleaded guilty, Philbrick obtained over $86 million in loans and sale proceeds.[6] However, in 2019, investors and lenders began to learn of the fraudulent records they had been provided by Philbrick and the material misrepresentations and omissions he had made. In October 2019, one lender notified Phibrick that he was in default, and shortly after, various investors began to file civil lawsuits in various jurisdictions.[7]

Philbrick’s galleries in Miami and London closed and Philbrick fled the country to Vanuatu, but in 2020 he was arrested by U.S. Marshals.[8] Philbrick was charged with one count of wire fraud and one count of aggravated identity theft.[9]

ARGUMENTS

With regards to the first count charged, wire fraud, the U.S. prosecution argued that Philbrick, with others, devised and intended to devise a scheme defrauding collectors, investors, and financial lenders by providing false information and false documents regarding the sale, ownership, and provenance of artworks.[10] The U.S. government claimed Philbrick obtained funds through wire transfer.

As for the second count, aggravated identity theft, the prosecution argued that Philbrick knowingly and unlawfully used the identification of someone else.[11] They revealed that Philbrick used the name and signature of an officer of a Pennsylvania-based company to create a false art sale contract.[12]

In its complaint, the U.S. prosecution described Philbrick’s various unlawful activities such as his misrepresentations of Jean-Michel Basquiat’s “Humidity” and Christopher Wool’s “Untitled.”[13] The U.S. prosecution also highlighted Philbrick’s fraudulent activity with regards to Rudolf Stingel’s “Picasso,” selling a total of more than one-hundred percent ownership in the painting to three investors.[14]

Philbrick originally entered a plea of not guilty but eventually entered a plea of guilty to Count 1, wire fraud.[15] Many court documents in the case have been sealed, so the defense’s exact arguments are unknown.

COURT RULING

On May 23, 2021, Philbrick pleaded guilty to count one, wire fraud, in the indictment.[16] He was sentenced to seven years in prison.[17] The court recommended to the Federal Bureau of Prisons that Philbrick be admitted to the Residential Drug Abuse Program, if he meets the requirements for the program.[18] The court also sentenced Philbrick to two years of supervised release upon completion of his imprisonment.[19] The court ordered Philbrick to pay forfeiture in the amount of $86,672,790.00 and restitution in the amount of $82,592,367.00.[20]

TAKEAWAY

While Philbrick’s web of lies ultimately unraveled, the case highlights the consequences of greed and sheds light on the institutions and actors who knowingly or unknowingly facilitate such schemes. There has been much debate surrounding the transparency of the art market, and schemes like Philbrick’s leave the question of what more can be done in order to prevent such schemes from occurring in the future and increase confidence in the art market.

About the Author: Nikki Vafai is a law student at the University of Maryland Carey School of Law and holds a B.A. in International Affairs and Art History from the George Washington University. Nikki is a 2022 fall legal intern at the Center for Art Law.

