Cease-and-Desist Letter Instead of Jitters

David Adjmi, a professional playwright, wrote "3C" that was produced off Broadway. His modest annual income, excluding royalties, from theater commissions and grants was reported between $25,000 and $50,000. It was a parody of a TV series "Three's Company" about a man pretending to be gay living with two female roommates. Copyright owner of "Three's Company" sent a cease-and-desist letter arguing violation of intellectual property. Adjmi did not contend that his play was unrelated to the TV series, instead he was commenting on the famous series.


The cease-and-desist letter apparently listed at least 17 common elements that Adjmi took from the series thus undermining a fair-use parody argument he could have raised in defense of his work. Instead of fighting the legal battle, Adjmi initially decided to comply with the terms of the letter. Apparently, "[t]he idea of spending emotional energy and possibly his savings in a legal battle seemed depressing."

The challenge has been issued, 'stop infringing' but the outcome is uncertain and the fight may be brewing.  Encouraged by other playwrights Adjmi is weighing his options and probably waiting for an attorney to step up and offer assistance in the matter. At least one intellectual property attorney quoted in the New York Times believes Adjmi has a good defense case for his work being a parody. The same article notes that the publicity surrounding Adjmi/Three's Company dispute may attract an attorney willing to represent Adjmi on pro bono basis. All Adjmi would have to spend in this scenario would be his emotional energy.

What is interesting to me in this situation (incidents where creators dispute originality or fair use of ideas are much more common) is the appeal for pro bono assistance. There are indeed many attorneys interested in representing artists and working with arts-related issues, including copyright, real estate, trusts and estates.  In some instances, attorneys take clients on pro bono basis, even as they struggle to collect fees from other clients.  Pro bono service providers, such as Lawyers Alliance for New York or Volunteer Lawyers for the Arts, also routinely review and place cases, such as the one surrounding "3C," with qualified attorneys, frequently on pro bono basis.  Various bar associations, including New York State Bar Association's Entertainment, Arts and Sports Law Section, offer pro bono referral services. All with a caveat, there are no guarantees that financial situation of a client-to-be qualifies for pro bono representation and that a qualified attorney will emerge to offer his or her time and services on pro bono basis. The pressing question is what must happen first: should Adjmi seek legal assistance, and thus decide that he want to fight for his work, or should eager attorneys flock to him offering their services for free.

The recently announced 50-hour requirement of pro bono work from attorneys seeking admission to New York Bar may dovetail with this quandary. Where there is a legal dispute to be settled and one of the sides is mildly vested in the outcome, have that side represented by a recent grad fulfilling the pro bono requirement. To balance the playing field, courts should decline to grant legal fees to the winning side (for training purposes).

Source: The New York Times.

A Question of Valuation: IRS to Face Off With the Heirs of Illeana Sonnabend

The heirs of famed art collector Illeana Sonnabend and representatives of the Internal Revenue Service will meet in Washington tax court next month to resolve whether the $29 million tax penalty will in fact be paid on Robert Rauschenberg's "Canyon"--an artwork inherited from Sonnabend's extensive collection.

The issue will ultimately turn on a question of valuation. Because the piece contains the stuffed remains of a bald eagle, appraisers initially told Sonnabend's heirs that the piece's market value was zero. Federal law makes it a crime to possess, transport, sell, or otherwise convey a bald eagle, as it is an endangered species. In 1981, Sonnabend got an informal waiver from the U.S. Fish and Wildlife Service, allowing her to keep the piece as it is considered a masterpiece of 20th century American art. 


Nina Sundell and Antonio Homem, Sonnabend's beneficiaries, have already sold $600 million in artworks from Sonnabend's $1 billion art collection, which includes pieces by Jasper Johns and Andy Warhol, to pay the high estate taxes on her collection. However, the IRS has valued the work at $65 million and is now demanding $29 million as a special penalty rate due to their claim that Sonnabend's heirs undervalued the work.

