Free CLE - IP Colloquium on Fair Use and Shepard Fairey v. Associated Press

Prof. Doug Lichtman has put together another excellent program at the IP Colloquium. This program interviews players in the case Shepard Fairey v. Associated Press (attorney Mark Lemley for Shepard Fairey and attorney Dale Cendali for the Associated Press). Ken Richieri, GC of the New York Times comes in with an interesting take on the controversy. I wrote about the case here.

The case is pending in the Southern District of New York before Judge Alvin Hellerstein. The latest news from the docket sheet (as of August 14, 2009) is that photographer Mannie Garcia is claiming ownership of the photograph, and both Fairey and Associated Press are counterclaiming against Garcia.

The image you see here is of Paul Newell, a candidate endorsed by the New York Times in his race against Speaker of the Assembly Sheldon Silver that took place on New York's Lower East Side.

Newell, deemed "the quintessential anti-establishment democrat" by the Times garnered a respectable 24% of the vote where the incumbent spent over $800,000 to keep his seat.

I think that the IP Colloquium perhaps underplayed the whole political aspect of the expression involved and the role that core political speech plays in our jurisprudence, at least for Fairey's activities up until the election. But the arguments are interesting and for those interested in copyright issues, political speech and artistic freedom, the case opens up a very tasty can of worms.

IP Colloquium has programs that you can listen to or download for free. Attorneys can receive free CLE credits by completing an online form after listening to the program.

Tennessee Judge Immunizes Germany From Nazi Art Looting Claims Finding "Commercial Exception" to Act of State Doctrine

In Westfield v. Federal Republic of Germany, 2009 WL 2356554 (M.D. Tenn. July 28, 2009), a federal judge dismissed a lawsuit against Germany on the grounds that Germany enjoyed soveriegn immunity for act of the Nazi regime in looting artworks from Jews that it systematically murdered.

The decision is remarkable in that it fails to cite any of the binding case law that goes precisely the other way. In Bernstein v. N.V. Nederlansche-Amerikaansche Stoomvaart-Maatschappij, 210 F.2d 375 (2d Cir. 1954), the U.S. stripped Germany of its immunity for actions of the Nazi regime in murdering and looting from Jews.

In Bernstein, the Second Circuit revisited an earlier opinion granting the Nazis sovereign immunity for their actions. The court wrote:

Following our decision, however, the State Department issued Press Release No. 296 on April 27, 1949, entitled: ‘Jurisdiction of United States Courts Re Suits for Identifiable Property Involved in Nazi Forced Transfers.’ The substance of this Release follows:
‘As a matter of general interest, the Department publishes herewith a copy of a letter of April 13, 1949 from Jack B. Tate, Acting Legal Advisor, Department of State, to the Attorneys for the plaintiff in Civil Action No. 31-555 in the United States District Court for the Southern District of New York.
‘The letter repeats this Government's opposition to forcible acts of dispossession of a discriminatory and confiscatory nature practiced by the Germans on the countries or peoples subject to their controls; states that it is this Government's policy to undo the forced transfers and restitute identifiable property to the victims of Nazi persecution wrongfully deprived of such property; and sets forth that the policy of the Executive, with respect to claims asserted in the United States for restitution of such property, is to relieve American courts from any restraint upon the exercise of their jurisdiction to pass upon the validity of the acts of Nazi officials.'
The letter from Mr. Tate is then quoted, pertinent parts of which follow:
‘1. This Government has consistently opposed the forcible acts of dispossession of a discriminatory and confiscatory nature practiced by the Germans on the countries or people subject to their controls. * * *
‘3. The policy of the Executive, with respect to claims asserted in the United States for the restitution of identifiable property (or compensation in lieu thereof) lost through force, coercion, or duress as a result of Nazi persecution in German, is to relieve American courts from any restraint upon the exercise of their jurisdiction to pass upon the validity of the acts of Nazi officials.'
In view of this supervening expression of Executive Policy, we amend our mandate in this case by striking out all restraints based on the inability of the court to pass on acts of officials in Germany during the period in question. See 173 F.2d at pages 75-76. This will permit the district court to accept the Release in evidence and conduct the trial of this case without regard to the restraint we previously placed upon it.

Ever since Bernstein, the exception to soveriegn immunity where the Executive branch has opened up the federal courts for business has been known as the Bernstein exception to the Act of State Doctrine.

