Banksy’s Laugh Now graffiti predicted a role inversion. On Thursday, May 18th, the Cancellation Division of the European Union Intellectual Property Office (EUIPO) invalidated a trademark on the street artist’s image of a monkey wearing the sign “Laugh now, but one day we’ll be in charge.” This was the EUIPO’s second invalidation of a Banksy trademark in less than a year.
Banksy, Rage, Flower Thrower (2003). Image Courtesy of Lazinc
On September 14, 2020, the Cancellation Division aligned with Full Black Colour and invalidated the artist’s trademark: “It must be pointed out that…[Banksy] cannot be identified as the unquestionable owner of such works as his identity is hidden; it further cannot be established without question that the artist holds any copyrights to a graffiti. The contested EUTM was filed in order for Banksy to have legal rights over the sign as he could not rely on copyright rights, but that is not a function of a trademark.”
Banksy, Laugh Now (2005). Courtesy Artsy
In the meantime, Full Black Colour had filed a second complaint before the EUIP to invalidate Banksy’s trademark of Laugh Now on the same legal grounds. On May 18, 2021, the artist argued that the claimant had not provided sufficient evidence to prove bad faith. Banksy referred to the Court of Justice of the European Union’s C-371/18 judgement (2020), in which the Court had held that invalidation for bad faith is appropriate when the trademark was filed “with the intention of undermining, in a manner inconsistent with honest practices, the interests of third parties or with the intention of obtaining…an exclusive right for purposes other than those falling within the functions of a trade mark.” (§74). Banksy also raised the interesting argument that, under Article 11.1 of the EU Charter of Fundamental Rights, which protects freedom of expression, he could not lose the right to file a trademark on the basis that he had previously claimed that copyright is for losers. Moreover, Banksy explained his comment “was clearly ironic as it was accompanied by both a copyright and trade mark symbol.” Finally, the artist recalled that in Creative Foundation v. Dreamland Leisure Ltd. (2015), which concerned Banksy’s entitlement to copyright protection as a street artist, the English High Court’s Chancery Division held that trademarks and copyrights are not exclusive. Banksy argued that his refusal to copyright Laugh Now did not disqualify his trademark registration.
Once again, however, the EUIPO aligned with Full Black Colour. The Cancellation Division found that Banksy did not use any of his registered marks as trademarks. Instead, it held that his trademarks were an attempt to monopolize images on an indefinite basis, and that his EU trademark was filed to circumvent copyright law, amounting to bad faith. Who’s laughing now?
Last week, our founder Leila Amineddoleh spoke at an event hosted by the Art Law Foundation titled Non-Fungible Tokens in the art market: the beginning of a digital art boom? The event was organized and moderated by attorney Anne-Laure Bandle, Director of the Art Law Foundation and co-founder of the Responsible Art Market initiative. Other panelists included Gabriel Jaccard, a legal scholar in the field of smart contracts and Co-Chair of the Regulatory Working Group Crypto Valley, and Garrett Landolt, a Postwar and Contemporary Art Specialist at Christie’s auction house. This multidisciplinary group of speakers presented varying perspectives on NFTs and the art market, demystifying this new asset class for the audience.
After Gabriel explained the technological aspects of NFTs, Leila stressed the importance of understanding and drafting contractual terms relating to them. As digital assets, NFTs fall outside traditional frameworks of property law and art sales agreements. In conventional transactions, a buyer will purchase a work from an artist or on the secondary market and receive a tangible object. With NFTs, it is not always immediately clear what the collector is buying or what rights they will be allowed to retain and exercise. A digital token can exist separately from a physical work of art or contain rights to a unique digital artwork that does not have a physical counterpart. Each situation will carry different rights for the creator, the seller, and the purchaser. For instance, a variety of options are available for the protection of artists’ moral and intellectual property rights, although this is complicated by the fact that such rights vary between countries. (A prior blog post examines moral rights and NFTs.) As this is a rapidly developing field, contracts will need to adapt to the rapidly changing technology and art market.
Gabriel noted that NFT sales are governed by smart contracts embedded within the purchased tokens that are programmed to operate automatically. (These contracts work similarly to a vending machine, which is programmed to release an item when a buyer inserts payment). However, as NFTs are a recent addition to the legal world and are usually more expensive than chips and soda, parties are still struggling with how to draft contractual terms that program the tokens effectively. Without clear legal precedent to inform these agreements, questions have arisen as to how the trade in these assets will develop. Depending upon the limitations the seller wishes to place on the NFT (such as commercial use and publicity restrictions), the parties may approach sales as straightforward exchanges of goods, as more complex licensing agreements, or even as hybrid contracts that incorporate these two forms. In any case, the parties’ rights should be clearly specified and memorialized in an agreement in order to avoid future legal challenges. Another critical matter to consider is the potential conflict between private contract provisions and the terms of services on an NFT platform. Although it is unclear which terms will prevail in the event of a dispute, including protections in the agreement will help safeguard the parties and help enforce their rights.
