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February 1, 2012

Use of Art Images in Gallery and Auction Catalogues: Copyright Minefield and Practical Advice

By Barry Werbin

A prominent NYC art gallery is preparing for a show highlighting a new exhibition of known and upcoming artists, some of whom are alive and others recently deceased. In preparing the show's catalogue, which will not be sold publicly, the gallery intends, as is long-standing custom, to include high-quality photographs of all the works in the exhibition. Most photos are obtained from the living artists themselves, or from the estates or trusts that control the underlying copyrights and reproduction rights of the deceased artists' works. In a few cases, however, the gallery will need to take its own photos. As a courtesy gesture, it intends to ask for approvals to do so from these few artists or their representatives.

A problem arises, however, when a deceased artist's administering trust questions the provenance of one of that artist's pieces in the exhibition and refuses to grant permission for the gallery to photograph any of the works for use in the catalogue or for any other purpose in connection with the exhibition. Can the gallery nevertheless take photos of these works and use them in its catalogue, which will not be sold or posted online but only given to attendees at the exhibition? Does it a make a difference if the catalogues will be sold or made available digitally on the gallery's website?

As the issue revolves around copying and displaying images of the original pieces of art, the answer should lie in several provisions of the U.S. Copyright Act of 1976 (the "Act"). But while providing critical guidance, the Act may not entirely provide a clear-cut answer.

Copyright Protection of Artworks

Copyright protects original works of authorship from the moment of their creation. In the case of an individual artist, the artist owns the copyrights of his or her original artworks, and the copyright term lasts for the life of the artist (the "author") plus another 70 years after his or her death. Section 106 of the Act reserves to the copyright owner specifically enumerated "exclusive" rights, which include (as relates to art) the rights of reproduction (copying), public display and distribution (by sale/assignment, rental, lease/license or lending), and the right to prepare derivative works based on the original. Notwithstanding these exclusive rights granted to the copyright owner, the Act carves out two important exceptions related to what is referred to as the "first sale doctrine" and, particularly germane to artworks, a limited display right granted to an "owner" of an original work. Before discussing these exceptions, however, it is important to recognize the significant difference between ownership of legal title and ownership of copyright.

Legal Title vs. Copyright

The purchaser of an original work of art only acquires legal title to that one original work; the underlying copyright is not transferred. Instead, copyright remains with the artist or his or her successor in interest. Thus, a consignor seller who owns an original work of art cannot grant to a gallery or auction house any rights greater than what that owner has (bare legal title) with no right to exercise any of the exclusive rights reserved to the copyright owner under Section 106 of the Act.

First Sale Doctrine

Without the statutory exceptions, there could never be a legal art exhibition or sale, as either would invoke the exclusively reserved "display" and "distribution" rights of the copyright holder. In its wisdom, however, Congress included two key exceptions in the Act that facilitate the resale of copyrighted works and grant a limited "display" right. These two exceptions are largely responsible for the legal existence of galleries, auction houses, and museums that display and sell works still under copyright.

First, Section 109, or the "first sale doctrine," provides that:

Notwithstanding the provisions of section 106(3) [the exclusive distribution right], the owner of a particular copy or phonorecord lawfully made under this title, or any person authorized by such owner, is entitled, without the authority of the copyright owner, to sell or otherwise dispose of the possession of that copy or phonorecord.

Thus, someone who owns an original work of authorship protected by copyright (referred to as a "particular copy" in Section 109) is free to sell it. That particular single work may then be resold innumerable times, without limitation, including by a gallery or auction house that is "authorized" by that owner to conduct a sale. The first sale doctrine is responsible for all aftermarket sales of copyrighted materials, including art, used records, music CDs, and books.

But what about the display right that also is exclusive to the copyright owner? Section 101 of the Act defines "display" as follows: "To 'display' a work means to show a copy of it, either directly or by means of a film, slide, television image, or any other device or process...."

While Section 106 reserves to the copyright owner the exclusive right to display a work publicly and the right of reproduction, Section 109(c) carves out a special limited exception (tied to the first sale doctrine) for the display of a copy of a work rightfully owned:

(c) Notwithstanding the provisions of section 106(5) [the exclusive display right], the owner of a particular copy lawfully made under this title, or any person authorized by such owner, is entitled, without the authority of the copyright owner, to display that copy publicly, either directly or by the projection of no more than one image at a time, to viewers present at the place where the copy is located."

This Section is responsible for permitting all "displays" of copyright-protected art by galleries, auction houses, and museums. But Section 109(c) does not on its face permit any copying of a "particular" work, including the taking of any photographs and publishing them in a catalogue or on a website. This exception is further limited to a display only to "viewers present at the place where the copy is located."

The limited scope of the Section 109(c) exception seems pretty clear on its face. Nothing in Section 109(c) expressly permits our hypothetical gallery to take its own photos and use them in a catalogue in connection with an exhibition. Thus, the gallery's legal fallback becomes the complex and frequently litigated concept of "fair use" under Section 107 of the Act.

Fair Use Doctrine

The "fair use doctrine" has a long, complex, and tumultuous history in the courts that is beyond the scope of this article. In brief, the doctrine is intended to permit certain uses of copyright-protected materials as exceptions to what otherwise would be infringing activity. Section 107, which codifies the doctrine, provides a non-exclusive list of such permissible uses that are then subject to a non-exhaustive list of four specific criteria courts are required to address to determine whether "fair use" exists. The relevant text of Section 107 is rather brief:

[T]he fair use of a copyrighted work, including such use by reproduction in copies ... for purposes such as criticism, comment, news reporting, teaching (including multiple copies for classroom use), scholarship, or research, is not an infringement of copyright. In determining whether the use made of a work in any particular case is a fair use, the factors to be considered shall include--

(1) the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes;

(2) the nature of the copyrighted work;

(3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and

(4) the effect of the use upon the potential market for or value of the copyrighted work.


Taking photos of artworks for use in an exhibition or auction catalogue does not fall squarely within the above-enumerated fair use examples, as such copying and display do not facially qualify as criticism, comment, news, teaching, research, or parody. (Although catalogues ultimately may be used for reference and research that is typically not the original reason a catalogue is created.) Section 107 does not make express exception for making copies for "descriptive" or "display" uses (i.e., to simply describe and display images of what is in an exhibition). This contrasts with U.S. trademark law, which does accept a "descriptiveness" defense where a third party's trademark is used merely descriptively and not in a trademark sense. The delineated statutory examples, however, are just that--examples--as the statute's preamble refers to "the fair use of a copyrighted work, including such use by reproduction in copies ... for purposes such as...." Thus, there is room for courts to find that copying for other purposes that are consistent with the policies underlying Sections 107 and 109(c) also qualifies as fair use. Arguably, such use is also commercial in nature if the catalogue will be sold or otherwise used to market an exhibition or auction at which the art will be offered for sale; but the existence of some commercial aspect of a work has not precluded a fair use finding in all cases because it is just one of the primary factors to be considered by a court.

The fourth fair use factor is particularly significant because taking photos of art for use in a catalogue will likely not have any negative effect "upon the potential market for or value of the copyrighted work." But the four listed factors also must be balanced by the courts. Even where one factor might win the day, the others may be more weighted either against or in favor of fair use, and courts must not lose sight of the fundamental principles underlying the fair use doctrine.

To complicate matters, in recent years courts have also read into the fair use statute a requirement that under the first factor ("purpose and character of the use"), to be "fair" and thus not infringing, a use must also be "transformative." This concept has become controversial as courts have disagreed over what that term means. Essentially, the "transformative" concept looks at the use made of the copy and whether it is for a purpose different from that of the original work. As the U.S. Supreme Court noted in Campbell v. Acuff-Rose Music, Inc. (510 U.S. 569, 579 (1994)), a work is generally deemed "transformative" when the new work does not "merely supersede the objects of the original creation," but rather "adds something new, with a further purpose or different character, altering the first with new expression, meaning, or message." The non-exclusive permissible uses listed in Section 107, such as for commentary on or criticism of a copyrighted work (which includes parody), are themselves "transformative" uses.

