The Art Law Report

Providing timely updates and commentary on legal issues in the museum and visual arts communities

Syncora Reaches Deal with Detroit and Apologizes to Mediators, Grand Bargain to Protect Detroit Institute of Arts Likely Secure

Posted in Bankruptcy, Detroit Bankruptcy

After months of bitter fighting over the so-called Grand Bargain to infuse the Detroit bankruptcy with hundreds of millions of dollars from (among others) the State of Michigan, the Community Foundation for Southeast Michigan, the Kresge Foundation, the Ford Foundation, the John S. and James L. Knight Foundation, the William Davidson Foundation, the Fred A. and Barbara M. Erb Family Foundation, the Hudson-Webber Foundation, the McGregor Fund, and the Charles Stewart Mott Foundation to keep the collection of the Detroit Institute of Arts out of discussion for any sale or use as collateral, the Grand Bargain’s fiercest opponent has announced an agreement with the city and the withdrawal of its opposition to the plan of adjustment.  This does not completely put an end to discussion about the role of the DIA collection, but for all intents and purposes it will likely be the last of any proposal to collateralize or sell the artwork.  The episode also provides a lesson to practitioners about the cost of overzealousness. 

Of the many creditors in the Detroit bankruptcy, Syncora Capital is among the largest.  Syncora guaranteed payment of some of the city’s pension obligations to other banks, and is thus facing a large reckoning if and when those pensions are not paid in full (as they won’t be, since the bankruptcy is necessarily going to pay less than 100 cents on the dollar on the city’s debts).  Along with the Financial Guaranty Insurance Co., Syncora has been a vocal opponent of the Grand Bargain specifically, and of the idea generally that the DIA collection (which is largely owned by the city) should be left out of the bankruptcy discussion.  Syncora has disputed—accurately—the idea that a generalized “public trust” actually prohibits such a sale for the benefit of the city’s debts, and has countered the city and DIA at every turn as best it can.  When the city had the collection appraised by Christie’s, Syncora drove a competing appraisal.  When the city and DIA claimed the art couldn’t be sold, Syncora argued that even if the city believed it shouldn’t, it actually could.

All of this was in service of a relatively straightforward argument: even if the city could not be compelled to sell any artwork, once it brought DIA into the discussion for the benefit of the bankruptcy, it had had fiduciary obligation to maximize the return.  Thus, Syncora argued, the city’s “undervaluing” of the collection led to an underperforming return in the Grand Bargain, i.e., even without selling the art outright, it could and should have gotten more.  Also, it argued, the Grand Bargain treated some creditors preferentially over others, a bankruptcy no-no.

These were and are arguments to be taken seriously.  No one really believed Syncora or anyone else would be repaid in full, but this was about pressuring Detroit to come up with a plan that maximized Syncora’s recovery.  The problem for Syncora is that it badly overplayed its hand in the end.  While making its serious arguments about whether the city had done enough, it also made accusations of bias and favoritism against mediators Gerald Rosen (chief judge of the U.S. District Court for the Eastern District of Michigan) and Eugene Driker, based on former family connections to DIA.

Suffice it to say, that was a serious tactical error.  It is one thing—indeed a mandatory thing within the duties of advocacy—to make a recusal request if a lawyer thinks that a tribunal or judge is or might appear to be biased.  But once that is made, the parties are in for the ride, with the issue preserved for appeal in the event of an adverse result.  Syncora could—and should—have argued to Judge Rhodes presiding over the bankruptcy trial that the mediators should have recused themselves, and that the mediation was thus doomed from the start when they did not (we have no view of whether that was indeed the case, of course).  They should also have left it at that.  But they went the extra step to actually accuse the mediators explicitly of partiality.  Judge Rhode was furious, and separately issued a “show cause” order, putting the burden of proof back on Syncora to show why its accusation did not merit litigation sanctions.

Today’s deal was accompanied by a public apology, and Judge Rhodes has apparently accepted it and withdrawn the show cause order.  Did the sanctions drive the settlement deal?  Probably not entirely, but it cannot have been irrelevant.  Among the many lessons this case will teach, it is that no matter how strong or weak your legal position, one has to resist the urge to take up the rhetoric.  It is almost always of no use, and quite often counterproductive. 

The Art Law Report Turns Three: the Training Wheels are Off

Posted in Copyright, Cy Pres, Deaccession, Detroit Bankruptcy, Fair Use, Gurlitt Collection, Restitution

As I have before, I wanted to mark the third anniversary of this blog since we posted three articles on September 15, 2011.  In the last year, you (the reader) have helped the Report grow beyond our most optimistic hopes.  We have done our best to cover significant events like the Gurlitt saga and restitution issues, the Detroit bankruptcy and the Detroit Institute of Arts, the Corcoran Gallery merger, auction houses and privacy in New York, the Beastie Boys GoldieBlox and copyright/fair use, the “flea market Renoir” case, and so much more.  Our monthly traffic in year three has almost surpassed the readers in all of year one, and the sky is the limit.  As always, the goal remains to present a fresh perspecive on these legal issues affecting the visual arts and its institutions, of use and interest both to the lawyer and non-lawyer alike. 

