A Breakdown in Appropriation

A New View on Using Copyrighted Images

By MICHAEL MCCULLOUGH          April 30, 2013

When a Federal court scratches its head about how to regulate the art market, get ready for total baldness as you start tearing out your hair. Last week, a Federal Appeals Court in New York issued one of the daftest opinions of recent memory in the copyright infringement case against Richard Prince. As you read the decision you get a sense that the court not only misunderstands the art market completely but that it lost track of what the copyright law was meant to protect. If the decision is not overruled by the Supreme Court then the case will certainly change the way artists use appropriated images.

I don’t think the judges ever thought to consider the difference between artistic and commercial achievements in the art market, a common problem in our larger society. And you can see this coming from a mile away when they cart out the Great White Father, himself, as the poster boy for 20th century expressionism. They describe Warhol’s work, incorporating appropriated images of Campbell’s soup cans or of Marilyn Monroe, as commentary on consumer culture and exploring the relationship between celebrity culture and advertising. The first error in this reasoning is that it’s Duchamp and not Warhol who sets the standard for artistic expression in the 20th century. The court forgets that appropriation, at its core, is a philosophical inquiry into a person’s relationship with the material world and not a psychological tour of the various artists’ and patrons contributing to the dialogue. Furthermore, Warhol’s appropriations were largely of images already commercialized, as his intent was to comment on a commercial, consumer society; since the images had been put into the commerce to promote products or people, the people who owned those copyrights were happy for Warhol to exploit them. During his lifetime, Warhol retained the copyright to his own artworks and never addressed the issue of any rights of the Campbell Soup Company. It’s interesting how the court completely misses that Warhol’s use of Campbell’s copyright was certainly a copyright violation in 1962. Warhol never sought permission from the Campbell Soup Company to paint their soup cans, but, then again, the company viewed his use of their copyright as amusing, expressive, and confirming the status of their tasty soup in American culture. All of this is aside from the fact that it was free advertising for Campbell’s, something no marketing department would balk at. It was only after Warhol’s death, when the Andy Warhol Foundation began making licensing agreements with various manufacturers to use Warhol’s imagery on products, that there was an official legal agreement between the Andy Warhol Foundation and Campbell Soup Company. Presently, both parties own a stake in the copyright and neither party can make licensing agreements without the other party’s permission.

I won’t even begin to address Warhol’s use of celebrity images, as that discussion could take volumes to complete. Suffice it to say that most, if not all, of Warhol’s celebrity subjects would have happily given their and their photographers’ copyrights in those images in exchange for Warhol’s endorsement of their iconic status. The fact that the court made no distinction between Warhol’s use of consumer products and his use of celebrity imagery is another sign of something gone awry.

In contradistinction, the photographs done by Cariou and appropriated by Prince were not put into the consumer culture in any comparable way to the images appropriated by Warhol. Again, the court misses the idea that Warhol’s use of images certainly violated copyrights at the time; it’s just that the owners didn’t object because they already had the iconic status that Warhol was commenting on, so the use offered no harm to them. In contrast, Prince’s use of Cariou’s images does nothing for Cariou and allows Prince to exploit Cariou’s work in a way the copyright law was meant to dissuade. And here’s another comparison that is telling: Warhol only sold five of his 32 soup can paintings at the opening show in 1962 for a hundred dollars each. On the other hand, some of Prince’s paintings and collages in the Canal Zone series sold for over one million dollars. Could the court have considered the economic exploitation as a factor in whether Prince’s use was a “fair use”?

The answer is yes, but they decided not to. The Copyright Law of 1976 allows a court to consider “the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes.” This part of the law is meant to favor nonprofit uses over commercial uses, but within the realm of permissible commercial uses the court could have considered the commercial exploitation of Cariou’s photographs. Instead, they decided that since Prince’s works were “transformative” they were not going to “place much significance” on the fact that the use was commercial. In essence, the commercial versus nonprofit distinction has been abandoned.