As another example, Google has successfully defended its image search feature under a fair use argument. Google's image search results display digital thumbnail images, which are reduced, lower-resolution versions of full-sized images stored on third-party computers. The image search results are generated in response to end users' search queries for artwork, photos, and other graphical works on the Internet, thereby transforming the thumbnail copies displayed in the search results into a research tool. Google also generates advertising revenues by tying sponsored third-party ads to certain search results. The Ninth Circuit Court of Appeals ruled on this issue in a key 2007 decision, where it found that "the significantly transformative nature of Google's search engine, particularly in light of its public benefit, outweighs Google's superseding and commercial uses of the thumbnails in this case." (Perfect 10, Inc. v. Amazon.com and Google (amended opinion), 508 F.3d 1146 (9th Cir. 2007)).

Applying the Law

Back, then, to our hypothetical exhibition catalogue. Is photographing artwork to display in an exhibition or auction catalogue "transformative"? Does it satisfy the statutory fair use factors? Can an analogy be drawn to the Google image "search" service? Under a fair use paradigm, should the first sale doctrine and the "display" exception contained in Section 109 of the Act, by implication to carry out their intended purposes, permit a "descriptive" use of art photographs simply to describe the works in an auction or gallery exhibition catalogue? Denying such limited copying and display right arguably undermines the purpose of the display exception in Section 109(c), which facilitates auctions and exhibitions, because without it the ability to promote such sales and exhibitions is severely compromised. After all, this is visual art.

These are as of yet undecided legal questions, but there are cogent arguments that such use does not meet the fair use criteria under Section 107 as it is written, because such use is essentially "commercial," the entire image i s copied (photographed), and the copy is not being used for a "transformative" purpose. On the other hand, an enticing argument can be made that, while it may not truly be "transformative," when a photo is being used solely to identify the art in an auction or exhibition (where such display is authorized by Section 109(c) of the Act), the use of the photo in a catalogue for such limited purpose is merely incidental to a permissible use, and only improves the potential market for the work. It should therefore be considered fair use. But being the test case in the courts would be protracted and expensive.

Galleries and auction houses have always printed beautiful high-resolution catalogues with images of art not in the public domain. But the issue of seeking advance permissions rears its ugly head when an artist's representative objects to such photographic copying because, for example, the representative does not accept the provenance. Moreover, because the owner of an artwork seeking to sell it (unless it's the actual artist or his or her legal representative) owns only that "copy," and does not own the underlying copyright rights, the owner cannot legally grant a gallery or auction house permission to photograph the work from a copyright standpoint.

With all this in mind, the conservative approach would be to seek permission to photograph from the rights owner, his or her agent, or a clearinghouse, and to always do so if the image will be used on the cover of a catalogue or prominently in advertisements or marketing materials to promote an auction or exhibition. In most cases, this should not be an issue because, as a practical matter, most artists or their representatives are happy with this practice as it promotes the works and creates and maintains underlying markets for the art. But in the case of a deceased artist without an estate representative or non-U.S. works under copyright, for example, licensors or clearinghouses will need to be contacted for permission, which likely will require payment of some license fee tied to the notoriety of the artist, scope of use, and number of catalogues to be printed.

Real-World Examples

Gagosian Gallery, for example, always asks living artists for permission to photograph works going into its exhibitions for use in its catalogues. Andrea Crane, a Director at Gagosian Gallery in New York, says that doing shows with living artists requires a "close collaboration with the artists," who are pleased to cooperate. "The catalogues tend to benefit the artist by complementing the artwork," notes Alison McDonald, Gagosian's Director of Publications.
According to Ms. McDonald, Gagosian often deals with deceased artists' estates, which typically grant rights to photograph their artists' works for use in catalogues. In cases where estates cannot be contacted or don't exist, says Ms. McDonald, permissions are sought, typically for a fee, from artists' publishers and clearinghouses, such as Visual Artists and Galleries Association (VAGA), Artists Rights Society (ARS), and the Design and Artists Copyright Society (DACS). If consent cannot be obtained, an image of the artwork is not used.

Likewise, Christies auction house "always obtains permissions or licenses to use art images on the covers of its catalogues and in advertising collateral," says Karen Gray, Christies' General Counsel. Ms. Gray notes, however, that "there is a compelling fair use argument for using smaller photos of art tied to the applicable lot description within a particular catalogue, as this is consistent with the policy under Section 109(c), which permits display of the art without the copyright owner's permission, and principles of fair use." Catalogues retained for archival purposes (both in hard copy and digitally on Christies' website) serve a research and reference purpose, which falls more squarely within the traditional scope of fair use.

Conclusion

What guidance should gallery owners and auction house directors take away from all this? Apart from consulting with intellectual property legal counsel, prudence dictates taking a conservative and practical approach, especially in these litigious days in the art world. Some well-funded gallery or auction house may one day pick the fair use catalogue fight, but it will be expensive and protracted, and the outcome will be uncertain.

Barry Werbin is a partner and Chair of the Intellectual Property Practice at Herrick, Feinstein, LLP. This article was originally published in his firm's Art & Advocacy newsletter, Fall 2011, Vol.10.

Use of Art Images in Gallery and Auction Catalogues: Copyright Minefield and Practical Advice

By Barry Werbin

A prominent NYC art gallery is preparing for a show highlighting a new exhibition of known and upcoming artists, some of whom are alive and others recently deceased. In preparing the show's catalogue, which will not be sold publicly, the gallery intends, as is long-standing custom, to include high-quality photographs of all the works in the exhibition. Most photos are obtained from the living artists themselves, or from the estates or trusts that control the underlying copyrights and reproduction rights of the deceased artists' works. In a few cases, however, the gallery will need to take its own photos. As a courtesy gesture, it intends to ask for approvals to do so from these few artists or their representatives.

A problem arises, however, when a deceased artist's administering trust questions the provenance of one of that artist's pieces in the exhibition and refuses to grant permission for the gallery to photograph any of the works for use in the catalogue or for any other purpose in connection with the exhibition. Can the gallery nevertheless take photos of these works and use them in its catalogue, which will not be sold or posted online but only given to attendees at the exhibition? Does it a make a difference if the catalogues will be sold or made available digitally on the gallery's website?

As the issue revolves around copying and displaying images of the original pieces of art, the answer should lie in several provisions of the U.S. Copyright Act of 1976 (the "Act"). But while providing critical guidance, the Act may not entirely provide a clear-cut answer.

Copyright Protection of Artworks

Copyright protects original works of authorship from the moment of their creation. In the case of an individual artist, the artist owns the copyrights of his or her original artworks, and the copyright term lasts for the life of the artist (the "author") plus another 70 years after his or her death. Section 106 of the Act reserves to the copyright owner specifically enumerated "exclusive" rights, which include (as relates to art) the rights of reproduction (copying), public display and distribution (by sale/assignment, rental, lease/license or lending), and the right to prepare derivative works based on the original. Notwithstanding these exclusive rights granted to the copyright owner, the Act carves out two important exceptions related to what is referred to as the "first sale doctrine" and, particularly germane to artworks, a limited display right granted to an "owner" of an original work. Before discussing these exceptions, however, it is important to recognize the significant difference between ownership of legal title and ownership of copyright.

Legal Title vs. Copyright

The purchaser of an original work of art only acquires legal title to that one original work; the underlying copyright is not transferred. Instead, copyright remains with the artist or his or her successor in interest. Thus, a consignor seller who owns an original work of art cannot grant to a gallery or auction house any rights greater than what that owner has (bare legal title) with no right to exercise any of the exclusive rights reserved to the copyright owner under Section 106 of the Act.