Thank you for reading, and stay tuned for more.

Just Kidding? Celebrity Hacked Photograph Exhibition Scuttled

Posted in Copyright, Fair Use

Having presumably gotten all of us to take the bait, appropriation artist XVALA has backed off and announced that he will not include versions of hacked photographs of Jennifer Lawrence, Kate Upton, and others, in a show entitled “No Delete.”  The show will instead include, apparently, “the artist’s self-shot, life-size, nude images.”  So, there’s that. 

With that said, a few points came to mind after first considering the issue on Tuesday.  First, it is important to remember that the copyright protection that the celebrities/authors could claim in their photographs is not limited to this exhibition.  Anyone circulating the pictures would be an infringer.  The possibility of an art exhibition raised the prospect that XVALA might claim fair use, but garden variety peddlers of such things could not plausibly do so.

The other is to clarify a point we made about injunctive relief.  To be clear, no one holding a copyright in the photographs needs a court order to begin protecting herself.  Under the Digital Millenium Copyright Act, any Internet Service Provider that receives a takedown notice can spare itself from infringement liability by complying with that notice.  In a case as publicized as this, it is hard to imagine any ISP not doing so as quickly as possible.  An injunction would simply strengthen the celebrity plaintiff’s hand.

So perhaps we were just trolled on this one, but it will be interesting to see if there are any further uses of copyright. 

Glass Half Full or Half Empty? Detailed Report Published on Worldwide Efforts to Restitute Nazi-Looted Art Since the 1998 Washington Conference

Posted in Restitution, World War II

After the 1998 Washington Conference on Holocaust Era Assets and the eponymous Washington Conference Principles on Nazi-Stolen Art that came out of it, it is hardly surprising that a recurring theme has been to assess the progress of those nations that participated and signed on.  Equally unsurprisingly, those assessments are usually more anecdotal than empirical, and usually arise out of a particular case or cases in the context of that country’s response.

As part of the International Council of Museums (ICOM) Museum and Politics Conference currently taking place in St. Petersburg, two writers have aimed to change that, and have issued a remarkably detailed yet broad report on the progress of the forty-four countries that endorsed the Washington Conference Principles, and the forty-seven that endorsed the 2009 Terezin Declaration after that conference on the tenth anniversary of the Washington Conference.  Dr. Wesley A. Fisher and Dr. Ruth Weinberger, on behalf of the World Jewish Restitution Organization (WJRO) and the Conference on Jewish Material Claims Against Germany (Claims Conference) give an overview of recent history, and then address each country one by one.  It is a most impressive piece of work. What does it all mean?  Most are unimpressed with the results (not the report), Graham Bowkley’s headline in the New York Times reads “Nations Called Lax in Returning Art Looted From Jews.”

The report begins with a definition:

“Looted art,” as defined for the purposes of this paper, consists of artworks, including paintings, prints and sculptures, as well as other cultural property plundered from Jews by the Nazis, their allies and collaborators.

Notably, this does not include “flight goods,” and it is not clear whether it is meant to include forced sales or inherently coercive sales under duress (I, sham transactions well below market value).  The latter forms a critical part of the universe of Nazi-looted art, given the bizarre propensity for papering these illegitimate sales with receipts and “paying” their victims for their art.

In any event, the report takes a high level view at what progress has been made.  Just to review, the Washington Conference Principles, while deliberately non-specific in many regards, have an overarching theme: that countries should take a variety of steps (archival openness, fair processes, internal review) to improve what had been the state of restitution and provenance research.  Thanks to the sea-change in attitudes, at least, it is almost easy to forget that in 1998 the problem was almost unaddressed, and barely acknowledged.  The Terezin Declaration took stock of some progress, and recommitted the participants to the effort. 

The Washington Conference Principles are of greatest relevance to those countries both with significant state collections, and where the events of the war or occupation took place.  This is for several reasons: while private museums and foundations (particularly in the United States) can be encouraged to undertake certain steps (as the Association of Art Museum Directors and American Alliance of Museums do), those institutions hold private property of which the U.S. government cannot dictate a transfer.  California’s revision of its statute of limitations is a notable exception.  But in the museums of Europe, most are owned by their respective states, so assuming a will to act, the outcome is within reach.  And, of course, simple geography means that so much of the art that changed hands during the war went somewhere, but still in Europe. 

How one views the report from there really is a matter of outlook.  At first blush, this quote is terribly depressing:

Of the 50 countries for which summaries are appended to this report, only 4 may be said to have made major progress towards implementing the Washington Conference principles and the Terezin Declaration, while an additional 11 have made substantial progress in this regard.