The U.S. Supreme Court recently found Nazi art looting to be part of the "expropriation exception" to the Act of State Doctrine. I quote from Republic of Austria v. Altmann, 541 U.S. 677 (2004):

The Act itself grants federal courts jurisdiction over civil actions against foreign states, § 1330(a),FN12 and over diversity actions in which a foreign state is the plaintiff, § 1332(a)(4); it contains venue and removal provisions, §§ 1391(f), 1441(d); it prescribes the procedures for obtaining personal jurisdiction over a foreign state, § 1330(b); and it governs the extent to which a state's property may be subject to attachment or execution, §§ 1609-1611. Finally, the Act carves out certain exceptions to its general grant of immunity, including the expropriation exception on which respondent's complaint relies. See supra, at 2245-2246, and n. 5. These exceptions are central to the Act's functioning: “At the threshold of every action in a district court against a foreign state, ... the court must satisfy itself that one of the exceptions applies,” as “subject-matter jurisdiction in any such action depends” on that application. Verlinden, 461 U.S., at 493-494, 103 S.Ct. 1962.
FN12. The Act defines the term “foreign state” to include a state's political subdivisions, agencies, and instrumentalities. 28 U.S.C. § 1603(a).
The District Court agreed with respondent that the FSIA's expropriation exception covers petitioners' alleged wrongdoing, 142 F.Supp.2d, at 1202, and the Court of Appeals affirmed that holding, 317 F.3d, at 967-969, 974.

Since the court's decision does not even mention the expropriation exception, it is hard to tell whether this was alleged in the complaint or argued in the briefs. I will look into this, since the decision is so contrary to precedent.

The Nazis were tried by the U.S. and found to be a criminal conspiracy, not a legitimate government. In re Nurnberg, 6 F.R.D. 69, 121 (1946, 47).

The Tennessee court's decision is deeply troubling and clearly wrong.

(Eglon van der Neer's "Portrait of a Man and Woman In an Interior")

Mergers and Acquisitions: Lack of Clarity in Copyright Assignments and Licenses Can Blow A Deal

In The SCO Group Inc. v. Novell Inc., --- F.3d ---, 2009 WL 2581735 (10th Cir. August 24, 2009) the Tenth Circuit Court of Appeals revisited a ten-year old transaction. In a transaction characterized as the sale of a "businesss", one party claimed that no copyrights were transferred. The other party claimed that copyrights were transferred. The $300 million 1995 involved the sale of a business.

This case ought to be made part of any curriculum for attorneys involved in mergers and acquisitions. A list of lessons to be derived from the case:

1. in corporate transactions, specify what copyrights are being transferred, if any - be as specific as possible;

2. if you don't understand what is being sold or transferred, no one else will;

3. where licenses are being transferred and one party retains certain powers, clearly define the powers in the transaction documents;

4. following the deal, amend any copyright notices and copyright registrations to conform to your understanding of the transaction;

5. if you are left in doubt (some quick deals necessitate this), insert a few hypotheticals to show how the contract is supposed to work ("for the elimination of doubt").

Much of the opinion deals with the court struggling with the meaning of the contract language, what rights are involved, what copyrights are involved, and how licenses work. The Copyright Act piece is a discussion of 17 U.S.C. Section 204(a) which requires a "note or memorandum" in writing and signed by the owner.

Where there is no question that a transfer of copyright was intended, but the scope of the transfer is ambiguous, the ambiguity will not invalidate the transfer, but opens the door for parol evidence.

The 10th Circuit reversed the lower court's grant of summary judgment and remanded on a number of issues. Where really smart lawyers and really smart federal judges can't figure out what a transaction means, it is a sure sign that the transactional lawyers dropped the ball.

Create Your Own Radio Station: In Victory For Webcasters, Second Circuit Finds Service Not Interactive

In Arista Records LLC v. Launch Media Inc., --- F.3d ---, 2009 WL 2568733 (2d Cir. August 21, 2009), the Second Circuit considered the case of an internet "radio" station on Yahoo called Launchcast. The Second Circuit is the first federal appeals court to rule on the issue.

Launchcast, like Pandora permits listeners to "create" their own radio stations. The Court's opinion does a great job of explaining how such "stations" work and the extent to which consumers' preferences are registered within Yahoo's service. Essentially, consumers have very limited control over the content and have veto power over songs that they don't like.

The court's opinion is a good explanation of both the technology and the legislative history. Noting that federal judges are appointed for life and thus have "varied" understandings of the technology involved, the court endeavored to make the inner workings of Launchcast's technology clear in plain English.

"Interactive service" is defined in the Copyright Act 17 U.S.C. Section 114(j)(7). Webcasting services that are not interactive must pay a statutory royalty set by the Copyright Royalty Board.

Interactive services, on the other hand, must also pay an individual license fee for each song in question to a performing rights society. The reason is that the copyright holder has the exclusive right to "to perform the copyrighted [sound recording] publicly by means of a digital audio transmission" 17 U.S.C. Section 106(6).

The Second Circuit agreed with the appellant BMG that the question of interactivity was a question of law for the court, not a jury question (the trial court put the question to the jury). But the Second Circuit then found against BMG in that the Launchcast service was not an "interactive service" within the meaning of the Copyright Act.