First Sale Doctrine

Without the statutory exceptions, there could never be a legal art exhibition or sale, as either would invoke the exclusively reserved "display" and "distribution" rights of the copyright holder. In its wisdom, however, Congress included two key exceptions in the Act that facilitate the resale of copyrighted works and grant a limited "display" right. These two exceptions are largely responsible for the legal existence of galleries, auction houses, and museums that display and sell works still under copyright.

First, Section 109, or the "first sale doctrine," provides that:

Notwithstanding the provisions of section 106(3) [the exclusive distribution right], the owner of a particular copy or phonorecord lawfully made under this title, or any person authorized by such owner, is entitled, without the authority of the copyright owner, to sell or otherwise dispose of the possession of that copy or phonorecord.

Thus, someone who owns an original work of authorship protected by copyright (referred to as a "particular copy" in Section 109) is free to sell it. That particular single work may then be resold innumerable times, without limitation, including by a gallery or auction house that is "authorized" by that owner to conduct a sale. The first sale doctrine is responsible for all aftermarket sales of copyrighted materials, including art, used records, music CDs, and books.

But what about the display right that also is exclusive to the copyright owner? Section 101 of the Act defines "display" as follows: "To 'display' a work means to show a copy of it, either directly or by means of a film, slide, television image, or any other device or process...."

While Section 106 reserves to the copyright owner the exclusive right to display a work publicly and the right of reproduction, Section 109(c) carves out a special limited exception (tied to the first sale doctrine) for the display of a copy of a work rightfully owned:

(c) Notwithstanding the provisions of section 106(5) [the exclusive display right], the owner of a particular copy lawfully made under this title, or any person authorized by such owner, is entitled, without the authority of the copyright owner, to display that copy publicly, either directly or by the projection of no more than one image at a time, to viewers present at the place where the copy is located."

This Section is responsible for permitting all "displays" of copyright-protected art by galleries, auction houses, and museums. But Section 109(c) does not on its face permit any copying of a "particular" work, including the taking of any photographs and publishing them in a catalogue or on a website. This exception is further limited to a display only to "viewers present at the place where the copy is located."

The limited scope of the Section 109(c) exception seems pretty clear on its face. Nothing in Section 109(c) expressly permits our hypothetical gallery to take its own photos and use them in a catalogue in connection with an exhibition. Thus, the gallery's legal fallback becomes the complex and frequently litigated concept of "fair use" under Section 107 of the Act.

Fair Use Doctrine

The "fair use doctrine" has a long, complex, and tumultuous history in the courts that is beyond the scope of this article. In brief, the doctrine is intended to permit certain uses of copyright-protected materials as exceptions to what otherwise would be infringing activity. Section 107, which codifies the doctrine, provides a non-exclusive list of such permissible uses that are then subject to a non-exhaustive list of four specific criteria courts are required to address to determine whether "fair use" exists. The relevant text of Section 107 is rather brief:

[T]he fair use of a copyrighted work, including such use by reproduction in copies ... for purposes such as criticism, comment, news reporting, teaching (including multiple copies for classroom use), scholarship, or research, is not an infringement of copyright. In determining whether the use made of a work in any particular case is a fair use, the factors to be considered shall include--

(1) the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes;

(2) the nature of the copyrighted work;

(3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and

(4) the effect of the use upon the potential market for or value of the copyrighted work.

Taking photos of artworks for use in an exhibition or auction catalogue does not fall squarely within the above-enumerated fair use examples, as such copying and display do not facially qualify as criticism, comment, news, teaching, research, or parody. (Although catalogues ultimately may be used for reference and research that is typically not the original reason a catalogue is created.) Section 107 does not make express exception for making copies for "descriptive" or "display" uses (i.e., to simply describe and display images of what is in an exhibition). This contrasts with U.S. trademark law, which does accept a "descriptiveness" defense where a third party's trademark is used merely descriptively and not in a trademark sense. The delineated statutory examples, however, are just that--examples--as the statute's preamble refers to "the fair use of a copyrighted work, including such use by reproduction in copies ... for purposes such as...." Thus, there is room for courts to find that copying for other purposes that are consistent with the policies underlying Sections 107 and 109(c) also qualifies as fair use. Arguably, such use is also commercial in nature if the catalogue will be sold or otherwise used to market an exhibition or auction at which the art will be offered for sale; but the existence of some commercial aspect of a work has not precluded a fair use finding in all cases because it is just one of the primary factors to be considered by a court.

The fourth fair use factor is particularly significant because taking photos of art for use in a catalogue will likely not have any negative effect "upon the potential market for or value of the copyrighted work." But the four listed factors also must be balanced by the courts. Even where one factor might win the day, the others may be more weighted either against or in favor of fair use, and courts must not lose sight of the fundamental principles underlying the fair use doctrine.

To complicate matters, in recent years courts have also read into the fair use statute a requirement that under the first factor ("purpose and character of the use"), to be "fair" and thus not infringing, a use must also be "transformative." This concept has become controversial as courts have disagreed over what that term means. Essentially, the "transformative" concept looks at the use made of the copy and whether it is for a purpose different from that of the original work. As the U.S. Supreme Court noted in Campbell v. Acuff-Rose Music, Inc. (510 U.S. 569, 579 (1994)), a work is generally deemed "transformative" when the new work does not "merely supersede the objects of the original creation," but rather "adds something new, with a further purpose or different character, altering the first with new expression, meaning, or message." The non-exclusive permissible uses listed in Section 107, such as for commentary on or criticism of a copyrighted work (which includes parody), are themselves "transformative" uses.

As another example, Google has successfully defended its image search feature under a fair use argument. Google's image search results display digital thumbnail images, which are reduced, lower-resolution versions of full-sized images stored on third-party computers. The image search results are generated in response to end users' search queries for artwork, photos, and other graphical works on the Internet, thereby transforming the thumbnail copies displayed in the search results into a research tool. Google also generates advertising revenues by tying sponsored third-party ads to certain search results. The Ninth Circuit Court of Appeals ruled on this issue in a key 2007 decision, where it found that "the significantly transformative nature of Google's search engine, particularly in light of its public benefit, outweighs Google's superseding and commercial uses of the thumbnails in this case." (Perfect 10, Inc. v. Amazon.com and Google (amended opinion), 508 F.3d 1146 (9th Cir. 2007)).

Applying the Law

Back, then, to our hypothetical exhibition catalogue. Is photographing artwork to display in an exhibition or auction catalogue "transformative"? Does it satisfy the statutory fair use factors? Can an analogy be drawn to the Google image "search" service? Under a fair use paradigm, should the first sale doctrine and the "display" exception contained in Section 109 of the Act, by implication to carry out their intended purposes, permit a "descriptive" use of art photographs simply to describe the works in an auction or gallery exhibition catalogue? Denying such limited copying and display right arguably undermines the purpose of the display exception in Section 109(c), which facilitates auctions and exhibitions, because without it the ability to promote such sales and exhibitions is severely compromised. After all, this is visual art.

These are as of yet undecided legal questions, but there are cogent arguments that such use does not meet the fair use criteria under Section 107 as it is written, because such use is essentially "commercial," the entire image i s copied (photographed), and the copy is not being used for a "transformative" purpose. On the other hand, an enticing argument can be made that, while it may not truly be "transformative," when a photo is being used solely to identify the art in an auction or exhibition (where such display is authorized by Section 109(c) of the Act), the use of the photo in a catalogue for such limited purpose is merely incidental to a permissible use, and only improves the potential market for the work. It should therefore be considered fair use. But being the test case in the courts would be protracted and expensive.

