Art Case update - June 2022
Image: International application published under the Patent Cooperation Treaty
Guest Work Agency is your go-to source on art-related legal cases and law reform in Australia, as well as select cases internationally.
In this story, our Director and Founder, Alana Kushnir and Paralegals, Mia Schaumann and Jess Olford report on the Full Federal Court of Australia’s recent determination that an artificial intelligence system cannot be an inventor, the long-running copyright dispute between the Andy Warhol Foundation and photographer Lynn Goldsmith, an NFT trade mark dispute plus more.
Australia
Full Federal Court determines that an artificial intelligence system cannot be an inventor
We previously reported on Thaler v Commissioner of Patents [2021] FCA 879, 160 IPR 72 in which the Federal Court determined that an artificial intelligence (AI) system could be an inventor for the purposes of a patent application, making Australia the first country in the world to rule in favour of AI inventorship. However, this judgement has been recently overturned by the Full Federal Court, bringing Australia into line with other jurisdictions such as the UK, the US and the EU.
By way of background, Dr Steven Thaler filed the Australian Patent Application No. 2019396177 for ‘Food container and devices and methods for attracting enhanced attention’ (Application) and named the AI system ‘DABUS’ as the inventor for the purposes of the application. The Deputy Commissioner of Patents initially rejected the application on the grounds that it was inconsistent with both the Patents Act 1990 (Cth) (Patents Act) and Patents Regulations 1991 (Cth) (Patents Regulations) which requires that the name of the inventor be provided with the application. Thaler sought judicial review of the Commissioners decision and Justice Beach of the Federal Court ruled in favour of Thaler, recognising an AI system or device as an inventor.
On appeal, the Full Federal Court found that the ‘primary judge [had] misconstrued s15 of the Act and 3.2C(2)(aa) of the [Patent] Regulations.’ The Court found that the view formed by the Deputy Commissioner, that being that ‘it was a legal impossibility for an artificial intelligence machine to be “the inventor of an invention” within reg 3.2C(2)(aa)’ was correct. In making this determination, the Court understood ‘inventor’ to have the same meaning as that found in section 15(1) of the Patents Act, which provides that a patent for an invention may only be granted to a person who:
a. is the inventor; or
b. would, on the grant of the patent for the invention, be entitled to have the patent assigned to the person; or
c. derives title to the invention from the inventor or a person mentioned in paragraph (b); or
d. is the legal representative of a deceased person mentioned in paragraph (a), (b) or (c).
Though case precedent was made reference to, the Court found that ‘the duty to resolve an issue of statutory construction is a text-based activity.’ The court ultimately found that only a ‘natural person’ can be an inventor for the purpose of the Patents Act and Patents Regulations. This construction was found to be consistent with the Explanatory Memorandum to the Patents Bill 1989 (Cth) and supported ‘by reference to the legislative history of the development of the law of patents in Australia.’ Though the judges acknowledged the debate surrounding the role of artificial intelligence in patents law, they ultimately found that it ‘clouded consideration of the prosaic question before the primary judge, which concerned the proper construction of s15 and reg3.2C(2)(aa).’ Upon this reasoning the Court held that the decision of the primary judge should be set aside, and the orders made by the Deputy Commissioner of Patents be reinstated.
The Full Federal Court reiterated its role as being limited to statutory construction and cautioned against imputing desirable policy outcomes to the legislation. The judgement does however shed light on a number of policy considerations, including ‘whether, as a matter of policy, a person who is an inventor should be redefined to include an artificial intelligence,’ and if so, ‘to whom should a patent be granted in respect of its output?’ The judges urged for these questions to be attended to by the legislature.
The Full Federal Court’s decision illustrates the desire for policy reform in light of the increasing sophistication of technology. As a response to this judgement, Dr Thaler has filed a special leave application to the High Court of Australia, the outcome of which is yet to be determined.
The Federal Court denies copyright protection for a neoprene tote bag by Australian fashion designer, State of Escape
The Full Federal Court of Australia has upheld a decision that a neoprene tote bag is not a 'work of artistic craftsmanship” and as such cannot be protected by Australian copyright law. The three judges emphasised that the bag’s design choices were constrained by functional considerations and lacked the artistic qualities necessary to be covered by the Copyright Act 1968 (Cth), asserting that legislative policy is to ‘encourage the use of the registered design system, rather than copyright, for the purpose of protecting artistic works which are applied to industrial products.’ In other words, design registration is the most appropriate avenue for the protection of the design of mass-produced goods. You can read the judgement here and our previous coverage on the primary judgment here.
The High Court emphasises importance of written agreements
The High Court of Australia is revisiting the question of whether the terms of a copyright license authorising the sub-licence of a copyright-protected work can be inferred or implied in an informal oral agreement.