Source: Christie’s
As a complement to the legal discussion, Garrett provided an exclusive account of the now famed March 2021 Beeple sale, which drew 22 million visitors to Christie’s website during the final minutes of the auction. This unprecedented traction perhaps suggests that NFTs are a more desirable (or at least more accessible) asset class for Millenials than the traditional art market sphere: bidders for Beeple’s “Everydays” averaged 36 years old. Garrett also indicated that while Christie’s had an excellent start, this sale was a learning experience for future transactions. The auction house plans to pursue NFT sales and will offer blockchain-embedded works called Cryptopunks in an upcoming auction. It remains to be seen whether NFTs will be treated as a luxury asset, but Christie’s will remain selective with the items chosen for auction.
As part of the event, Anne-Laure then moderated audience questions. The first question concerned recommendations for potential purchasers. All the panelists agreed that purchasers should perform due diligence in advance of transactions to ensure that they fully understand what is being purchased, their respective rights, liabilities, and potential legal implications. Proceeding with caution is necessary to avoid pitfalls. Gabriel further noted that purchasers should verify whether the relevant contract addresses their needs, depending on the purpose of the transaction (investing versus collecting). Another question concerned the reception of NFTs by financial institutions as collateral for loans. Gabriel stated that NFTs currently represent a high-risk ratio and as such, financial institutions are hesitant to use them as collateral. However, this could change in the future if NFT-related transactions become more common, and smart contracts could potentially be used as collateral. It is worth noting that financial institutions must also comply with anti-money laundering (AML) regulations, which were recently extended to antiquities dealers in the US and already apply to art market participants in the EU and UK. If financial institutions apply the new regulations to NFT transactions, these institutions will need to conduct diligence regarding the identity of the work’s ultimate beneficial owner. This requirement might mitigate the anonymity provided by the Internet and ultimately discourage certain NFT buyers.
The legal landscape surrounding NFTs continues to develop. Collectors, artists, and other art market participants are wise to obtain legal counsel from experienced professionals with an understanding of this new asset class. At Amineddoleh & Associates, we have a strong track record representing artists, collectors, and galleries at all stages of art transactions. We have served as legal advisors on a number of high-profile NFT transactions, and we are currently working with Nifty Gateway and Monax, as well as with artists and their estates. We relish the opportunity to continue work in this developing area. We are proud to be at the forefront of legal work for this exciting new asset in the digital, artistic, and legal fields.
Our founder appeared on an episode of the Wedding Industry Law Podcast to discuss intellectual property rights. The link is available here: https://www.youtube.com/watch?v=QFxUq4aOgqw
Our founder, Leila A. Amineddoleh had a great time briefly discussing artists’ rights and graffiti art with Jon Bristow, anchor at KCBS Radio. They discussed the significance of the recent ruling in favor of graffiti artists in the “5Pointz case” (Cohen v. G&M Realty L.P.). In that matter, a group of graffiti artists received millions of dollars in damages after a land owner whitewashed their work. It was decided in favor of the artists after it was determined that the graffiti art rose to the level of “recognized stature.” This is the first time that graffiti art has received protection under the Visual Artists’ Rights Act. For more information, read Leila’s editorial for the Conversation. You can also listen to her brief radio interview here:
Graffiti art has been garnering a great deal of attention in the art world, particularly as this once “subversive” style of art has gained acceptance. In turn, prices for some urban artists’ works have risen. Predictably, these artists are now also being copied and infringed, most notably by fashion companies. A few high profile copyright cases involving graffiti were filed in 2015 and earlier this year, and hopefully the outcomes of those litigations will provide more guidance for artists, fashion companies, and their legal representatives. Leila Amineddoleh was cited in The Hollywood Reporter earlier this month questioning the status of intellectual property protection for artists who used illegal means to create their art. Although courts have found that the Visual Artists’ Rights Act (VARA) does not protect works of art created illegally, it is unclear whether US copyright law does protect those works. Hopefully pending lawsuits will finally clarify the application of US intellectual property law and whether those protective tools protect all graffiti artists, even those using illegal means to create their art.
Graffiti art has been garnering a great deal of attention in the art world, particularly as this once “subversive” style of art has gained acceptance. In turn, prices for some urban artists’ works have risen. Predictably, these artists are now also being copied and infringed, most notably by fashion companies. A few high profile copyright cases involving graffiti were filed in 2015 and earlier this year, and hopefully the outcomes of those litigations will provide more guidance for artists, fashion companies, and their legal representatives. Leila Amineddoleh was cited in