Read the full story in a recent article in the New York Times: A Catch-22 of Art and Taxes Starring a Stuffed Eagle

Homeland Security Investigations returns School of Rubens to Germany

Sanssouci means "without a care." Museums are rarely that, particularly those with missing art works. The Potsdam Sanssouci Museum had art work stolen during World War II. One of these missing pieces was consigned for sale to an auction house in 2010.

Special agents with U.S. Immigration and Customs Enforcement's (ICE) Homeland Security Investigations (HSI) in Los Angeles learned of the consignment and traced the painting back to a California-based family.

The story of the painting according to the consignors imitates the trajectory of the war. It was allegedly taken by a Russian general who presented it to a daughter of some Soviet official, who later sold it to the family in LA in the 1970s. Ultimately, the consignor agreed to return the painting, which at one point belonged to Frederick the Great of Prussia, to Germany.

 Source: ICE.

New York's Southern District Court Rules that Artworks Consigned to Galleries May Be Reached By Creditors

Last Tuesday, July 10, federal district judge Cathy Seibel ruled that New York state law may permit a bankrupt art gallery to sell an artwork to benefit its creditors, even if the piece was provided by a consignor. As a result of this ruling, "Madonna and Child" (c. 1500)--a painting attributed to Sandro Botticelli valued at $9.5 million--may provide relief to Salander-O'Reilly Gallery creditors, victims of one of the most infamous scams to rock the New York art world.

The painting at the heart of the controversy--"Madonna and Child"--originally sold at Christie's New York in 1991 for $231,000, attributed only to the "workshop of Botticelli" at that time. However, it was later ascribed to the master himself, raising its value significantly. 

The painting was consigned to Salander-O'Reilly by Kraken Investments in 2007 with an asking price of $9.5 million, according to a letter of agreement filed in federal court. The 14x10 inch work was to be displayed in an exhibition titled "Masterpieces of Art: Five Centuries of Painting and Sculpture," which was to open in October, 2007. However, the Botticelli masterpiece became entangled in complex bankruptcy proceedings, as lawsuits began to mount from angry Salander-O'Reilly customers and partners and a state judge ordered the gallery closed in 2007.

The Salander-O'Reilly Galleries scandal was called "New York's biggest ever art fraud," leaving many creditors collectively defrauded of millions of dollars. In 2010, proprietor Lawrence Salander pleaded guilty to stealing more than $100 million from investors and customers, including high-profile celebrities such as Robert De Niro and John McEnroe. Salander, who is currently serving 6-18 years in state prison, admitted to taking proceeds from selling art he did not own and selling half-shares in the same work three or more times. The dealer used the funds to acquire dozens of Renaissance works, lavish homes, jewelry for his then-wife, rare books, furniture, and private jet rentals. Although some creditors were able to retrieve art through a claims process in bankruptcy court, only the lawyers, auctioneers, and others involved with the gallery's bankruptcy filing have received money, leaving scores of creditors still to be compensated.

Kraken Investments initially sought that ownership of "Madonna and Child" be decided in the Channel Islands, in accordance with its Salander-O'Reilly consignment agreement stipulating that disputes be arbitrated there. However, U.S. Bankruptcy Judge Cecelia Morris in New York denied Kraken's motion, ruling that bankruptcy court was the proper forum to determine ownership. Kraken appealed this ruling to U.S. district court, where last Tuesday, the bankruptcy court's decision was affirmed.

Southern District Court Judge Cathy Seibel held that "a creditor could obtain a security interest in a consigned item senior to that of a consignee who does not file a UCC financing statement." The law provides that when a consignor delivers goods to a gallery but does not file a financing statement, the consignor's security interest is "unperfected," which creates a security interest in a gallery's creditors, provided the creditors filed a proper financing statement. In such a case, as here, the "creditor's rights are senior to the consignor's."

