The New Copyright Small Claims Bill: A Ray of Hope for Independent Photographers

By Adelaide Dunn*

screen-shot-2016-10-18-at-4-11-35-amThe U.S. Copyright Act’s single regulatory system fails to accommodate the diversity of production methods, output speeds and business models of today’s creative entrepreneurs. In the eyes of independent and freelance artists, one of copyright’s greatest flaws is its requirement that an infringement claim be litigated in a federal court – an endeavor accruing costs that often far surpass the value of the work at issue. Since 2006, the United States Copyright Office has been questioning creators, holding panel discussions and conducting research pertaining to a new model for resolving small claims. The Copyright Alternative in Small-Claims Enforcement Act of 2016 (“CASE Bill”), introduced in July this year, would create a new Copyright Small Claims Board (“Board”) facilitating the resolution of claims valued below $30,000 in actual damages. The aim is to overcome two of the most common criticisms of copyright law: that its systems favor large corporations over independent and freelance creators, and that it is an abstract set of rules that the general public chooses to ignore. The CASE Bill sketches out an ambitious yet promising new system that has the potential to facilitate settlements, dissuade infringing activity (particularly online), and ensure remedies for copyright infringement are available to low-income creators.

The proposed Board is a streamlined, inexpensive, Internet-based dispute resolution system to be administered by the Copyright Office. Three Officers are to act as adjudicators – two having had significant experience representing or presiding over a diversity of copyright interests, and the third having expertise in alternative dispute resolution. Decisions are primarily made on the papers filed with the administration. Hearings or discussions towards settlement can take place over teleconferencing facilities where needed. The system is designed without the need for attorneys, such that rules of procedure are relaxed, discovery is minimal, and costs are only awarded for cases brought in bad faith. All copyright defenses, including fair use, are available. Because of constitutional limitations, participation with the Board is voluntary, and its decisions do not create precedent.

Creative associations such as The Professional Photographers of America (“PPA”) and the Authors’ Guild are seeing their long-term lobbying efforts come to fruition. The type of creator in need of the new system is what the PPA describes as “low value, high volume” – individuals such as designers, illustrators and photographers – who spend time creating many copyrightable works that are individually of low commercial value. The business of photographers is profoundly affected by online copyright infringement, such that photographers are the prime candidates for the new system (and the example used in this article).

The copyright woes of the independent photographer

Photographers differ from “low volume, high value creators” – such as film directors – who channel their creative efforts into one high value work at a time. A photographer may take hundreds of copyrightable photographs in a day, while also conducting the day-to-day administrative tasks of running a small business. It is easy – and habitual – for Internet users to share photographs without permission, often with watermarks and rights information scrubbed from images or metadata. Exacerbating the issue is the common belief that works of creative expression that appear online – particularly images – are free for the taking. According to a survey by the PPA, 70% of professional photographers have had their work infringed over the past three years.

It is unsurprising that photographers have long protested our “one size fits all” copyright system. Although photographers and filmmakers both depend financially on the licensing of copyright in their works, filmmakers are often better placed to pursue infringement claims. With a stable, financed project overseen by numerous stakeholders, a filmmaker and her studio receive comprehensive legal advice. Attorneys maintain the film’s “IP-hygiene”, including ensuring that copyright in the film (as well as in its posters, soundtrack and other components) is registered with the Copyright Office. Though a creator attains copyright automatically on the creation of the work, the Copyright Act requires that a plaintiff possess a registration certificate before bringing suit for infringement. Registering works in a timely way means that the plaintiff can recover attorney fees from the defendant (17 U.S.C. § 505). It also enables the plaintiff to recover statutory damages, which do not require proof of actual damage, and can be significant (up to $150,000 if the infringing activity is found to be willful) (§ 504(c)).

Softer registration requirements

The registration requirement has been criticized for benefiting the deep-pocketed and well advised over the low-income creators that statutory damages and attorney fees are designed to benefit (Ciolli, 1007). A photographer often lacks the time and money to register his works, given that the Copyright Office’s fees average between $35 – $55 per work, and differ for “published” and “unpublished” works – a distinction many photographers see as burdensome and outdated due to the digital sharing ecosystem. The new small claims system bypasses these difficulties and caters to the reality that most creators do not learn of the legal benefits of a registration certificate until a dispute has arisen that necessitates one. To file a claim, a complainant needs only to have submitted an application for a registration, and can still recover statutory damages if successful. The Board can also award actual damages and profits, but because these are complex calculations in copyright disputes, the combination of statutory damages and soft registration rules will be a boon to photographers.

The Copyright Office will need to create a user-friendly digital platform that allows for e-registrations to be made contemporaneously with the filing of claims. Because many photographers will participate pro se, the platform will be critical in communicating instructions and providing downloadable forms and templates to aid the drafting of briefs. But such a system is probably outside of the Copyright Office’s current IT capacities. Register Maria Pallante has testified to the U.S. House of Representatives that the Copyright Office’s resources are inadequate to support the current digital economy, and that allowing the Copyright Office to establish itself as an autonomous body (independent of the Library of Congress) will give it the authority to make IT investments in furtherance of its own modernization goals (Pallante, 7). Whether these recommendations will eventuate remains to be seen.