Yet two of the countries lauded for significant progress are Germany and Austria, which are of unique importance for obvious reasons.  The Netherlands and the Czech Republic, two countries whose significant Jewish populations and collections were decimated, round out the circle of honor.  So in a certain sense, if you had to pick a short list of countries where progress is essential, these would be on it.  Austria is clearly the gold standard, and perhaps the greatest reason for optimism for one simple reason: at the time of the first Washington Conference, Austria was at the other end of the spectrum, known for foot-dragging and hiding behind its post-war restitution laws that facially returned Jewish property but forbade its export.  In 1998, however, Austria passed its revised restitution law that has created a formal arbitration process and led to the restitution of dozens, if not hundreds, of works.  Change is clearly possible. 

Germany is a harder case to assess.  The report lauds the creation of the German Advisory Commission for the Return of Cultural Property Seized as a Result of Nazi Persecution, Especially Jewish Property (Beratende Kommission im Zusammenhang mit der Rückgabe NS-verfolgungsbedingt entzogoner Kulturgüter, insbesondere aus jüdischem Besitz).  That commission, better known from presiding member Jutta Limbach, has indeed recommended some restitution.  But the number of cases it has handled is low, and it has recently put its foot in it twice in a row

The report was complimentary of the information made available in Germany, but noted that most research is still conducted by the museums themselves.  That makes any progress necessarily slow.  The proposed national research center (which German Minister of Culture Monika Grütters was quoted yesterday in Die Welt as possibly opening this year) is also cited favorably.  The report discusses the Gurlitt case, but more as a matter of reporting, and mentions the assertions of Gurlitt’s representatives somewhat uncritically. 

Lastly, the so-called “Lex Gurlitt” to extend the statute of limitations is discussed.  This is timely, because after almost eight months languishing in the Bundesrat, Bavarian Minister of Culture Winfried Bausbeck has renewed his push to get the law passed, but the results are uncertain and the effect of the proposed law is debatable (from the standpoint of both efficacy and, apparently, constitutionality). 

The Netherlands is rightfully treated as a success story.  Like Austria, while all the people can’t be pleased all the time, most regard the national claims system there as fair and comprehensive. 

That’s the glass is half full view.

France gets the designation of “substantial progress” with Belgium, Luxembourg, Norway and Slovakia.  I think France failing to make the top category has to be regarded as a disappointment, however, because of its importance.  The targeting of French Jews, whether in Vichy territory or under German occupation, was among the most organized and ruthless aspects of Nazi art looting.  And the French national museums’ seemingly annual announcement that they are about to get serious on the issue is best tuned out at this point.  France’s 2,000 “heirless” objects have been a known commodity for two decades, with little change.  To be fair, France does have a 1999-created Commission for the Compensation of Victims of Spoliations. 

That’s as good as it gets, however.  From there, the only question in report is just how bad the offenders are.  Progress in nearly all of eastern Europe is regarded as non-existent (in addition to those discussed specifically below: Belarus, Bosnia, Bulgaria, Estonia, Latvia, Macedonia, Poland, Romania, Serbia, Slovenia, and Ukraine).

Italy is singled out for particular criticism, and fairly so, frankly.  Italy has pursued antiquities, museums, even curators, to the ends of the earth (even objects found in international waters), so one might expect a comparable effort with regard to Nazi-looted art closer to home (Italy’s established Jewish community fared well by comparison until late in the war and Mussolini’s collapse, after which the Nazis took over the persecution in earnest).  Not so, regrettably.  The report states succinctly:

It does not appear that provenance research is taking place in Italy, nor is there a legislative background that would allow for the restitution of cultural and religious property.

Hungary also gets worked over in the report:

About 90-92 % of the artworks taken out of the country were returned between 1945 and 1948, with approximately 20% remaining in Hungary’s cultural institutions – including artworks looted from Hungarian Jews. The National Gallery and the Museum of Fine Arts are known to hold looted art. Despite numerous legal attempts, the heirs to the Herzog collection, the Hungarian banker Baron Mor Lipot Herzog, who had collected between 1,500 and 2,500 artworks, have been denied any restitution. In 2010, the heirs to the Herzog collection filed a lawsuit in the United States against Hungary. The Herzog collection is not the only collection of Jewish artworks kept by Hungarian cultural institutions. According to experts in the field, Hungarian museums still store several hundred works of art obtained under questionable circumstances.

Hungary has never set up a historical commission to investigate Hungary’s role and participation in the financial and physical annihilation of its Jews, and it has not initiated any provenance research by its cultural institutions. While a few restitutions have taken place, important works of art have consistently been kept from being restituted to their rightful owners.

Many other countries are criticized for giving lip service to the Washington Principles but little else. 

In the end, there is no question that the state of affairs now relative to 1997 is night and day.  That should be acknowledged and celebrated.  But there is clearly more to be done. 

Registration Open for 2015 National Cultural Heritage Law Moot Court Competition at Depaul Center for Art, Museum & Cultural Heritage Law

Posted in Copyright, Moral Rights

For students following the various issues we cover here, there is an exciting opportunity next winter.  Registration is now open for DePaul University College of Law’s 2015 National Cultural Heritage Law Moot Court Competition in Chicago on February 27-28, 2015.  The competition is open to twenty-six two- and three-member student teams from ABA-accredited or provisionally accredited law schools.  Schools may register up to two teams. 

