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Art Law

Recent Developments in Art Litigation and Art Finance

Update in Terry Gilliam Infringement Lawsuit: Plaintiff’s Seek Preliminary Injunction

Posted in Litigation Issues

In August, we posted about the federal lawsuit filed by three street artists against film director (and Monty Python actor) Terry Gilliam for allegedly plagiarizing their mural in his latest movie, The Zero Theorem.  Read post here.

On September 22, plaintiffs filed a motion for a preliminary injunction asking the court to bar defendants, including Gilliam, from further distributing images of the mural used in the film pending a trial on the merits of their infringement claim.

According to plaintiffs, images of the mural shown in Gilliam’s film have been used to promote the film and are featured prominently in the film’s official trailer.  If granted, the preliminary injunction could prohibit defendants from using images of the mural in their promotion of the film, and/or delay or halt release of the film until the case goes to trial.

The court is scheduled to hear plaintiff’s motion on October 1.

Below are images from the plaintiff’s mural (“Copyrighted Work”) and the mural used in Gilliam’s film (“Infringing Work”).

Copyrighted Work Infringing Work
                       Copyrighted     Infringing

The Art Loss Register: A Significant Deterrent To Art Theft

Posted in Art Recovery/Theft

For those not already familiar with The Art Loss Register (“ALR”), I thought this would be a helpful albeit brief introduction to the ALR and the key services the London-based company, International Art and Antique Loss Register Limited, offers to art dealers, art fairs, auction houses, insurers, law enforcement agencies, museums, and private individuals.

The ALR is recognized as the “world’s largest private database of lost and stolen art, antiques and collectables.”  The ALR offers various specialized services from item registration to search and recovery services to the art trade, collectors, insurers, and worldwide law enforcement agencies.  According to the ALR website, the company efficiently delivers its services by utilizing state of the art information technology and a worldwide team of specially trained professional art historians having a diverse range of language capabilities as well as specialties in antiquities, modern art, and old masters.

There are two primary aspects to the company’s business—(1) the ALR serves as a significant deterrent to art theft by encouraging the registration of items of valuable possession directly on the database and the expansion of checking searches; and (2) the ALR operates a recovery service for the return of art work to the rightful owner by providing a due diligence service to sellers of art and being the worldwide focus in the case of any suspicion of illegitimate ownership.  More recently, the company has expanded its recovery service to include negotiating compensation to victims of art theft and the legitimizing of current ownership.

With the existence of the ALR, criminals are very well aware of the risks when they try to sell stolen art work.  Impressively, the ALR’s renown in the stolen art field has enabled the business to play a crucial role in the recovery of in excess of $320M worth of stolen works.


Corcoran Gallery of Art Will Be Dissolved, Officially

Posted in Litigation Issues

In July, we posted about the Save the Corcoran Coalition, a non-profit corporation seeking to intervene in certain legal proceedings surrounding the future of the Corcoran Gallery of Art. Read post here.

On July 21, the D.C. Superior Court ruled that nine members of the advocacy group be admitted as intervening parties in the proceeding launched by the Corcoran Gallery to revise its 1869 charter.   Read more here.

Despite the efforts of Save the Corcoran, on August 18 the court “upheld the financially failed institution’s plan to be taken over by the National Gallery of Art and George Washington University.”  Read more here.

“Blatant Misappropriation”: Terry Gilliam Sued for Alleged Use of Street Mural in His New Film

Posted in Litigation Issues

On August 12, 2014, a trio of street artists filed a lawsuit in federal court against film director (and Monty Python actor) Terry Gilliam for allegedly plagiarizing their mural in his latest movie, The Zero Theorem.

The mural, or “Copyrighted Artwork,” was painted collaboratively by the artists in 2010, in the zona de graffiti on Fitz Roy Street in Buenos Aires.

Picture A

Gilliam’s film was shot in Romania in 2012; it tells the story of an eccentric computer genius who lives in a burnt-out partially converted chapel.  The chapel exterior features the “infringing mural,” which the plaintiff-artists claim is a “blatant misappropriation” of their work.

Picture B

The artists allegedly registered the mural with the Copyright Office in Argentina in November 2013, approximately one year after Gilliam’s film was shot.

Must-See Exhibition In Southern California This Summer And Fall

Posted in Current Art Exhibits

This past weekend I ventured out to the California Science Center in Exposition Park near downtown Los Angeles.  I took in the much anticipated Pompeii:  The Exhibition (currently running through January 4, 2015) featuring over 150 exquisite artifacts on loan from the Naples National Archaeological Museum in Italy and was not disappointed.  The exhibition offers attendees a unique glimpse into the daily life and tragic end of this ancient Roman society.  Some of the featured objects include ancient Roman coins, wall-sized frescoes, marble and bronze sculptures, gladiator armor, jewelry, and full body replica casts of the volcano’s victims.