  1. Business Partner Of Art Dealer Inigo Philbrick Pleads Guilty To Defrauding Art Buyers And Financers, The United States Department of Justice, (September 23, 2022), https://www.justice.gov/usao-sdny/pr/business-partner-art-dealer-inigo-philbrick-pleads-guilty-defrauding-art-buyers-and ?
  2. Former Art Dealer Sentenced To 7 Years For $86 Million Fraud Scheme, The United States Department of Justice, (May 23, 2022), https://www.justice.gov/usao-sdny/pr/former-art-dealer-sentenced-7-years-86-million-fraud-scheme ?
  3. Id. ?
  4. Former Art Dealer Sentenced To 7 Years For $86 Million Fraud Scheme, The United States Department of Justice, (May 23, 2022), https://www.justice.gov/usao-sdny/pr/former-art-dealer-sentenced-7-years-86-million-fraud-scheme ?
  5. Id. ?
  6. Judd Tully, Inigo Philbrick’s 7-Year Sentence for $86 Million Fraud Has Rattled the Art World, ARTnews, (May 26, 2022), https://www.artnews.com/art-news/news/inigo-philbricks-7-year-sentence-for-86-million-fraud-has-rattled-the-art-world-1234630012/ ?
  7. Eileen Kinsella, Dealer Inigo Philbrick Gets Seven Years in Prison for ‘One of the Most Significant Frauds’ in Art-Market History, artnet news, (May 23, 2022), https://news.artnet.com/art-world/disgraced-dealer-inigo-philbrick-is-sentenced-2119879 ?
  8. Bob Van Voris, Art Dealer Inigo Philbrick Gets 7 Years in Prison for $86 Million Fraud, Bloomberg, (May 23, 2022) https://www.bloomberg.com/news/articles/2022-05-23/art-dealer-philbrick-gets-7-years-for-86-million-fraud ?
  9. Complaint at 1-2, U.S. v. Philbrick, No. 1:20-cr-00351 (S.D.N.Y. Apr. 30, 2020). ?
  10. Complaint at 1, U.S. v. Philbrick, No. 1:20-cr-00351 (S.D.N.Y. Apr. 30, 2020). ?
  11. Complaint at 2, U.S. v. Philbrick, No. 1:20-cr-00351 (S.D.N.Y. Apr. 30, 2020). ?
  12. Id. ?
  13. Complaint at 6-7, U.S. v. Philbrick, No. 1:20-cr-00351 (S.D.N.Y. Apr. 30, 2020). ?
  14. Complaint at 8, U.S. v. Philbrick, No. 1:20-cr-00351 (S.D.N.Y. Apr. 30, 2020). ?
  15. Docket Report, U.S. v. Philbrick, No. 1:20-cr-00351 (S.D.N.Y. Apr. 30, 2020). ?
  16. Id. ?
  17. Judgment, U.S. v. Philbrick, No. 1:20-cr-00351 (S.D.N.Y. Apr. 30, 2020). ?
  18. Id. ?
  19. Id. ?
  20. Id.; Order, U.S. v. Philbrick, No. 1:20-cr-00351 (S.D.N.Y. Apr. 30, 2020). ?
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Protecting Chaco Culture National Historical Park: When Culture and Congress Clash

By KimberMarie Faircloth

At the intersection of politics and culture there is usually a robust repelling force keeping the two from fully understanding one another. This force is made up of partisan policies, modern-day climate concerns, and economic issues all mingling with vestiges of history. On November 15, 2021, a long running conflict was brought to a head when a proposal for enacting a 20-year moratorium on oil and gas drilling around Chaco Culture National Historical Park (Chaco) was announced.[1] Advocates who have been working for such a ban for decades cheered while opponents grumbled. At the center of the issue is a cultural landmark with a birthdate of approximately 850 A.D., outlasting either side of the current debate.[2]

To understand the importance of such a proposal by the Biden Administration, the importance of Chaco must initially be understood. This article will briefly attempt to first explain the history and cultural significance of the historic park and then summarize the legislative build-up to the current moratorium as well as what it actually calls for. Finally, a short synopsis will be provided looking at the reasoning behind both the proponents and opponents of the drilling ban and buffer. From a birds-eye view, this is an attempt to better understand the various influences affecting policies which aim to protect the integrity of cultural heritage.

What is Chaco Culture National Historical Park and Why Does It Matter?

Chaco refers to a southwestern United States’ cultural complex containing over 4,000 archaeological sites on the Colorado plateau of the San Juan Basin in New Mexico.[3] It was designated as a World Heritage Site by UNESCO for its “monumental public and ceremonial buildings and architecture,”[4] the remarkability of which is due to the level of preservation maintained in such a climatically harsh geographic area as well as the level of craftsmanship by the creators.[5] These sites are associated with Paleo-Indian, ancestral Puebloans, Navajo, and Euro-American interactions and occupations.[6]

In 1907, Chaco became a national park after President Theodore Roosevelt signed the Antiquities Act of 1906.[7] In fact, it was Chaco that initiated the enactment of such legislation due to the damage being done to it at that time which alarmed archaeologists.[8] Such an enactment granted the park federal protection in preserving Chaco’s “extensive cultural system,” which included landscaping and architecture oriented “in accordance with solar, lunar, and cardinal directions potentially to capture the various solar and lunar cycles.”[9]

If one still wonders what exactly makes Chaco so important, beyond its historical and cultural significance mentioned previously, it remains a sacred site for Native Americans to this day.[10] The descendants of those who inhabited Chaco are the modern-day Hopi, Pueblo peoples of New Mexico, and the Navajo.[11] According to President of the Navajo Nation Russell Begaye, in a 2017 press release, “We are descendants from the Chaco Canyon area. We are connected to these lands spiritually. The voices of our ancestors live in this area and any disturbance to this area is culturally and morally insensitive.”[12]

What is the 20-year moratorium on oil and gas drilling around Chaco?

