Virtual Galleries Pure Play or Pure Trouble?

Joshua Kaufman, Esq. © 2001

A new breed of art gallery has appeared on the scene - the "Virtual Gallery". It is an art gallery that has no terrestrial presence, one that exists only on the Internet. These virtual galleries generally have little or no inventory yet present an image of an established business. They often sell their wares at deeply discounted prices. When a customer views the site they see a list of "featured artists". When they click on an artist's name they are taken to a page with a description of the artist and digital images representing the artist's work. Often there is text describing the artist and perhaps a bio. One often finds a retail price list and the discounted prices offered by the Virtual Gallery. While artists or publishers who are interested only in sales may well welcome these Virtual Galleries, most artists and publishers are not embracing these new potential outlets for their products. It goes without saying that brick and mortar galleries who have a much greater overhead and carry inventory are less than pleased at seeing the proliferation of Virtual Galleries. As a result many artists, galleries and publishers are seeking ways to limit if not eradicate the Virtual Gallery. Publishers of course have the option of not selling to Virtual Gallery, that is if they're aware of their true status. Are these galleries legal? Are they breaking any laws? Are they violating anyone's rights? Let's take a look.

What does it take to create a virtual gallery? One must have a web site designed, 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 would enter into a relationship directly with an artist(s) or a distribution agreement with a publisher(s). Before they will affiliate with a gallery publishers often require of galleries 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. At times 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 that the gallery will present them appropriately and because the gallery has invested in the artist they will make a concerted effort to insure that the program is successful and the artist's reputation and market is maintained.

On the other hand if a gallery has no financial nor strategic commitment to an artist their 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 maybe violating numerous laws. Simply because one operates on the Internet does not mean that the copyright and trademark laws do not apply. They apply the exact same to Virtual Galleries and virtual entities as they do to brick and mortar companies. For whatever reasons there seems to be a misconception that if one is operating online different standards apply. Not so, 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 format or medium. The first step a Virtual Gallery undertakes is to acquire copies on the artist's works. They can be from a book, calendar, tear sheets, catalogs, greeting cards, prints, posters, etc. These images are generally scanned and a digital file is created. In the act of scanning and creating a digital file a copy is made. If it 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 web site another infringing copy is made, a separate violation of copyright law. Virtual Galleries make images available for viewing, a public display of the artwork. Public display is also the right of the copyright owner. As such, having a work displayed on the web site without permission is a third copyright infringement. While the next concept this 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 one views 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 maybe transitory it is enough of a copy for copyright infringement purposes. Therefore, by scanning an artwork, posting it to web site, displaying it and allowing viewers to view the images at least four separate copyright infringements have occurred. Virtual Gallery often incorporate text regarding the artist, their careers artwork from books or the artist's promotional materials. The unauthorized reproduction of such text is also copyright violation (a fifth).

Artist's names are often consider trademarks. Using the artist's name to solicit business without their consent can also violated their trademark rights. Many Virtual Galleries give the impression that the artist is affiliate with the gallery. Words such as, "Our featured artists" or "Representing" or other words that confuse the public as to what the relationship is between the artist and the gallery by implying that there is in fact a relationship. This sense of an affiliation provides the consumer with a sense of security when buying from a gallery. This is particularly true with artists who are known to deal only with authorized dealers. The impression created is if the work is available for sale that it must be from an authorized dealer. Part of the trademark law which is known as the Lanham Act specifically Section 43(a) states that creating a "likelihood of confusion" as to an association, affiliation or sponsorship is a violation of federal trademark law. Therefor by listing an artist's name and creating the impression that they are affiliated with the Virtual Gallery results in federal trademark laws being violated.

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 their permission. Therefore, the use of the artist's name on web site can, depending on the state in which (the web site is housed or the gallery is located or the artist is located) be a violation of the artist's Right of Publicity.

In addition 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 a Certificate of Authenticity be available to be viewed after the time or prior to the time of purchase. Therefore, not having it available on a web site but simply putting a Certificate of Authenticity into a package when shipping is a violation of most state print disclosure laws. A problem for Virtual Galleries who do not have the 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 they have incorporated they will not be held individually liable because of the limitations of liability for individuals who work for corporation they are in for an unpleasant surprise. An artist can pierce the "corporate veil" and sue individuals as well if they can show that the proprietor, or directors, or 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 anyone contemplates opening a Virtual Gallery I would recommend they think twice about it unless the appropriate rights are secured from the artists and/or publishers.

Joshua J. Kaufman, Esq. is an expert in Art, Licensing and Copyright Law. He has a national practice. He is a partner in the Washington, D.C. office of Venable, Baetjer, Howard & Civiletti, LLP and represent clients in the Arts, Licensing and Entertainment fields. He has published over 150 articles many of which can be downloaded from his web site, www.jjkaufman.com.