Prior to the disastrous eruption of Mount Vesuvius in 79 A.D., Pompeii had 25,000 inhabitants and was considered a very cultured and vibrant city on the Mediterranean with an abundance of architecture, complex infrastructures, and precious works of art.  With the eruption of Mount Vesuvius, the surrounding landscape in Pompeii had changed forever.  On August 24, 79 A.D. within a period of 24 hours, Pompeii was buried entirely under 12 feet of ash and stone.  It was not until the eighteenth century in which this time capsule of a preserved ancient city was discovered under the ash and stone.

Today, large-scale excavation of Pompeii (a quarter of a square mile) has ceased and about one-third of the city remains underground.

If you are in the Los Angeles area this summer or fall, you will not want to miss this fascinating exhibit.  After you visit the exhibition, I highly recommend a visit to the Getty Villa, which is modeled after a first-century Roman country house preserved by the ash of Mount Vesuvius.

Forged Art: No Tax Refund for Untimely Refund Request on Fake

Posted in Art Recovery/Theft, Litigation Issues

As the old saying goes – nothing is certain but death and taxes.

In a recent decision, a New York Division of Taxation administrative law judge denied a prominent art dealer a refund on state taxes paid on a now rescinded $2.5 million USD sale of a fake Max Ernst.  The matter involved a forged painting sold in 2004 that was linked to Wolfgang Beltracchi who after admitting to creating a series of fake paintings was sentenced to six years in prison in 2011.  The judge determined that the dealer was ineligible for the $200K plus refund because the request was not timely filed under New York State tax law § 1139(c).  The dealer unsuccessfully argued that the statute of limitation based on fraud, which begins from when the cause of action accrued or two years from when the plaintiff discovered the fraud, should apply.  Specifically, the judge rejected the argument that the statute of limitations for refunds, which is three years, should have been tolled until the fraud scheme was discovered more than six years after the sale.  The judge ruled that the statute of limitation clearly required disallowance of untimely filed refunds (no matter what the reason).  The judge further noted that certainty of the refund deadline was a necessity because“[a]nything less than this degree of certainty would make the financial operation of government difficult, if not impossible.”  In recent reports, the art dealer has vowed to pursue an appeal of the administrative law decision.  For all of you art lovers out there, this decision highlights the risks involved in art connoisseurship . . .  when even the experts can be fooled.



Art Theft: Third Largest Criminal Enterprise in the World

Posted in Art Recovery/Theft

According to a recent Newsweek article, art theft is the third highest-grossing criminal enterprise, behind only drugs and guns.  A significant contributing factor to the prevalence of art theft is the fact that the art trade is generally unregulated – most countries, including the U.S., do not require transaction records or public listing of art sales.

The FBI reports that criminal income generated by art crime each year is roughly $6-8 billion, which is more than 20% of the estimated $30 billion in annual private art sales reported in a recent ARTnews survey.  And, while 50,000-100,000 works of art are stolen each year, only about 10% of stolen art is recovered.

Industry insiders consider the implementation of dealer licensing, codes of conduct and regulation.  However, they are skeptical that regulation is achievable or will be effective due in part to the lack of communication throughout the art industry.

Without a system of effective regulation and law enforcement, buying art is not to be taken lightly.  According to Chris Marinello, an art recovery specialist, art buyers must “perform due diligence, pay an appraiser, an art authentication expert, a provenance researcher, lawyers and even a scientist.”

A Unique Blend Of Artist Collective And Hedge Fund To Benefit Artists From Around The World

Posted in Art Finance, Art Valuation

A fascinating article on Bloomberg.com recently highlighted the globally based Artist Pension Trust (APT), which is claimed to hold the largest global collection of contemporary art, including 10,000 contributed artworks from 2,000 artists in 75 different countries.  APT offers artists a unique blend of artist collective and hedge fund.

Launched ten years ago by high-tech entrepreneur and art collector, Moti Shniberg, APT is a promising fix to what is widely viewed as a broken art market.  That is, “[t]hose who create art – even valuable art – often don’t profit from it nearly as much as their collectors  or even, on occasion, their own dealers.  Shniberg’s solution is a combination of skipping the middleman (artists get to bypass their dealers by selling through APT instead)” and altruistic motives (sale of an artist’s work is shared with the other artists).