"The court well understands why Kraken is perturbed, even outraged by the idea that Salander-O'Reilly creditors may enjoy the proceeds from the sale of a valuable painting concededly owned by Kraken," wrote Judge Seibel. But the rationale of this rule is to protect gallery creditors, as undisclosed consignment agreements between consignors and galleries can create secret liens on a gallery's inventory.

Petra Davenport, one of Kraken's lawyers, declined to comment on whether Seibel's decision will be appealed.

Source: Bloomberg Business Week, The Art Law Blog

How to Remove the Curse of the Outcast Artifact

Last week NY Times ran a story about collectors who bought antiquities in good faith and got stock between a rock and a hard place, unable to return their purchases to the market place. It was entitled "The Curse of the Outcast Artifact." Those who did not think to ask about provenance of the beautiful foreign objects they were buying in hopes of selling or donating them later and those knowingly purchasing looted cultural heritage are now in the same situation. They are stuck with their acquisitions. Museums are increasingly rejecting donations of art objects and artifacts lacking clear documentation of their origin and exportation. At the same time auction houses are applying more stringent policies before they agree to include objects in sales and catalogs. Even if a given object was purchased at auction in the 1980s and 90s, today the same auction house may easily decline to take it back on consignment. The mores did not change overnight or without stimulation from the law enforcement but collectors who bought their artifacts decades ago are the ones at a loss. The same question keeps popping up "What do we do with these objects?"

In short "[a]cross the country measures taken to curb the trade in looted artifacts are making it more difficult for collectors of antiquities to donate, or sell, the cultural treasures that fill their homes, display cases and storage units."  The trend is a warning to the modern-day looters and dealers; however, one cannot help but feel sorry for the 'cursed' artifacts and for those who got stock with them. While the United States government gives a tax break to collectors who donate to national institutions, there is no incentive for a US citizen to donate, present or simply return an object to the country from where it arrived decades ago. Most of the objects in question are expensive. Of course, the argument against assisting collectors with their dilemma is simple -- they risked by purchasing these objects and should pay the bill. After all, if somebody purchases a fake after statue of limitation runs is out of luck and and out of money. Still, by assisting collectors to dispose of their holdings in a palatable fashion may expedite return of valuable artifacts to the general public.


What is the right thing to do for a collector in this state of limbo? Keep the object and pass it to heirs to enjoy and decide? Return the object to the government of the country where he or she thinks it originated? Identify a museum abroad and ship at own cost the statute or sarcophagus back to its supposed place of origin? What if the collector is mistaken and the objects ends up in a wrong  country? 


Earlier this summer, we wrote about a WikiLoot concept designed to identify origins of orphaned antiquities by use of crowd-sourcing. How about removing the curse and rehabilitating the 'cursed' artifacts? Perhaps it is time to consider creating a model, which would facilitate return of 'cursed' objects with guidance of scholars and Import/Export authorities.  Funding could come from the general public; and/or from dealers and auction houses that sold these objects in the first place; museums, in exchange for a write to display objects pending their return; and/or interested governments and collectors who wish to dispose of their imprudent purchases.

New Publications of Interest

TAKING IT PERSONALLY: THE INDIVIDUAL LIABILITY OF MUSEUM PERSONNEL
edited by Ruth Redmond-Cooper and Norman Palmer
ISBN: 9781903987254 - November 2011

Art litigation is an inventive field and nowhere are its claimants more resourceful than in the search for new defendants and heads of claim. This collection of essays explores an initiative that has begun to occupy increasing attention in modern claims against museums: the visiting of personal liability upon individual members of museum staff for acts and omissions related to their employment. Courts in common law jurisdictions are increasingly willing to perceive and enforce both national and individual rights to recover looted art, with the result that the range of potential defendants is correspondingly widened. Trustees, directors and curators may all now be targeted by claimants - particularly where there is concern as to the financial resources of the employing museum. Moreover, modern legislation creating offences related to cultural property has shown an increasing tendency to expose senior officers of cultural institutions to the threat of criminal prosecution.