Lower costs and streamlined proceedings

It is neither time nor cost effective for a photographer to pursue an infringement claim in a federal court. The PPA has surveyed its members and found that – however numerous – most infringements of single photographs cost below $3,000 (PPA). At the same time, the American Intellectual Property Law Association’s 2015 Report of the Economic Survey indicates that the median cost for a claimant to litigate a copyright infringement suit with less than $1 million at stake through appeal is $250,000 (AIPLA). Even mediating that dispute would cost a median of $40,000 (Ibid.). In addition, according to the 2015 Federal Judicial Caseload Statistics, civil trials take approximately twenty-five months to conclude (Administrative Office of the US Courts). The length is due in part to delaying tactics aimed at draining the other side’s resources and inducing an unequal settlement, such as delaying discovery and filing unnecessary pre-trial motions. Wealthy defendants have strong incentives to behave this way towards low-income adversaries, to ensure that lawyers working pro bono or on contingency bases cannot bear the burden of the full trial.

Indeed, while most content creators are private, most content users – and infringers – are corporate (Wild). The photographer Alex Wild, who left the professional photography business due to frustrations with copyright, writes that his signature extreme close-up insect photographs have been used without permission on venues as diverse as billboards, newspaper articles, video game graphics, company logos, board games, pest-control trucks and iPhone cases (Wild). The corporate disregard for copyright is doubly frustrating to photographers who rely on licenses issued to corporations in those exact sectors.

Key procedures of the Board are aimed at leveling the playing field. To prevent unnecessary delays, rules of civil procedure are simplified, and procedural and discovery-related counterclaims are not accommodated for. Discovery is limited to the production of relevant information, documents and written interrogatories, in order to allow the parties to obtain material facts, establish proof of actual damages, and rebut evidence. The Board also substitutes a formal appeal process with narrow administrative review procedures. This would prevent losing parties with substantial resources from re-litigating a dispute in a federal court.

Potential for collaborative approaches to dispute resolution

Perhaps the Board’s most promising function is to facilitate settlements. The abbreviated and inexpensive trial would give the parties an idea of the merits of their cases, leading to productive discussions, overseen by the Officers. The Board’s utilization of mediation techniques – aided by the Officer with expertise in alternative dispute resolution – could lead to a holistic approach to problem solving. This would give artists an outlet for airing their grievances while also bypassing the power struggles of adversarial trials. Resolutions could lead to innovative and therapeutic business arrangements, such as ongoing royalty fees, partnerships and other agreements.

Criticisms

The CASE Bill is not without its detractors. The foremost worry is that the ease of filing claims will open the Board to abuse by copyright trolls. However, the CASE Bill provides that a Copyright Claims Attorney review each claim to ensure that it complies with copyright law (including, presumably, that it establishes a prima facie case of copyright infringement), before the adversary can be served. In aid of pro se claimants, there are then two opportunities to improve a deficient claim. Though the parties must bear their own costs, the Board may award attorney fees and costs up to $5000 to a party adversely affected by a harassing or improper claim, creating a monetary disincentive against meritless or frivolous claims.

A related worry is that large corporations hiring attorneys will have a significant advantage over pro se parties in terms of the quality of pleadings and submissions. Indeed, organizations such as New Media Rights, California Lawyers for the Arts, and Volunteer Lawyers for the Arts will presumably be vital in helping artists file claims. Interestingly, the CASE Bill also permits qualified law students to represent complainants. Law schools might take this opportunity to set up clinics and internship programs, benefiting both the students taking part and parties in need of representation.

Critics also question whether the Officers should be empowered to make fair use determinations, which are notoriously uncertain and complex. However, as Register Pallante has noted, fair use is a critical safeguard of the Copyright Act (Pallante, 29), which is particularly true with regard to the creation of contemporary art. The availability of the defense will also give respondents an incentive to engage with the Board, and ensure that copyright law continues to align with legitimate consumer expectations. The Officers’ expertise in copyright law will help with the streamlining of fair use decisions. They may develop simpler proxies with which to apply fair use concepts such as transformative use, given that small claims do not have the same cultural and economic ramifications as federal fair use cases (such as the Second Circuit’s recent holding that Google Books amounts to fair use: Authors Guild, Inc. v. Google, Inc.).

Further, the Board does not have a mechanism with which to identify anonymous online infringers. However, its issuance of subpoenas might give further burdensome enforcement duties to Internet Service Providers. Notably, the Copyright Royalty Board has the authority to issue subpoenas but has never exercised this (Copyright Office, 124). The Board also cannot grant injunctions. Though some argue that this might render its determinations toothless, a contrary opinion is that copyright owners can gain unfair leverage through threats of injunctions, and awarding licensing fees in the alternative might lead owners and users to bargain more effectively (Pamela Samuelson et al). Indeed, the Supreme Court in Campbell v. Acuff-Rose noted that a system relying on monetary relief rather than restrictions on commercial behavior might better serve the purposes of copyright and facilitate the lawful use of copyright protected works (at 578 n. 10). The Board can, however, require the respondent to cease the infringing conduct, which appears to be a kind of soft injunction. Because of the voluntary nature of the proceedings, this remedy might function like a contractual promise.

Conclusion

The time is ripe for a new dispute resolution system catering to more diverse range of creators. Currently, the CASE Bill has been referred to the Subcommittee on Courts, Intellectual Property, and the Internet, and has not yet passed the House. Whether it will pass before the next Congressional session begins in January is unclear. But as it incorporates years of research and comments from the Copyright Office, scholars and creative associations, it or a similar law’s incorporation into the Copyright Act seems likely. Indeed, it would align the U.S. with other jurisdictions instigating similar systems, such as the United Kingdom, which in 2012 began to allow informal hearings in its Intellectual Property Enterprise Court regarding claims for infringement of copyright, trademark or unregistered design rights (valued below £10,000). For the U.S., the new system has potential to transform copyright law into an everyday business reality, to give a voice to artists who are currently silenced by the federal system, and to lead to more collaborative and innovative solutions to copyright infringement.