The 2015 Competition will focus on constitutional challenges to the Visual Artists Rights Act of 1990 (VARA), 17 U.S.C. § 106A, which protects visual artists’ moral rights of attribution and integrity. The problem will address both a First Amendment and a Fifth Amendment challenge to VARA.

The Center for Art, Museum & Cultural Heritage Law is a national leader for cultural property issues and the law (headed by the renowned Patty Gerstenblith, Morag Kersel, and Lubna El-Gendi), and its events are invariably fascinating and well-run.  Moreover, VARA is a fascinating topic that is not as well-known or interpreted as other aspects of copyright law, particularly insofar as its moral rights components are slightly at odds with many other aspects of copyright law.  Any students interested in these issues should consider joining the competition. 

Visit the competition website at go.depaul.edu/chmoot to register, or contact the Competition Board at chmoot@gmail.com with questions.

Massachusetts High Court Clarifies: Written Agreement Not Required to Create Consignment of Fine Art and its Resulting Trust Duties

Posted in Bankruptcy, Consignment, Legislation

The Supreme Judicial Court, the high court of the Commonwealth of Massachusetts, has answered a certified question from the Bankruptcy Court about the interpretation of Massachusetts’s fine art consignment law, G.L. c. 104A.  The case, Eve Plumb et al. v. Debra Casey, SJC-11519, originated with an art dealer’s bankruptcy and the claim by the trustee in that bankruptcy that the artwork in the dealer’s possession belonged to that bankrupt dealer, not the artists.  The SJC has interpreted the 2006 amendments to the law for the first time and clarified the roles of everyone involved.  In full disclosure, I did some work for two of the artists (Dylan Stark and Robert Stark) at an early phase of the Bankruptcy Court proceedings.  Eve Plumb, now an artist but also well known as the actress who played Jan Brady on The Brady Bunch, was another of the artist-claimants.  In sum, once an artist delivers a work of art for sale for the purpose of exhibition or sale, it is a consignment, and the seller/consignee holds it in trust for the artist, regardless of the consignee’s own circumstances.

Kenneth Wynne III and Allyson Wynne owned a gallery called Wynne Fine Art, Inc. in Chatham.  While in possession of a large number of artworks that had been delivered for consignment by various artists, the Wynnes, and the gallery itself, all filed for bankruptcy.  The gallery filed a Chapter 7 petition, meaning that the corporation intended to liquidate itself, rather than reorganize and emerge to try again.  As is typical in that scenario, a bankruptcy trustee is appointed to oversee the liquidation.

In a nutshell, when the gallery went out of business and the artists who had put their works there for consignment requested them back, that trustee (Debora Casey) took the position that the paintings were the property of the estate, and moved for permission to sell the art.  The downside to the artists was enormous: rather than receive the actual artwork back, which they could sell or treat however they want, the art would have been sold and the sales proceeds added to the overall bankruptcy estate, against which the artists would have claims as unsecured creditors (i.e., not secured by any specific collateral or priority), certain to get back pennies on the dollar of the art’s value, if that.

The trustee’s position was based on the interplay between the Uniform Commercial Code (the U.C.C.) and G.L. c. 104A.  In a general context, unless a consigner “perfects” its interest under the U.C.C. by filing a U.C.C.-1 statement with the Secretary of State of the state where the property is located, anything in the actual possession of a debtor becomes property of the bankruptcy estate when the petition is filed.  Casey argued that since none of the artists had filed U.C.C.-1 statements before the bankruptcy, all of the artwork was estate property.  She rejected the artists’ claims that the delivery was a consignment because of her interpretation of G.L. c. 104A, § 2(b), which states:

(b) A consignor who delivers a work of fine art hereunder shall, upon delivery of the work of fine art, furnish to the consignee a separate written statement of delivery of the work of fine art, which shall include at a minimum the following information:—

(1) the artist’s name and the name of the owner of the work of fine art;

(2) the title, if any, of the work of fine art;

(3) the medium and dimensions of the work of fine art;

(4) the date of completion of the work of fine art;

(5) the date of delivery of the work of fine art; and

(6) the anticipated fair market value of the work of fine art.

Thus, Casey argued, any of the artists who had delivered paintings to the Wynnes without such a written statement were not consignors, but rather unsecured creditors under the U.C.C.

Not surprisingly, the artists disagreed.  Citing the legislative history of the 2006 amendment (in which Arts and Business Council Executive Director Jim Grace, who testified on behalf of the artists at an early hearing in the Bankruptcy Court, had an important role in drafting), the artists cited the provision immediately prior, which states:

(a)  Notwithstanding any custom, practice or usage of the trade to the contrary, or any other language herein, whenever a consignor delivers or causes to be delivered a work of fine art to a consignee in the commonwealth for the purpose of exhibition or sale, or both, on a commission, fee or other basis of compensation, the delivery to and acceptance of the work of fine art by the consignee shall constitute a consignment, unless the delivery to the consignee is pursuant to an outright sale for which the deliverer of the work of fine art receives or has received compensation for the work of fine art upon delivery.