Last Christmas, I showed my mother how to create a radio station on Pandora that played songs like "Charlie Brown's Christmas". She has since become a big Pandora fan.

9th Circuit Strikes Down California Holocaust Statute of Limitations As Violative of Federal War Powers!

In von Saher v. Norton Simon Museum of Art at Pasadena, 2009 WL 2516336 (9th Cir. August 19, 2009), the Ninth Circuit struck down Section 354.3 of California's Civil Code. Section 354.3 extended the statute of limitations until December 31, 2010 for the recovery of Holocaust-era art.

In a gross misreading of history, the court found that California's permitting Holocaust art claims to proceed against museums and galleries somehow impinged on the federal government's powers to deal with reparations.

The dissent, by Judge Pregerson, got it right. Judge Pregerson said that permitting lawsuits against museums and galleries present in California has nothing to do with permitting claims against a foreign power.

Fortunately, the court permitted von Saher's claims to proceed under Section 338 of California's Civil Code which applies a discovery rule to the statute of limitations.

But there is plenty of federal precedent on using the federal courts to unwind Nazi-era looting transactions. With over six million despoiled and murdered, a lot of art and other personal property flooded the world market, and particularly the U.S. art market during and after World War II. Americans with strong dollars profited from the tragedy by building great collections of European art. The federal government has always had a strong policy of using the courts to unwind Nazi-era transactions. The "Berstein" exception to the Act of State Doctrine is precisely such a strong federal policy in this area. In the Bernstein case, the U.S. State Department told the federal judiciary to suspend the act of state doctrine and not give the Nazi regime the deference ordinarily due a foreign sovereign.

Why are the federal courts recently so often hostile to permitting property stolen from Jews to be returned? There is no conceivable federal interest in stopping California from permitting persons to recover stolen private property.

Lucas Cranach the Elder's Adam and Eve.

Motion to Stay Imposition of Attorneys Fees Under the Copyright Act

I last wrote on the Renoir/Guino case decided by the Ninth Circuit creating perpetually unpublished works here. The defendants are now back in district court disagreeing with the Ninth Circuit's finding that the copyright is valid and pointing out that the Register of Copyrights might not have registered the work if she had been provided with accurate information on publication in the registration certificate.

In Societe Civile Succession Richard Guino v. Beseder Inc., 2009 WL 2497447 (D. Ariz. Aug. 13, 2009), the defendant made a motion to stay the determination of attorneys fees until the Court first inquired "whether the Register of Copyrights would have refused to copyright the works at issue if [she] had known of inaccurate information regarding the first date of publication contained in the copyright application pursuant to 17 U.S.C. Section 411."

A motion to stay is a last-ditch desperation shot. The district court shot it down.

Since I tend to root for the underdog, I have to point out that the district court's reasoning is flawed. In rejecting the motion, the district court reasoned that a finding of a "valid copyright" leads to an award of attorneys fees, and that if the Register said she wouldn't register, that would create an "irreconcilable conflict." The district court reasoned that this was a question "previously decided".

But just because a copyright is valid does not mean that attorneys fees are available for infringements. A failure to register disentitles a copyright plaintiff to attorneys fees and statutory damages.

You can have a valid copyright and no registration. And a valid copyright and no attorneys fees. Happens every day, as I advise many potential clients who have failed to register their copyrights.

If a copyright owner fails to register properly and promptly, statutory damages and attorneys fees are not available against an infringer.

Section 412 of the Copyright Act provides that registration is a prerequisite for statutory damages and attorneys and gives the particulars.

Statutory damages and attorneys fees are governed by Sections 504 and 505 of the Copyright Act.

If indeed the plaintiff made misrepresentations in obtaining a copyright registration, the defendants ought to read Fogerty v. Fantasy and its progeny and develop more nuanced arguments against an award of attorneys fees. In my Copyright Litigation Handbook I note the surprisingly unsettled area of law that is attorneys fees under the Copyright Act. There is much room for advocacy, the Circuits don't agree, and in a case that Prof. Patry called a "brain teaser," the defendants should not be tagged for full attorneys fees on litigating an unsettled or novel area of law if there was some degree of bad faith by plaintiff in registration.

But on the losing end of a case and getting whacked for attorneys fees, the adrenal glands have worked overtime, are blown out and it is tough to put in the time necessary to protect yourself. At the end of a hard-fought litigation, courts may be sympathetic to a party that really believed in its case. This is particularly true when your adversary is wealthier or has allowed himself to gloat. There are very serious cases declining to award attorneys fees, so a non-victorious party ought to marshal every factor possible to persuade a court to exercise its wide discretion in that party's favor.

Renoir Self-Portrait above.

