Art Case Update – June 2023

Image: KAWS SEEING/WATCHING, permanent installation, 2018. Courtesy of Capricorn Song via Unsplash.

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 Paralegal Mia Schaumann report on an investigation into the provenance of First Nations artworks, the establishment of a new arts funding and advisory body in Australia, the final outcome in the legal dispute involving Warhol’s Prince Series plus more.  

Australia

Investigations into the provenance of First Nations artworks

The Commonwealth, Northern Territory and South Australian governments will undertake an inquiry into the authorship of First Nations artworks. This inquiry is taking place in response to an investigation by The Australian newspaper which revealed allegations of white studio staff painting on Indigenous artist’s works at the APY Art Centre Collective located in South Australia.

Peter Malinauskas, the premier of South Australia, has said that the investigation will ‘specifically look at the provenance of Aboriginal art particularly in SA and the NT to ensure that its integrity is true when it goes into the marketplace or into various galleries.’ Though the precise timeline and terms of reference are yet to be released, the inquiry will focus on securing the integrity of First Nations art, with regards to the allegations made against the APY Art Centre Collective.

Similarly, the National Gallery of Australia (NGA) will undertake an independent review of 28 Indigenous works of art prior to their upcoming exhibition, Ngura Pulka, which features works by artists from Anangu Pitjantjatjara Yankunytjatjara Lands (APY). In a statement made by the NGA, the review ‘will consider the scope and extent of contributions (if any) that third parties—and, in particular, studio assistants and managers at the APY Art Centre Collective—made to the creation of the 28 paintings that form the Ngura Pulka exhibition, with the ultimate view of assessing whether those works were made under the creative control of the artists to whom they are attributed.’ The independent panel consists of intellectual property law barrister, Colin Golvan, and Shane Simpson, a solicitor specialising in arts and cultural property law. They will be advised by First Nations experts, Yhonnie Scarce and Maree Meredith.  Read more here and here

The Creative Australia Bill 2023 establishes a new arts funding and advisory body

Recently passed by Parliament, the Creative Australia Bill 2023 establishes Creative Australia as the new arts funding and advisory body, replacing the Australia Council. Bolstering the Government’s National Cultural Policy (NCP) released earlier this year, the Bill will oversee support for contemporary artists and arts workers, establishing the Music Australia Council and the Creative Workplaces Council within Creative Australia. Creative Australia is forecasted to receive an additional $199 million in funding to go towards the deliverables set out in the NCP. You can read our past coverage of the NCP here and more on the Bill here.

Changes to Australia’s design rights system

IP Australia is consulting on proposed changes to Australia’s design rights system to ensure it is more modern and accessible, drives innovation and delivers greater benefits to the Australian economy. These changes form the second part of a two-stage program of designs reform to enhance designs protection in Australia. The consultation covers three topics; virtual designs, partial designs and incremental designs. Submissions are currently open and close on Tuesday 8 August 2023. 

If you’re an Australian designer, arts organisation or business with a design focus and you’d like to make a submission, we'd be happy to assist. Get in touch with us by LinkedIn or Instagram DM or email us at info@guestworkagency.art. Read more here.

 

International

US Supreme Court rules in favour of photographer Lynn Goldsmith

In May the US Supreme Court ruled in favour of photographer Lynn Goldsmith, settling the protracted legal dispute concerning Andy Warhol’s infamous Prince Series. By way of background, in 1984 Goldsmith licensed her photo of Prince to Vanity Fair magazine, to be used as a reference image by Andy Warhol.

Warhol also used Goldsmith’s image to create an additional 15 works, known as the Prince Series. Goldsmith became aware of the Prince Series after Prince’s death, when the work was republished by Vanity Fair in a commemorative issue. She notified the Andy Warhol Foundation (AWF), the successor to Warhol’s copyright in the Prince series, of the infringement. AWF sued Goldsmith for a declaratory judgment that the works were non-infringing, or made fair use of the image. Goldsmith countersued for infringement and the United States District Court for the Southern District found in favour of AWF. The Court of Appeals ultimately reversed the South District ruling, the outcome of which has been upheld by the US Supreme Court.

On appeal to the Supreme Court, the matter to be determined by the Court centred on the interpretation of the ‘fair use’ defence which allows works protected by copyright to be used without obtaining permission from the copyright owner or authorised licensee(s) for certain purposes. The common law doctrine as codified in §107 provides ‘[t]he fair use of a copyrighted work, for purposes such as criticism, comment, news reporting, teaching, scholarship, or research, is not an infringement of copyright.’ For the fair-use defence to be made out, the US Copyright Act of 1976 enlists four factors for the courts to consider when determining whether the use of a copyrighted work is “fair’’: the purpose and character of the use, the nature of the copyrighted work, the amount or substantiality of the portion used, and the effect of the use on the potential market for or the value of the work.