You can order a copy of this book from the Institute of Art and Law here for £29.       

UNESCO Adds Twenty-Six New Sites to its World Heritage List

After a two-week meeting in Russia, UNESCO announced that twenty-six new sites are being added to its World Heritage List, including first-time entries from Africa, Asia, and the Pacific Islands, Latin America, the Caribbean, and the Arab states. The committee met in St. Petersburg from June 24 to July 6. It added five sites to its "natural" class, one to its "mixed" class (includes natural and cultural elements), and twenty to its "cultural" class. The new additions bring the List to a total of 962 properties in 157 countries.


Sixteen of the twenty-six new sites are not in North America or Europe, demonstrating UNESCO's efforts to recognize underrepresented geographical areas. New sites include: a series of interconnected lakes in Chad, a national park in Congo, Palau's Rock Islands Southern Lagoon, the colonial town of Grand Bassam in Cote d'Ivoire, and Xanadu in China--capital of the Mongolian emperor under Kublai Khan.

In addition to being designated World Heritage sites, several of locations were also added to UNESCO's "Danger" list. The committee made the controversial decision to add the Church of the Nativity in Bethlehem--said to be built on Jesus' birthplace--to the World Heritage List, as well as to put it on the "Danger" list, as the church is in desperate need of repair. Additionally, sites in northern Mali were added to the "Danger" list due to desecration of tombs in Timbuktu. Islamists from Ansar Dine, the rebel group that seized control of northern Mali and Timbuktu in May, have systematically attacked several mausoleums in the region, including the tomb of Muslim scholar Sidi Mahmoud Ben Amar. In response, the committee condemned the destruction of the sites and placed Timbuktu and the 15th century Tomb of Askia in the nearby city of Gao on its list. The committee also appealed to Mali's neighbors to help prevent illicit trafficking of artifacts, including the country's extensive collection of manuscripts. Additionally, the committee urged UNESCO's director-general, Irina Bokova, to create a fund to help conserve Mali's cultural heritage and called upon similar organizations to contribute.

Source: The Art Newspaper

New US Transport Law Has Hidden Effects for Archaelogists

A recent transport law will make securing funding for projects more difficult for American archaeologists. On Friday, President Obama signed a major new transportation funding bill that extensively reworks and cuts "Transportation Enhancements Program" (TEP), a program that has been in place for 20 years that requires states to spend small portions of their federal transport funds on twelve types of activities, including "archaeological planning and research," as well as on "environmental mitigation." Between 1992 and 2011, the program provided more than $50 million to archaeological expeditions and research, helping to fund over 200 projects. However, there has been a long debate over this issue, as some lawmakers feel that the government should be spending its funds on deteriorating roads and bridges, rather than on archaeological research.

Ultimately, Congress decided to replace TEP with a new program. "Moving Ahead for Progress in the 21st Century" (MAP-21) reauthorizes federal funding for road and transit projects over the next two years and combines TEP with several other programs. MAP-21 also gives state governments greater authority over spending, including the right to divert up to half their funding to other transportation projects. It also cuts the total funding available by one third--to $800 million per year. Additionally, the new law also narrows the definition of archaeological projects eligible for funding, requiring them to be "related to transportation projects" and broadens the eligibility of environmental projects. Analysts say that many more potential projects will be competing for a smaller pot of funds.

Source: The Science Insider

Barnes Foundation Hit With New Lawsuit after Former Barnes CEO Admits that Foundation Not Fully Bankrupt

The Friends of the Barnes Foundation have filed a new petition to Pennsylvania's Superior Court on Monday, following the public admission of former Barnes CEO Kimberly Camp that "bankruptcy was not the reason" for the relocation.