Murder Mystery and Egon Schiele's Dead City: Nazi Looted Artworks in US Museums

In May of this year I gave a lecture at the Jewish Museum titled "Murder, Mystery and Egon Schiele's Dead City: Swiss Laundering of Stolen Austrian Artwork". You can access a video of the lecture here at a blog called Art Stolen from Fritz Grunbaum.

I took the photo at left in the Holocaust Tower at the Jewish Museum.

If you care about the issue of artworks looted by the Nazis being concealed by the Austrians and the Swiss - and never returned to the heirs of their murdered Jewish owners, then you will find the video of interest.

According to 2006 Congressional testimony of AAMD President James Cuno, U.S. museums contain tens of thousands of artworks that were potentially looted by the Nazis that U.S. museums have failed to research. Since many families were wiped out entirely, there are no heirs to claim stolen Jewish assets in U.S. museums.

According to a recent statement by Amb. Stuart Eizenstat, 1% of Holocaust survivors die each month. 36% of them live at or below the poverty line.

U.S. museums promised to make all of their records relating to Holocaust-era assets public in 1999 and to put this information online to aid the Diaspora in tracing their heritage. This was at the Washington Conference on Holocaust-Era Assets.

Unfortunately, U.S. museums have failed to follow up on their promises. Each item in a museum, like, for example, the Museum of Modern Art, has a "confidential object file" The "confidential object file" is concealed from historians as a matter of routine. New York City taxpayers subsidize this concealment by giving tax breaks and grants to institutions like the MoMA.

If you visit the MoMA's website, you can click "Explore" and "Collection" and find "Provenance Research Project". In there, you will find 719 objects fitting the criteria of having entered the U.S. after 1932 but created before 1946. Numerous of these objects were stolen by the Nazis and never returned to their true owners.

Although there was a movement during the Clinton Administration to push U.S. museums to reveal information relating to European artworks entering the U.S. after 1933 but created before 1945, but this initiative was dropped like a hot potato once the Bush/Cheney administration came to power.

Unfortunately, Edgar Bronfman, who was a real leader in this area was replaced by art collector Ronald Lauder who has resisted disclosure of his art dealings.

Visiting the Jewish Museum in Berlin was an incredible experience. The building was designed by architect Daniel Libeskind in a manner designed to disturb and disrupt your expectations.

I have reprinted below the Washington Principles on Nazi-Confiscated Art from the U.S. State Department website.

Other countries have made great strides in remedying this problem. Let's hope that the Obama Administration will make it a priority.

Washington Conference Principles On Nazi-Confiscated Art Released in connection with the Washington Conference on Holocaust-Era Assets, Washington, DC, December 3, 1998

In developing a consensus on non-binding principles to assist in resolving issues relating to Nazi-confiscated art, the Conference recognizes that among participating nations there are differing legal systems and that countries act within the context of their own laws.

I. Art that had been confiscated by the Nazis and not subsequently restituted should be identified.

II. Relevant records and archives should be open and accessible to researchers, in accordance with the guidelines of the International Council on Archives.

III. Resources and personnel should be made available to facilitate the identification of all art that had been confiscated by the Nazis and not subsequently restituted.

IV. In establishing that a work of art had been confiscated by the Nazis and not subsequently restituted, consideration should be given to unavoidable gaps or ambiguities in the provenance in light of the passage of time and the circumstances of the Holocaust era.

V. Every effort should be made to publicize art that is found to have been confiscated by the Nazis and not subsequently restituted in order to locate its pre-War owners or their heirs.

VI. Efforts should be made to establish a central registry of such information.

VII. Pre-War owners and their heirs should be encouraged to come forward and make known their claims to art that was confiscated by the Nazis and not subsequently restituted.

VIII. If the pre-War owners of art that is found to have been confiscated by the Nazis and not subsequently restituted, or their heirs, can be identified, steps should be taken expeditiously to achieve a just and fair solution, recognizing this may vary according to the facts and circumstances surrounding a specific case.

IX. If the pre-War owners of art that is found to have been confiscated by the Nazis, or their heirs, can not be identified, steps should be taken expeditiously to achieve a just and fair solution.

X. Commissions or other bodies established to identify art that was confiscated by the Nazis and to assist in addressing ownership issues should have a balanced membership.

XI. Nations are encouraged to develop national processes to implement these principles, particularly as they relate to alternative dispute resolution mechanisms for resolving ownership issues.

When Buying A Painting Can You Rely on an Expert Appraisal You Didn't Personally Commission?

In Mandarin Trading Ltd. v. Wildenstein, --- N.Y.S.2d ---, 2009 WL 2497306 (1st Dept. August 18, 2009) New York's Appellate Division first department struggled with the question of whether a purchaser of a painting may rely on an expert appraisal commissioned by an intermediary in an art transaction. The plaintiff Mandarin purchased Gauguin's Paysage aux trois arbres. According to the complaint, the defendant Wildenstein had ownership interests in the painting, yet issued an expert appraisal with an inflated value, knowing that Mandarin would rely on it.
The Supreme Court judge (in New York this is the trial level judge) tossed the case out on a pre-answer motion, finding that there was no privity between Wildenstein and Mandarin and that the appraisal contained non-actionable opinion.

