Federal Circuit Says Korean War Memorial Stamp Violated Sculptor's Copyright

By Dave Rein

Sometimes a 37¢ stamp does buy quite a bit.  One lucky sculptor, Frank Gaylord, may find that such a stamp could give him some extra spending money in the neighborhood of six or seven figures.

The Court of Appeals for the Federal Circuit recently reversed the lower court and ruled that the U.S. Postal Service violated Mr. Gaylord's copyright when it issued a stamp based upon a photograph of a sculpture called "The Column".  The Column is composed of 19 statutes representing a platoon of soldiers such as the one on the left and is part of the Korean War  Memorial.  

Years after the memorial was opened, the Postal Service decided to use a photograph of the Column that John Alli shot early in the morning after a snowstorm.  It paid Mr. Alli $1,500 to use the photograph.  

To show how difficult it can sometimes be to determine who owns a copyright, Mr. Alli believed he had authority to commercially exploit his photograph because he entered into a license agreement with an entity that said that it held the copyright in The Column.  Only later did Mr. Alli learn that Mr. Gaylord actually held the copyright.

While it may have been difficult for Mr. Alli to determine who owned the copyright in The Column, the government was certainly aware of Mr. Gaylord as it worked with him on certain aspects of The Column (the degree of which was disputed).  Surprisingly, it never required Mr. Gaylord to either share his copyrights or provide it with a license to use The Column. 

Mr. Gaylord sued the Postal Service claiming that he was owed a 10% royalty on the sales of $17 million worth of postage stamps plus other merchandise that featured images of the stamp.  

The parties agreed that Mr. Alli was entitled to his own copyright protection in his photograph as a derivative work. Although the parties stipulated that the photograph was a derivative work, as I noted elsewhere, this is still an open question.

There were multiple issues before the Federal Circuit, but the main one was whether or not the  stamp's depiction of The Column was fair use under 17 U.S.C. § 107.  It was not only the crux of the parties' argument, but also one of the first times that the Federal Circuit weighed in on fair use.

Typically, fair use is "for purposes such as criticism, comment, news reporting, teaching . . . scholarship, or research", but it also applies more generally to uses that fall within the four statutory factors.  The Federal Circuit agreed that the stamp did not effect the potential market or value of The Column, but it found that the other three factors weighed against the government.

The parties' argument about the first factor, i.e. the purpose and character of the infringing use, centered on whether or not the stamp was "transformative" of the original sculpture.  Mr. Gaylord argued that the stamp could not be transformative because the stamp and The Column both have the same purpose of honoring the veterans of the Korean War.  The court agreed and rejected the government's argument that the addition of snow and muted colors enhanced the sculpture's surreal character because they do not change the  "character, meaning or message" expressed in the sculpture.   As the court said:  "Nature's decision to snow cannot deprive Mr. Gaylord of an otherwise valid right to exclude."  

The Court of Appeals also seemed troubled that the stamp did not comment upon the original work nor was it part of a biography.   It will be interesting to see whether this case will be interpreted as narrowing the test for what constitutes a transformative use. 

Because the stamp was not a transformative use and was for a commercial purpose, the court held the first factor weighed against fair use. The second (the nature of the copyrighted work) and third (the amount and substantiality of the portion used) factors also weighed against fair use according to the Federal Circuit.  At least one commentator believes that the Federal Circuit's decision was right.  

Regardless of whether it is right or not, this case illustrates the importance of licensing.  The government decided it did not need a formal agreement that allowed it to use the sculpture.  I applaud public entities for making sure that they treat artists fairly, but they also need to make sure that they think through the repercussions of not obtaining some protection in the form of joint ownership in the copyrights or a perpetual license to use the copyrighted works upon terms that are fair for everyone.  

A Stunning Confession Potentially Destroys Fairey's Fair Use Defense

By Dave Rein

Source of Poster:  Stephen Fairey; Source of Photograph:  Mannie GarciaDespite depictions in TV shows and the movies, most court cases do not involve dramatic confessions, cover ups and Presidential politics.  Of course, most court cases don't involve Stephen Fairey.  From pasting the Obey Giant (now his Twitter name) and other "Obey" posters on public property (much to the ire of city officials around the country) to talking smack with the Associated Press over the Presidential candidate Obama Hope poster, he seems to seek and thrive on controversey.