To understand the moratorium that has been proposed is to understand the years of advocacy and push-back that led up to its inception. In 2018, the former Secretary of the Interior Ryan Zinke delayed a lease proposal in an attempt to protect 4,000 acres of Chaco while requesting that more cultural research on the land take place.[13] Zinke’s efforts were made moot when the Trump Administration approved leases for drilling to take place on 2,300 oil and gas wells.[14] This action was subsequently followed by Congress enacting a moratorium for a one-year period on drilling.[15] Any further efforts by Congress to create a permanent barrier around Chaco via legislation failed, but hope was restored in the new Department of the Interior’s Secretary Deb Haaland and her position’s authority to create such a barrier granted by the 1976 Federal Land Planning and Management Act.[16]

Finally, at the White House Tribal Nations Summit of last year, President Biden and Secretary Haaland introduced the executive order that would, in theory, put into action the long sought after moratorium. The goal of the summit was to provide “an opportunity for the President and senior leaders from his administration to meet with tribal leaders and engage in Nation-to-Nation dialogue on critical issues in Indian Country.”[17] This executive order by President Biden would direct the Bureau of Land Management (BLM) to begin protecting the federally owned lands within the 10-mile radius around Chaco from future oil and gas drilling.[18] The Biden Administration summarized the efforts to protect Chaco in the Summit’s Progress Report published by the White House:

“For the past decade, Pueblos and Tribes in Arizona and New Mexico have raised concerns about encroaching oil and gas development threatening sacred and cultural sites, and Congress has passed a series of actions to temporarily defer new leasing. In the coming weeks, the Department of the Interior will initiate consideration of a 20-year withdrawal of federal lands within a 10-mile radius around Chaco Culture National Historical Park, protecting the area from new federal oil and gas leasing and development. The proposed withdrawal will not apply to Individual Indian Allotments or to minerals within the area owned by private, state, and Tribal entities. The action will also not impose restrictions on other developments, such as roads, water lines, transmission lines, or buildings. To support conservation of the area, the State of New Mexico Land Office has implemented a moratorium on new state mineral leases within a 10-mile radius of Chaco Culture National Historical Park.”[19]

The proposal will be subject to a public comment period, environmental analysis, and formal tribal consultation during the first two years of the moratorium on creating new oil and gas drilling leases in the 10-mile buffer around Chaco.[20] This concern over protecting Chaco follows President Biden’s administration’s restoration and expansion of protections over other culturally important parks such as the Bears Ear National Monument and the Grand Staircase-Escalante, both of which are located in Utah.[21]

Who are the opposing teams in support of and opposing the ban?

For those in support of the moratorium, the cultural, historic, and environmental significance of preserving the park is obvious.[22] Fracking has been and continues to be a controversial method for extracting natural gas from the earth. In regards to Chaco, the main concern is that drilling could cause beyond-the-surface damage, destabilize underground structures, and potentially cause earthquakes underneath important Chaco architecture.[23]

Yet, for the opposing side, concerns of arbitrary political maneuvering and a lack of accurate tribal representation outweighs the need for such a buffer zone around Chaco.[24] In regards to the amount of land being protected in the buffer zone, Robert McEntyre, New Mexico’s Oil and Gas Association representative, questioned the “arbitrary limits on development in the region [which] will only disrupt the largest and most successful part of New Mexico’s economy.[25] Other concerns expressed by figures such as Bruce Westerman, a representative of Arizona, also focus on the economic impact of “[s]hutting down safe, reliable pipelines” and thus, “eliminating thousands of technical jobs and thwarting energy development at every turn…”[26]

Those somewhere in between supporting the proposal and opposing it question whether the ban itself will have any effect on actually protecting Chaco and if it is too late already.[27] “[I]n 2014, NASA satellites detected clouds of methane gas from thousands of leaking wells and pipelines” in the area along with approximately 30,000 inactive wells from drilling in the area that “will never be plugged and reclaimed.”[28]

Beyond just being concerned with the physical effect on Chaco, there is an equally, if not greater, alarming factor involved: lack of tribal representation and consultation.[29] The Navajo Nation ultimately withdrew their support of the proposed moratorium since it would also take away their agency to lease their lands as they see fit.[30] This is yet another move by the federal government, in a long line of moves regarding tribal lands, done without thorough consideration of tribal voices. A press release from the 24th Navajo Nation Council stated their position:

The Biden Administration bypassed previous requests to Congress for field hearings and for leaders to hear directly from our Navajo families affected in the Chaco Canyon region. The position of the Navajo National Council is for the creation of a 5-mile buffer within and around this sacred site. It is important that the federal government consider and work with our Navajo allottees to further advance development. The Administration must respect our tribal sovereignty and what the government to government relationship entails.[31]

Conclusion: is there a middle ground?