Putting substantial weight on the interpretation of the first factor, the court clarified that if a copyright protected work is used to the extent that it serves a different purpose or character (such that it is ‘transformative’) the defence will be made out. AWF contended that the Prince Series employed new aesthetic and creative sensibilities giving Goldsmith’s photograph a ‘different character’ such that it was transformed.

Relying on the reasoning in Campbell v. Acuff-Rose Music, Inc., 510 U. S. 569, 579 (1994), Justice Sotomayor of the Supreme Court found that ‘although new expression may be relevant to whether a copying use has a sufficiently distinct purpose or character,’ this must be weighed against the commercial nature of the use pursuant to §107(1). On this, the court held that ‘derivative works borrowing heavily from an original’ cannot preclude a finding of fair use. The court commented that it is not their role to take on the role of an art critic, nor evaluate the artistic merit or meaning of a work. Rather, their role is limited to determining the purpose of Warhol’s ‘use’ of Goldsmith’s original work. On this basis the Court found that the portraits of Prince produced by Warhol share ‘substantially the same purpose’ as the Goldsmith’s photograph in that they both depict the musician in magazine stories for a commercial objective.

The long-awaited outcome narrows the scope of the purpose and character fair use factor, in contrast to previous ‘appropriation’ cases such as Cariou v. Prince, 714 F.3d 694 (2d Cir. 2013). Read our past coverage here and the full judgement here.

Court settles Bored Ape Yacht Club dispute

In April the U.S. District Court for the Central District of California granted Yuga Labs, Inc. (Yuga) a summary judgment in connection with a number of claims filed against Ryder Ripps and Jeremy Cahen (Defendants). Justice John Walter’s (Justice Walter) reasoning sheds light on the way in which US courts are continuing to grapple with the legal issues emerging within the NFT space.  

By way of background, Yuga is the creator of the Bored Ape Yacht Club (BAYC) NFT series which has risen to global prominence since 2021, having been featured on the cover of Rolling Stone magazine and purchased by a number of high-profile celebrities. By virtue of their scarcity, BAYC NFTs can resell for millions of dollars. Purporting to critique Yuga, the Defendants subsequently released their own collection of NFTs titled ‘Ryder Ripps Bored Ape Yacht Club’ (RR/BAYC) in 2022. Yuga subsequently filed a Complaint against the Defendants for false designation of origin and cybersquatting.

Similar to trade mark infringement, the Lanham Act also ‘prohibits the use of false designations of origin, false descriptions, and false representations in the advertising and sale of goods and services.’ The burden rested on Yuga to prove ‘that: (1) it has a protectable ownership interest in the mark; and (2) the defendant's use of the mark is likely to cause consumer confusion.’  

Regarding the first limb, the Court held that whist the BAYC marks weren’t registered, ‘an unregistered trademark can be enforced against would-be infringers.’ The Defendants argued that as NFTs are intangible property, they are not capable of trademark protection. However relying on the reasoning in Hermès (see our past coverage here), Justice Walter ultimately found that as ‘goods’ are not required to be tangible. Justice Walter goes on to specify that NFTs, attributable to both digital and tangible assets, have the necessary qualities attributable to ‘goods’ and as such are capable of protection. 

The second limb of the test requires consumer confusion to be established. Though only being on the market since 2021, Justice Walter emphasized the commercial and conceptual success of the BAYC NFT series. He ultimately found that as the Defendants intentionally adopted Yuga’s BAYC marks in connection with their own RR/BAYC NFT collection, that the public was likely associate the two. Though Justice Walter made out a positive finding for the claim of false designation of origin, he reserved the issue of damages for trial.

Regarding the second claim, under the Anti-Cybersquatting Consumer Protection Act (ACPA), for a cybersquatting to be made out Yuga needed to prove that the Defendant used a domain name that was confusingly similar to their protected mark in bad faith with the intent to profit. Justice Walter ultimately found that as the Defendant’s domain name contained Yuga’s trade marks with the intent to profit, that this claim was made out. Read the full judgement here.

US Copyright office grants partial registration of AI generated work

In 2022 New York based AI artist and researcher, Kris Kashtanova, obtained copyright registration from the US Copyright office for her 18-page AI generated graphic novel Zarya of the Dawn (the “Work”). As a self-proclaimed ‘part-time prompt engineer,’  Kashtaova utilised the AI program Midjourney which allows users to input text prompts to generate imagery. The US Copyright office has recently revoked Kashtanova’s original registration, instead granting a more narrow scope of protection for the Work.