Two dissenters (Justice Tom and Justice Nardelli) balked. Tom believed that the complaint stated a claim in equity for unjust enrichment. In a very well-reasoned dissent, Justice Nardelli found that the majority had made numerous factual findings unsupported by the record, which on a pre-answer motion is to be construed in favor of the plaintiff. Also Justice Nardelli found that fraudulent misrepresentation, negligent misrepresentation, third-party beneficiary (contract), and unjust enrichment were all well-pleaded claims.

When there are two dissenters at the Appellate Division, one may take an appeal to the New York Court of Appeals "as of right".

If art dealers can write bogus "appraisals" for works in which they have an ownership interest, it really taints the market and encourages fraud. Many art transactions are concluded through intermediaries for perfectly legitimate reasons. Justice Nardelli's dissent is compelling and appears to be a correct statement of the law.

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Stormy Weather for Joint Authors: Doo Wop Ditties in the Seventh Circuit

Clients who are grateful to collaborators often wish to give credit to someone, particularly when they can't pay that person for their services. Designating that person a "joint author" may have unpleasant consequences.

Janky v. Lake County Convention and Visitors Bureau, --- F.3d--- 2009 WL 2357929 (7th Cir.) is a litigation involving members of the Doo Wop band Stormy Weather. I have written on the case before involving the issue of attorney sanctions. In this appeal the attorney committed the faux pas of forcing the client to pay sanctions against him out of a judgment he'd won. Since he lost the appeal, the issue was moot because "there is now no verdict from which sanctions can be deducted.

But the issue that divided the Sevent Circuit (opinion by Judge Evans, dissent by Judge Ripple) was on the issue of joint authorship.

Janky wrote a song. She copyrighted it, listing herself as the sole author. Farag listened and gave some suggestions. Based on those suggestions, Janky modified the work. Janky filed a copyright registration calling the modified version a "joint work". In the registration, she noted that Farag had a "10% ownership share". When she sued Farag for copyright infringement, she claimed that she didn't intend to make Farag a joint author.

Joint authors can't sue each other for copyright infringement. They can each license the work and must account to each other for proceeds.

The classic test for joint authorship is 1. whether the parties intended to create a joint work; and 2. whether each party contributed an independently copyrightable contribution.

The Seventh Circuit granted summary judgment against Janky in what it called a "close call". The dissent believed that there were issues of fact on both prongs of the test.

A good case on what type of evidence it takes to prove joint authorship and why it's important to think twice in filling out copyright registration forms.

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Pete Gleason Calls for New York City Holocaust Art Disclosure Act

New York City Council District 1 candidate Pete Gleason calls for a Holocaust Art Disclosure Act for New York City museums. Such an Act would compel New York museums to disclose provenance documents of artworks potentially looted by the Nazis currently in their collections.

This local action follows Amb. Stuart Eizenstat's call for a U.S. Commission to assist descendants of Holocaust victims in determining title to artworks stolen by the Nazis and is a follow-up to this June's Prague Conference on Holocaust-Era Assets.

Pete Gleason's press release is here and his campaign website is www.pete2009.com. The Democratic Primary is September 15.

Last week, the Liz Benjamin of the Daily News reported here a scandal involving a charity on New York's Lower East Side involving the incumbent City Councilman using the charity's employees to collect signatures.

New York County Lawyers' Art Litigation Institute Now on DVD

Art Litigation and Dispute Resolution Instititute Flyer

I recommend highly a Continuing Legal Education program that I helped to organize on art litigation and dispute resolution - you get 4 CLE credits for ethics and it is HIGHLY entertaining. Many attendees told me that it was the best CLE program they had ever attended.

To purchase the DVD, visit www.nycla.org

Credits: 8.5 MCLE Credits8.5 MCLE Credits: 4 Ethics; 1 Skills; 3.5 Professional Practice; Non-Transitional