For the purposes of both of these provisions, “consignment” and “consignor” are defined in G.L. c. 104, § 1 as “a delivery of a work of fine art under which no title to, estate in, or right to possession of, the work of fine art superior to that of the consignor shall vest in the consignee, notwithstanding the consignee’s power or authority to transfer and convey to a third person all of the right, title and interest of the consignor in and to the work of fine art,” and “a person who consigns a work of fine art to a consignee, including but not limited to an artist who creates works of fine art, an artist’s heirs or legatees, or an owner of a work of fine art who holds title to the work of fine art,” respectively.

This distinction is critical, because G.L. c. 104A, § 3(b) dictates that if art is lent on consignment, then it becomes property held in trust for the benefit of the consignor.  Property held in trust creates fiduciary obligations on behalf of the consignee, chief among them in this case that he cannot use the property for his own benefit.  So, if the artwork was consigned, then it was trust property and the Wynne’s insolvency would be irrelevant.  The artists would be entitled simply to get the art back without waiting in line as bankruptcy claimants.  The stakes were obviously high.

As noted above, the trustee moved to sell the art, after which the artists responded with a number of procedural actions, including the filing of an adversary proceeding.  At that point, some federal-state structural quirks came into play.  In the federal system of the United States, federal courts (including bankruptcy courts) are often called on to apply laws of the fifty states, the District of Columbia, and the territories.  There are any number of federal court cases that will then be cited thereafter (by both federal and state courts) for their analysis.  Ultimately, the interpretation of a state’s laws rests with that state’s highest court.  So, to take the extreme, even if a case is before the United States Supreme Court, the Supreme Court has to look to the particular state high court for that statutory interpretation (unless the law conflicts with the U.S. Constitution, in which case the Supreme Court gets the final word again).

Sometimes, however, a federal court will be presented with a question that it cannot answer from researching state caselaw.  So it was here, because the 2006 amendments to G.L. c. 104A had not yet been interpreted by the SJC.  To get to the bottom of this state law’s meaning, the Bankruptcy Court “certified the question” to the SJC, which just means that it asked the SJC to tell it what the law means on this question.  The Bankruptcy Court framed the question this way:

Under Mass. Gen. Laws. c. 104A, the Massachusetts fine art consignment statute (‘Chapter 104A’), must a consignor transmit a written ‘statement of delivery’ to a consignee as a necessary prerequisite to the formation of a ‘consignment’; or, alternatively, under Chapter 104A does a consignment arise upon the delivery by a consignor, and acceptance by a consignee, of a work of fine art for sale on consignment, regardless of whether a written ‘statement of delivery’ is sent by the consignor?

The unanimous SJC determined that the statue does not require a written agreement to create a consignment.  The court looked at the passages of the statute quoted above, and started from the traditional interpretive concept that a statute cannot be read in such a way as to make part of it nonsensical.  The trustee’s view, the court said, would render meaningless the description of how a consignment comes into being.  The written agreement required is to protect the artists, not lay a trap for them.  That is, artists are supposed to accompany their consignment with a written agreement and thus create a recording system for fine art.  If they fall short, they will have problems of proof (potentially he said/she said about what was delivered), but they still have a consignment.  In this case, the trustee did not really dispute the circumstance of the delivery, so the result flowed from there.  The Court stated:

The Legislature thus intended the requirement of a written statement of delivery in G. L. c. 104A, § 2 (b), to facilitate a recording system that enhances protections for consignors of art work, and not to create a barrier to such protection.

[]

By delivering a written statement that is then kept on record by the consignee, the consignor reduces the risk that art work will be misidentified, become untraceable, or, in the worst case, be forfeited. . . .   A consignor who does not furnish a written statement of delivery thus jeopardizes the consignor’s own interest in the art work, but nevertheless effects a valid consignment under G. L. c. 104A, § 2 (a), so long as there is delivery of the art work and acceptance for the purpose of exhibition or sale on commission.

The SJC got this one right, and frankly it should never have come to this.  But the upshot is a bolstering of artists’ rights, and a strong encouragement for all sides to get the consignment agreement in place.  A prospective agreement protects everyone, by making the parties’ rights and obligations clear so there is nothing to argue about later.  Anyone on either side of such a transaction will do well to pay close attention and seek counsel about what it should include.

Can Copyright Aid Kate Upton, Jennifer Lawrence, and Other Victims of Celebrity Photo Hack?

Posted in Copyright, Fair Use

As anyone with a computer now knows, the story broke last week of a supposed cache of hundreds of intimate photographs of numerous celebrities, including Kate Upton and Jennifer Lawrence, and Detroit Tigers pitcher Justin Verlander.  Over the course of the week, rumors circulated about who, exactly, had them, and whether or where they would be leaked online.  The story also raised important questions about privacy, security, and default cloud storage of which many people were simply unaware.