It is safe to say that no branch of government – nor person, ever – will create a law or policy that satisfies everyone. There is no political panacea. Yet, without such structures, a vital aspect of our democracy will crumble. It is a fact that Chaco Culture National Historical Park holds unparalleled cultural and historic value, not just for the United States but for global society as well. It is also true that sustaining economic opportunities for American citizens is important. Perhaps, then, the issue is not in choosing one over the other but in discerning the means by which we can achieve both ends. The means of which must include those directly involved and descending from Chaco ancestors: Tribal Nations. Voices of whom have been repeatedly ignored for centuries and could provide solutions that are able to strike a balance between economic and cultural priorities.

About the Author: KimberMarie Faircloth is a law student at Elon University School of Law and has a B.S. in Anthropology from the College of Charleston. KimberMarie interned for California Lawyers for the Arts this past summer, is currently a Staff Member for Vol. 16 of the Elon Law Review, and co-hosts Law School Crucible, a podcast for first-generation law students.

  1. Joshua Partlow & Darryl Fears, Biden proposes 20-year drilling ban around Chaco Culture National Historic Park, a sacred tribal site. The Washington Post. (Updated Nov. 15, 2021 at 2:59 p.m.) https://www.washingtonpost.com/climate-environment/2021/11/15/chaco-canyon-drilling-biden/.

  2. New Mexico: Chaco Culture National Historical Park, National Park Service (last updated Aug. 7, 2017). https://www.nps.gov/articles/chaco.htm.

  3. Id.
  4. “Chaco Culture,” UNESCO World Heritage Convention, https://whc.unesco.org/en/list/353/.
  5. Id.
  6. New Mexico: Chaco Culture National Historical Park, National Park Service (last updated Aug. 7, 2017). https://www.nps.gov/articles/chaco.htm.
  7. Richard Moe, The Treasures of Chaco Canyon Are Threatened by Drilling, The New York Times (published Dec. 1, 2017) https://www.nytimes.com/2017/12/01/opinion/chaco-canyon-new-mexico-drilling.html.
  8. Id.
  9. New Mexico: Chaco Culture National Historical Park, National Park Service (last updated Aug. 7, 2017). https://www.nps.gov/articles/chaco.htm.
  10. Press Release: “OPVP Protect Chaco Canyon Region Through Collaboration with all Pueblo Council of Governors,” Office of the President and Vice President of the Navajo Nation. For immediate release (Feb. 24, 2017). http://www.navajo-nsn.gov/News%20Releases/OPVP/2017/Feb/OPVP%20PROTECT%20CHACO%20CANYON%20REGION%20THROUGH%20COLLABORATION%20WITH%20ALL%20PUEBLO%20COUNCIL%20OF%20GOVERNORS.pdf.
  11. New Mexico: Chaco Culture National Historical Park, National Park Service (last updated Aug. 7, 2017). https://www.nps.gov/articles/chaco.htm.
  12. Press Release: “OPVP Protect Chaco Canyon Region Through Collaboration with all Pueblo Council of Governors,” Office of the President and Vice President of the Navajo Nation. For immediate release (Feb. 24, 2017). http://www.navajo-nsn.gov/News%20Releases/OPVP/2017/Feb/OPVP%20PROTECT%20CHACO%20CANYON%20REGION%20THROUGH%20COLLABORATION%20WITH%20ALL%20PUEBLO%20COUNCIL%20OF%20GOVERNORS.pdf.
  13. Joshua Partlow & Darryl Fears, Biden proposes 20-year drilling ban around Chaco Culture National Historic Park, a sacred tribal site. The Washington Post. (Updated Nov. 15, 2021 at 2:59 p.m.) https://www.washingtonpost.com/climate-environment/2021/11/15/chaco-canyon-drilling-biden/.
  14. Id.
  15. Id.
  16. Bruce Babbitt, Chaco Culture National Park is under siege, Writers on the Range (Published Sep. 27th, 2021) https://writersontherange.org/chaco-culture-national-park-is-under-siege/.
  17. The White House Tribal Nations Summit Progress Report, Nov. 15-16, 2021. Prepared by The Domestic Policy Council. https://www.whitehouse.gov/wp-content/uploads/2021/11/WH-Tribal-Nations-Summit-Progress-Report.pdf
  18. Joshua Partlow & Darryl Fears, Biden proposes 20-year drilling ban around Chaco Culture National Historic Park, a sacred tribal site. The Washington Post. (Updated Nov. 15, 2021 at 2:59 p.m.) https://www.washingtonpost.com/climate-environment/2021/11/15/chaco-canyon-drilling-biden/.