Faculty: Matthew F. Bogdanos, Manhattan District Attorney’s Office; Judith A. Bresler, Withers Bergman; John J. Byrne, Byrne Goldenberg & Hamilton, Washington, D.C.; John R. Cahill, Lynn & Cahill; Hon. Miriam Goldman Cedarbaum, US Dist. Ct., SDNY; Sharon H. Cott, Metropolitan Museum of Art; Andrea Crane, Gagosian Gallery; Hon. Stephen G. Crane, JAMS; Raymond J. Dowd, Dunnington Bartholow & Miller; Hon. Laura E. Drager, New York State Supreme Court; Monica S. Dugot, Christie’s; David J. Eiseman, Golenbock, Eiseman, Assor & Bell; Robert J. Feinstein, Pachulski, Stang, Ziehl & Jones; Edward W. Hayes, Edward W. Hayes; Hon. Barbara Jaffe, Civil Court of NYC; Lawrence M. Kaye, Herrick Feinstein LLP; Thomas R. Kline, Andrews Kurth, Washington, D.C; John B. Koegel, Koegel Group LLP; Hon. John G. Koeltl, US Dist. Ct., SDNY; Jules B. Kroll, Jemkroll Holdings; Ralph E. Lerner, Withers Bergman; Dean R. Nicyper, Fleming, Zulack, Williamson, Zauderer; Anke Nordemann, Boehmert & Boehmert, Berlin, Germany; William G. Pearlstein, Golenbock, Eiseman, Assor & Bell; Lindsay Pollock, Art & Auction Magazine; Jan Prasens, Sotheby’s; Hon. Eve M. Preminger, Kramer, Levin, Naftalis & Frankel; Hon. Loretta A. Preska, US Dist. Ct., SDNY; Dr. Lucille Roussin, Cardozo Law; Jay G. Safer, Locke, Lord, Bissell & Liddell; Ronald D. Spencer, Carter, Ledyard & Milburn; Howard Spiegler, Herrick Feinstein; Peter R. Stern, McLaughlin & Stern; Hon. Joseph P. Sullivan (Ret.) Holland & Knight; Nancy E. Wolff, Cowan, DeBaets

Description: One of our finest course offerings from NYCLA-CLE, brings together an unparalleled panel of experts from the bench, bar, museums, art galleries, auction houses, trade publications, appraisers, and insurance companies to discuss the latest legal issues affecting the art community. Specific panels presented included:

Art Litigation and Dispute Resolution: Litigation, Arbitration or Mediation—Considerations for Practitioners Learn how to choose between and among litigation, arbitration and mediation when confronted with disputes concerning pieces of art. Some of the issues discussed by the panel of experts include the advantages and disadvantages of litigation, arbitration and mediation in the art context; how arbitration and mediation can be used more effectively in art disputes; and ways to make mediation more useful in art disputes.

Commencing an Action in Art Litigation: Replevin, Quiet Title, Slander of Title, Injunctive Relief and Statutes of Limitation In art law cases, the use of provisional remedies is neither rare nor usual. Typically provisional relief is sought to prevent a sale or other transfer of art – often because it has surfaced publically for the first time in years. A discussion of the forms of provisional remedies available is provided, as well as illustrative cases involving art law.

Art Lending, Bailments, Consignments, UCC, Liens and Security Interests While Article 2 of the U.C.C. governs an array of issues arising in art transactions, many states, including New York, doubting the sufficiency of the U.C.C. alone to safeguard art buyers, have enacted legislation that in some cases overrides the U.C.C. Learn about warranties, both from a review of U.C.C. principles and legislative and judicial expansions of the protections.

Contemporary Art, Copyright and Moral Rights The United States has reluctantly recognized the moral rights of artists to protect their reputations from harm through adverse treatment of their works of art or misuse of their identity as artists. Non-economic and personal to the artist, these rights exist independently of an artist’s copyright in or ownership of his or her own creation.

Dealing with Artists Estates and Foundations, Dealers, Auction Houses and Museums Experts discuss issues relating to how to deal with artists’ estates and foundations, art dealers, auction houses, museums and the press. Hear how the estate of Andy Warhol was handled, including litigation concerning attorney’s fees; learn about the issues surrounding how a private gallery works with attorneys to avoid and resolve disputes; discover how museums handle dispute resolutions; and find out how the press covers breaking legal stories in the art world.

Art Litigation and Dispute Resolution: Antiquities, Authentication, Provenance, Insurance, Damages, Appraisals and Valuation; Foreign Law and Choice of Law

Buying and selling ancient art requires the prudent purchaser to research the origin and history of ownership of an object and to evaluate the available information in the context of the legal framework discussed by this panel, for potential penalties for the unwitting purchaser of smuggled objects include civil forfeiture and for those who knew or in retrospect “consciously avoided” full knowledge, jail.

Program Co-Chairs: Hon Stephen G. Crane, JAMSRaymond J. Dowd, Dunnington Bartholow & Miller LLPAll Programs include: (1) Affirmation, (1) DVD/CD packet and (1) set of Written Materials TITLE AVAILABLE IN DVD FORMAT ONLY.

Changing Software Vendors: Can Leaving Old Software On Your Computer Be Copyright Infringement?

Image via Wikipedia

Quantum Systems Integrators, Inc. v. Sprint Nextel Corp., 2009 WL 1931196 (4th Cir. July 7, 2009) deals with a company changing software vendors. In this case, Sprint stopped using Quantum's software. After entering into a settlement agreement, a number of Sprint's computers inadvertently were left with copies of Quantum's software on them. When Sprint employees rebooted the computers, Quantum's software was automatically loaded into the RAM. Sprint employees didn't realize that the Quantum software was being loaded and didn't actually use it. Quantum received messages from the computer showing that its software was being accessed.

