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Protecting the Intangible Assets of a Visual Artist’s Work: Estate Planning and Management of Copyrights to Create Value and Preserve Legacy (Part I)

December 16, 2016

Storage, conservation, and cataloging needs create special problems for the visual artist’s estate. It is important to separate artistic property from other physical possessions. — Barbara Hoffman, Attorney

I am frequently called upon with respect to the planning of visual artist’s estates, particularly as it concerns the development and preservation of the artist’s legacy. Whether creating artist endowed foundations during the artist’s lifetime or planning for a legacy after death, preserving a legacy will involve management of intangible assets such as copyright as well as the physical body of work left behind.

The Internet has the ability to make exhibitions and archival material available to a global public. Artists, artists’ foundations, artists’ trusts and estates and archives may hold valuable intellectual property assets, which with careful management can promote the artist’s reputation, provide revenue streams, and benefit society by providing visual images for study, research, and education.

For example, the Willem de Kooning Foundation in its public 990 tax form for June 2006 derived $44,579 from licensing royalties. The 990 describes how its revenue-raising activities are related to its exempt purpose. The foundation states, “Royalties from the licensing of reproductions and/or publications of Willem de Kooning constitute some of the means by which the Foundation currently accomplishes its exempt purpose. Its exempt purpose is to preserve the artwork of Willem de Kooning, and provide access thereto; to create and maintain an archive of artworks and reference papers relating to Willem de Kooning and provide access to the archive to scholars for research; and to educate the public about the art of Willem de Kooning and art in general.”

The “mother” of licensing foundations is The Andy Warhol Foundation for the Visual Arts. Since 2004, The Andy Warhol Foundation for the Visual Arts has seen significant growth and development in its licensing program.

Licensed products designed from Warhol images have appeared in prominent publications such as Italian Vogue, Interview, and i-D Magazine. The foundation was nominated for International License of the Year by the Licensing Industry Merchandising Association, competing against major properties such as Harry Potter and Spider Man. The line of Andy Warhol products, including clothing, housewares, stationery, and other items, is well established and successful in Europe, and will soon move aggressively into the North American market with a new line of products for the home. Annual revenues from licensing are estimated at approximately $19 million per year.

Copyright and other intellectual property rights should be specifically discussed and addressed in any visual artist’s estate plan with respect to the dual benefits of minimizing estate taxes and building a legacy. As I use the term, “visual artist” includes those who create images—photographers, painters, multi-media artists, graphic artists, computer artists, performance artists, and filmmakers. There is no one correct solution. Strategies will in part depend on the medium of expression, the importance of licensing to the medium, and whether works exist in editions, are intended to be unique, or are plans for yet unrealized works.

Some Thoughts on a Checklist for Copyright and Intellectual Property Management in Estate Planning and Administration:

    • Inventory copyright interests and other intellectual property assets; record all assignments, exclusive licenses, nonexclusive licenses.
    • Create art image and likeness usage checklist for prospective licensees/usages.
    • Plan for unified management of artistic and intellectual property and identify future owners of artistic property, secondary materials like journals, photographs, letters, and copyright interests in both categories.
    • Consider various options for copyright licensing management.
    • Consider moral rights (statutory and contract).
    • Create organizational  documents for foundation, basic licensing forms, artist/gallery consignment agreements.
    • Seek out and enter into agreements with art critics, art historians, or galleries for preparation of catalogue raisonné of all or part of a body of work.
    • Provide testamentary instructions and guidance concerning copyright exploitation of works of art in the estate.
    • Consider contacts with museums as recipients of works and archives.

Determining the copyright status of works created before 1978 may prove complex; however, normally, an artist’s foundation or estate will own the copyright in works created after 1978, unless the work was created as a “work for hire” or the artist assigned the copyright in writing or published the work without notice prior to March, 1989, and failed to correct the omission as permitted by the 1976 Copyright Act. Nevertheless, the foundation, estate, or archive must use due diligence to establish the copyright status of works. Particularly, photographic collections may have multiple layers of authorship (i.e., the “author” of the photograph and the “author” of the original work). In addition, certain works of art may implicate rights of privacy and publicity of a depicted subject.