  19. The White House Tribal Nations Summit Progress Report, Nov. 15-16, 2021. Prepared by The Domestic Policy Council. https://www.whitehouse.gov/wp-content/uploads/2021/11/WH-Tribal-Nations-Summit-Progress-Report.pdf

  20. Coral Davenport, Biden to Bar New Drilling Around a Major Native American Cultural Site, The New York Times, (published Nov. 15, 2021). https://www.nytimes.com/2021/11/15/climate/biden-bans-drilling-chaco-canyon.html
  21. Id.
  22. Bruce Babbitt, Chaco Culture National Park is under siege, Writers on the Range (Published Sep. 27th, 2021) https://writersontherange.org/chaco-culture-national-park-is-under-siege/
  23. Richard Moe, The Treasures of Chaco Canyon Are Threatened by Drilling, The New York Times (published Dec. 1, 2017). https://www.nytimes.com/2017/12/01/opinion/chaco-canyon-new-mexico-drilling.html.
  24. Coral Davenport, Biden to Bar New Drilling Around a Major Native American Cultural Site, The New York Times, (published Nov. 15, 2021). https://www.nytimes.com/2021/11/15/climate/biden-bans-drilling-chaco-canyon.html; “Navajo Nation Opposes Withdrawal for Development Chaco Canyon, Tribal Consultation Ignored.” The 24th Navajo Nation Council, Office of the Speaker. Press Release (Nov. 16, 2021). https://www.navajonationcouncil.org/wp-content/uploads/2021/11/Chaco_Opposition_2021.11.16.pdf.
  25. Joshua Partlow & Darryl Fears, Biden proposes 20-year drilling ban around Chaco Culture National Historic Park, a sacred tribal site. The Washington Post. (Updated Nov. 15, 2021 at 2:59 p.m.) https://www.washingtonpost.com/climate-environment/2021/11/15/chaco-canyon-drilling-biden/.
  26. Coral Davenport, Biden to Bar New Drilling Around a Major Native American Cultural Site, The New York Times, (published Nov. 15, 2021). https://www.nytimes.com/2021/11/15/climate/biden-bans-drilling-chaco-canyon.html
  27. Mark Armao, In Chaco Canyon, a moratorium on oil and gas leases might be too little too late.” Grist (published Feb. 17, 2022). https://grist.org/indigenous/in-chaco-canyon-a-moratorium-on-oil-and-gas-leases-might-be-too-little-too-late/
  28. Bruce Babbitt, Chaco Culture National Park is under siege, Writers on the Range (Published Sep. 27th, 2021) https://writersontherange.org/chaco-culture-national-park-is-under-siege/
  29. “Navajo Nation Opposes Withdrawal for Development Chaco Canyon, Tribal Consultation Ignored.” The 24th Navajo Nation Council, Office of the Speaker. Press Release (Nov. 16, 2021). https://www.navajonationcouncil.org/wp-content/uploads/2021/11/Chaco_Opposition_2021.11.16.pdf
  30. Mark Armao, In Chaco Canyon, a moratorium on oil and gas leases might be too little too late.” Grist (published Feb. 17, 2022). https://grist.org/indigenous/in-chaco-canyon-a-moratorium-on-oil-and-gas-leases-might-be-too-little-too-late/
  31. “Navajo Nation Opposes Withdrawal for Development Chaco Canyon, Tribal Consultation Ignored.” The 24th Navajo Nation Council, Office of the Speaker. Press Release (Nov. 16, 2021). https://www.navajonationcouncil.org/wp-content/uploads/2021/11/Chaco_Opposition_2021.11.16.pdf
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Case Review: Art Works, Inc. v. Diana Al-Hadid

By Nina Rice*

The history of New York’s statutory law pertaining to the art market is relatively brief despite the state’s long held status as the art capital of the United States, if not the world. As visual arts continue to evolve in complexity, lawsuits between artists and their gallerists, too, have become increasingly more complex. It begs the question of whether New York should expand upon its legislative history with further amendments to the New York Arts & Cultural Affairs (NYACAL) or any other art laws. For example, currently, NYACAL, which governs artist-gallery relationships, does not explicitly address any scenario where the gallerist or merchant funds the creation of an artwork and employs a third party to assist in producing the works nor does it address any of the complications that such interactions can create in an artist-gallerist relationship. NY’s Commercial Code similarly is silent on this point.