In this case Mr Hardingham, the owner of Real Estate Marketing Australia Pty Ltd (REMA) took promotional photographs of real estate and licenced them out to estate agents for marketing campaigns and online material. REMA had an oral agreement with the estate agents, as part of which it was implied that the agents would be able to upload the photographs to the estate listing site Realestate.com.au (REA). The terms and conditions imposed by REA’s own website provided REA with ‘an irrevocable, perpetual, world-wide, royalty free licence’ to licence the content provided by the agencies to third parties. In accordance with the terms, REA sub-licenced the content uploaded to its website to a real estate marketing agency, RP Data Pty Ltd.
The majority of the Full Federal Court had held that ascertaining whether an informal term can be read into a contract should not be inferred lightly, and ultimately found that the oral agreement did not include an implied term allowing for the sub-licencing of photographs. The High Court has commenced the application for special leave to appeal. You can read the hearing transcript here.
International
The US Supreme Court in Nazi-looted art case continues…
The US Supreme Court has remanded an ongoing dispute regarding Camille Pissarro’s Rue Saint-Honoré in the Afternoon, Effect of Rain back to the Ninth Circuit Court of Appeals in California after the long-running case wound its way up through the courts, eventually culminating in the technical question of the correct law to be applied – Californian or Spanish.
The painting had been owned by the Cassirers, a Jewish family living in Berlin prior to World War II, but in 1939 Lilly Cassirer Neubauer had to give up the painting in exchange for $360 and visas to flee Nazi Germany. Unable to find the painting after the war, she eventually received $13, 000 settlement from the German government. Her family and heirs have maintained that she had never formally waived the right to Rue Saint-Honoré.
Despite questions relating to provenance, the painting was bought in 1976 by a Swiss collector, Baron Hans Heinrich Thyssen-Bornemisza and was subsequently sold to the Spanish state as part of a collection of works that became the basis of the Thyssen-Bornemisza Collection Foundation. Upon discovering that the painting was intact and on display in a museum, Lilly’s grandson Claude Cassirer petitioned Spain and the Foundation for the return of the painting but was denied despite Spain being a signatory to the (non-binding) Washington Principles on Nazi-Confiscated Art 1998, which espouses “just and fair solutions” and national processes for implementation “particularly as they relate to alternative dispute resolution mechanisms for resolving ownership issues.”
In 2005, Claude brought a suit in California’s Federal Court against Spain and the Foundation for the painting’s return. The defendants argued that as they were foreign sovereigns, they had immunity under the Foreign Sovereign Immunities Act 1976 (FISA). The court found Spain’s argument valid, and it was dismissed from the case. The court also found that FISA’s expropriation exception applied to the Foundation as the painting was originally seized by the Nazis in violation of international law.
After Claude died in 2010, his son David Cassirer has continued the quest for the painting’s return. In 2015, a California District Court held that Spain was the correct law to apply. As the painting had been on display and in public possession in the Thyssen-Bornemisza Museum for more than six years, under Spanish law this is enough to transfer good title to the property, even if it was originally stolen. This is not the case under Californian law.
The decision was appealed several times, and the Ninth Circuit Court held a full trial in late 2018, applying Spanish law to determine the case. The two questions asked were: Did Baron Hans Heinrich Thyssen-Bornemisza buy the painting in good faith? And did either the Baron or the Foundation have actual knowledge that the painting had been stolen? The Court held that the Baron did not buy the painting in good faith, as there were “suspicious circumstances that should have alerted the Baron that something was amiss, such as “intentionally removed and torn labels… minimal provenance information, and… well-known history and pervasive nature of the Nazi looting of fine art during WW2.” Turning to the second question of actual knowledge, the Court found that neither the Baron nor the Foundation had “actual knowledge” that the painting had been stolen as it requires “wilful (sic) intent”. The Foundation made the purchase in good faith, and was the rightful owner.
This decision was appealed again by David Cassirer to the US Supreme Court, which considered the question of what ‘choice of law’ rule should be applied when considering such cases, the rule of the forum (the law of the place where the suit is brought i.e., California) or federal common law. In their decision, the Court held that “[i]n an FSIA suit raising non-federal claims against a foreign state or instrumentality, a court should determine the substantive law by using the same choice-of-law rule applicable in a similar suit against a private party. Here, that means applying the forum State’s choice-of-law rule, not a rule deriving from federal common law.”
The case will need to be re-adjudicated with the application of California’s “choice of law” rule, which may mean the application of Californian property law. This ruling could substantially affect the outcome of the case. Read more here.