 

Sources:

  • Copyright Alternative in Small-Claims Enforcement Act of 2016, H.R. 5757, 114th Cong. (2016).
  • Copyright Act (17 U.S.C.).
  • Campbell v. Acuff-Rose Music, Inc., 510 U.S. 569, 578 n. 10 (1994).
  • Jeffrey Bils, David’s Sling: How to Give Copyright Owners a Practical Way to Pursue Small Claims, 62 U.C.L.A. L. Rev. 464 (2015).
  • Anthony Ciolli, Lowering the Stakes: Toward a Model of Effective Copyright Dispute Resolution 110 W. Va. L. Rev. 1000 (2007).
  • Her Majesty’s Courts & Tribunal Services (United Kingdom), Guide to the Intellectual Property Enterprise Court and Small Claims Track (July, 2014).
  • Virginia Knapp Dorell, Picturing a Remedy for Small Claims of Copyright Infringement, 65 Admin. L. Rev. 449 (2013).
  • Jessica Litman, Real Copyright Reform, 96 Iowa L. Rev. 1 (2010).
  • David Nimmer, A Modest Proposal to Streamline Fair Use Determinations, 24 Cardozo Arts & Ent. L. J. 11 (2006).
  • Register Maria Pallante, The Register’s Perspective on Copyright Review, Statement Before the Committee on the Judiciary, House of Representatives (April 29, 2015).
  • Joel Reidenberg, The Rule of Intellectual Property Law in the Internet Economy, 44 Hous. L. Rev. 1073 (2008).
  • Pamela Samuelson et al., The Copyright Principles Project: Directions for Reform, 25 Berkeley Tech. L. J. 1175 (2010).
  • United States Copyright Office, Copyright Small Claims – A Report of the Register of Copyrights (September 2013).

 

*About the Author: Adelaide Dunn recently graduated with a Master of Laws in Competition, Innovation and Information Law from the New York University School of Law. Before that, she completed a Bachelor of Arts in Art History and a Bachelor of Laws with Honors from The University of Auckland in New Zealand. Adelaide is particularly interested in the intersections of copyright, moral rights and the visual arts. She is currently doing intellectual property, entertainment and commercial law work as a law clerk for a solo practitioner in New York City. Adelaide can be reached at adelaide1dunn@gmail.com.

HEAR and the Guelph Treasure Recovery Efforts: Restitution in Review

By Nina Mesfin*

On June 7, 2016, the Senate Judiciary Committee heard a bipartisan-backed piece of legislation called the Holocaust Expropriated Art Recovery (HEAR) Act, S. 2763, 114th Cong. (2016). As recently reported by Center for Art Law and elsewhere, the HEAR Act aims to allow “civil claims or causes of action to recover artwork or other cultural property unlawfully lost because of the persecution during the Nazi era, or for damages for the taking or detaining of such artwork or cultural property.” In other words, the HEAR Act proposes a federal statute of limitations on restitution claims as opposed to statutes of limitation that vary by state in order to “lift unfair restrictions from heirs’ claims.” In addition to garnering support from both the Republican and Democratic parties, the HEAR Act also offers advocates outside of the political realm.

Screen Shot 2016-08-09 at 11.21.25 AMFollowing the bill’s introduction, on June 7th actress Helen Mirren testified before the Senate on behalf of the bill. Mirren’s support, in part, stems from her recent portrayal of Maria Altmann in the film Woman in Gold (released in 2015). Altmann was a Jewish woman who successfully reclaimed five Nazi-looted works by Gustav Klimt from the Austrian government in the landmark case Republic of Austria v. Altmann (03-13) 541 U.S. 677 (2004) 327 F.3d 1246, affirmed. The Altmann case set a legal precedent in which the Foreign Sovereign Immunities Act (FSIA) was applied retroactively, allowing a sovereign body to be tried in a U.S. court.

The timing of Woman in Gold, which has drawn public attention to Altmann’s success, coupled with recent congressional efforts to facilitate the restitution of Nazi-looted works, may impact the outcome of other restitution claims. One of these cases involves the Welfenschatz or Guelph Treasure– a collection of medieval art currently in the Kunstgewerbe Museum in Berlin—with an estimated value of $250 million dollars. On February 23, 2015, the heirs of the art dealers who sold the Guelph Treasure to Germany filed a civil action in a U.S. district court against Germany and the Prussian Cultural Heritage Foundation. The case of the Guelph Treasure will test further the limits of both the U.S. government’s dedication to Holocaust-era restitution claims and ability to broker restitution deals.

What is the Guelph Treasure?

The Guelph Treasure, consisting of 82 gold, silver and gem encrusted liturgical objects from the Church of St. Blaine in Brunswick, Germany, and according to art historian Christina Nielsen, it is considered to be “the greatest group of medieval objects ever offered for sale.” The objects range in date from the 8th to the 15th century and the majority are works of German craftsmanship while other notable pieces are Italian and Byzantine in origin. One of the most extraordinary characteristics of this collection is its indisputable authenticity; records indicate that prior to its auction, the Treasure has been in continuous care of the same noble German family for more than 800 years.