But the controversey with the AP over the Obama Hope poster may have seriously backfired on Fairey.  On February 9, 2009, Fairey filed a Complaint in the Southern District of New York saying that his use of a photograph claimed by the AP fell within the fair use defense and therefore, he owed the AP nothing for using the photograph to create the Obama poster.  One former blogger on this site thought that if Fairey's inspiration for the poster did come from the picture of Obama and George Clooney at a press conference as Fairey claimed, then Fairey might succeed.  It is unlikely that we will find out if he was right. 

On October 16, 2009, Fairey confessed that he used a different picture from the same press conference, one that more closely resembles the Obama poster.  A number of bloggers including Tom GralishPhoto District News and others had suspected as much, but Fairey had denied their claims until now.

An AP article appearing in the New York Times could barely conceal its delight of the confession and the news that Fairey's legal defense team from the Stanford Fair Use Project intend to withdrawal their representation because Fairey lied to them and tried to cover it all up. 

Fairey can likely afford to hire other legal counsel, but the legal arguments for his new defense team just got a lot more difficult.  One of the four fair use factors analyzes the amount of copyrighted work taken.  When the Obama Hope poster is compared to the picture that Fairey now confesses to using, this prong may now weigh against him where it may have helped in in the other picture.  

But beyond the simple analysis of the factors, it should be remembered that the fair use defense is an equitable rule.  Fairey's confessed dishonesty undercuts his ability to ask for equity, i.e. fairness.  In other cases, the courts have not looked kindly on those accursed of infringing a work who denied that he or she used the accuser's work and then later tried to invoke the fair use defense.  Further, should this case go to trial, the AP will likely be able to tell the jury that Fairey initially lied about the picture and that he lied because he thought that he would lose if the actual photograph was known.  Much of the jury sympathy that Fairey might have had has likely been lost.

While Fairey's case against the AP still raises interesting questions such as whether the AP or Mannie Garcia, the photographer, own the copyright to the photograph, it now looks like a much anticipated case analyzing the fair use defense will disappoint many.

Before Revealing Your Masterpiece On Facebook, Read The Terms Of Use

By Dave Rein

Either this week or next, Facebook will make it official that it will follow its new terms of use -- the legal stuff buried in a link at the bottom of the homepage entitled "Terms".  Who cares?

If you are a writer, photographer, musician or other creative type, you are likely to have a Facebook page and you definitely should care.

But, you don't need to be a writer or other artist to care.  What you post today may be worth something tomorrow -- whether by design or dumb luck.  If you are reading this blog and are under the age of 106, you are likely to be on Facebook or some other social networking site.  Facebook alone claims to have 200 million users and there seem to be enough social networking sites to fill a Costco-sized grocery cart.

Still, many creative people are using the enormous popularity of social networking sites to tap an international audience in hopes of creating a buzz that will promote his or her creations.  It is not uncommon for photographers, for example, to post pictures such as this one -- albeit much cooler -- on their page to generate interest.  Of course, this is not unique to photographers.  Writers, musicians and others who develop creative material regularly post their creations on social networking sites.  

Perhaps because there are so many people who have posted their creative works on Facebook, a mini-revolt took place when Facebook announced that it was changing the terms of use.  As the Consumerist reported, bloggers discovered that Facebook had changed its terms to arguably grant itself significant new rights to the creative works that users posted.  The change led several artists such as photographer, Jim Goldstein of San Francisco, to announce that they were removing their work from Facebook.

Facebook did back off of its broad terms and agreed to allow the Facebook community to chose whether to adopt the old set of terms or a revised set of terms.  Last Friday, Facebook announced that the tenative results (presumably subject to an inspection for hanging chads) showed that its users voted to approve the revised set of terms that are somewhat less broad that the ones that set off the mini-revolt.  I expect that we will hear an official confirmation of the vote soon.

So is it now safe to post your creative work on social networks?  I count myself as one who takes Facebook CEO Mark Zuckerberg at his word when he says that there was no intent to make a mass grab at the intellectual property rights stemming from user generated content.  But, you still need to get the terms of use right else a court may listen sympathetically and then rule:  "So sorry, too bad."