We will leave those questions to experts better versed on the topics.  But relevant to our purposes, an appropriation artist “XVALA” (whose real name is Jeff Hamilton) announced plans to exploit the situation in a show entitled “No Delete.”  The show will supposedly take place under the auspices of Cory Allen Contemporary Art and The Showroom, located in the Warehouse Arts District in Saint Petersburg, Florida.

The plans apparently are to include life size images of Upton and Lawrence from among those leaked, unaltered, printed on canvas.  The larger concept for the show is described by Cory Allen as “the artist’s 7 year collection of images found on Google of celebrities in their most vulnerable and private moments, that were comprised by either hackers or the paparazzi.  ‘We share our secrets with technology,” said XVALA.  “And when we do, our privacy becomes accessible to others.’”  The artist went on, “An individual’s privacy has become everyone else’s business…It has become cash for cache.”

What, if anything, will the law say about all this?  Hamilton and Cory Allen have rights of expression, and the mere fact of interest in exploiting someone else’s embarrassment will usually enjoy strong First Amendment protection.  Likewise, while many states (Florida included) have rights of publicity laws, they are often related to the commercial exploitation of another person’s name or likeness.  Art is obviously also commercial, but in the application these laws tend to be strictest with respect to perceived endorsement or unrelated commercial products.  This is not to say that one shouldn’t expect Upton, Lawrence, and anyone else victimized to avail themselves of these laws, but is there anything else they can do?

From here, the strongest potential lies in copyright law.  For this discussion, assume that some significant proportion of the leaked images were taken by the victims themselves (providing the segue for the Art Law Report’s very first use of the word “selfie”).  That photograph, as soon as it was taken, enjoys copyright protection: it is a work of expression fixed in a tangible medium.  Remember, copyright’s minimal thresshold will not inquire into the wisdom or quality of such images, just whether they fit the bill.  These should. 

As a result, the photographer-celebrity would have the right to control (i.e., prohibit) the reproduction or distribution of any copy of that image.  Anyone making a copy has infringed the copyright.  It is also important to remember that copyright formalities are no longer required.  One need not write “© Jennifer Lawrence 2014” or register the photo with the U.S. Copyright Office.  Registration and formalities help an artist establish that he or she is in fact the author or get statutory damages, but there won’t be much question about who took a selfie in a mirror, or even with an arm extended to the camera. 

This brings us squarely back into what seemed to be the ubiquitous topic of 2013: Fair Use.  Indeed, Richard Prince’s Canal Zone was comprised entirely of the use of otherwise copyrighted photographs.  So as the playing field has slanted in favor of fair use, could XVALA or someone like him simply claim fair use?

My opinion is that a court would likely find infringement.  Any fair use analysis is tied to the use in question.  Accepting that “transformativeness” has become the overriding factor (we shouldn’t expect a drawn-out consideration of whether the infringement hurts the celebrities’ market for their own private photographs, for example), would a full sized print on canvas of a private photograph be transformative?  The proposed use apparently adopts the entire image, unaltered (unlike Prince’s use, for example).  And here, perhaps the absence of a transformative intent that actually helped Richard Prince (he expressed indifference as to any particular meaning) will hurt anyone using the celebrity images.  Put another way, if Prince saying he doesn’t care what the images means is less important than what he actually did to the Patrick Cariou Yes, Rasta images, then an artist using an image unaltered but declaring that it has a new meaning just because he says so may fail.  The medium has changed (print on canvas, not photographic paper or digital screen), but it is hard to envision even the Second Circuit panel that decided Prince as sympathetic to the idea that this would be a transformation.  The exhibition, as described, seeks to draw meaning from the fact of the photographs’ availability, not the subsequent act of the copying artist. 

This does not answer all the use questions raised by this story, and photographs taken by another person would be a more complicated question.  But it could be the shortest route to injunctive relief, in particular—meaning the ability to start to remove the images from public view.  The threat of money damages may motivate some potential defendants, but more important to the victims will be such a court order that can be applied to third-party hosts as well as infringers to get them down.  Though, perhaps, many affected by the scandal will decide that the best strategy is simply to ignore it and hope that the attention dies down.  

Kunstmuseum Bern Still Undecided About Gurlitt Inheritance as Regional Politics Loom

Posted in Gurlitt Collection, Museums

Almost none of the legal issues flowing from the seizure of some 1,280 works of art from Cornelius Gurlitt’s apartment in 2012, his agreement with the Bavarian prosecutor, and the ongoing review of the collection for connections to Nazi looting can be resolved until his named heir—the Kunstmuseum Bern—decides whether or not to accept that appointment. When the one-year review deadline passes (with only two public recommendations made so far), it is entirely unclear who will stand for Gurlitt’s “rights” over what is left.