Subsequent Sales of the Treasure

Duke Ernst August was the last of his German ancestors to possess the Guelph Treasure. Due to economic hardship in 1928, the Duke was forced to put a price on what was considered a collection of “incalculable intrinsic value” because of “its antiquity and art-historical importance”(Nielsen, 442). To the dismay of many German citizens and the State itself, the Duke sold the Treasure to a consortium of Jewish art dealers in 1930: Julius F. Goldschmidt of Frankfurt, Berlin, and New York and Z.M. Hackenbroch and J. Rosenbaum of Frankfurt. Although the Duke intended for the collection to stay together, the consortium of art dealers, having failed to resell the collection in its entirety, began to sell off pieces of the Treasure.

After meticulously cataloging the collection, the dealers began selling, or rather attempting to sell, portions of the Guelph Treasure in Germany. As Germany frowned upon the sale of what it considered to be cultural patrimony, the new owners, a consortium of Jewish art dealers, then tried to sell the collection in the United States. The Guelph Treasure was first exhibited in New York in 1929, and by 1934, the consortium sold 40 of the Treasure’s 82 pieces to several museums in the United States, including the Cleveland Museum of Art (Nielsen 443). In 1935, the remaining 42 pieces of the Treasure were sold to the State of Prussia for 4.25 million Reich marks, or $1.7 million. High-ranking Nazi official Hermann Göring oversaw the acquisition and later gifted it to Adolf Hitler. It is the legality of the second sale in 1935 that the heirs of the consortium are disputing.

Appearing before the German Advisory CommissionScreen Shot 2016-08-09 at 11.27.45 AM

Before their U.S.-based lawsuit, the heirs of art dealers J. and S. Goldschmidt, I. Rosenbaum and Z.M. Hackenbroch appeared before the German Government Advisory, also called the Limbach Commission. The Commission is a joint initiative of the Federal Commissioner for Cultural and Media Affairs and the Länder and the National Association of Local Authorities; it invites claims concerning Nazi-looted property that public institutions in Germany currently possess. The Commission serves as a mediator between these public institutions and former owners as well as their heirs, hearing cases and offering resolution recommendations. The New York Times reported that the heirs’ lawyers cited the “climate of fear and uncertainty for the [dealers’] futures in which Jews in Germany found themselves in 1935,” arguing that these dire circumstances suggest that any “purchase by the state from Jewish businessmen must be considered as having taken place under duress.” The lawyers representing the heirs attempted to prove that the sale was, in fact, forced by explaining that the dealers sold the pieces for $4.3 million less than they had paid for it five years earlier. The panel attributed the ten percent market price decease to the economic downtown wrought by the Great Depression.

After contemplating this argument, in March of 2014 the Commission’s panel recommended that the 42 “jewel-encrusted, intricately wrought silver and gold crucifixes, altars and other relics of the Guelph Treasure should remain in the possession of the state-run foundation.” Bloomberg News noted that the Commission went on to state that “[f]ar from selling under duress, the consortium had been attempting to unload the Guelph Treasure for years,” pointing to the correspondence among consortium members celebrating the sale.” The Commission also noted that the Guelph Treasure is an exception to the Washington Conference Principles on Nazi-Confiscated Art, which all German museums have agreed to uphold. The Principles are a set of guidelines that maintain that “any art object sold by Jews for less than its fair value during this period (Jan. 30, 1933, through 1945) is a candidate for restitution,” a period that includes the Guelph Treasure.”

This ruling, in favor of the Kunstgewerbe Museum is one of many made by the Commission that has been met with criticism. As art journalist Catherine Hickley reports, the Limbach Commission has recently “come under fire for a lack of transparency, the length of time it takes, failure to appoint a Jewish member and the low number of cases it has mediated.” The Commission has only mediated thirteen cases since its founding in 2003, whereas its Dutch counterpart has issued more than 140 since 2002.** In July of 2016, Germany’s culture minister, Monika Gütters, actually announced plans to reform the Limbach Commission.

The Civil Lawsuit over the Treasure

Screen Shot 2016-08-09 at 11.32.39 AMAlmost a year after the Commission made its non legally binding recommendation, the heirs to the Guelph Treasure, filed a civil lawsuit in U.S. District Court for the District of Columbia. Philipp et al. v. Federal Republic of Germany et al., 15-cv-00266 (D. D.C.). According to a Washington Jewish Week article, the seventy-one page complaint alleges that the consortium sold the 42 pieces to the State of Prussia “via a manipulated sham transaction spearheaded by Dresden Bank, which was acting on behalf and by order of the two most notorious Nazi leaders and war criminals,” Göring and Hitler. The complaint further notes that the heirs used the fact that the alleged forced sale was made for less than 35 percent of its actual value and that the payment “was then subjected to flight taxes that were demanded so the Jewish dealers could flee Germany,” as evidence backing their claim. One of the dealers, Hackenbrock,was able to leave Germany in 1935, although died shortly thereafter in London in 1937. Details concerning the other two dealers, Rosenbaum and Goldschmidt, are unknown.

In order to justify filing this suit in a U.S. court, attorneys for the claimants invoked the Foreign Sovereign Immunities Act, which “provides jurisdiction over foreign states that conduct business in the U.S. via exhibitions and other museum-related activity.” According to O’Donnell, one of the attorneys representing the claimants, FSIA’s applicability to this case is straightforward, as “Jewish victims of persecution like the Plaintiffs’ ancestors are victims of takings in property in violation of international law.” He further explains, “[a]s a result, and because the Defendants are engaged in commercial activity in the United States, this case presents precisely the category of claims over which § 1605(a)(3) of the FSIA, the expropriation exception, creates jurisdiction.”