The New York District Court has rejected a motion to dismiss claim in the Hermès NFT dispute
In the most recent evolution of the Hermès v. Rothschild dispute, Judge Jed Rakoff of the U.S. District Court for the Southern District of New York denied Mason Rothschild’s motion to dismiss Hermès’ trade mark dispute concerning Rothschild’s use of the BIRKIN trade mark for his collection of NFTs titled ‘MetaBirkins.’ The digital works depicting images of faux fur covered Birkin Handbags were sold on four different NFT platforms.
Hermès, the luxury fashion house known for its highly coveted Birkin bag, filed a suit against Rothschild in January of this year for a number of allegations, including infringing on its federally registered BIRKIN trademark, misleading and deceptive conduct, trademark dilution and cybersquatting claims.
In a recent development, Rothschild filed a motion to dismiss claim pursuant to Fed. R. Civ. P. 12(b)(6) for a ‘failure to state a claim upon which relief can be granted.’ In order to survive dismissal, the court has to ascertain whether the claims filed by Hermès are ‘plausible’ and not merely ‘naked assertion[s]’ per Bell Atlantic Corp. v Twombly 550 U.S. 554, 557 (2007).
Rothschild argued that as he ‘used “MetaBirkins” as the title of the artwork and not a source identifier for his products, the test in Rodgers v Grimaldi 875 F.2d 994 (2d Cir. 1989) (Rodgers) applies, requiring the court to dismiss Hermès’ claim on First Amendment grounds. The test relates to claims against works of artistic expression ‘where public interest in avoiding consumer confusion outweighs the public interest in free expression.’ Though the case of Rodgers referred to the Langham Act (the Langham Act’), the federal statute governing trademarks in the US, the court clarified that sections 34 and 42(a) of the Act parallels trademark infringement claims in New York. Rothschild further asserted that the use of the “MetaBirkins” mark was used in non-commercial speech for artistic relevance and was not explicitly misleading as to the source or content of the work.
In relation to this test, Hermès claimed that ‘the court cannot make determinations of artistic relevance or explicit misleadingness at the motion to dismiss stage.’ Regarding the alleged trade mark infringement, Hermès went on to argue that ‘Rothschild use[d] the ‘MetaBirkins’ mark, in commerce, to brand a product line, and to attract public attention and signify source,’ which creates an association between Hermès and MetaBirkins.
In analysing the trade mark infringement issue, Judge Rakoff applied the test in Rodgers, noting that ‘while titles can be source indicators, this function is “inextricably intertwined” with their communicative artistic functions’ which necessarily implicates First Amendment rights. Rakoff ultimately rejected Rothchild’s claims, noting that the complaint contains sufficient factual allegations to dispute his argument and that the Court is unable to resolve factual disputes at the motion to dismiss stage.
Regarding the issue of ‘artistic relevance,’ Rankoff relied again on the findings in Rodgers, indicating that artistic relevance requires a non-commercial association with Hermès’ Birkin mark, as opposed to one in which ‘the defendant intends to associate with the mark to exploit the mark’s popularity and goodwill.’ He also found that the allegation that Rothschild intended to associate the MetaBirkins mark with that of Hermès and leverage off the popularity of the Birkin mark was plausible. Regarding explicit misleadingness, Rakoff found that Hermès’ allegations ‘are sufficient to survive a motion to dismiss.’
Whilst an outcome of the case is yet to be determined, it may set a useful precedent for those working within the fashion and art NFT space.
Other NFT cases of note
As the law plays catchup with the rapidly growing NFT space, the High Court of England and Wales has recently characterised NFTs as property in Lavinia Deborah Osbourne v. (1) Persons Unknown and (2) Ozone Networks Inc. This outcome means that NFTs can have the same rights and remedies attributed to them as other proprietary assets.
This finding was the result of a recent complaint filed by Lavinia Osbourne against Ozone Networks, the company responsible for the NFT marketplace Opensea. In January of this year Osborne alleged that two of her Boss Beauties NFTs were withdrawn from her MetaMask crypto wallet without her authorisation. Judge Mark Pelling QC granted an urgent interim injunction to ensure that the NFTs weren’t transferred elsewhere until further Court order, treating NFTs ‘for present purposes as property as a matter of English law.’ Read more coverage of the case here.