After a jury trial, the district court awarded $69,000 for eight infringing computers and almost $400,000 in attorneys fees. For each computer, the jury awarded the license fee ($8,700 for each computer). The Fourth Circuit found that the district court properly rejected Quantum's attempt to obtain a portion of Sprint's profits, holding that Quantum had failed to sustain its burden of proof that any of Sprint's profits were "reasonably related to" the automatically generated RAM copies. The court also rejected Sprint's argument that it did not engage in "volitional" copying, finding that the RAM copies satisfied the fixation requirement and that since the computers were Sprint's the case was not analogous to a passive ISP or third party that does not have control over what passes through its system.

The Fourth Circuit upheld the award of actual damages but remanded for a determination of the reasonableness of the attorneys fees, noting Quantum's "minimal success" and the apparently disproportionate amount of attorneys fees awarded, in line with its case law applying Fogerty v. Fantasy Inc., 510 U.S. 517 (1994).

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German and Other Foreign Heirs in New York: Standing To Sue Clarified in Andrew Lloyd Webber Picasso Case

Schoeps v. Andrew Lloyd Webber Art Foundation, N.Y.L.J. August 14, 2009 courtesy Amlawdaily here. The heirs of Paul von Mendelssohn-Bartholdy suffered a setback in New York's Appellate Division, First Department when the court found that Julius Schoeps, a German heir seeking the return of an artwork taken from Mendelssohn-Bartholdy under duress during Nazi rule in Germany.

Nazis looted tens of thousands of artworks by forcing Jews to "sell" the works and "paying" the money into blocked accounts that would be stolen by the Nazis or forced Jews to pay confiscatory foreign exchange rates of up to 96% if they wanted to flee Nazi Germany. So for example if a Jew wanted $4 in U.S. currency, he would have to pay $100 worth of Reichsmarks to obtain it.

Schoeps, an heir under German law of Mendelssohn-Bartholdy, commenced an action in New York without complying with Section 13-3.5 of New York's Estates Powers and Trusts Law ("EPTL") titled "Action or proceeding by foreign personal or other legal representative.

The problem is that in Germany and certain other countries, there is no such thing as an "estate" in the sense that we know it here. Heirs may become so by operation of law and may not have letters of administration as is the practice in common law jurisdictions. For heirs inheriting in such jurisdictions, the practice is to either obtain letters in New York or obtain an affidavit from a foreign legal expert and the heirs themselves swearing to their legal entitlement in that foreign jurisdiction.

In Schoeps v. The Museum of Modern Art, 594 F. Supp.2d 461 (S.D.N.Y. 2009), Mr. Schoeps got a much better result based on the opinion of a foreign legal expert that Judge Rakoff took into account.

As I outlined in my speech at the Prague Conference on Holocaust-Era Assets in June (view video here), many legal obstacles arise for heirs pursuing artworks looted in the Nazi era. It is tough legal work, not for the faint of heart. And unfortunately, apart from some excellent works published in the past there is very little scholarly historical work in this area (a recent exception is Martin Dean's excellent Robbing the Jews: The Confiscation of Jewish Property in the Holocaust, 1933-1945 (Cambridge 2008). There is almost no legal scholarship in this area (I took the foreign exchange example above from Dean's book).

The world's greatest robbery is hiding behind the world's greatest murder.

Our current court system - in decisions around the country -- seems to consider that six million Jews gave up their belongings "voluntarily" for next to nothing and seems to ignore postwar German and Austrian laws (drafted by the Allies) nullifying such transactions.

Although it appears that Mr. Schoeps did not encounter an insurmountable hurdle (the requirement of an affidavit of a foreign legal expert), in no other context do owners of stolen property find such a hard time getting it back. As I argued in Prague, if someone steals your car, you call the police. When a Jew wants stolen art back, the rules seem to change, and the cops don't have the education or the interest to cope with the problem.

Nazi Looted Art in U.S. Museums: Amb. Stuart Eizenstat's Call for a US Commission

Ambassador Stuart E. Eizenstat was appointed by Secretary of State Hillary Clinton to lead a delegation to the Prague Conference on Holocaust-Era Assets. Eizenstat was the principle architect of the 1999 Washington Conference on the same topic. He authored the book Imperfect Justice and has been instrumental in achieving international solutions that afford restitution to Holocaust victims.

In the PBS video linked to below, Eizenstat calls for the U.S. to create a commission of experts to rule on ownership issues and decries U.S. museums that are asserting "technical defenses" such as statutes of limitations against Holocaust victims and their heirs.
Check out http://www.pbs.org/newshour/art/blog/2009/07/conversation-stuart-eizenstat.html

For the full text of what came out of the Prague Conference, known as the Terezin Declaration, click here.