In March 2016, Germany and the Prussian Heritage Cultural Foundation responded by filing an eighty-five page motion to dismiss the case, contesting the jurisdiction of the U.S. courts. Within the motion, the defendants contend “that the persecution and expropriation of property from its Jewish residents were a sufficiently internal affair so as not to be a violation of international law.” O’Donnell has described this motion as “revisionist” and “troubling.” Most recently, on May 11, 2016, claimants filed an opposition to the motion to dismiss. The latest filing in the case was in June a reply to opposition to motion re motion to Dismiss the Plaintiffs’ First Amended Complaint. Now we are waiting for the court to review the filings.

Conclusion

The pending case involving ownership of the Guelph Treasure has brought two interesting issues into focus. The first is whether the blanket application of forced sales to an entire time period, in this case the years immediately preceding and spanning WWII, is legitimate, not taking into account the market or the profession of the seller, i.e. an art dealer who is almost always in the process of making a deal. The Guelph Treasure also tests the authority of advisory commissions with no binding power, as rulings made by the Limbach Commission are unenforceable. On the other hand, there are several other European arbitrating bodies whose opinions are binding, such as the Austrian Restitution Binding Commission and the Dutch Advisory Committee on the Assessment of Restitution Applications for Items of Cultural Value and the Second World War. As Hickley points out in her article “German minister promises to reform Limbach Commission after mounting criticism,” unlike the Limbach Commission, the Austrian and Dutch advisory committees do not require both parties to agree in order to mediate disputes.

In challenging the Limbach Commission’s clout, the case of the Guelph Treasure may bring a foreign body into conflict with the crux of the U.S. court system. It will be interesting to see if and how the U.S. judicial system, in its dealings with the Guelph Treasure, will impact the authority enjoyed by European advisory board’s ruling on contested art. As Elazar Barkan explains in The Guilt of Nations: Restitution and Negotiating Historical Injustices, restitution as a means of acknowledging gross historical injustices is a relatively novel phenomenon. Nowadays, it “is a large part of the growing attention being paid to human rights.” The question becomes: in which instances is restitution warranted and in which does it potentially exploit society’s overeagerness to atone for past atrocities? Furthermore, at what point, if at all, is it appropriate for a third party state to hear these claims and issue rulings? While the United States at times offers a venue to bring restitution claims, the outcome and the cost of these claims is unpredictable.

Select Sources:

**There are currently five restitution commissions: United Kingdom, Austria, France, Germany, and the Netherlands. In 2007, the United States government considered establishing its own restitution advisory commission, to no avail.

About the Author: Nina Mesfin is a Summer 2016 legal intern at Center for Art Law. She is a rising junior at Yale University majoring in Ethnicity, Race and Migration and concentrating in Art, Literature and Narratives of Race and Ethnicity. Nina is also a scholar in the Yale Multidisciplinary Academic Program in Human Rights.

Disclaimer: This article is intended as general information, not legal advice, and is no substitute for seeking representation.

WYWH: You’ve Been Served – “Gerhard Richter Painting” and German Cultural Heritage Protection Law

By Elizabeth Weber, Esq.*

Screen shot 2015-04-17 at 2.41.44 PMOn February 3, 2016, the “You’ve Been Served” dinner and a movie event was hosted by the Brooklyn Law School Art Law Association. Attendees included attorneys, artists, art dealers, and students. The film screened, Gerhard Richter Painting, is a documentary that provides a glimpse, deliberately and slowly, into the life and artistic processes of visionary German artist Gerhard Richter. In the film, director Corina Belz highlights Richter’s creative process and allows viewers to watch Richter work on art in real-time. Interspersed in the film are clips from Richter’s youth, in which he discusses his views on art and life, which may or may not have changed for the artist over the course of his long and prolific life. The film attempts to provide viewers an intimate view of Richter’s past and his present: his escape from Eastern Germany at the age of 28, his trove of family photos that have an ambivalent effect on the artist, who wonders, “Who is this woman?” as he points to an image of his mother and wonders “Should I throw all of these away?” when trying to organize the photo trove in chronological order. In the film, Richter observed how American audiences tend to be more direct in commenting on his work, with one observer calling his gray series the English term for “scheisse.”

Following the screening of the  film, a partner in Sullivan & Worcester’s Litigation Department in Boston, Nicholas O’Donnell, led a discussion about German cultural heritage law. Mr. O’Donnell, who is the editor of the firm’s Art Law Report blog and an attorney working on a number of art law matters involving Germany – including the Restitution claim for the Guelph Treasure – discussed the hotly contested 2015-2016 German Cultural Heritage Protection Law. The first draft of this legislation proposed that all objects of national importance older than 50 years and valued at €150,000 or more must be granted an export license by the German government to leave German soil. A subsequent draft revision amended the value threshold, raising it from €150,000 to €300,000 and increasing the object’s age from 50 to 70 years. Additionally, the revision states that works of living artists may qualify as objects of national importance only with the artist’s permission. Having written about the proposed revisions already, O’Donnell described the law as archaic in a time when the art market is expanding beyond geographical national borders and becoming part of the larger global economy.

The legislation sparked outrage throughout the art world. Some artists, like Richter, and other art market experts condemned the act, with some experts portending the destruction of the German art market should the act come to pass. Mr. O’Donnell noted that other artists, including Georg Baselitz, went so far as to withdraw loaned works from German museums in protest of the law.

