The Legal Canvas, Spring 2009

Spring 2009

We are pleased to welcome you to the first edition of The Legal Canvas, a publication of the Art and Museum Law Group at Patterson Belknap Webb & Tyler LLP. The purpose of The Legal Canvas is to report developments in the field of art law in a way that is user-friendly and practical — whether you are a collector, an artist, a museum trustee or employee, a gallerist, or an art adviser.

Please click the link to the PDF to read any of the below articles.

In this issue...

Downturn and Deaccession by Jo Laird

It is not surprising that the economic downturn has brought back the deaccession debate. Museums, colleges and universities have been hit with the one-two punch of watching their endowments shrink, while at the same time losing many of their major donors who themselves have been hit by the market and perhaps by Mr. Madoff. The current economic situation has made real what in many cases before may have been mere hyperbole – that the sale of art could be crucial to the continued existence of an institution.

Holocaust Restitution: Will a Recent New York Case Open  the Door to a Wider Set of Claims? by Jo Laird

Over the past decade, the number of art restitution claims in U.S. courts involving transfers of works of art with Nazi-era provenance has increased dramatically. These suits often pit innocent parties against one another. On the one hand, the claimants are heirs of Holocaust victims and may have learned only recently that their deceased relatives owned the works in question. On the other hand, the current holders of the art are usually good-faith purchasers who paid full value for their purchase, had no knowledge of the art's Nazi-era provenance, and now must defend their title against claims involving actions taken more than 60 years ago in foreign countries during times of war and massive upheaval.  In many cases, the documents that would show whether or not title passed legitimately have been lost, the witnesses to the suspect transactions are no longer living, and the works of art have passed several times among numerous owners in multiple foreign jurisdictions.

Art Authentication Committees Attract Lawsuits by Hugh Freund

Is that Warhol on your wall really a Warhol? Says who?

Unless it was the Andy Warhol Art Authentication Board, you may run into trouble if you try to sell the work. The Board, like similar bodies that exist for artists such as Basquiat, Calder, Lichtenstein and others, is generally accepted by the art market as the essential arbiter of artistic authenticity. These committees offer to opine on the genuineness of pieces put before them, claiming absolute discretion in the making of such judgments and closely guarding their procedures.

What Does it Take to Get Art Law Discussed on the Colbert Report? by Gloria Phares

On February 12, David Ross, the former director of SFMOMA and current director of the Albion Gallery in New York, faced off against intellectual property lawyer Ed Colbert, on a show that rarely takes on arcane questions of art law: The Colbert Report. The topic was the dispute between Shepard Fairey and the Associated Press about whether Fairey infringed the AP's copyright when he used an AP photograph in his "HOPE" poster that became an emblem of Barack Obama's presidential campaign.

New Restrictions on Importing Chinese Antiquities by Jo Laird

Collectors of Chinese art and antiquities should take note of a recent agreement that might complicate the acquisition of such works in the United States. According to a Memorandum of Understanding that the outgoing Bush Administration signed with China, various Chinese works dating from 75,000 B.C. to 907 A.D., as well as monumental sculpture and wall art dating to 1759, can no longer be imported into the United States without certain documentation. The affected works include ceramic vessels, jade ornaments, stone sculpture, musical instruments, bronze items, silks, lacquer, coins and paintings.

Underwater Endowments:  Understanding Your Options Under New York Law by John Sare

With world financial markets down dramatically, museums and many other cultural organizations are facing difficult questions about what they can and must do with endowment funds that are now "underwater." Because underwater endowments are now a widespread problem in the nonprofit community, we thought readers of The Legal Canvas might find it helpful to have a brief outline of the available options. This article has been adapted from a more comprehensive article posted on the Tax-Exempt Organizations section of the Patterson Belknap website. To read the longer article click here

New York State Eliminates Some Sales Tax Advantages For Exempt Organizations by Bill Gaske, Rich Upton and Jo Laird

New York law exempts certain types of organizations (such as nonprofit charitable, educational and religious organizations) from the payment of sales tax on their purchases and from the collection of sales tax on certain sales by such organizations. Recent changes in the law, however, have considerably increased the situations in which such organizations must collect sales tax on their sales of tangible personal property such as books, jewelry, furniture and art.

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