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February 7th, 2018
Art Collaborators Settle Suit over Ownership of Works
Recently, a settlement was reached in a lawsuit over the intellectual property rights in a body of thousands of works of visual art created by a husband and wife duo. The case delved into complicated questions about the ownership of copyright interests that should be top of mind to all artists who collaborate with others. Here's what you need to know.
In 2017, plaintiff Eric Chan started a lawsuit in federal court in New York seeking a declaration that he is the sole author of the works created over the course of more than 20 years collaborating with his wife and fellow artist, defendant Heather Schatz, in an artistic endeavor that the two called "ChanSchatz." The lawsuit arose after Ms. Schatz filed an action for divorce in state court in Wisconsin in 2015; at issue in that action was the division of the marital property, including the intellectual property rights in the artwork. Because federal questions under the Copyright Act could not be decided in the matrimonial action, the federal lawsuit was started in order to determine the ownership rights.
In the federal suit, Mr. Chan claimed that he alone authored the body of artwork, and that he only agreed to publicly present the works under the single name "ChanSchatz" for professional and personal reasons. Mr. Chan claimed that Ms. Schatz only offered suggestions and discussed the works, but did not contribute any fixed independent expression, and never intended that Ms. Schatz would be a joint author of these works.
For her part, Ms. Schatz claimed that Mr. Chan was not entitled to a declaration of sole authorship of the works in question. According to her version of events, the parties worked together exclusively as a collaborative visual artist duo for nearly 30 years, making thousands of works together. As proof of this collaboration, she pointed out that she and her husband had marketed themselves as collaborators (using "ChanSchatz," for example) in interviews, applications, invoices, certificates of authenticity, and joint copyright notices on works. She further noted that Mr. Chan never claimed that he was the sole author of the works until she filed for divorce.
Although the suit was resolved before the court ruled on the issue of ownership, it raises interesting legal questions about copyright ownership over works created by multiple authors. Where multiple individuals participate in the creation of a work, courts generally follow certain rules in adjudicating copyright ownership. First, under the Copyright Act, the authors of a joint work are co-owners of the copyright in the work, and a "joint work" is a work prepared by two or more authors with the intention that their contribution be merged into inseparable or interdependent parts of a unitary whole. If the collaborators are deemed joint authors, then either author may separately exploit their joint works - even without permission from their co-author - as long as they account to each other and hand over the appropriate portion of profits.
Where the work is not a joint work, courts in the Second Circuit apply the "dominant author test" to determine ownership. This involves a fact-intensive analysis that relies on a number of factors concerning the collaborators' relationship. The critical questions include: Who had decision making authority over creative changes to the work? How did the collaborators bill or credit themselves for their work? Did any of the collaborators have separate agreements with third parties and, if so, what kinds? Not surprisingly, when courts go down this road, the results can be difficult to predict.
With this in mind, there are some key takeaways for artists and other authors of original works who are considering collaborating with others. And for those who are already collaborating, but have no mutual understanding with their creative partners, listen up!
First, it is always best to deal with this issue up front. If possible, come to an agreement with your collaborator(s) before you begin any of your creative work. Put that agreement in writing. If you have been collaborating and don't yet have any agreement, it isn't too late -- but you should know that unless the agreement specifically addresses the issue, the scope of your rights to any of the works created prior to your eventual written agreement may later be challenged.
Additionally, document your contributions. Although none of the factual evidence that courts look at when determining authorship - control, billing rights, third-party agreements, etc. -- is dispositive, this evidence can still tip the balance of a case in favor of one side or the other. With that in mind, consider documenting your own exercise of creative control, whether in a memo, an email, or some other way. Make sure you are always credited for work on which you've collaborated. And, to the extent there are agreements with third-parties (perhaps a lease of studio space, an agreement with a gallery or other institution, or a work-for-hire agreement with contractors), be attentive and consider being named personally in those agreements as appropriate.
If you have any questions about art law matters, please contact Amelia Brankov at (212) 826 5574 or firstname.lastname@example.org, Lily Roos at (212) 705 4894 email@example.com, or any other member of the Frankfurt Kurnit Art Group.
Other Art Law Alerts
Real Estate Developer Ordered to Pay $6.75 Million for Destroying Aerosol Artists’ Works
A New York federal court recently ordered a real estate developer to pay $6.75 million for whitewashing aerosol artists' works located at the famed 5Pointz site in Long Island City.
February 22 2018
Recent NYS Sales Tax Law Change Affects Art Sales Between Related Entities
On August 14, 2017, the New York State Department of Taxation & Finance issued a Technical Memorandum, TSB-M-17(4)S, which will be of interest to many New York-area art dealers and collectors.
August 23 2017
Appraisal Relied on by Estate Undervalued Paintings by $1.77 Million
Recently, in Estate of Kollsman v. Commissioner the U.S. Tax Court held that an art collector's estate significantly underreported the value of two artworks for estate tax purposes. The problem: the estate relied on appraisals by an auction house specialist who had an incentive to "lowball" the appraisals to win the right to later auction the works. In addition to this conflict of interest, the court found that the values reported by the estate were unpersuasive because the auction house specialist exaggerated the dirtiness of the paintings and failed to adjust his appraisals after one of the works sold at auction for approximately five times more than the reported value. Here's what you need to know about the case.
April 4 2017