In a similar outcome, the Singapore High Court has legally recognised NFTs as digital assets. The Court granted an injunction to bar the potential future sale of a Bored Ape Yacht Club NFT (No. 2162) (BAYC NFT) which was used as collateral in a loan agreement between Janesh Rajkumar and the lender who goes by the name ‘chefpierre.’ Upon entering the loan agreement, Janesh transferred the NFT to NFTfi, a marketplace which allows NFT owners to use their assets as loan collateral to access liquidity. Contrary to the agreement which explicitly stipulated that Janesh would not forsake the NFT if he was unable to repay the loan, chefpierre moved BAYC No. 2162 into his personal wallet and listed the NFT for sale on Opensea when the loan was unable to be repaid on the terms set out. The High Court ordered an injunction, which not dissimilarly to the case above, effectively recognised the NFT as a proprietary asset. Read more coverage of the case here.
In the ever-expanding market of NFTs the law is slowly beginning to play catch up. These cases establish much-needed precedent for NFT-related disputes in their jurisdictions.
The US copyright office has determined that Artificial Intelligence cannot be an ‘author’ for the purposes of a copyright application
In an outcome that mirrors the position taken in Australia, the US Copyright Office has dismissed Steven Thaler’s application for copyright protection of an artwork created by the artificial intelligence machine, DABUS. Thaler put down ‘Creativity Machine’ as the author of the artwork titled ‘A Recent Entrance to Paradise’ in an application which was initially rejected in 2018.
Not dissimilar to the Full Federal Court of Australia’s recent determination against Thaler which we have summarised above, the copyright office rejected Thaler’s application on the grounds that it ‘lacks the human authorship necessary to support a copyright claim,’ reiterating the outcome of their original decision. Read more here.
Nike sues StockX in the Manhattan federal court for selling NFTs of Nike sneakers without permission
Nike has accused sneaker resale marketplace, StockX, of selling NFTs depicting Nike sneaker designs without permission. The case was initially brought in February 2022, with Nike alleging that StockX had infringed its trademarks by causing consumer confusion and interfered with Nike’s own NFT plans. Nike subsequently sought leave to amend its initial complaint to include counterfeiting and false advertising claims, saying it bought four pairs of counterfeit shoes on the platform. The court is yet to determine the outcome of this case. Read more here.
Martin Eder, a cherry tree and pastiche as art
Three years after being the subject of a lawsuit brought by British artist Daniel Conway claiming that Martin Eder had plagiarised part of his painting, Scorched Earth, the Berlin Regional Court has ruled that the work is a “pastiche” and therefore does not constitute an infringement on the copyright of a pre-existing work pursuant to both European Union Law and the Freedom of the Arts guaranteed under the EU Charter of Fundamental Rights and the German Constitution. Edgar’s work, titled The Unknowable, combines the classical medium of oil paint with stock images found on the internet to create collage-like works. It is yet to be seen if the judgment will be appealed. Read more here.
Sculptor Daniel Druet claims he is the true author of a number of Maurizio Cattelan’s works
French sculptor Daniel Druet has brought proceedings against artist Maurizio Cattelan aiming to be recognised as the “exclusive author” of nine works including La Nona Ora and Him. Cattelan came up with the original concepts for the works and Druet was paid to create the moulds and prototypes, though it has been acknowledged that the original agreement between the two was vague. A key issue in the case is at what point, if any, a third party can claim ownership of a work if parts of, or the whole production of the work is outsourced. A verdict is expected to be announced on July 8. Read more here.
The U.S Supreme Court will determine whether Andy Warhol is in violation of copyright law
In the latest iteration of the long-running copyright dispute between the Andy Warhol Foundation and photographer Lynn Goldsmith over a portrait of the singer Prince, the Supreme Court announced its plans to review the decision of the U.S. Court of Appeals later this year. The question at the centre of this controversy is whether Warhol had sufficiently transformed Goldsmith’s original portrait in creating his series, or if they are “substantially similar.” Read our previous coverage here and more on the current case here.
The Institute of Digital Archaeology is seeking legal recourse against the British Museum
The Institute of Digital Archaeology (IDA) has filed a freedom of information request to the British Museum in the hope of gaining insight into public inspection requests after the Museum refused to allow a 3D scan of the Parthenon Sculptures to be made. The IDA hopes to replicate the Parthenon Sculptures using digital scanning technology with a view to enabling the originals to be returned to Athens. Read more here and here.
Florida court rules in favour of Miami Beach for the removal of an artwork
The District Court of Florida ruled in favour of the City of Miami Beach for removing an artwork tributed to Raymond Herisse, who was killed by Miami Beach police in 2011. The City of Miami Beach commissioned the artwork by Rodney “Rock” Jackson for the public art show “ReFrame Miami Beach” but was only on show for one day before the City requested that the work be removed. The American Civil Liberties Union brought a lawsuit alleging that the removal of the mural violated the First Amendment right to free speech, however the Court held that the city’s censoring of the commissioned mural constituted protected “government speech” and as such the First Amendment did not apply. Read more here.