It was noted that other EU countries have export limitations on cultural valuables, including France and Italy, among others, and that Germany may be using these countries’ laws and overarching EU law as justification for its Cultural Heritage Protection Law. Indeed, the European Economic Community, one of the three founding pillars of the European Union, issued a regulation in 1993 that set uniform export controls for EU member countries. This regulation, titled “On the Export of Cultural Goods,” stated that “[t]he export of cultural goods outside the customs territory of the Community shall be subject to the presentation of an export license.” Accordingly, Germany’s Cultural Heritage Protection Law narrowed the geographic scope of the EU regulation by decreasing the acceptable export zone from the entire EU to Germany only.

A press release issued by the German Press and Information Office of the Federal Government acknowledged the EEC regulation, stating that “[s]ince 1993, EU law has required permits to export relevant cultural property outside the EU, for example to major art markets in Switzerland and the U.S.” The press release further indicates that “the German law sets more generous terms” than the aforementioned EU law.

Additionally, German authorities have characterized the law as an attempt to keep illegally-imported artifacts, especially those sold by ISIS to finance terrorist regimes, from being imported into and subsequently purchased and sold on German soil. Professor Monika Grütters, Germany’s Minister of State for Culture, stated that “[i]n view of the barbaric destruction of cultural heritage in the Middle East and many other areas of crisis and civil war, this move was long overdue, demanded by ethics and morals and by our identity as a nation of culture.”

During the Q&A session with Mr. O’Donnell, the discussion included possible loopholes within the  law, what permits for below market pricing and selling goods on the illicit black market. In addition, O’Donnell commented on the ramifications of the law vis-a-vis restitution claims that are currently pending against German institutions and individuals. Namely, would the law disallow the export of objects that qualify as “national treasure” after a restitution claimant succeeds in proving that property was looted from the family during the Nazi-era? It’s possible – if the draft German Cultural Heritage Protection Law passes this year, all works produced before 1946 (70 years before 2016) would be categorized as artifacts possibly restricted from export .

Cultural heritage issues are not exclusive to antiquities and remain a pervasive issue for contemporary artists. Different interests come into play between the governments seeking to protect and preserve their cultural identity and those who disseminate art to the international community. Although it is vitally important to protect cultural objects, governments must weigh the benefits derived from restricting the export of cultural patrimony against the curtailment of artists’ and art dealers’ rights. Namely, governments should take into account the far-reaching effects of cultural patrimony laws before restricting the flow of goods into the market to avoid the negative backlash that naturally follows such regulations.


Center for Art Law would like to thank Tess Bonoli and all the members of the Brooklyn Law School Art Law Association for their generosity and enthusiasm for the program. Many thanks to all who attended this event, with special thanks to Nicholas O’Donnell for his illuminating discussion of German cultural heritage issues.

About the Author: Elizabeth Weber is a lawyer living in Brooklyn, NY.  She graduated from the University of Florida Levin College of Law, where she received her certificate in Intellectual Property Law and served as an active member of the Art Law Society and the Journal of Technology Law and Policy. She is the Spring 2016 Postgraduate Fellow with Center for Art Law.

Sources:

Disclaimer: Reading “Wish You Were Here” a/k/a “WYWH” articles is no substitute to attending art law events, trials and programs. This and all http://www.itsartlaw.com articles are for educational purposes only. Readers should not construe or rely on any comment or statement in this article as legal advice. In case of legal questions, readers should seek a consultation with an attorney.

Artists’ Use of Drones Endangered

From KATSU's Remember the Future, 2015. Source: http://theholenyc.com/2015/01/02/katsu/

From KATSU’s Remember the Future, 2015.
Source: http://theholenyc.com/2015/01/02/katsu/

By Dennis C. Abrams*

Since the Federal Aviation Administration (FAA) first authorized the use of unmanned aircraft in 1990, noncommercial operation thereof has been relatively unregulated. As a result, artists in the United States have long had free rein to utilize drones in their artwork. However, this freedom may come to an end before the end of 2015. The Chairman of the House Transportation and Infrastructure Committee, Representative Bill Shuster, R-Pa., said in December of 2014 that Congress would prioritize overhauling aviation policy and reauthorizing FAA programs in 2015. In January The Art Newspaper reported that the FAA is planning to submit new restrictive drone regulations to Congress by September.

Drones have become relatively affordable and available to lay consumers over the past few years; the DJI Phantom, the world’s bestselling drone model, is now available for $479 on Amazon.com. As such, the proportion of drone operators who are artists has been increasing relative to the original user base of aviation enthusiasts. Notorious for pushing boundaries of the permissible and possible, artists have used drones as a subject of art (such as in James Bridle’s political commentary “Drone Shadow”), an instrument to create art (as in works by Addie Wagenknecht and KATSU) and a medium in and of themselves (for example, Alex Rivera’s “LowDrone” and Bart Jansen’s taxidermy). Drones have been useful to artists working in different media and fields including photography, painting, audio-visual art and live performances (as in shows by Cirque du Soleil and Japanese dance troupe Eleven Play).