Nazi Looted Art at Oberlin College and Other U.S. Museums: Prague Conference on Holocaust-Era Assets

In late June I was invited to speak on a panel of legal experts on artwork looted by the Nazis. My topic was legal obstacles to the recovery of stolen artworks.

The image you see here is of an artwork by the artist Egon Schiele called Girl with Black Hair. Every major Schiele expert in the world - Jane Kallir, Eberhard Kornfeld and Rudolph Leopold - has said that this artwork came from Fritz Grunbaum's collection. Yet Oberlin College refuses to return it - or even to share their research or conclusions about where they believe it came from. Oberlin's website shows that the work mysteriously surfaced in Switzerland in 1956 - and stops there.

U.S. museums and liberal arts institutions concealing the origins of their artworks is one of the biggest obstacles to researchers being able to restitute artworks to the Jews and other Nazi persecutees from whom they were stolen. As Holocaust victims and their descendants die, U.S. museums simply wait, knowing that they have stolen artworks in their collections. In his 2006 testimony to Congress, AAMD Director James Cuno estimated the number of potentially Nazi-looted works in U.S. museums at "tens of thousands".
It is astonishing that U.S. museums can engage in this Holocaust denial and feel no backlash. Shame on Oberlin College. Its Dean should be tossed out on his ear.
Amb. Stuart Eizenstat supports a U.S. Art Restitution Commission. Good for him, and not a moment too soon.
You can find my full speech in Prague at the link below.

http://artstolenfromfritzgrunbaum.wordpress.com/category/speech-at-holocaust-conference/live-recorded/
Disclosure: I represent the heirs of Fritz Grunbaum, a Jewish cabaret performer who was murdered by the Nazis at Auschwitz.

The Federal "Discovery" Rule: Can you sue for infringements occuring more than three years ago?

In Graham v. Haughey, --- F.3d ---, 2009 WL 1564223 (3d Cir. June 5, 2009), the Third Circuit considered the question of whether a victim of copyright infringement may sue for infringements that occurred over three years prior to the commencement of the lawsuit.

At issue is the federal "discovery" rule for accrual of an action versus the "injury" rule. I discuss this distinction in Chapter 5 of my Copyright Litigation Handbook (West 4th Ed. 2009). I was pleased to see that the Third Circuit discussed the cases that I had cited on this conflict (by the way, this fourth edition of Copyright Litigation Handbook just shipped last week).

The question is whether a cause of action for copyright infringement "accrues" when the infringement takes place (the "injury" rule) or whether it accrues when the victim, exercising reasonable diligence, discovers the infringement (the "discovery" rule). Most circuits have ruled that the federal discovery rule applies. But some district courts in the Second Circuit, relying on a powerfully-reasoned decision by Judge Kaplan in Auscape Intern. v. National Geographic Soc., 409 F. Supp.2d 235 (S.D.N.Y. 2004), have applied the "injury" rule.

To illustrate: under the injury rule, a court would either dismiss or grant summary judgment on a pleading that alleged infringements over three years prior to the action being filed.

Under the discovery rule, a court would permit equitable defenses such as tolling for fraudulent concealment and factfinding to determine whether a plaintiff could have, did, or should have discovered infringements over three years old prior to filing suit.

These rules relate to "accrual" of the action. The statute of limitations is always three years under 17 U.S.C. 507(b).

Graham v. Haughey determined that the "discovery" rule applies and that the plaintiff could sue on infringements that occurred over three years prior to the commencement of the action. Graham v. Haughey digs into the legislative history and consists of a point-by-point refutation of the Auscape decision. It also has an excellent discussion of issues relating to burdens of proof on damages, the nexus neccessary for damages to be attributable to copyright infringement, and the role of a judge in reviewing a jury verdict of copyright infringement.

Graham's facts are interesting because the infringement was committed by an ex-employee. The new employee used the infringing documents to generate millions in profits, but the publications were in proposals kept confidential by both the infringer and the recipient of the proposals for many years. After these secret transactions were finally revealed, the copyright owner sued and obtained a jury verdict in excess of $16 million.

This case involved an ex-employee breaching a contract not to retain or use copyrighted materials, so is an important cautionary tale for both new employers who don't want millions in liabilities and old employers who wish to protect their materials.

This is the odd case where a "publication" was not "public".

The Third Circuit remanded on apportionment issues.

Graham's counsel David J. Wolfsohn of Philadelphia's Woodcock Washburn (who was successful on the appeal and is pictured above) informs me that the matter is in abeyance pending Haughey's cert petition (due Sept 3). Haughey was represented by Floyd Abrams of Cahill Gordon & Reindell.