Camp wrote on her blog:

"The Barnes has always belonged in Merion. Its circumstance required its relocation. That circumstance was not bankruptcy. I shared that fact with a reporter a few weeks before the opening, and he told me that I had dropped his jaw. Bankruptcy was not the reason we filed the petition to move the Foundation to the city. At the time the petition was filed, the Barnes Foundation had a cash surplus and we had no debt -- none. But, saying so made the rescue so much more gallant."

This admission has shocked and angered many, spurring this most recent lawsuit. The group is asking for a new hearing "since apparently false information was presented." However, whether bankrupt or not, Judge Ott's opinion from the initial lawsuit stated clearly that "what has been established beyond peradventure is that the Foundation's finances have reached a critical point."

It remains to be seen how this lawsuit will play out in light of Camp's public statements.

More more information, see: Art Info, The Art Law Blog, The LA Times

Financial Crisis Leads Many European Nations to Consider Commercial Measures to Secure Restoration Funds

In the wake of extreme financial pressures, the local Venetian government has made a painful and somewhat desperate decision; it will put the Palazzo Manfrin--one of the floating city's most magnificent palaces--up for sale for $20.5 million. The 17th century five-story home, widely considered one of the city's most important architectural sites, which also once boasted a large collection of artworks by masters such as Raphael and Bellini, is now crumbling. Although clearly in dire need of repair, cuts to government budgets have ensured that there is not enough money to fund restoration of the palace. Rather than face certain disintegration of the landmark, the government made the difficult choice to put the structure up for sale.


This measure follows a recent trend of turning to private sponsorship and commercial initiatives to secure funds to preserve historical relics and sites. Two years of financial crisis in Europe have led to falling tax revenues and slashed budgets, while at the same time, historical buildings, churches, monuments, bridges, barracks, archaeological ruins, and other sites are disintegrating from weather erosion, pollution, the constant stream of tourists, and sheer age. Local governments, searching for ways to afford upkeep, are attempting to combat budget shortfalls by hanging ads, selling usage rights, and in some cases, putting the structures themselves on the market.

There are many examples across Europe of such measures. In France, the caretakers of Versailles agreed to let two hotels open on palace grounds and proposed licensing the image of the building for use on luxury watches. In Spain, planners eager for more tax revenue approved the construction of an office tower in the historic city center of Seville near the Gothic cathedral where Christopher Columbus is buried, ignoring UNESCO threats to disqualify the city as a World Heritage site if the project proceeded. In Greece, the government voted this year to open sites such as the Parthenon, the Poseidon Temple, and Delphi to cinematographers willing to pay per-minute fees.

Debates as to how the Italian government should handle these issues are heated. Fausta Bressani, Director of Cultural Affairs for the region of Veneto, which encompasses Venice, stated that the government "is conscious that the perception of this is not so positive... But our priority is to save the structure." However, there has also been a public backlash toward this attitude. Citizen groups have staged protests and filed lawsuits in an effort to stop officials from selling out Italy's cultural treasures. Alessandra Mottola Molfino, national president of Italia Nostra, a cultural heritage group that has campaigned against such projects, condemns these actions. She stated, "Our monuments are being degraded by these exchanges of money between private and public powers. Are we so poor that we have to sell our grandfathers?" Attempting to take a more balanced approach, UNESCO culture chief Francesco Bandrin--a Venice native--has said that selling ads is "an acceptable measure" to fund conservation efforts at a time of financial difficulty but that certain conditions must be met, such as respecting the dignity of the monuments and informing the public of how the money will be spent." However, he added that he did "not think that all these principles were fully respected in Venice, where there are been several cases of excess."

It is a difficult conundrum for many European nations. National cultural treasures cannot be preserved without significant influx of funds, but where should the line be drawn at how those funds are procured? Bressani deftly describes the crux of the issue and the balance that must be struck: "We are facing a major crisis, and the future is still uncertain. But I do not believe it's impossible to find private sponsors who respect that these buildings are cultural products."

Source: The Washington Post