While drones do present exciting means of expression previously unavailable to most artists with modest budgets and little technical training or interest, these drone operators do recognize the unique challenges and risks posed by using the aircraft in their artwork. For example, in 2014, Brooklyn-based graffiti writer KATSU, who has long been on the cutting edge of graffiti innovation, having previously invented the highly influential fire extinguisher spray can, developed a graffiti drone – a quadcopter with an attached aerosol can. Although he has yet to perfect his graffiti drone, he has expressed an intent to use the aircraft to bring his unique brand of art to otherwise inaccessible areas in public view hundreds of feet above the street. However, KATSU’s work may be for naught if the FAA’s forthcoming regulations ground his drone before it can revolutionize the graffiti world. In an interview with Bard College’s Center for the Study of the Drone at a 2014 showing of his drone-created paintings, KATSU acknowledged the novel dangers of using the technology in graffiti, explaining that his traditional graffiti only involves risking his own safety whereas a major concern of using drones is “losing control and having it fly down and hit a woman in the head, or…kill someone.” In addition to injury prevention, the FAA has interests in national security, air traffic control and privacy which could be advanced by regulating noncommercial drone use.

Indeed, the line between commercial, regulated use and recreational, unregulated use of drones can be difficult to identify in the art world. If an operator pilots a drone for use in taking photographs for her own amusement and then later sells those photographs for a modest sum, is she a recreational operator a commercial operator?

Some, such as art critic and journalist Benjamin Sutton, have speculated that the new legislation would eliminate such gray areas by applying the same rules to commercial and noncommercial operation. The legislation may also codify the FAA’s voluntary safety standards for drone operation which, among other suggested “best practices,” encourage operators to not fly near people or crowds, to keep their drones below 400 feet, to give way to full-scale aircraft and to not hesitate to ask for assistance from air traffic control towers in flying safely. The regulations might additionally confine operation to daylight hours.

Commercial drone operation is not absolutely prohibited, however. Under Section 333 of the FAA Modernization and Reform Act of 2012, unmanned aircraft can be used for commercial purposes only if they are granted a certificate of airworthiness by the FAA. In order to grant permission for commercial operation under Section 333, the FAA requires that the operation does not pose a threat to other airspace users or to national security, that there is an “observer” separate from the pilot, that the aircraft remain within sight at all times and that the pilot has at least an FAA Private Pilot certificate and a current medical certificate. To date, the FAA has received 342 requests for Section 333 exceptions and has granted only twenty-four. There is also an exception under Section 334 of the Act allowing federally funded entities, referred to in the statute as “public entities,” to operate drones, which could theoretically allow for continued drone usage in public arts projects.

Until further details come to light, the effects on the art world of the forthcoming legislative revisions are still very speculative. If it were to approach noncommercial drone use the same way that commercial use is handled under current regulations, it would be very difficult for private artists to employ drones in their artwork without running afoul of FAA regulations. However, if the legislation were to only codify the voluntary safety standards, it would not likely be very restrictive of artists’ ability to utilize drones to a reasonable extent.

Selected Source:

  • FAA’s general homepage for drone info: Unmanned Aircraft Systems, Fed. Aviation Admin., http://www.faa.gov/uas/ (last modified Feb. 04, 2015).

About the Author: Dennis C. Abrams, Legal Intern with Center for Art Law, is a 3rd year student at Benjamin N. Cardozo School of Law, concentrating in intellectual property, media, art, entertainment, and sports law. He can be reached at denniscabrams@gmail.com.

Disclaimer: This and all articles are intended as general information, not legal advice, and offer no substitute for seeking representation.

Artist Resale Royalty Rights – Is a US Droit de Suite in our Future?

By Hanoch Sheps*

Contention, concern and equity – three words that best describe a recent discussion of proposed federal legislation for an artist’s resale royalty right in the United States. If passed, US artists would also benefit from the royalties on sales in other countries with resale royalty rights through reciprocity protocols. Currently the lack of a resale right in the US prevents such participation.

Last week, the International Foundation for Art Research held a panel discussion on the pros and cons of adopting an artists’ right known as the droit de suite which exists in one form or another in Europe and elsewhere. The only US equivalent existed on the state-level in California until the U.S. District Court in Los Angeles recently found it unconstitutional, a decision currently on appeal. [Estate of Robert Graham v. Sotheby’s Inc. C.D. Cal.No. 2:11-cv-08604-JHN-FFM, complaint filed 10/18/11; Sam Francis Foundation v. Christie’s Inc. C.D. Cal.No. 2:11-cv-08605-SVW-PJW, complaint filed 10/18/11].

The controversial right in its basic form is a compensation for secondary art market sales artists. Emerging in early 20-th Century France, some 50-70 countries in the European Union, South America, and Australia have since adopted a resale right. Most recently, the UK adopted a resale right pursuant to the European Union 2006 directive. There, the resale right guarantees a percentage of the resale price which is nontransferable, not waivable, lasting throughout the artist’s life plus 70 years. Amongst other goals, the limits imposed on resale rights prevent parties contracting with unwary or emerging artists from signing away this bundle of rights. In theory, as the value of an artist’s oeuvre appreciates, that artist stands to benefit from appreciation of his or her artworks in the art market.

Here in the US, the notion of a resale right is not novel and dates back to the 1980’s. The previous iteration of the Equity for Visual Artists Act, proposed in 2011, stalled in congressional committee debate. However, targeted studies performed by the U.S. Copyright Office and some new Senate sponsors (Senator Tammy S. Baldwin (D-Wisc.), and Senator Edward J. Markey (D-Mass.)) hope to breathe new life into the legislation. (See here for more Center for Art Law articles on resale rights.)