 

It is hardly surprising that the question is a difficult one, but nearly six months after Gurlitt’s death, the museum has not tipped its hand. An article today in the Berner Zeitung reports on a brewing political debate over whether to spend public funds to accommodate the collection. “No tax millions for the Gurlitt collection,” said Samuel Leuenberger (from Trubschachen) in the Grosser Rat, Bern’s regional (Canton) senior legislative council. Bern is already considering additional expenditures for the Paul Klee center, and the Gurlitt prospect has apparently struck a nerve with many.

On the other side of the debate, delegates urged consideration of the tourist and economic possibilities. Beat Giauque (from Ittigen) argued “This is a chance for Bern! Why rule it out before the details are known?”

One has to wonder if the museum is waiting to see how this breaks down. Putting all other factors in the decision aside for a moment, accommodating the size of a collection of that quality would clearly require substantial investment, and whether the canton foots the bill may have more of an effect than we had previously considered.

All Sides Show Their Cards on Detroit Institute of Arts Collection as Bankruptcy Trial Begins

Posted in Deaccession, Detroit Bankruptcy

Opening statements concluded in the Detroit Bankruptcy trial yesterday, and as expected, the role of the art at the Detroit Institute of Arts played a central role. Although opening statements constitute nothing of evidentiary value, they obviously show the road map that the various sides intend to follow. Thanks to courtroom reporting, we have a number of clues about the themes that the lawyers intend to develop.

Not surprisingly, Detroit’s lawyer stressed the value of the Grand Bargain. This fits well with the coordinated strategy of the city and the museum itself to argue, in effect, that the Grand Bargain is a windfall that would otherwise be unavailable, because the art is either held in trust, restricted property, or encumbered in some other way. And, regardless of the technical constraints, that as the city emerges from bankruptcy, its people have a “right to t and culture.”

Creditor Syncora Capital took the lead in attacking the plan of adjustment and the Grand Bargain’s inclusion in it. Most importantly, it argued that the Grand Bargain was the only option that the city ever considered, which is not enough for approval. More inflammatorily, according to reporter Kate Wells, Syncora argued that even if Detroit can’t be forced to sell the art, it should. Even more controversially, Syncora apparently claimed that the collection is so valuable, the city should sell it and just defend whatever litigation followed over the property restrictions.

This last claim obviously got lots of attention, but from here it is a not terribly surprisingly tactic to make the first argument seem more reasonable. Lest anyone dismiss it out of hand, this has been the large creditors’ approach with the DIA collection for some time: to throw out there a possible use of the collection in service of their real point, which is that the plan of adjustment is inadequate and should be redone.

Expect this to get very interesting in the weeks ahead.

Are “Flight Goods” Different than Looted Art? Questions About Fair Value and Duress in Wartime Resonate After Recent Limbach Commission Decision

Posted in Auctions, Restitution, World War II

A conference was held last week at the Oskar Reinhart Museum in Winterthur, Switzerland, entitled “Fluchtgut: Geschichte, Recht und Moral” (Flight Goods: History, Law and Morality).  The objective conference was described in its program as follows (my translation):

As a result of the Nazi policies of persecution, expropriation, and plundering, Switzerland has played a significant role as a destination and transit country of flight goods. . . .  “Flight Goods” are considered cultural goods that were brought to safety into exile by their owners to protect them from governmental access or destruction.  Unlike looted goods, flight goods were and are often disposed of by the owners and their successors in neutral countries.  But difficult questions remain with flight goods, of how to evaluate such a sale against the backdrop of a possible economic hardship, which may have been caused by the changed balance of power in the owners’ home.

While I was not able to attend, Florian Weiland at the Südkurier has written an excellent summary of what sounds like a fascinating day.  The conference and its question are timely after the recent decision by the Limbach Commission in Germany (German Advisory Commission for the Return of Cultural Property Seized as a Result of Nazi Persecution, Especially Jewish Property, or Beratende Kommission to recommend against the restitution of Lovis Corinth’s Drei Grazien (Three Graces) held by the Bavarian State Painting Collections (Bayerische Staatsgemäldesammlungen).  If the Corinth is not “looted art” in the classic sense (though this point remains fiercely disputed), it would certainly qualify as “flight goods” at the very least.  That is to say, even if the occupying Nazi authorities did not seize the painting before it left Luxembourg (in which case no one would dispute that it was looted art), it was most certainly disposed of as a result of the persecution at home in Berlin and in Luxembourg of Clara Levy and her family.  More on that below.  The conference also spotlighted hard questions about defining fair transactions in retrospect in times of persecution and war. 

Weiland’s overview of the conference in Winterthur (in German) begins with a similar premise: even if there is consensus about what should be done with looted art, what if the sale of objects was of necessity rather than compulsion?  Is there a moral obligation to return the works?  He notes that “at least from a Swiss perspective, the answer seems clearly to be ‘no’.” 