In her original application, Kashtanova failed to disclose her reliance on AI technology, listing herself as the sole author of the Work. Having been previously unaware of her use of Midjourney, shortly after registration the Copyright Office became aware of this via statements made on social media. As a result, the Office ‘determined that the application was incorrect, or at a minimum, substantively incomplete’ and sought additional information to reevaluate the validity of the copyright registration. 

As a response, Kashtanova argued that as the AI technology merely served as an assistive tool, registration should not be cancelled. In the alternative, she contended that as she authored the text and compiled the arrangement of the text and images, that specific components of the Work warrant copyright protection.  

Pursuant to 17 U.S.C. § 102(a) of the Copyright Act (the “Act”), a work may be granted protection if it is an ‘original work of authorship fixed in any tangible medium of expression.’ Although not expressly addressed in the Act, authorship in the context of copyright law has been interpreted to mean human authorship. The Copyright Office determined that the use of Midjourney in the production of the images falls under the gamut of non-human authorship, and as such is not capable of copyright protection. In making this finding, the Office relied on the reasoning in COMPENDIUM (THIRD) § 313.2  which held that works are not capable of registration if ‘produced by a machine or mere mechanical process that operates randomly or automatically without any creative input or intervention from a human author.’ Though Midjourney’s output is based on human-authored prompts, the Copyright Office ultimately reasoned that as there is no ‘guarantee that a particular prompt will generate any particular visual output,’ it does not satisfy the test of human authorship. 

Kashtanova sought to rely on her personal editing of select images via Photoshop to attribute human authorship to some of the Midjourney images. However, for works to be protected under the Act, they must also be original - as an independent creation and must demonstrate sufficient creativity. The Office ultimately found the editing to be too minor to demonstrate the necessary level of creativity to warrant copyright protection.

Though copyright protection of the original registration was cancelled, upon review the Office issued a new certificate covering Kashtanova’s expressive contributions, ‘namely, the “text” and the selection, coordination, and arrangement of text.’ Read more here.

New York federal jury ruled on landmark NFT insider trading case

Former product manager of NFT marketplace, OpenSea, has been convicted of money laundering and wire fraud, representing the first NFT insider trading case to come before a court. Nathanial Chastain was convicted by the Manhattan Attorney’s Office of using confidential information obtained by virtue of his position to purchase works by artists that he subsequently featured on the marketplace’s landing page, knowing that in doing so they would increase in value. Read more here.

U.S. District Court rules in favour of KAWS in counterfeit suit

The United States Southern District Court has ruled in favour of American artist, KAWS, in a suit against two Singapore-based companies who produced a range of counterfeit works replicating the artist’s style. Found in violation of copyright and trademark law, the defendants were ordered to pay $900,000 USD in damages and served with an injunction to stop producing the counterfeit products. Read more here.  

The English High Court makes determinations on bitcoin technology

The English and Wales High Court recently grappled with a decision concerning Dr Craig Wright, who claims to be the author of the seminal Blockchain White Paper which introduced bitcoin currency to the world. Wright claims to have copyright subsistence in the Bitcoin File Format, which is used to create blocks on the Bitcoin blockchain. The court ultimately found that copyright doesn’t subsist in the Bitcoin File Format as it doesn’t amount to subject-matter expressed or fixed in material form. Read more here

Europe passes an Artificial Intelligence Act

The European Parliament recently adopted its stance on the Artificial Intelligence (AI) Act, with an overwhelming majority in favour of the new legislation. The Act will aim to ‘promote the uptake of human-centric and trustworthy artificial intelligence and to ensure a high level of protection of health, safety, fundamental rights, democracy and rule of law and the environment from harmful effects.’ To facilitate this, the European Parliament has outlined a list of prohibited uses including predictive policing, various biometric identification systems and untargeted facial scraping practices to create facial recognition databases. The final form of the Act will be released after further negotiations with the EU Council of Ministers. Read more here.

France releases its much anticipated restitution report   

Commissioned by President Emmanuel Macron, France has released an 85 page report detailing its restitution policy. As France currently lacks a legal basis for the deaccession of objects from its national collections, the report provides necessary guidelines on the return of cultural property obtained under duress. Specifically, the report requires the repatriation of objects of cultural heritage, human remains and Nazi era objects subject to eligibility requirements. Read more on the report here and here.

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