I am still puzzled by the expansive language that has been adopted.  One who posts anything on Facebook still gives Facebook a license to use the work for almost any purpose.  This is in stark contrast to terms on MySpace, Xanga and Bebo for example that more narrowly restrict the purpose for which the social network receives a license to use posted content.  Even better, Twitter expressly states that it does not claim any intellectual property rights over the material provided to Twitter.

For now, I think that someone who posts work that he or she created on Facebook should be cautious.  I don't think that there is anything sinister going on at Facebook, but the legal language still does not match its public statements.  The terms are better at several other social networking sites, but they are still fairly broad so read the terms of any social networking site before posting your work and check periodically to see that the terms have not changed.  Take these precautions before you post and avoid hearing the judge rule:  "So sorry, too bad!"

Can Contract Law Tame Public Art Controversies?

By Dave Rein

The story of a thirty-two foot tall blue demon with glowing red eyes that that killed its famous creator and greets those arriving at the Denver airport was picked up nationally by the Wall Street Journal, the New York Times and other newspapers.  "Demon" is a bit strong as it was the long-awaited installation of Luis Jiménez's blue mustang commissioned by the Denver International Airport.  But, it has all the ingredients of an attention-getting story:  fame, money, death and even a protest using Facebook.

With some calling for the removal of the blue mustang from the airport, the DIA has been in an uncomfortable spotlight.  But, the DIA has one thing going for it.

Kudos should go out to whomever inserted a provision in the contract between the DIA and the artist that the statue remain in place for five years.  A short detour before I explain why . . . .

Is there any other legal reason why the statute would have to stay in its current location?  Some have suggested that the Visual Artists Rights Act (VARA) which provides artists with limited moral rights in addition to the usual copyright protection would prevent the DIA from removing the enormous mustang. That day may come, but as it stands now, I agree with the Patry Copyright Blog that nothing in the VARA would prevent the DIA from moving the blue mustang -- even if the artist believes that a different location alters the vision he or she had for the art.

An early decision interpreting the VARA (English v. BFC&R East 11th St. LLC) held that moving a sculpture does not, by itself, constitute "destruction, distortion or mutilation."  Although the courts have prevented some entities from moving a sculpture when it would destroy the work itself (i.e. Carter v. Helmsley-Spear), the DIA can rope and move the wild mustang without damaging it.

So why are kudos deserved?  Absent the contractual language, the DIA would have to take a side in the dispute -- understandably, politicians are not eager to take a position over public art that may alienate potential voters.  Likewise, the artist may welcome the attention.  After all, the whole idea of the art may have been to engage us in a conversation.  But, even someone like Jimenez (assuming he was still alive) who has works at the Smithsonian and in several cities -- including my own Kansas City, may not have the clout or financial wherewithal to wage a public relations campaign.  

A contract clause that keeps the art in place at a specific location for 5 years or even 1 year protects both the artist and the public entity that commissions the art from what usually amounts to a vocal minority of the public.  Such a clause effectively creates a "cooling off" period during which the public entity can state that its "hands are tied" because the contract requires the statute to remain in place. The artist can rest assured that for some period of time, his or her art will not be relegated to an obscure location or warehouse.  At the end of the cooling-off period, more reasoned decisions can be made.

Not every contract between an artist and a public entity should include such a clause, but it should be used more frequently than it currently is used.   After all, the blue mustang is hardly the first or last public art project to stir debate or passions.  Just last week, the Artist's Magazine Blog noted the "Money for a Bunny" controversy stemming from Sacramento's commission of a large red rabbit for its airport.  To round out our primary colors, I predict that an airport in the eastern United States will announce the commission of a green elephant -- you heard it here first!   

Sure contracts can be broken, but don't dismiss them as toothless wonders.  One only needs to look to see how the United States government was powerless to stop from giving $165 million or so in bonuses to those in the very unit of AIG that is the poster child for the world-wide economic debacle.

There is nothing wrong with controversy and it may be welcome.  But adding the contract clause should help both the artist and the public entity ride safely through the storm.

When Celebrities Hang Out At The Pawnshop

By Dave Rein

It is no secret that banks large and small pulled the Persian rug (perhaps a green one for St. Patrick's Day) out from art buyers who sought to finance their purchases with a loan.  The Wall Street Journal noted this trend back in April 2008.