Background

On February 23, 2021, Marianne Boesky Gallery, incorporated as Art Works, Inc., (“Art Works”) filed a complaint against sculptor and mixed media artist Diana Al-Hadid declaring that Art Works had an ownership interest in Al-Hadid’s unsold works and was entitled to share in the proceeds from any sale.[1] On May 9, 2022, Justice Louis Nock entered a judgment in favor of Al-Hadid. What sets this lawsuit apart from notable cases between artists and gallerists dealing with the question of ownership, which is clearly stated in NYACAL § 12, is the fact that the gallerist here funded a third party to assist in creation of the works. Terms of ownership set forth in NYACAL do not explicitly address circumstances which include a third party interest and the gallerist’s funding of the creation of works. Thus, this case looks to the terms of the contract.

Part of exhibits in the case, contract for production of Diana Al-Hadid’s work.

Al-Hadid and the Gallery entered into a consignment agreement[2] on February 17, 2011, which stipulated the rights to profit off of five sculptures[3] and costs which the Gallery would take on to facilitate the creation, marketing, and sale of Al-Hadid’s five sculptures. The fabrication costs were about $25,000 for each sculpture. In 2019, Boesky terminated its representation of Al-Hadid. At that time, one sculpture remained unsold.

Boesky originally filed suit in 2021, alleging that pursuant to the 2011 agreement, the Gallery was entitled to one-third of the shares of multiple sculptures, plus the one-third share of the fabricator, Graphicstudio. Previously the Gallery had purchased these interests from the fabricator. The Gallery asserted that it was entitled to a share of ownership in the unsold work because the Gallery financed Al-Hadid’s fabrication costs and purchased the fabricator’s share in the work. Al-Hadid unequivocally asserted complete ownership of the unsold work, stating that the 2011 Agreement was terminated in 2012 and further, pursuant to the New York Arts and Cultural Affairs Law, the gallery has no greater ownership to the work then Al-Hadid.[4]

A Brief History of New York’s Art Laws

New York State amended its General Business Law to include its first law pertaining to the gallery-artist relationship in 1966, stating that any artwork delivered by the artist to the gallery for the purpose of its sale within the gallery would be deemed to be a consignment and that the gallery is to act as the agent for the artist. [5] In 1969, the law was amended to require art merchants to act as fiduciaries, making the dealer liable to the artist of the consigned artwork and requiring proceeds of a sale of consigned artwork to be held in trust by the gallery for the benefit of the artist (here, the consignor).[6] The gallery must “deal fairly and honestly with the artist, to account periodically to the artist as to dispositions of the property, and to disclose to the artist all information relevant to the subject matter of the agency.”[7] In 2011, New York finally modified the Arts and Cultural Affairs Law, 45 years after its initial effort to protect artist’s rights in relation to the art market, and in 2012, amended its Arts and Cultural Affairs Laws to allow for criminalization of gallerists and art merchants who fail to act responsibly with regards to payments received for the sale of an artwork, further regulating their fiduciary duty in consignment agreements.[8] Currently, after an even more significant boom in New York’s art scene, with over 1,000 galleries in New York City alone, this codification has not been amended in respect to ownership of art co-produced.[9]

Now, the relevant section of NYACAL reads in part:

NYACAL § 12.01 (a), (c):

1. Notwithstanding any custom, practice or usage of the trade, any provision of the uniform commercial code or any other law, statute, requirement or rule, or any agreement, note, memorandum or writing to the contrary:

(a) Whenever an artist or craftsperson, or a successor in interest of such artist or craftsperson, delivers or causes to be delivered a work of fine art, craft or a print of such artist’s or craftsperson’s own creation to an art merchant for the purpose of exhibition and/or sale on a commission, fee or other basis of compensation, the delivery to and acceptance thereof by the art merchant establishes a consignor/consignee relationship as between such artist or craftsperson, or the successor in interest of such artist or craftsperson, and such art merchant with respect to the said work, and:

(i) such consignee shall thereafter be deemed to be the agent of such consignor with respect to the said work;

(ii) such work is trust property in the hands of the consignee for the benefit of the consignor;

