Virtual Galleries: Pure Play or Pure Trouble?

A new breed of art gallery has appeared on the scene--the virtual gallery. It is an art gallery that has no terrestrial presence and exists only on the Internet. It generally has little or no inventory yet presents an image of an established business, and it often sells art at deeply discounted prices. While some artists and publishers interested only in sales may welcome these virtual galleries, most are not embracing these new outlets for their work. As a result, many artists, galleries and publishers are seeking ways to limit, if not eradicate, the virtual gallery. Publishers have the option of not selling to a virtual gallery, if they are aware of its true status. Is a virtual gallery legal? Is it breaking any laws or violating anyone's rights? Let's take a look.

Setting Up Shop

What does it take to create a virtual gallery? One must have a Web site, a server and a URL. With those elements in place, you are ready to go into business, except you need a product. Or do you? Traditionally, a gallery enters into a relationship directly with an artist or a distribution agreement with a publisher. Before it will affiliate with a gallery, a publisher often requires a gallery to meet its minimum requirements, such as a committed amount of wall space, minimum amounts of art purchases and/or sales and, at times, a co-op advertising requirement. Often the gallery staff is required to be trained in regard to the work of the artist. All of this takes time, commitment and money. Dealers and artists are assured the gallery will present them appropriately and, because the gallery has invested in the artist, it will make a concerted effort to ensure that the program is successful and the artist's reputation and market is maintained.

On the other hand, if a gallery has neither a financial nor strategic commitment to an artist, it's perspective can be very different. This is not to say that individuals who run virtual galleries cannot represent artists in a professional, first-rate manner. They simply represent a situation where some of the incentives to do so are missing.

Artists and publishers often take a long view of an artist's career and are willing to sacrifice immediate sales in order to establish a collector base and a team of galleries with mutual interests for long-term relationships and career enhancement. For these reasons, artists and their publishers will often bypass the opportunity to sell to more galleries and move more product where they see short-term gain but long-term harm to the artist's career.

A virtual gallery that does not have a relationship with the artist or publisher and sets up its gallery without seeking permission may be violating numerous laws. Simply because one operates on the Internet does not mean that copyright and trademark laws do not apply. They apply to virtual galleries and virtual entities as they do to brick and mortar companies. All one needs to do is look at the case law from the early rapper sampling cases to Napster to see that copyright and trademark laws apply--no matter the medium.

The first step a virtual gallery undertakes is acquiring copies of the artist's works. They can be from books, calendars, tear sheets, catalogs, greeting cards, posters and more. These images are generally scanned and a digital file is created. If this is done without the artist's permission, it is a copyright infringement. In transferring the copy from the PC attached to the scanner to the server which houses the site, another infringing copy is made--a separate violation of copyright law. Virtual galleries make images available for public display, which is also the right of the copyright owner. As such, having a work displayed on the site without permission is a third copyright infringement.

While the next concept is not intuitive, the law has supported the premise that viewing an infringing image causes each individual who is viewing the infringing image to be violating the artist's copyright. By facilitating the "infringing actions" of viewers, the virtual gallery owner is what is known as a "contributory infringer" and perhaps also a "vicarious infringer".

When viewing a Web site, a temporary copy is made in the viewer's computer, and the courts have held that even though the copy is only in RAM and may be transitory, it is enough of a copy for copyright infringement purposes. Therefore, by scanning an artwork, posting it to a Web site, displaying it and allowing viewers to view the images, at least four separate copyright infringements have occurred. Furthermore, a virtual gallery often incorporates text regarding the artist from books or the artist's promotional materials. The unauthorized reproduction of such text is a fifth copyright violation.

Artists' names are often considered trademarks. Using the artist's name to solicit business without consent can also violate trademark rights. Many virtual galleries give the impression that the artist is affiliated with the gallery. Words such as "Our featured artists" or "Representing" confuse the public regarding the relationship between the artist and the gallery. This sense of affiliation provides the consumer with a sense of security when buying from a gallery. Therefore, customers often believe that if a work is available for sale, it must be from an authorized dealer. The Lanham Act states that creating a "likelihood of confusion" as to an association, affiliation or sponsorship is a violation of federal trademark law. Therefore, by listing an artist's name and creating the impression that they are affiliated with the virtual gallery is a violation of federal trademark laws.

Most states also have a "Right of Publicity" law which forbids one from using the name or likeness of a person for commercial purposes without permission. Therefore, the use of the artist's name on a Web site can, depending on the state in which the site, gallery or artist is housed, be a violation of the artist's Right of Publicity.

All art Web sites should have Certificates of Authenticity or comparable information available on their Web sites. No virtual gallery that I have observed has complied with this requirement. Most print disclosure laws require that this certificate be available to be viewed before or after the time of purchase. Simply putting the certificate into a package when shipping is a violation of most state print disclosure laws.

A problem for virtual galleries who do not have prints in stock is that they will not have access to the required print disclosure information found on the certificates and therefore are not in a position to post the necessary information in order to comply with the various state print disclosure laws.

As the above paragraphs indicate, most virtual galleries are violating numerous state and federal laws. The exposure of virtual galleries is staggering. They are potentially liable to the artist for the artist's losses, for an allocable portion the profits they earned, attorneys fees and treble damages (in the trademark cases). If copyright registrations are in place for the artists' works before the infringements take place, damage of up to $150,000 per infringement may be awarded (up to $750,000 per image). If a proprietor of a virtual gallery believes that because it is incorporated, it will not be held individually liable, he is in for an unpleasant surprise. An artist can pierce the "corporate veil" and sue individuals and show that the proprietor, directors, officers or employees of the corporation controlled it, participated in and benefited financially from the infringement (in a small business this is usually the case).

Before opening a virtual gallery, one should think twice about the possible consequences unless the appropriate rights are secured from the artists and/or publishers.

SUMMARY BOX

* A virtual gallery that posts images to its Web site without the artist's or publisher's permission can be found guilty of several forms of copyright infringement.

* A virtual gallery that uses the artist's name to solicit business without his/her consent violates trademark rights.

* A virtual gallery is potentially liable to the artist for the artist's losses, for an allocable portion the profits it earned, attorneys fees and damages.

Joshua J. Kaufman, Esq. is an expert in art, licensing and copyright law. He has a national practice and is a partner in the Washington, D.C., office of Venable, Baetjer, Howard & Civiletti, LLP. He has published more than 150 articles, many of which can be downloaded from his Web site, www.jjkaufman.com.

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