So given the current economic mess we are in, it should not come as a surprise that the borrowing-to-buy-art trend has taken a step in the other direction -- the number of pawnshops dedicated to loaning money in return for high-end art as collateral is on the rise.  An article in the New York Times mentioned several prominent art pawnshops:

It is also not unusual for auction houses such as Christie's and Sotheby's to provide a similar service as the art pawnshops by providing a bridge loan to tide the seller over until the auction is over and the proceeds have been collected.  But, the auction houses generally did not offer their clients the ability to pawn art.  In the bad old days of economic prosperity, someone pledging his or her Andy Warhol used to have to stand in line at a traditional pawnshop behind the guy pledging his toaster oven.  Not anymore apparently.

The part of the NYT article that caught my eye was that Annie Leibovitz, one of the most famous celebrity photographers of our time, pledged all of her photographs to Art Capital Group for $15.5 million.  The terms  include not only all of the photographs and contract rights of those that she has taken, but also all of the photographs that she will take.  The Guardian has an excellent audio discussion of the Leibovitz transaction and the possible reasons why Ms. Leibovitz may have been compelled to pledge all of her photographs.  

The photograph that Ms. Leibovitz takes next week?  Pledged to the Art Capital Group.  Next year?  Art Capital Group gets those as well.  That's on top of the 6 to 16% interest rate.  Those are tough terms.

Presumably she gets to receive the income stream from fees and royalties that her photographs generate unless her loan goes into default.  She has a number of projects in the works which should bring in a tidy wad of cash so nobody should count her out yet.

I am still curious about the remaining terms of these types of loans and how, if at all, they would affect her copyright ownership and the right to enforce them.  During the term of the loan, does she retain all rights to the copyrights?  Does she retain the right to enforce the copyright?  My suspicion is that Ms. Leibovitz retains her ownership and enforcement rights unless the loan goes in default.

But what other terms does the contract provide?  For example, it would seem that among the terms is the requirement that she enforce the copyrights so as to protect the value of the pledged collateral, but how much discretion does she have in deciding whether to sue a possible infringer?  Please let me know if you are familiar with the loan terms and the impact on her copyrights.

If there is a clear winner in this story, it is probably Art Capital Group because others looking to pawn their art may be more inclined to use Art Capital Group knowing that prominent artists themselves have pledged their work to it.  But, will it be a short-term winner?  Will there be a great demand to pawn expensive pieces of art when the economy bounces back and we can once again crawl out of the Stone Age?   

Christie's Dilemma: Sue When Buyer Refuses To Pay?

By Dave Rein

If you are an average Joe the plumber who happens to have an extra $40 million laying around to bid on an item or two at an auction and you don't pay, the auction company will sue you and will likely win.  The terms at most auction houses are such that it will probably win attorney fees as well.  But, things get a bit more complicated when the refusal to pay is done at the instigation of or has the support of the Chinese government.

I wrote about the recent legal circus surrounding two Chinese bronzes sold as part of the Yves Saint Laurent art collection that the auction house, Christie's held last week.  The latest twist is either a brilliant bit of patriotism or unvarnished commercial sabotage -- depending upon your perspective.

The winning bidder for the bronzes, Cai Mingchao, announced on Monday that it was his patriotic duty to scuttle the auction of the items and that he could not and would not pay for the bronzes.  A video clip of his announcement is found here.   As a prominent bidder of Chinese art, he was allowed to register the day of the auction.  Closer scrutiny would have shown that he was an adviser to the National Treasures Fund which is a group backed by the Chinese government to recover Chinese art.

The contract terms are clear that Christie's could bring an action to enforce the sale, it could sell to the next highest bidder and seek the difference from Mr. Mingchao, or return the bronzes to the seller and sue to recover the expected commission.  Or it could walk away.

But, if Christie's walks away, does it open itself and other auction houses to future games whenever someone decides an item should be returned even if there is no legal basis for requiring the item's return?

Jackie Chan, I get it.  You are upset that items were looted from China and there is no legal recourse.  I'm not weighing in on the moral rights China may or may not have to demand the bronzes' return.  Make your movie about a quest for stolen Chinese relics.  I, for one, will likely go and see it.