The court also said that Prince’s work needn’t comment on Cariou’s images or on aspects of popular culture closely associated with the images, as the law does not require the secondary use to comment on the original artist or work, or on popular culture. They found that twenty five of Prince’s artworks make fair use Cariou’s copyrighted photographs because they are “transformative.” The other five works were sent back to the lower court for a decision based upon the courts new standard.

Now that an artist need not justify the secondary use with some specific commentary or criticism, the new work must only alter the original with “new expression, meaning, or message” to qualify as a fair use. In that regard, Judge Barrington Parker, Jr. wrote, “[w]hat is critical is how the work in question appears to the reasonable observer, not simply what an artist might say about a particular piece or body of work. Prince’s work could be transformative even without commenting on Cariou’s work or on culture, and even without Prince’s stated intention to do so.”

Of course, the “reasonable observer” in the final analysis will be a judge, so it will be difficult for an artist to make any decisions about employing fair use without the aid of a lawyer. And that- the need to have a lawyer in the artist’s studio passing judgment on the work- might just mark the end of appropriation art as we know it.

A Crisis of Confidence?

By MICHAEL MCCULLOUGH          March 14, 2013

The Economics of Authenticating Art

In April of last year, I attended a gathering where Michael Straus of the Andy Warhol Foundation spoke about the foundation’s then recent decision to stop authenticating works by Andy Warhol. It was interesting to hear him say that part of the reason for the decision was the foundation’s confidence that the market for Warhol’s works “can take care of itself.” What this means in practical terms is that galleries, auctioneers and collectors can make their own determinations about the authenticity of a Warhol work when they decide to sell or purchase. Having worked in the art market for a decade and a half now, I’m sure the art market can take care of itself but the problem is that it really doesn’t want to.

Galleries and auctioneers rely on art experts’ opinions because it gives them cover to offer guarantees of authenticity to buyers. Only the criminally insane- though there are some out there buying- would spend millions of dollars on an artwork without some form of an authenticity guarantee. Therefore, if I own an artwork and want to sell it, I must have “the” expert on the artist bless the work; if they don’t then my artwork is practically worthless. To make this more complicated, sometimes the expert doesn’t say “no,” but determines that there is not enough information to form an opinion, which amounts to a vote of no confidence. And if I want to dispute the expert’s “no” or “no confidence” determination then I have to find not one, but two recognized experts who are willing to state that the work is authentic. The net result is that it’s difficult- if not impossible- to contest “the” expert’s authenticity determination. Moreover, sometimes it is the case that there is only one recognized expert for a certain artist’s works. The response of lately by collectors has been to bring lawsuits against “the” experts under various legal notions such as negligence, fraud, antitrust violations, and any other theory their lawyers can conceive. In consequence of this, many of the authentication boards for major artists will no longer authenticate works because too many of them have been sued by unhappy collectors.

What do we say when we want to cast doubt on a long-standing tradition that has ceased to produce useful results? We begin by saying tentatively, “Well, it’s not exactly written in stone.” Authenticity opinions were never meant to be written in stone in the first place, so it was quite predictable that the art market would be faced with this problem. Prices for highly coveted artworks have increased exponentially while the ability of collectors to authenticate those works has remained stagnant. What has changed is that collectors are no longer satisfied with their options.

Several years ago, I saw a cartoon of two art experts looking at a painting by the artist Peter Doig. One expert said to the other, “I’m certain it’s a Doig.” The other expert responds, “I think it might be a cat.” While a great deal of experience and thought might go into an expert’s decision about authenticity, in the end it’s only an opinion along the lines of “Doig” or “cat” at that particular moment in time. That is to say, the experts are offering galleries and auctioneers the ability to avow authenticity subject to future reconsideration while the economic demands placed upon collectors call for assurances on a longer continuum.

As a general tenet of life, people are created equal but opinions are not. When you receive an opinion from a doctor about your health you expect you can rely on it; we know that not every aspect of human body is if fully understood, but we at least expect to be given the variables and a prognosis of the disease. On the other hand, when a stockbroker tells you that a certain stock is a “must buy,” then you should run for the hills because you know something else is coming your way. Experience in life teaches us whom we should trust.