Galleries and auction houses have always printed beautiful high-resolution catalogues with images of art not in the public domain. But the issue of seeking advance permissions rears its ugly head when an artist's representative objects to such photographic copying because, for example, the representative does not accept the provenance. Moreover, because the owner of an artwork seeking to sell it (unless it's the actual artist or his or her legal representative) owns only that "copy," and does not own the underlying copyright rights, the owner cannot legally grant a gallery or auction house permission to photograph the work from a copyright standpoint.

With all this in mind, the conservative approach would be to seek permission to photograph from the rights owner, his or her agent, or a clearinghouse, and to always do so if the image will be used on the cover of a catalogue or prominently in advertisements or marketing materials to promote an auction or exhibition. In most cases, this should not be an issue because, as a practical matter, most artists or their representatives are happy with this practice as it promotes the works and creates and maintains underlying markets for the art. But in the case of a deceased artist without an estate representative or non-U.S. works under copyright, for example, licensors or clearinghouses will need to be contacted for permission, which likely will require payment of some license fee tied to the notoriety of the artist, scope of use, and number of catalogues to be printed.

Real-World Examples

Gagosian Gallery, for example, always asks living artists for permission to photograph works going into its exhibitions for use in its catalogues. Andrea Crane, a Director at Gagosian Gallery in New York, says that doing shows with living artists requires a "close collaboration with the artists," who are pleased to cooperate. "The catalogues tend to benefit the artist by complementing the artwork," notes Alison McDonald, Gagosian's Director of Publications.According to Ms. McDonald, Gagosian often deals with deceased artists' estates, which typically grant rights to photograph their artists' works for use in catalogues. In cases where estates cannot be contacted or don't exist, says Ms. McDonald, permissions are sought, typically for a fee, from artists' publishers and clearinghouses, such as Visual Artists and Galleries Association (VAGA), Artists Rights Society (ARS), and the Design and Artists Copyright Society (DACS). If consent cannot be obtained, an image of the artwork is not used.

Likewise, Christies auction house "always obtains permissions or licenses to use art images on the covers of its catalogues and in advertising collateral," says Karen Gray, Christies' General Counsel. Ms. Gray notes, however, that "there is a compelling fair use argument for using smaller photos of art tied to the applicable lot description within a particular catalogue, as this is consistent with the policy under Section 109(c), which permits display of the art without the copyright owner's permission, and principles of fair use." Catalogues retained for archival purposes (both in hard copy and digitally on Christies' website) serve a research and reference purpose, which falls more squarely within the traditional scope of fair use.

Conclusion

What guidance should gallery owners and auction house directors take away from all this? Apart from consulting with intellectual property legal counsel, prudence dictates taking a conservative and practical approach, especially in these litigious days in the art world. Some well-funded gallery or auction house may one day pick the fair use catalogue fight, but it will be expensive and protracted, and the outcome will be uncertain.

Barry Werbin is a partner and Chair of the Intellectual Property Practice at Herrick, Feinstein, LLP. This article was originally published in his firm's Art & Advocacy newsletter, Fall 2011, Vol.10.

February 2, 2012

Weekly Issue in the News

By Geisa Balla

A former Harper's Bazaar intern filed a putative class action lawsuit in the Southern District of New York on February 1, 2012, alleging that parent company the Hearst Corporation violated federal and state wage and hour laws by not paying her while she worked there full time. The lawsuit seeks to join hundreds of unpaid interns at Hearst Corporation in the class. According to the lawsuit, the plaintiff, an Ohio State University graduate, was an intern at Harper's Bazaar from August 2011 to December 2011, where she worked between 40 and 55 hours a week, and was not paid for her work. The complaint states: "Employers' failure to compensate interns for their work, and the prevalence of the practice nationwide, curtails opportunities for employment, fosters class divisions between those who can afford to work for no wage and those who cannot, and indirectly contributes to rising unemployment."

http://mediadecoder.blogs.nytimes.com/2012/02/01/former-intern-sues-hearst-over-unpaid-work-and-hopes-to-create-a-class-action/?scp=1&sq=class%20action&st=cse

Britain's Advertising Standards Authority ("ASA") ruled on February 1, 2012, that a magazine advertisement for L'Oréal's Revitalift Repair 10, featuring actress Rachel Weisz, "misleadingly exaggerates the performance of the product," and must not appear again in its current form. WWD.com (Women's Wear Daily) reported: "The ASA said that the ad was misleading in relation to the claim that the product made skin look smoother and the complexion look more even, as the committee believed Weisz's image had "been altered in a way that substantially changed her complexion to make it appear smoother and more even." The ASA also told L'Oréal not to continue to use postproduction techniques that could misrepresent a product's claims."

In its response, L'Oréal attributed the quality of the image not necessarily to post-production, but to the lighting and techniques of the photography.

http://www.wwd.com/beauty-industry-news/color-cosmetics/asa-criticizes-rachel-weisz-ad-for-loreal-5593980


February 4, 2012

Arts Festival

BOOTSTRAP ARTS FESTIVAL ANNOUNCES FEBRUARY SCHEDULE OF EVENTS

Month Long Series of Performing, Literary, Visual and Media Arts Events Presented By Artspire and New York Foundation for the Arts

NEW YORK, NYC - The Bootstrap Arts Festival, the month long series of arts events presented by Artspire and New York Foundation for the Arts (NYFA), has released its preliminary schedule of exhibits and performances. Set to take place throughout February and across the five boroughs, the Bootstrap Festival includes performing, literary, visual and media arts events.

The Festival kicks off with an opening night reception at NYFA on February 3. The kick-off event features works and performances across a spectrum of media by a number of Artspire affiliated artists. The accompanying Boot Camp exhibition at NYFA runs from now through May, 2012.

The Bootstrap Arts Festival has emerged out of NYFA's on-going Artist as Entrepreneur Boot Camp, a program for arts professionals in all fields looking to focus on the business side of their creative practice. NYFA's Boot Camp is designed to help define concrete steps to building a business plan that can lead to greater financial security.

The first Bootstrap Arts Festival was held in November, 2010 and featured artists who had attended NYFA's Boot Camp. The 2012 festival continues and expands on that theme as it offers Boot Camp graduates venues and opportunities for exhibiting and/or performing their work.

Both Bootstrap and Boot Camp are key elements within NYFA's broad-based effort to provide a template for arts professionals that enables them to develop as entrepreneurs by offering support, education and resources. The most prominent tent pole initiatives within this ambitious plan are the recently launched Artspire.org and the new book The Profitable Artist (Skyhorse Publishing/Allworth Press).

Artspire.org is the new community website that empowers individual arts professionals and organizations anywhere in the country to support their work with tax-deductible contributions while building entrepreneurship and creating a robust social network of supporters. With Artspire, artists can leverage the dynamic power of crowdsourced funding to galvanize, tap into and expand their roster of followers, thus building sustained financial backing for their work.

The Profitable Artist is the first complete "how-to" guide to being a professional and profitable working artist. This handbook features techniques in the areas of strategic planning, financial management, marketing, fundraising, and legal rights and obligations, aimed to assist all arts professionals. Further closing the circle, many of the lessons in The Profitable Artist were first developed during NYFA Boot Camp. Some of the artists who have taken part in Boot Camp are also in the book.

The schedule of events to date include:

February 2 - 15
Tue - Fri, 3:30 pm - 8:30pm; Sat & Sun, 12 pm - 6 pm, or by appointment

Bootstrap Exhibition
Clemente Soto Velez Cultural & Education Center, Inc, Abrazo Gallery
107 Suffolk Street, 2nd Floor
New York, NY 10002

Featuring the works of 21 visual artists, including painters, sculptors, photographers, and video artists. An opening reception will be held on Thursday, February 2 from 6pm - 9pm.