(iii) any proceeds from the sale of such work are trust funds in the hands of the consignee for the benefit of the consignor;

(iv) such work shall remain trust property notwithstanding its purchase by the consignee for his own account until the price is paid in full to the consignor;  provided that, if such work is resold to a bona fide third party before the consignor has been paid in full, the resale proceeds are trust funds in the hands of the consignee for the benefit of the consignor to the extent necessary to pay any balance still due to the consignor and such trusteeship shall continue until the fiduciary obligation of the consignee with respect to such transaction is discharged in full;  and

(v) such trust property and trust funds shall be considered property held in statutory trust, and no such trust property or trust funds shall become the property of the consignee or be subject or subordinate to any claims, liens or security interest of any kind or nature whatsoever of the consignee’s creditors.

(c) Proceeds from the sale of consigned works covered by this section shall be deemed to be revenue from the sale of tangible goods and not revenue from the provision of services to the consignor or others, except that the provisions of this paragraph shall not apply to proceeds from the sale of consigned works sold at public auction.

The following is a study of two recent cases that cited NYACAL 12.01 in connection with consignment agreements between artist and galleries that went array: Art Works, Inc. v. Al-Hadid, No. 651267/2021, 2022 N.Y. Misc. LEXIS 2428 (Sup. Ct. New York Co. 2022) and Scher v. Stendhal Gallery, Inc., 983 N.Y.S.2d 219 (App. Div. 2014).

Holding in Art Works, Inc. v. Diana Al-Hadid

Justice Nock ruled that the agreement between Boesky and Al-Hadid “did not evince an intent to create joint ownership in defendant’s work,” and thus the Gallery has no claim to ownership.[10] The agreement only created a consignment through which the Gallery would sell the sculptures for Al-Hadid in exchange for one-third of the sales proceeds. Therefore, the Gallery is only entitled to a share of the proceeds, not a share of the art itself, even if it was unable to recoup the funds advanced for the creation of the sculptures through sale during the term of the agreement. The ruling was appealed and on appeal affirmed in favor of the artist, with attorney fees awarded to Al-Hadid.

This case echoes another lawsuit between artist and gallerist, Scher v. Stendhal Gallery, Inc.[11] In Scher, renowned graphic designer and fine artist Paula Scher sued Stendhal Gallery for the relinquishment of over 300 unsold works from the gallery.

While Scher’s case revealed a litany of complaints rising from the corrupt intentions of her gallerist, the gallery incurred around $300,000 in printing and production costs and believed it was entitled to partial ownership of the works. The gallery argued that NYACAL § 12.01 did not apply because what the two parties had was not a consignment agreement. Under NYACAL § 12.0, a consignment agreement is created when the artist, already having title to an artwork she created, then delivers the piece of art to an art merchant for sale; here, the gallerist engaged the printer, paid the printer, and took delivery of the prints from the printer to be sold in the gallery. Therefore, the artist never actually delivered the art works to the gallery.

The court struck down this argument and asserted that Scher was the owner of the works, and according to their agreement, the gallery was acting as Scher’s agent. As Scher’s agent, they were prohibited from acting for their own self-interest or benefit.[12] Essentially, the Court asserted that if the gallery wanted to be entitled to the works of art, they should have disclosed this, in plain terms, to Scher at the time of contracting.[13]

Scher and Al-Hadid’s cases share a similar issue: Stendhal Gallery, like Marianne Boesky Gallery, maintained that because it financed and oversaw the fabrication of the works, in this case the silk-screen printing of Scher’s Maps collection, that it was entitled to the ownership of the unsold works.

Implications

The ruling in Art Works, Inc v. Diana Al-Hadid sets precedent in that ownership, regardless of whether an art merchant finances the creation of artwork, is undisputedly entitled to the artist, unless the merchant and artist explicitly contract for a provision stating otherwise. However, artists may still take extra precaution when entering a consignment agreement to prevent questions of ownership or debts upon the termination of the relationship. Galleries, in turn, must recognize that there is a certain amount of risk entailed with taking on a new artist, especially so when they advance funds for the creation of works, and they too can negotiate terms to an agreement to divide risk amongst parties.