It shouldn’t be a surprise to anyone that art experts’ opinions are rarely meant to be final decisions. Scholarship, they will tell you, changes based upon new information discovered from time to time about artists’ techniques and materials, and new works are found that add to their knowledge of the artist’s oeuvre. An opinion about an artwork is more akin to who will win the World Series this year- it will be a choice of one of two, but no more can be said for certain at this time.

Unavoidably, this is exactly how the courts have treated art experts’ opinions; without exception, all of the lawsuits against art experts over the past several years have failed miserably. Judges and juries are in no position to gauge the authenticity of artwork, so they rely on the trusted experts. The Warhol Foundation was sued twice in the last few years and won both cases, though that smile on the courthouse steps probably cost them several million dollars. This means, practically speaking, that the authenticity quandary is more of an economic problem than a crisis of confidence. A much better reading of the situation would gather that art experts are not being compensated at an appropriate level. Think about other trades where people offer their opinions as a paid service: the credit rating agencies in the financial industry have been subject to vicious lawsuits- and probably justifiably- over the past few years and we don’t see any of those companies getting out of the credit rating business. Why? Because credit rating agencies make barge-loads of money every day- paid for by the very financial institutions that rely on their opinions to sell their wares. Does this sound familiar? If art experts were compensated in the same manner as credit rating agencies then the art market would not be having this debate. The Warhol Foundation should charge five percent of the fair market value of a work in order to authenticate it, and I suspect they would willingly withstand the judicial activism directed at them by any disgruntled patrons.

Just today, I came across another cartoon of two art experts standing in a gallery looking at a taxidermy wolf covered in a sheepskin pelt and enclosed in a glass case. One expert said to the other, “I’m afraid it’s a fake.” How very appropriate.

Writing a Wrong

New York Changes its Laws to Protect Artists

By MICHAEL MCCULLOUGH          February 7, 2013

In an interview in 1976 with Barbaralee Diamonstein-Spielvogel , the great dealer Leo Castelli said, “[t]he function of an art dealer, well, can be various; certainly, a good art dealer, an art dealer who really cares for art and not about making money, should be to find new artists, make them known to the public.” When asked the insightful question about his role in the business of selling art, he responded, “I am more than somebody who wants to sell paintings. The selling of paintings seems to be a secondary thing. I have to, of course, sell them to finance my activity, but the activity really is the important game, my gallery. And I am very happy to just tag along in the midst of tremendous financial difficulties as long as I can keep the gallery going.”

That, in my opinion, is the way that the art market is supposed to work. Not to say that there is anything wrong with art dealers making money- the economics of operating a gallery have changed dramatically since Castelli’s time- but the basic principal should still stand: at no point in the calculation should the dealer’s interest in the artwork be greater than the sum total of the artist’s. The good dealer understands that the primary objective of a gallery is to promote the artist and the artwork, and there is plenty of money to be made along the way. But, there are people pretending to be art dealers in order to have fun, to throw big parties and to make buckets of money, even as the artists’ interests are abandoned as secondary concerns. And when it all goes horribly wrong with these ventures, as it always does, the death knell sounds when the dealer makes the insalubrious choice to pay the gallery’s debts before paying the artist.

Take the case of Sae Hyun Lee, a talented painter from South Korea, who, like most other artist, painted for years before receiving critical acclaim for his work. After several successful solo exhibitions in Europe, Mr. Lee received an invitation in 2011 from Nicholas Robinson Gallery for a solo show in New York. Ten paintings were consigned immediately. Two of the paintings sold before the show was over and Mr. Lee received his commissions, but things went very silent even before the gallery stopped returning phone calls about the return of the unsold artworks. It wasn’t long before the arrival of a terse letter from Nicholas Robinson’s attorneys about how the gallery was out of money and contemplating bankruptcy. Sadly, as it goes, neither the artwork nor the money could be accounted for properly, which means not at all.