Admission: Free


February 4
5:00 pm & 7:30 pm

Joyce SoHo,
155 Mercer Street
New York 10012

An Evening of Dance Featuring: Ephrat Asherie Dance, Trainor Dance (Caitlin Trainor), Sydnie L. Mosley Dances, SAWTOOTH dancers (Cristina Jasen), Shandoah Goldman. Reception to follow after 7:30pm performance.

Admission Price: $15
For tickets/reservations go to http://www.eventbrite.com/event/2735821917.


February 5, 2012
4:00 pm - 6:00 pm

Baruch Performing Arts Center,
Engelman Hall
55 Lexington Avenue, New York, NY

An Evening of Original Music Featuring: Gretchen Farrar, John Kamfonas, Eugene Marlow, Judith Sainte Croix. Reception to follow.

Admission Price: $10
For tickets, visit http://www.baruch.cuny.edu/bpac/calendar/event.php?id=774, or call the box office at (646) 312-5073.


February 7, 2012
7:30 pm

Clemente Soto Velez Cultural & Education Center, Inc.
107 Suffolk Street, 2nd Floor (Los Kabayitos Theater)
New York, NY 10002

Two Evenings of Dramatic Works (Night One) Featuring Laura Pruden, Rosanna Plasencia, Frances Lozada. Reception to follow.

Admission: Free
For reservations go to http://bootstraptheater1.eventbrite.com

February 9, 2012
7:00 pm

Clemente Soto Velez Cultural & Education Center, Inc.
107 Suffolk Street, 2nd Floor (Los KabayitosTheater)
New York, NY 10002

Two Evenings of Dramatic Works (Night Two) Featuring Katy Rubin, Craig Nobbs, LuAnn Adams, Michelle Chai. Reception to follow.

Admission: Free
For reservations go to http://bootstraptheater2.eventbrite.com


February 10 & 11, 2012
Time: 7:30 pm

UnionDocs
322 Union Avenue
Brooklyn, NY 11211
(718) 395-7902

Two Evenings of Entrepreneurs in Film. Includes a discussion with the filmmakers regarding entrepreneurial practices in filmmaking.
http://www.uniondocs.org/2012-02-10-nyfa-bootstrap-art-festival-1/

Night One (February 10, 2012): Featuring filmmakers Frances Lozada, Melissa Hacker, Michelle Chai and Isabel Sadurni.

Night Two (February 11, 2012): Featuring filmmakers Yunah Hong, Ama Birch, Lisa Crafts, Dempsey Rice and Melissa Hacker.
http://www.uniondocs.org/2012-02-11-nyfa-art-festival-2/

Admission Price: $9 suggested donation
For tickets/reservations go to www.uniondocs.org.


Wednesday, February 15, 2012
Time: 6:00pm - 9:00pm

NYFA
20 Jay Street, Suite 740
Brooklyn, NY 11201

Artist Talk and Tour: Visual artists in the NYFA exhibition speak about their work.

Admission: Free
For reservations go to http://bootstrapartist.eventbrite.com


Thursday, February 16, 2012
Time: 7:30pm

LaunchPad
721 Franklin Avenue
Brooklyn, NY 11238

An Evening of Literature featuring Katy Rubin (Concrete Justice), Ama Birch, Jennifer Cendaña Armas, and Hossannah Asuncion.

Admission Price: Free
For reservations go to http://bootstrapliterary.eventbrite.com


Friday, February 17, 2012
Time: 6:30pm - 8:00pm

EFA Project Space, a Program of the Elizabeth Foundation for the Arts
323 West 39th Street 3rd floor
NY, NY 10018
(212) 563-5855

An Evening of Interdisciplinary Work featuring John Kelly and Nora Ryan.

Admission Price: Free
For tickets/reservations go to http://bootstrapinterdisciplinary.eventbrite.com


February 18, 2012
7:30pm

Cumbe: Center for African and Diaspora Dance
558 Fulton Street, 2nd Floor (near Flatbush Ave.)
Brooklyn, NY 11217

A Celebration of Movement and Interdisciplinary Art featuring Nicola Iervasi, Artistic Director, Mare Nostrum Elements, Kayoko Nakajima, and Clark Jackson.

Admission Price: Donations gratefully accepted
For reservations go to http://bootstrapcelebration.eventbrite.com
The above schedule is subject to change.

Funding for this program is provided, in part, by the New York City Economic Development Corporation. Special thanks to Clemente Soto Velez Cultural & Education Center, Inc., The Elizabeth Foundation for the Arts, and LaunchPad, for the generous donation of their space.

For more information on the participants and their contributions, go to their website at www.bootstrapfestival.com, or see NYFA's webpage, www.nyfa.org.

About the New York Foundation for the Arts (NYFA)
The New York Foundation for the Arts (NYFA) was founded in 1971 to empower artists at critical stages in their creative lives. Each year it provides over $1 million in cash grants to individuals and small organizations. The NYFA Learning programs provide thousands of artists with professional development training and the website, http://www.nyfa.org, received over 1 million unique visitors last year and features information about more than 8,000 opportunities and resources available to artists in all disciplines.

February 9, 2012

Google Challenges Class

From the American Society of Media Photographers' Website:

Google Asks Court to Rule Against ASMP

Google has filed court documents challenging the standing of ASMP and the other associations as plaintiffs in the 2010 class action copyright infringement lawsuit filed over Google's unauthorized and massive scanning of library books and its related actions. Google argues that because of the requirements of copyright claims, plaintiffs must be actual rightsholders rather than associations acting on their behalf. It has also challenged the standing of the Authors Guild in its related lawsuit filed against Google in 2005.


http://asmp.org/news/current-news.html

February 16, 2012

Weekly Issues in the News

By Geisa Balla

Singers Beyoncé and Jay Z filed an application with the United States Patent and Trademark Office on January 26, 2012, to trademark their baby's name "Blue Ivy Carter" for use in a vast array of products such as accessories, clothes, baby products, and entertainment services. (Serial number 85526099). The application was filed on behalf of Beyoncé's company, BGK Trademark Holdings, LLC. Prior to this filing, two unrelated parties submitted trademark applications for "Blue Ivy Carter NYC" and "Blue Ivy Carter Glory IV", after baby Blue Ivy Carter was born. The UPSTO denied both applications, stating that the name belong to a "very famous infant" and "consumers would falsely assume that the products were approved by the celebrity parents."

http://www.washingtonpost.com/blogs/reliable-source/post/blue-ivy-the-trademark-feds-move-fast-on-rights-to-beyonce-and-jay-zs-babys-name/2012/02/03/gIQAOTDGnQ_blog.html

Singer M.I.A. raised quite a few eyebrows during Superbowl XLVI on February 5th, when she showed the camera her middle finger during her half-time performance. Unfortunately for M.I.A., she may have to pay dearly for the lewd gesture. If the Federal Communications Commission (FCC) decides to issue a fine, it appears that NBC and the NFL are off the hook, but M.I.A. will have to pay up. According to reports, M.I.A. signed a contract with the NFL agreeing to indemnify the latter for any potential FCC fines. However, at this time it is unclear whether the FCC will issue a fine for the gesture, as it fined CBS for Janet Jackson's wardrobe malfunction in 2004. NBC claims to have received very few complaints.

http://thelegalblitz.com/blog/2012/02/08/flipping-indemnity-the-bird-super-bowl-halftime-liability/

The defense attorney for William Balfour, the man accused of killing Jennifer Hudson's family members in 2008, is now requesting to examine Jennifer Hudson herself about the events surrounding this crime. Hudson was not expected to be named a witness in this case, but may now have to testify about texts she exchanged with her mother on the night of the murder.

http://www.suntimes.com/news/metro/10498042-418/accused-murderers-lawyers-want-to-talk-with-jennifer-hudson.html.