I am, however, weighing in on the legal questions.  Unless a reader can point me to some fact that I am missing, Christie's has strong legal arguments to pursue Mr. Mingchao although business concerns may weigh more heavily than the legal ones.  Will pursuing Mr. Mingchao cause Christie's a greater financial loss

Given that Christie's wants to maintain a strong presence in China and has a publicity mess on its hands, it may decide not to antagonize the Chinese government by pursuing damages against Mr. Mingchao.  China has already stated that the sale is going to have "serious affects on Christie's development in China."  Christie's does not have many other alternatives.  It could prohibit Mr. Mingchao or his own auction house from bidding in future auctions, but he could simply use an agent or a shell company to do his bidding.

One potential way that this may hurt the legal efforts to reclaim looted Chinese art is that an attorney representing an auction house or seller can cite this incident to argue that the National Treasures Fund, the Association for the Protection of Chinese Art in Europe or the Chinese government itself are simply trying to scare potential buyers and is again engaging in frivolous litigation.  The tactics that these organizations engaged in this time may encourage a future court to impose the strongest penalty available to discourage others from using the courts for what amounts to a publicity stunt.

What would you do now if you were Christie's?  Would you pursue Mr. Mingchao?  Do you think the recent events will help or hurt China's efforts to reclaim looted art?

No Legal Basis For The Return of Looted Bronzes

By Dave Rein

Not Your Ordinary Garden SculpturesIt is not surprising to find drugs and fashion in bed together and last week was no different.  Opium, a rat, a rabbit, and a  fashion house took center stage at the "Sale of the Century".  Even those whose art budget leans towards items painted on velvet may have heard about the sale of what has been called one of the most important art collections in private hands.  Items owned by the late fashion designer Yves Saint Laurent and his partner, Pierre Berge, received enormous attention even before they hit the auction block in Paris.

Among the items that received unusual attention were two bronze sculptures carved by a Jesuit priest that had been a part of a water-clock at a Chinese summer palace.  China formally protested the sculptures' sale and APCA (the Association for the Protection of Chinese Art in Europe) asked a Paris court to block the sale.  The court ruled that APCA did not have standing and ordered it to pay $1,274 US to both Mr. Berge and the auction house, Christie's.

The decision seems to have sparked strong emotion from the Chinese because the two statutes were looted by the British and French from the the Emperor's Summer Palace during the Second Opium War in 1860.  Putting aside the moral debate however, what struck me was the insistence that the Chinese government has strong legal claims to the bronzes.

Even if the Chinese government instead of APCA had filed the lawsuit, it is difficult to see how the case was anything more than an attempt to garner public attention.  The Shanghai Daily mentions that the UNESCO Convention on Stolen and Illegally Exported Cultural Objects would not apply a statute of limitations in this case -- suggesting that other provisions would obligate the bronzes' return to China.  If that is the argument, then it is a silly one.  The UNESCO Convention does not apply at all as it  would only apply to objects taken or exported after the convention became effective for the respective parties.  I think it is safe to say that nobody needs to run to the appendix of the the convention to see if China and France signed the UNESCO Convention (or any other convention) during the Qing Dynasty.  The first countries to sign the UNESCO Convention signed it in 1970 and everyone agrees that the bronzes were taken in 1860 -- long before there was any notion of a convention.  The same is true for those who point to the Uniroit Convention on Stolen or Illegally Exported Cultural Objects which was signed in 1995.

I know enough that I would be lost if opposing counsel started talking about the Napoleonic Code, but courts in most states in the U.S. would probably throw the case out too.  The sculptures were not exactly hidden away in the attic of a recluse.  Rather, it was well known that Laurent  and Berge owned the sculptures and only when the bronzes came up for auction was any effort made to demand their return.  Suffice to say, that most courts would likely hold that the statute of limitations would have run under state law in that if the Chinese government had exercised due diligence in searching for the sculptures, it would have had no trouble learning of their whereabouts.

It appeared that the bidders were not concerned about the legal ramifications as the sculptures sold for about $40 million US -- multiples of the initial estimates, but we learned on Monday that  the winning bidder had no intentions of paying.  His actions are discussed in a separate blog posting.  Is the combination of a lawsuit and fake bidding an effort to scare real bidders?

Perhaps the weak legal arguments or simple taunting prompted Mr. Berge to offer to return the sculptures if China "only" agreed to abide by human rights and allow the Dali Lama to return to Tibet. 

What do you think?  Did China have stronger legal arguments or was it resigned to making a moral appeal that at the end of the day, the items were admittedly looted?