Al-Hadid is now represented by Kasmin Gallery in New York (also Berggruen gallery in San Francisco and Morán Morán gallery in Los Angeles), where several of her pieces are on display. Upon meeting with her agent and another representative at Kasmin, it was clear that there are still galleries that remain proponents for artists’ rights. Both representatives spoke positively about the ruling and the precedent for future artists like Al-Hadid. Al-Hadid’s contract, as with all contracts at Kasmin Gallery, include a confidentiality clause. So while we are unable to know exactly how Al-Hadid now operates in terms of how creation pertains to ownership, one can assume that Al-Hadid has now learned from her case and that any agreement should contain terms outlining how a third party fabricator and any funding from the gallery for creation of future works effects ownership.

Scher, a veteran of the arts and design, unashamedly has taken the opposite route – a return to old-fashioned roots. She is now represented by two galleries, Jim Kempner Fine Art (NYC) and Bryce Wolkowitz Gallery (NYC), and has no formal contract in place with either. “If you cannot do business on a handshake with someone,” in this industry, Scher concedes, “then they are not worth doing business with at all.”

Does Scher have the right idea? Should artists, who are, for the most part, often by choice, not seasoned businessmen and women, oblige by the once traditional norms in hopes that good faith and governing law set forth to protect them prevail, or should they take matters into their own hands? And if it is the former, will the precedent set by Art Works, Inc v. Diana Al-Hadid, coupled with the current iteration of NYACAL, be enough to protect future artists from encountering lawsuit similar to Al-Hadid and Scher, or should there be further amendments to the NYACAL which would have made both the claims in Scher and Al-Hadid fail on their face? There are many more questions to be asked in this space and no one model fits all answer, save for the duties owed by parties to each other following good faith negotiations. If you want to learn more about this subject or ask your questions, take a look at the Center’s Artist-Dealer Relations Clinics.

About the Author: Nina Rice is a second-year student at New York Law School and member of the Center for Art Law intern class of 2022. With a passion for artist’s rights, Rice enjoys exploring the possible complexities of consignment agreements and laws that govern relationships in the art market.

Additional Reading Suggestions:

ARTnews, New York Judge Sides with Artist in Lawsuit Brought by Former Gallerist Over Bronze Sculpture and ‘Unpaid Sum,’ (2022).

Center for Art Law, Case Review: Scher v. Stendhal Gallery, Inc., et al., (2014).

Judith Wallace, ArtNet, Art Law on Consigning Art, Who needs protection when consigning art? (2013).

Leslie W. Chervokas and Stephen D. Brodie, Art & Advocacy, The Art Law Newsletter of Herrick, Feinstein LLP, Volume 13. (2012).

More about artist Diana Al-Hadid can be found here.

More about artist Paula Schere can be found here.

  1. Art Works, Inc. v. Al-Hadid, No. 651267/2021, 2022 N.Y. Misc. LEXIS 2428 (Sup. Ct. New York Co. 2022) at 6.
  2. For a one-year term, with the option to extend.
  3. (1/3-3/3 and AP 1/2 and 2/2)
  4. New York Arts and Cultural Affairs Law §11.01(12): “On consignment” means that no title to, estate in, or right to possession of, the work of fine art or multiple that is superior to that of the consignor vests in the consignee, notwithstanding the consignee’s power or authority to transfer or convey all the right, title and interest of the consignor, in and to such work, to a third person.
  5. Mayer Brown, Special Rules Govern Consignments of Art in New York (Jan. 3, 2017), https://www.mayerbrown.com/-/media/files/perspectives-events/publications/2017/01/special-rules-govern-consignments-of-art-in-new-yo/files/get-the-full-report/fileattachment/161229-update-bf-bfl.pdf

  6. Id.

  7. Ralph E. Lerner & Judith Bresler, Art Law, 6 (Practicing Law Institute, 3rd ed. 2005).
  8. NYACAL § 12.01.
  9. Amendments have been passed in respect to other areas, see A.107/S.7536 (https://www.assembly.state.ny.us/leg/?bn=A00604&term=&Summary=Y&Actions=Y&Votes=Y&Memo=Y&Text=Y) and A.8604-B/S.4988-B (https://www2.nycbar.org/pdf/report/uploads/20072122-ReportonA7189S4988reNewYorkArtsandCulturalAffairsLawNYACAL.pdf).
  10. Art Works, Inc. v. Al-Hadid, No. 651267/2021, 2022 N.Y. Misc. LEXIS 2428 (Sup. Ct. New York Co. 2022).
  11. Scher v. Stendhal Gallery, Inc., 983 N.Y.S.2d 219 (App. Div. 2014).
  12. Reed v. Warner, 5 Paige Ch 650, 656 (1836).
  13. Scher, at 25.
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