What Your Trade Association Can Do For You: The Issue of Associational Standing to be Addressed in American Society of Media Photographers v. Google and Authors Guild v. Google

By Mary Rasenberger and Joseph Gregory

Last week in the Google Books case, the Authors Guild (the "Authors Guild") and the American Society of Media Photographers ("ASMP") filed oppositions to Google's motions to dismiss the copyright infringement claims brought by the Authors Guild and ASMP on behalf of themselves and their members. In Google's motions, filed in December, it argues that the associations lack the requisite standing to bring infringement claims on behalf of their members. Google argues that, in order for ASMP and the Authors Guild to be eligible for "associational standing"--on which it presumes the Authors Guild and ASMP rely to sue on behalf of their members, it must be shown that participation of each association's individual members in the lawsuit is not necessary to the claim asserted or to the relief requested. In this case, Google contests, each individual work alleged to have been infringed must be separately analyzed, including as to the fair use defense; and, as such, the associations lack standing to assert copyright infringement on behalf of their members.

In their briefs in support of their oppositions to Google's motions to dismiss, both ASMP and the Authors Guild respond that the associational standing "requirement" is merely a prudential requirement aimed at administrative convenience and that district courts have discretion is deciding whether or not it must be satisfied for a party to attain associational standing. ASMP further argues that the Supreme Court has allowed associational standing in cases such as this, recognizing the benefits of the participation of the association. The Author's Guild also counters Google's contention that each work needs to be analyzed separately under the fair use defense.

ASMP's Response

In its brief, ASMP first points out that Google's position is "particularly incongruous, given that Google has copied and distributed plaintiffs' works en masse without performing the individualized analysis it now avers is required." ASMP explains that "Google's consistent position to date has been that its actions are categorically protected as fair use irrespective of the individual work at issue." Ironically, Google's argument to support its motion to dismiss undermines its defense on the merits.

ASMP sets forth multiple legal theories as to why the District Court for the Southern District of New York should deny Google's motion. First, ASMP argues that the issue of whether the associations have "association standing" is wholly unnecessary with regard to the overall standing issue. ASMP cites numerous cases in support of a "well settled" principle that where at least one plaintiff has satisfied the standing requirements to bring a claim, a court need not consider whether other named plaintiffs (i.e., the associations) also have standing. In this case, individual representative members of ASMP are indeed named as co-plaintiffs to the suit, and Google apparently concedes the fact that such individual member plaintiffs do have standing to bring their respective infringement claims. Therefore, the issue of associational standing should be moot and the case should be allowed to proceed with the associations as co-plaintiffs.

Benefits Provided by Associational Standing

ASMP also relies on Supreme Court precedent that emphasizes the importance of permitting associations to have standing, along with individual plaintiffs, in order to ensure that individual members' claims are properly litigated. Among the justifications that the Supreme Court has provided in favor of allowing associational standing include: (i) the ability of associations to draw upon a preexisting reservoir of expertise and capital; and (ii) the primary reason people join an organization is often to create an effective vehicle for vindicating interests that they share with others. (See Int'l Union, United Auto, Aerospace & Agricultural Implement Works of Am. V. Brock, 477 U.S. 274, 289-90 (1986).)

ASMP also addresses Google's argument that since one of the requirements for associational standing--namely, a requirement that that neither the claim asserted nor the relief requested requires the participation of individual members in the lawsuit--is lacking, the associations should be barred from proceeding as plaintiffs in the suit. ASMP cites Supreme Court case law, which indicates that this requirement is merely a matter of administrative convenience and efficiency, meaning, the requirement has no impact on constitutional standing and the district courts therefore have discretion in deciding whether or not to apply it. ASMP argues that practical obstacles prevent each and every individual association member concerned from instituting individual actions, and therefore any such prudential rationale regarding administrative convenience is outweighed. Thus, the district court should exercise its discretion and allow the association plaintiffs to proceed as parties to the suit.

The Authors Guild's Response

The Authors Guild similarly argues that no prudential considerations compel the dismissal of the Authors Guild as an associational plaintiff. Citing the fact that it has already actively participated in the case as an associational plaintiff for over six years, the Authors Guild argues that, not only will its continued participation present no administrative difficulties, but its participation furthers the interests of judicial economy. Like ASMP, the Authors Guild is quick to point out that Google did not make a book-by-book determination as to whether to include each book in its library; thus, to deny group relief to those collectively affected by Google's copying would be manifestly unjust.

The Authors Guild also deconstructs Google's fair use defense to determine whether, as Google claims, it must be analyzed on a case-by-case basis for each individual member of the Authors Guild. In analyzing fair use, courts consider the following factors: (i) the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes; (ii) the nature of the copyrighted work; (iii) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and (iv) the effect of the use upon the potential market for or value of the original work. Google argues that the individualized participation of every Authors Guild member is necessary to assess the second and fourth fair use factors.

The Authors Guild counters that, although the scope of fair use may be greater with respect to some works as compared to others, the Court is not required to separately analyze every book. Specifically, courts need not require individualized proof directed toward the second fair use factor, the nature of the work, in cases where large groups of works were infringed. In the cases cited by the Authors Guild, the courts either analyzed the works at issue by dividing them into separate large categories, or reviewed a sampling of the works to analyze the second factor. Neither approach requires the analysis as to each and every individual work.

With respect to the fourth fair use factor, the Authors Guild argues that the relevant evidence will be common to all of its individual members. Specifically, the Authors Guild argues that the potential market for and value of all in-copyright books will be adversely affected in similar ways by Google's use, and that this factor therefore can be fairly analyzed by the Court without the participation of each individual Authors Guild member.

What does this mean for future copyright litigation?

The Court's decision with regard to the associational standing theory in copyright infringement cases may have a profound impact on the ability of trade associations such as the Authors Guild and ASMP to enforce rights on behalf of their members. As discussed above, the reason why many people choose to join these organizations is for that exact reason; members seek to pool their interests and resources so as to receive protection when they need it most - i.e. when their interests are being violated in such a manner that litigation remains the only method of recourse. Further, given the expense associated with instituting individual lawsuits, the ability of such associations to adjudicate claims on behalf of their members may be the only way certain members might ever see relief.

Mary Rasenberger, Partner, Cowan DeBaets, Abrahams & Sheppard
Joseph Gregory, Law Student, New York Law School

Crowdfunding: Trends and Developments Impacting Entertainment Entrepreneurs

By Ronald Barabas

In 1913, a young man named Oscar Micheaux financed the printing of his autobiographical first novel with door-to-door advance sales of the still-unpublished work to his neighbors. He pitched them with a sample chapter and his considerable sales skills. Successful in this and a subsequent literary effort, Micheaux, a self-made African-American entrepreneur born to freed slaves, sought to produce the first feature length motion picture featuring African-American milieu and actors. Hollywood film studios would not undertake anything like this for many years to come. In order to accomplish this unprecedented, expensive adaptation of his first novel, Micheaux formed a corporation for film productions and sold shares of stock directly to the public. He drafted an investment brochure himself and personally solicited investments in company shares. Micheaux's initial capital-raise helped lead to some of the most groundbreaking cultural contributions in American history.

Micheaux was a pioneer of what we now call "crowdfunding". Yet if someone today were to solicit investments as he had, that person would likely be stopped by and face sanctions from the Securities and Exchange Commission.

Efforts to ease restrictions that limit artists' abilities to finance creative projects by raising small amounts of money from everyday investors online seem to be reaching a critical mass of support that could very likely lead to consequential near-term changes in securities law. At the present moment, three competing bills that address crowdfunding are in Congress (one of which, H.R. 2930 (http://thomas.loc.gov/cgi-bin/bdquery/z?d112:H.R.2930:@@@L), has passed the House). The SEC and the White House have also expressed their support.

Crowdfunding can be defined as a collective effort to pool money, popular today through the Internet, to support a project, cause or organization. It has become an increasingly common and effective way for entrepreneurs and artists to finance business and creative endeavors, making it easy to solicit financing from anyone with Internet access and available capital. Current US securities laws, however, limit the full possibilities of crowdfunding.