Speaking at IFAR’s event, The Honorable Jerrold L. Nadler, Congressman (D-N.Y.), Karyn Claggett, Esq., Associate Register of Copyrights and Director of Policy and International Affairs at the U.S. Copyright Office, Philippa Loengard, Esq., Assistant Director and Lecturer in Law, Kernochan Center, Columbia Law School, Sandra Cobden, Esq., General Counsel and head of Dispute Resolution and Legal Public Affairs at Christie’s, and Dr. Theodore Feder, Founder and President of the Artists Rights Society. Congressman Nadler, a sponsor of both the original and revised bill, addressed the need to create a balance between visual artists and authors, writers and musicians who benefit from other rights under US Copyright law. While musicians have a royalty system in associations like ASCAP and BMI, for example, visual artists have no comparable system. In an effort to succeed where prior legislation proposals failed, Congressman Nadler and his co-sponsors have asked the US Copyright Office to report on the impacts of the proposed legislation, the effects of similar laws in other countries on the art market and artists, and the potential efficacy of the right in achieving the goal of visual artist equality. [View the Equity for Visual Artists Act of 2011 here].

One of the immediate changes to the prior legislation is a royalty below the previous proposal of 7% and no cap on sale proceeds to be remitted to a royalty society, with all proceeds going to the artist. Previously, half of the proceeds would have been kept for the use of museums to create new art acquisition funds, but according to feedback from museums, says Nadler, they simply do not want the money. Auction houses will still bear the burden of collecting the royalty, which will likely to be added to already existing seller and buyer premiums. Galleries and dealers are conspicuously left out of the legislation in part because auction houses offer more transparency in the public recording of sales, but perhaps more so because galleries would be an entirely new source of opposition to the legislation.

With the new report to Congress by the Copyright Office due out in the coming weeks, Ms. Claggett responded to criticism the proposal received from different interested parties. The Copyright Office seeks to reconcile the proposal with the laws in other countries, amongst other US government studies, and its report issued for Congress back in 1992. Those compiling the current report ran into expectable obstacles such as the lack of transparency in art market transactions, but also found it difficult to grasp how artists actually struggle. The obvious question of the efficacy of the proposed law seemed to take a lot of foundation from a review of foreign laws. For instance, in the United Kingdom, there was no appreciable evidence that the royalty reduced art prices, or drove away sales from the UK, a main concern of oppositionists. Actually, it appears that the UK art market is growing faster than others in the region. (For the Center for Art Law’s response to a request for comments by the Copyright Office, see link).

Ms. Cobden represented the minority on the panel—part of a small but powerful collective of entities in opposition to the legislation, the auction houses. Christie’s sees itself in an awkward position of opposing the resale right where it otherwise considers itself a staunch supporter of artists. After all, the success of the artists has a positive correlation with the success of the auction house.  Auction houses opposed the previous legislation, the EU directive, and a debate over the right which is currently on the metaphorical back burner in China. Note, both Christie’s and Sotheby’s were also defendants in the CA case decided in 2012 . Christie’s justifies its opposition at least on three grounds:

  1. A royalty hurts the market: Citing statistics compiled by Dr. Clair McAndrews at Art Economics, Ms. Cobden notes that there was a complete recovery of the US market from the 2008 recession, whereas economies that have a royalty scheme saw fractional recoveries.
  2. A royalty would change US Copyright law in a manner that dilutes protection for private property: Christie’s posits that artists are on a level playing field with authors, writers and musicians. A royalty would go beyond what other artists receive as they only profit from the initial sale. Payments on subsequent transactions would seriously encroach on the freedom of alienation of personal property, a central tenet of US Copyright law (encompassed by the “first sale” doctrine). Granting artists a royalty would also make it difficult to distinguish other creator; should the architect get a royalty for the resale of a house he designs, or similarly a jeweler, fashion designer, or furniture maker?
  3. A royalty would not achieve the goal of helping a significant number of artists: Statistics simply do not show that the initiatives will help most artists – reports show that only 3% of UK artists are eligible for the royalty, and the most royalties went to the most successful artists.

“The resale royalty scheme is a broken model,” says Ms. Cobden, but Christie’s does not see in its opposition the inability to collaborate and propose alternatives to the legislation. Rather than a resale right, focus efforts to support artists on promoting sales in the primary market, or perhaps allow artists to get tax incentives for donating art to museums or other institutions.

Congressman Nadler as well as nearly every other panelist speaking at the IFAR Evening were eager to retort and confront Ms. Cobden on both the overall opposition and proposals. Simply put, major artists are likely to get most of the residuals as any performing artist would – “Elvis is going to see more residuals than a nobody,” says Congressman Nadler. But even if the royalty only helps a few artists, their position is that it is far better to help some than none. That major artists benefit in the aggregate does not diminish the value of the right. Also, even though “lesser” artists may see a smaller percent of residuals, we cannot discredit the fact that the artists themselves may see the residuals as critically important, however small they may be.

Dr. Feder spoke passionately to rebut claims that only rich artists benefit from royalties. In fact, he claims, statistics out of the EU show significant numbers of artists that benefit from the resale right. Dr. Feder noted that the same concerns over market losses by US oppositionists were felt  in the UK over the adoption of the royalty scheme there but were ultimately baseless. (SeeUK’s Artist Resale Royalty Law Didn’t Damage the Art Market (Despite All the Claims)”, Huffington Post, 9.14.12)

Wherever one’s allegiances may lie, it will be the members of congressional committees who get the next opportunity to debate the matter. The revised bill is expected to be reintroduced in January.

 *About the Author: Hanoch Sheps, J.D. is a recent graduate of New York Law School. He may be reached at Hanoch.sheps2@gmail.com or 201-696-6881.

Disclaimer: This and all articles are intended as general information, not legal advice, and offer no substitute for seeking representation.