This might have been the end of the story, save for the fact that Mr. Lee is represented in Seoul by Chan-kyu Woo of Hakgoje Gallery, a dealer cast from the Castelli mold. Mr. Woo engaged a New York lawyer, Henry Jung to press for the return of the artwork. Mr. Jung is a former Assistant District Attorney and a very good lawyer who had the very unpleasant experience of being my roommate in law school. Only after Mr. Jung filed a lawsuit in federal court last March, the judge issued a temporary restraining order against the gallery, and Nicholas Robinson himself appeared at a court hearing, did it become clear that Mr. Robinson had sold the paintings and spent the $370,000. Unfortunately for Mr. Lee, Mr. Robinson’s pockets were a bit light; in fact, they were empty. “How could this happen in New York, of all places?” asked Mr. Jung.

It’s not supposed to. In the 1960’s, the Arts and Cultural Affairs Law was passed in New York state to give artists certain protections: artworks consigned by an artist were deemed trust property and the proceeds of their sale were considered trust funds. This was done to dissuade irresponsible people from getting into the gallery business. The problem with the law was that it did not include any measures for enforcement and penalties, which, in a perverse way, enabled a dealer to use an artist’s sales proceeds to pay the gallery’s own operating expenses. If the gallery failed financially, the artist lost the money. In essence, a gallery that absconded with artwork or funds was subject to the same penalties as the drycleaner who failed to return your suit, although the dry cleaner would likely be decent enough to speak with you in person instead of through a lawyer, and might even apologize for the inconvenience.

The District Attorney’s offices might seem like the next port d’escale for Mr. Lee, as selling somebody else’s property and taking the money sounds like it should be a crime. Like most other things in life, it’s more complicated than it seems. That is to say, the failure of a dealer to pay the artist becomes a crime only if the dealer’s inability to pay is itself the result of an underlying criminal act. You may recall Larry Salander went to jail because, among other things, he used the proceeds of art sales to pay off prior debts in a Ponzi scheme. It would also be a criminal act for a dealer to use an artist’s money to enrich him or herself personally. In either example, the crime would be grand larceny which in New York State is pedigreed, like most other things, based upon the dollar amount involved. Law enforcement officials are often interested in art fraud cases, as they represent a welcomed break from drug dealers and purse snatchers; nevertheless the criminal nature of the event needs to be fairly certain for them to get involved. At first blush, the failure of a dealer to pay an artist is not necessarily indicative of any crime, perhaps just an unfortunate business decision. As a result, many of these cases are not investigated and artists, like Mr. Lee, are forced to bring civil lawsuits against galleries and gallery owners in order to protect their rights.

Remarkably, the balance of power shifted in October to favor the artists; a new law was enacted in New York giving teeth to the trust property and trust fund provisions in the existing law. Now, the artwork and the sales proceeds are considered property held “in statutory trust” and cannot become the property of the gallery or be subject to any claims by gallery’s creditors. Perhaps more important, the law adds clear penalties for its violation: a dealer who absconds with artwork or an artist’s money commits a misdemeanor criminal offense and is subject to criminal prosecution and fines. I’ll concede that it’s rare for a defendant convicted of a misdemeanor charge to serve jail time for a first offense, but the new law is ripe for judicial firmness in the most outrageous cases and always a peril for the previously tarnished.

Of course, all of this comes too late for Mr. Lee, as American jurisprudence abhors the ex post facto imposition of new criminal punishment for prior acts. Nonetheless, our government in Albany has finally acted to protect one of New York’s greatest assets, its artists, who are no longer subject to the caprice of businessmen who treat the loss of a painting like a bad investment in a barrel of oil or a bushel of corn. Everybody- well, almost everybody- knows that New York City’s vivacity emanates from the young people who come here to share their creativity with the world. How much longer could New York be called “the art market capital of the world” if the law couldn’t protect vulnerable artists?