A security is an investment of money in a common enterprise with an expectation of profits arising from the efforts of others. When a security is offered to the public over the Internet or other means, the offering party is required to meet registration and ongoing disclosure requirements with the SEC. While this helps guard against potential fraud, the expense and time it takes make public offerings impractical for almost all start-ups and small businesses. There are several exemptions to the public registration requirement, but none that would apply to a crowdfunding equity model where a financial stake in a small business or project is promoted online to the general investing public.

Internet crowdfunding initiatives have thrived despite the prohibition of offerings in unregistered investment opportunities. Artists, entrepreneurs and non-profits successfully use four non-equity Internet crowdfunding models that circumvent securities regulation. They are: (1) the rewards model; (2) the pre-payment model; (3) the donation model; and (4) the loan model (see Bradford, C. Steven, Crowdfunding and the Federal Securities Laws (http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1916184)).

The first three crowdfunding models can best be explained with a simple example. A musician wants to raise funds to finance the recording of an album. She sets up an account on a popular crowdfunding website like Kickstarter ((http://www.kickstarter.com/) and offers to send a copy of the finished album to anyone that has paid, in advance, $10 or more. This is the pre-payment model. In the same listing, she offers to write a song about anyone who pledges $500 or more (the rewards model) and also accepts donations in any amount (the donation model, where there is no expected return, is more commonly used for charitable causes). None of these is a situation in which the financial backer has an expectation of profit, and therefore no securities registration is needed.

The loan model has two importantly different variations. On sites like Kiva (http://www.kiva.org/about), lenders select a project to help finance and their loans are repaid to them without interest when the borrower makes repayments. Like the other non-equity models, offering individuals the opportunity to provide an interest-free loan does not trigger registration requirements since the lender has no expectation of profit. The SEC has, however, indicated that registration would be required for interest-bearing crowdfunding notes and loans, the other variety of the loan model (http://www.sec.gov/litigation/admin/2008/33-8984.pdf).

At a time when agreement between the major political parties is rare, a convincing group of economic factors have led policymakers to the popular consensus that action needs to be taken to open up the equity crowdfunding model. Among these is the increased difficulty of financing for seed-stage start-ups. Banks have altered their approaches to small business lending over the last five years and sophisticated investors are investing in later-stage emerging companies with greater regularity. Entrepreneurs need alternatives to traditional capital markets to fund their growth, and the weak job market needs the boost from small business hiring that access to new sources of capital could provide. This, combined with the proven success of other crowdfunding models, has helped this issue pick up steam.

The challenge for Congress and the SEC is to create a regulatory framework that unlocks the possibility of crowdfunding while mitigating the risk of fraud that comes with easing restrictions on the public solicitation of investment opportunities online. The current legislative proposals (H.R. 2930 (http://thomas.loc.gov/cgi-bin/bdquery/z?d112:H.R.2930:@@@L), S.1791 (http://thomas.loc.gov/cgi-bin/bdquery/z?d112:s.1791:), and S.1970 (http://thomas.loc.gov/cgi-bin/bdquery/z?d112:s.01970:)) each address this with some key common features, including:

• a cap on the amount of the offering;
• a cap on the amount each investor can contribute; and
• limited disclosure and ongoing reporting requirements.

Important differences in these bills include the amount of the offering and investor contribution cap and whether crowdfunding websites that act as intermediaries between a company and investors will be regulated as a broker-dealer or subject to other compliance guidelines.

Several outstanding issues will need to be considered as rulemaking progresses. When can an offering be grounds for a fraud claim if disclosure requirements are limited? If individual investments are limited to small amounts, will fraud victims have an incentive to seek legal redress? How can disparate small investors replicate the leverage and sophistication that enables an "angel investor" to receive offering terms that merit their capital risk?

While most politicians and commentators have focused on the expected increase in small business hiring that opening a crowdfunding exemption to the securities laws would have, it will have a particularly profound impact on the arts. Crowdfunding already has a special role in the creative community. Part of this is because first-time filmmakers and other less-established artists typically have even fewer financing options than other entrepreneurs. Angel investors and banks will rarely finance a creative project helmed by a novice. Friends, family, savings and credit cards are often the only way to fund such an independent endeavor.

Moreover, crowdfunded ideas get the unique benefit of public feedback before production begins. They go forward when enough people use their money to express interest and belief in a project, in contrast to hierarchical decision-making. Independent investors are also free from public relations and corporate conflict concerns that can hinder unorthodox works. Perhaps even more importantly, individuals that participate in funding a project are likely to be consumers of that project and promote it to others.

A crowdfunding exemption to the securities laws could have broad implications on the arts and development of artists. As Oscar Micheaux proved almost 100 years ago, crowdfunding can lead to great things.


Ronald Barabas is a Corporate and Entertainment Attorney at Di Santo LLP. He can be contacted at rbarabas@disantolaw.com.

An expanded version of this article will appear in the Spring 2012 issue of The Entertainment, Arts and Sports Law Journal.

February 17, 2012

Weekly Issues in the News

By Geisa Balla

Apple TM Issue in China

A trademark dispute between Apple and Proview Technology has brought sales of iPads to a halt in China. Proview Technology trademarked the name IPAD in several countries in 2000, intending to use it for Internet-capable handheld device. Yet this project did not take off. In 2009, Apple established a company called IP Applications in order to acquire the iPad trademarks and preserve confidentiality on its intent to launch its tablet. IP Applications bought the IPAD trademark from Proview's Taiwan company in December 2009 for $55,000. Apple believed that it had acquired all the rights to the IPAD trademark, but later found out that the rights for mainland China were registered under Proview's Shenzhen company. According to court documents, Proview refused to rectify the mistake and suggested that Apple should pay $10 million to purchase the China trademarks. Proview has filed for bankruptcy, but still holds rights to the IPAD trademark. In its lawsuit, Apple claimed that Proview refused to honor its contractual obligation. Apple was granted an injunction against Proview, preventing Proview from selling off its trademark rights. Yet in December 2011, a court in Shenzhen dismissed Apple's contention that it owned the iPad name in China. Apple intends to appeal the ruling.

If Apple does not prevail in this lawsuit, it would have to pay penalties, and possibly its tablet would be banned under the iPad name. Tens of millions of iPads have been manufactured in various plants in China since it was first launched in 2010. Proview now plans to take legal action against Apple for using a "fake company."

http://www.nytimes.com/2012/02/15/technology/second-city-in-china-halts-sales-of-apple-ipads.html

http://www.pcworld.com/businesscenter/article/250178/apple_faced_exploitation_in_ipad_trademark_dispute_hong_kong_court_ruled.html

Sex and the City Lawsuit

Sex and the City writer and creator Candace Bushnell is being sued by her former friend and manager Clifford Streit, the inspiration for Sex and the City character Stanford Blatch. Streit, who was Bushnell's manager until 1999, first filed a federal lawsuit against Bushnell in 2005, claiming that Bushnell owed him 10% of her earnings from the show. The parties settled the lawsuit in 2006 by agreeing to give him 7.5% of her earnings. Now Streit claims that Bushnell last paid him in 2009, and owes him 7.5% of her earnings from the Sex and the City 2 movie, as well as residual earnings from the first Sex and the City movie and the "Sex and the City" show.

http://www.nypost.com/p/news/local/manhattan/pay_me_for_sex_9QXwJTuMCMph1ZOlK3rVqL

Kodak

The Kodak Theater in Hollywood, where the Academy Awards have been held for the past 10 years, will soon have to change its name. Eastman Kodak Co. filed for Chapter 11 Bankruptcy protection in January 2012. In its proceeding, Kodak sought to cancel its 20-year agreement with landlord CIM/H&H Media to sponsor the theater. CIM/H&H Media moved to compel Kodak to continue performing under this agreement, but the court ruled in Kodak's favor. Kodak reportedly paid $3.6 million a year to CIM/H&H Media for the rights to the theater.