The model behind how APT works is quite simple.  A board of curators invite select talented artists from around the world to join their regional pool with 249 other artists.  These regional pools represent the largest art markets, such as New York, Los Angeles, London, Hong Kong, Shanghai, and the like.  APT also has a global pool with a capacity of 628 artists.  Over a period of 20 years the artworks in the trust are gradually sold for the benefit of the APT artists.  According to APT’s website, the funds from the net proceeds of each artwork sold are distributed to the artists as follows:  “72% are distributed to the artists in the trust, with 40% to the individual artist and 32% among the artists in that trust based on the number of artworks they have deposited.  The remaining 28% are used to cover the operational costs of the trusts.”

The article goes on to note the success of APT depends on three factors—(1) whether there is a rise in value of the trust’s body of artwork; (2) whether that body of artwork can be sold by the trust at the peak of its value; and (3) whether there is demand such that enough art collectors exist to buy the body of artwork that APT would like to sell.

The current value of APT’s art collection is reported to be around $125 million, however, in view of existing commitments of future donations by trust artists, its value is said to be closer to $500 million.



‘Save the Corcoran Coalition’ Files Complaint and Petition to Intervene

Posted in Litigation Issues

On July 2, 2014, the Save the Corcoran Coalition, a Washington D.C. non-profit corporation, filed a complaint and petition to intervene in the cy près proceeding of the Trustees of the Corcoran Gallery of Art. The complaint alleges that the Trustees breached their fiduciary duties, mismanaged fundraising efforts, wasted assets, and made misleading representations in support of their request for cy près relief.

The Coalition, which consists of students, alumni, faculty, staff, donors, and members of the Corcoran, filed this lawsuit in response to the Trustees’ petition that was filed on June 25, 2014. The Trustee’s petition seeks a court order to amend the Deed of Trust under which the Corcoran has operated since 1869, and authorize a recently announced deal that would allow other institutions to take over the Corcoran’s property.

According to the New York Times, the Trustees reached a deal which will, if court approved, permit the Corcoran to “cede its collection of more than 17,000 pieces, rich in American art, to the National Gallery” and transfer its building to The George Washington University, “which would use it for classes for students of the Corcoran College of Art + Design.”

In their complaint, the Coalition, which opposes the deal, claims that “the charitable purpose of the trust may yet be practicable, if managed properly,” and argue that the Corcoran’s bad financial situation is attributable to mismanagement of the gallery’s money through “self-dealing, conflicts of interest, hiring unqualified management and profligate spending on consultants whose advice was ultimately ignored.”


New Expert Appraisal Reveals That The Detroit Institute Of Arts’ World-Class Collection Could Be Worth In The Multi-Billions

Posted in Art Valuation, Litigation Issues

Having grown up in Michigan as a young child, I fondly recall a number of visits I made to the Detroit Institute of Arts (DIA) as well as to the Toledo Museum of Art (TMA) with my family.  I felt so fortunate to live in relatively close proximity to such two world-class art institutions in the Midwest.  Although I did not ultimately pursue a career as an artist or architect (I loved to draw/sketch growing up) and instead pursued a career as an intellectual property attorney (which I love), I still find myself fascinated with beautiful works of art whenever I visit museums such as the DIA and the TMA in the Midwest and the Getty and LACMA here in Los Angeles where I now live.

When I came across yesterday’s article in the New York Times that the DIA’s prized collection could be worth somewhere in the range of $2.7 billion to $4.6 billion, I am not at all surprised given that the DIA has some of the greatest masterpieces by Pieter Bruegel the Elder, Michelangelo, Rembrandt, van Gogh, and many other renowned artists.  As you may recall, late last year Christie’s had appraised a small, but significant portion of the DIA’s collection by these great masters in which it was estimated that such works alone would bring in around $454 million to $867 million if sold.

This latest appraisal, commissioned by the city of Detroit and the DIA in advance of an upcoming federal bankruptcy trial in August, noted that “such a price tag would never be attained at sale, for reasons including donor lawsuits that would delay or prevent the sale of many valuable works, weakness in the market for some kinds of paintings, and lower sale prices because of the sheer bulk that would flood into the market at once.”  It has been reported that the appraiser, Artvest Partners, a New York based art investment firm, believes that “because of these factors and the notoriety of such a forced sale from a venerable public institution, the bulk of the [DIA’s] collection might raise as little as $850 million.”

Undoubtedly, the estimated figures from this latest appraisal and the appraisal report’s conclusions will be fought over at next month’s federal bankruptcy trial.  Creditors had previously accused city officials of underestimating the value of the DIA’s collection so it could be protected.  The DIA’s more than 60,000 piece collection is owned by the city and is considered a municipal asset.