The Washington Principles here come into focus.  Monika Tatzkow, an art historian and co-author with Melissa Müller of the seminal Lost Lives, Lost Art: Jewish Collectors, Nazi Art Theft, and the Quest for Justice, is cited as saying at the conference that there is no reason to approach flight goods any differently than looted art in this respect.  By contrast, Weiland reports, Swiss historian Esther Tisa Francini fears an “anarchy of restitution” and argued that flight goods should not be considered to be looted. 

Oskar Reinhart was cited as telling example.  He never acquired stolen art, and it is generally accepted that he paid fair market prices that did not exploit the circumstances of sellers.  But there is no way around the fact that the amount and quality of works available in Switzerland during the Nazi regime was unprecedented.  By a simple matter of supply and demand, that calls into question the starting presumption about fair market prices. 

Quite interestingly, Jutta Limbach herself gave a presentation at the Winterthur conference about “insight into the Commission’s activities, which positions itself repeatedly by deciding against the views of the Swiss lawyers,” presumably meant to accept the possibility of flight goods as looted art. 

The last aspect of the conference that Weiland describes is a discourse about Hans Posse.  Posse is a well-known figure in German speaking circles.  Posse was the director of the Dresden museum in the Nazi period, and his relative complicity in acquiring works of former Jewish ownership is a matter of debate.  Posse acquired four works from the Freund collection at a Swiss auction at Hitler’s instruction.  The Limbach Commission decided in favor of restitution of those works.  Swiss authorities, by contrast, have seen no reason to discuss restitution of objects from that same auction. 

Lest anyone think that Switzerland is an outlier on the point, however, the Three Graces case cannot be ignored or, frankly, reconciled with the Freund decision alluded to by Limbach.  To return to the question posted in the program’s conference: what about sales out of necessity?  Is there a qualitative difference between the Levy family, surrounded on all sides by Nazi occupation, but for which they had no plans to sell their art, and a Jewish collector in Germany proper?  Is the threat any different, or the coercive need to dispose of a valuable object any less real?  From here, to parse those categories is to lose the forest for the trees, particularly if guided by the Washington Principles’ directive to achieve fair and just resolutions.  To distinguish the presumption that has been applied since the Allied Collecting Points after the war—that a sale by a Jewish collector in Germany or in an occupied area was presumptively coercive—from the export by the very same Jewish collector to a market abroad, seems forced. 

It is also important to remember what is a matter of presumption and what is a matter of proof.  If one rules out flight goods as a category for restitution, then the conversation is over.  Even if one allows for further exploration, however, there is still the matter of what happened in a particular case.  It may be that in a given case, whatever the initial motivation, the sellers were able to achieve a fair market value.  But that is far too complicated a question to answer with sweeping assertions. 

For one, as noted above, the very concept of the market was distorted by the Nazis’ activities.  They were perfectly happy to get less than full value for “degenerate art” that they had seized; why should we suppose now that dumping a trove of hitherto unavailable works—particularly Old Masters—would have had any less of a downward effect on prices?  And it so, then isn’t there further analysis to be performed about what the owners received at the time?  That is to say, Curt Valentin’s gallery more or less created a market in works of a certain kind in large numbers, so it seems entirely fair to ask whether, even if Clara Levy’s daughter did receive the painting and did sell it at an auction, whether circumstances necessarily deflated the price that she received. 

There is precedent for viewing “market prices” skeptically—particularly the earlier decision of the Limbach Commission itself when it recommended the return of two paintings by renowned Expressionist Karl Schmidt-Rotluff: a 1920 self-portrait and a 1910 landscape entitled “Farm in Dangast” that once belonged to Robert Graetz, a businessman from Berlin who was deported to Poland in 1942.  The Commission’s recommendation (adopted by the government of Berlin) noted the downward pressure on the price by virtue of the circumstances

Nor, as we discussed in reaction to the initial decision, is the fact of sale or transfer to New York at all clear.  Noted art lawyer and lecturer Lucas Elmenhorst wrote an article in the Handelsblatt on August 28, 2014 entitled, appropriately, “There are Still Doubts.”  Elmenhorst quotes the claimants’ attorney, Imke Gielen, as saying “Much of what they [the Commission] regard as undisputed or uncontested is not.”  “None of Clara Levy’s children could confirm that the picture actually arrived in New York,” she went on.  Nor, as Gielen noted, is there any corroboration whatsoever for the assertion that the painting was sold at a public auction; there is no record of a sale or catalogue in which the painting can be found.  Relying on a letter from a man who later sold it (and who therefore had every interest in asserting a clean title) is a bit thin. 

Gielen pointed to Valentin’s role in acquiring works at the infamous Galerie Fischer auction in Lucerne in 1939.  With a little more thought, the role of Valentin is one of the lingering problems with the Limbach decision.  Many regard Valentin as an opportunist, and some even as a collaborator.  But whatever one thinks, the presence of a painting in the Buchholz Gallery is hardly a sanitizing factor on its chain of title.  Yet that is how the Limbach Commission seemed to regard it. 

In any event, the Winterthur conference was clearly a timely event, and one hopes that its collected papers will be published at some point.