http://latimesblogs.latimes.com/entertainmentnewsbuzz/2012/02/kodak-name-to-disappear-from-academy-awards-theater.html

Facebook

On February 14, 2012, Facebook Inc. was awarded $75,776 in legal fees from Paul Ceglia. Ceglia first filed a lawsuit against Zuckerberg in July 2010, alleging that pursuant to a 2003 agreement with Zuckerberg, he was entitled to half of Zuckerberg's stake in Facebook. U.S. Magistrate Judge Leslie G. Foschio ordered Ceglia to reimburse Facebook for legal fees it incurred while trying to get Ceglia to comply with discovery in the lawsuit. Ceglia is now claiming that he should not have to pay the "stratospheric" legal fees charged by Facebook's attorneys.

http://www.latimes.com/business/technology/la-fi-tn-facebook-paul-ceglia-20120214,0,6212098.story

Whitney Houston

Grammy-winning artist Whitney Houston passed away on February 11, 2012, in her hotel room at the Beverly Hilton, where she was found partially submerged in a bathtub. Investigators did not find any illegal substances in Houston's hotel room, but found different prescriptions bottles, including some unidentified bottles. The Los Angeles County Coroner has issued subpoenas for Houston's medical records, and is investigating how Houston obtained these prescriptions. Hours after Houston was found dead, her 18-year-old daughter Bobbie Kristina Brown was rushed to the hospital after a "complete meltdown."

Despite Houston's death, her mentor Clive Davis went ahead with his annual pre-Grammy party that very same night, held in the same hotel. The February 12, 2012, Grammy awards honored Houston with an opening prayer and a performance by Jennifer Hudson. Whitney Houston's funeral service will be held on Saturday, February 18, 2012, at New Hope Baptist Church in Newark, and will be streamed live online.

http://www.vulture.com/news/whitney-houston/1/

February 24, 2012

Weekly Issues in the News

By Geisa Balla

NFL and Concussions

The family of former Chicago Bears player Dave Duerson filed a wrongful death suit against the NFL on Thursday, February 23, 2011. The lawsuit alleges that the NFL negligently caused the brain damage that led Duerson to commit suicide at age 50 by not warning him of the negative effects of concussions. Duerson took his own life on February 17, 2011. The lawsuit claims that the NFL knew of the effects of concussions, but concealed such information from Duerson. 657 retired NFL players have filed lawsuits against the NFL for concussion-related issues. A Philadelphia federal judge has consolidated the 657 complaints into 18 lawsuits. Duerson's case is different from the other lawsuits because his brain was the only one that was studied and found to have advanced brain damage. "We hope that through our case we can raise awareness and further effect change with the other retired players so they can get the benefits and medical attention they need," said Duerson's son, Tregg Duerson. "We also hope the change trickles down to youth sports and concussion policies, as well as how trainers treat these injuries."

http://articles.chicagotribune.com/2012-02-23/sports/ct-spt-0224-pompei-bears--20120224_1_neck-and-spine-committee-concussion-issue-head-injuries

Spider-Man

The producers of "Spider-Man: Turn Off The Dark" and the trade association representing the show's former director Julie Taymor have settled the legal dispute between them. Taymor worked on the production of "Spider-Man" until she was fired in March 2011. Almost immediately after her termination, Taymor filed a copyright infringement against the "Spider-Man" producers, claiming that the producers made unauthorized and unlawful use of the material she developed for the show. In turn, the producers filed a countersuit against Taymor in January 2012, claiming that she endangered the show's chances of commercial success by "developing a dark, disjointed and hallucinogenic musical." Although this Broadway production cost more than $70 million to bring to stage and was received poorly by the critics, it has been a massive success with audiences. Under the settlement agreement, Taymor will receive full royalty fees for work as a director through the production's duration, as well as undisclosed fees for her work in developing the show.

http://www.reuters.com/article/2012/02/16/us-spiderman-musical-idUSTRE81F1LD20120216

Michael Jordan

Michael Jordan has filed a lawsuit against Chinese sportswear company Qiaodan Sports Co. in a China court for illegally using his name on marketing materials. "Qiaodan" is the Chinese translation for "Jordan." Qiaodan Sports sells athlete-branded basketball clothes and shoes in more than 5,700 retail locations across China. Qiaodan Sports claims to own the exclusive trademark to its name, and first registered to use this mark with the Trademark Office of China's State Administration for Industry and Commerce in 1997. However, under Chinese law, businesses cannot freely use the names of famous people, even if the famous people do not have trademarks on their names. In a video, Mr. Jordan claims that the lawsuit is not about money, but about the principle of protecting his identity and name. He also claims that any awards received from this lawsuit would be "invested in growing the sport of basketball in China.

http://online.wsj.com/article/SB10001424052970204778604577240991687647450.html?mod=e2tw

Facebook as Service of Process

On February 21, 2012, a High Court judge in England approved the use of Facebook to serve legal claims. In a commercial dispute between two investment managers and a brokerage firm, counsel for one of the plaintiffs had been trying to track down one of the defendants to serve him with legal documents. A copy of the lawsuit was left at his last known address, but the attorneys did not have his new mailing address. The attorneys applied for permission to send him the claim via Facebook. Justice Nigel Teare permitted this method of service during a pretrial hearing, and gave the defendant extra time to respond "to allow for the possibility that he wasn't accessing his account regularly."

http://www.google.com/hostednews/ap/article/ALeqM5gqHvpfjOWk1tDBMwfGngTwmhHyog?docId=dce5c2df477b4598a477bb453a90f965

ACTA

The EU's Anti-Counterfeiting Trade Agreement ("ACTA") will be referred to the European Court of Justice to determine if it is compatible with freedom of expression and freedom of the Internet. "ACTA is an international trade agreement that targets counterfeit goods, generic medicines and copyright infringement on the Internet. The European Commission and the European Council of member states have already approved ACTA, and the European Parliament is set to formally debate it in June. However, ACTA has generated protests and demonstrations in several European cities, including Paris and Berlin. Its critics say that ACTA violates the freedoms of speech and privacy. The main concerns are over ACTA's copyright enforcement and monitoring of Internet activity. The United States is one of the outside parties that has signed this treaty.

http://online.wsj.com/article/BT-CO-20120222-715091.html
http://ec.europa.eu/trade/creating-opportunities/trade-topics/intellectual-property/anti-counterfeiting/

Online Shaming

Online shaming is the new tool in trademark disputes. User Phil Michaelson created an online cookbook, KeepRecipes.com, which allows users to save the instructions for a certain recipe by clicking "K" for "Keep." AdKeeper, a New York based service that allows users to "keep" online adds, sent Mr. Michaelson a cease-and-desist letter, claiming that his use of "K" and "Keep" constituted trademark infringement. Mr. Michaelson, who could not afford a legal battle, posted the cease-and-desist letter on Chillingeffects.org, a website created to help protect lawful online activity from legal threats. Mr. Michaelson was able to obtain free legal representation in this dispute after the letter was posted online.

TM Stats

The Wall Street Journal reports that trademark claims in U.S. district courts rose by 5% in the year ending March 2011. Fighting these battles in court is difficult for small start-up companies. Now a growing number of business owners are exposing trademark infringement threats on the Web, Facebook or Twitter.

http://online.wsj.com/article/SB10001424052970203358704577237473534179392.html?mod=WSJ_business_LeftSecondHighlights

About February 2012

This page contains all entries posted to The Entertainment, Arts and Sports Law Blog in February 2012. They are listed from oldest to newest.

January 2012 is the previous archive.

March 2012 is the next archive.

Many more can be found on the main index page or by looking through the archives.