Various Options for Copyright Licensing

Under Section 106 of the Copyright Law of 1976, the copyright owner has the exclusive right to (1) reproduce the work in copies or phonorecords, (2) prepare derivative works based on the copyrighted work (which includes the right to recast, transform, or modify), (3) distribute copies by sale or other ownership transfer, or to rent, lease, or lend copies, (4) perform the work publicly, and (5) display the work publicly.

Ownership of the bundle of intangible rights comprising copyright is separate and distinct from ownership in the work of art.

Under current law, absent a writing expressly conveying copyright, the sale, gift, or transfer of the original work of art does not transfer the copyright in the work of art. Under the 1976 Act, copyright interests can be transferred inter vivos or at death and in whole or in part. For example, a copyright owner can transfer all the rights or one or more of the exclusive rights or a full or undivided interest, or a divided interest in the copyright. A copyright owner may license or assign copyright in the work in a number of ways: by the type of use and/or media, by an exclusive license or nonexclusive license, by territory or duration, to name only a few possibilities.

Many artists’ foundations will have as part of their mission the organization of exhibitions, publications, including catalogues and books, and other activities to promote an understanding of the work of the artist and enhance his or her reputation. Each of these activities involves careful management of copyright.

Digital technology has provided the basis for a number of models for the licensing of images both for profit and not for profit. Artists, their archives, estates, and foundations should carefully review and negotiate any licensing agreements particularly for consistency with the foundation’s mission.

[CAVEAT: The artist and his or her advisors should be wary of any grant of a perpetual license and in any license agreement define precisely and narrowly terms such as “educational,” “noncommercial,” and “publicity or public relations.” Such terms are terms of art and derive meaning from industry practice and context.]

Those who manage and administer an artist’s copyrights should consider and develop a rights and reproduction policy.

If scholars cannot have access to or use photographs of an artist’s work because of excessive usage fee or because of censorship of their writings, scholars and art writers will no longer write about the artist or use images of his or her work.

A version of this article originally appeared in the 2008 Supplement of A Visual Artist’s Guide to Estate Planning sponsored by the Marie Walsh Sharpe Art Foundation and the Judith Rothschild Foundation. You can read the Supplement, as well as the original Visual Artist’s Guide to Estate Planning on Barbara Hoffman’s Website: http://www.hoffmanlawfirm.org/Publications/. See also “Reflections on the Survey and Other Musings on the Management of Artists’ Foundations and Museums” in the 2008 Supplement.

Founded in 1985, the Hoffman Law Firm is the preeminent art law boutique, recognized globally by artists, galleries, countries, collectors, museums, creatives, and explorers as the leader in the field of art, sustainable cultural heritage, and intellectual property law.

Barbara-Hoffman

Barbara Hoffman
Barbara T. Hoffman is recognized internationally and nationally as one of the preeminent art, intellectual property, and cultural heritage lawyers. With more than forty years of practice in every aspect of the field, Hoffman has been acknowledged by her peers with leadership positions in the New York City Bar Association and International Bar Association, elected to Super Lawyers, Best Lawyers in New York, Best Lawyers in the United States, and named to Art and Auction’s 51 Power Women in the Art World 2016: “As an attorney who has specialized in art law for more than three decades, Hoffman advises artists, their estates, and foundations; museums; collectors; galleries; auction houses; and even foreign governments on matters related to intellectual property, copyright, artists’ rights, and cultural heritage. Working with renowned artists such as Maya Lin and Faith Ringgold, she has litigated precedent-setting cases involving copyright and fair use, establishing copyright protection for visual images on par with that for music used in film and television. She has also been instrumental in drafting contractual guidelines for public art projects around the world.”

* © 2017 Banco de México Diego Rivera Frida Kahlo Museums Trust, Mexico, D.F. / Artists Rights Society (ARS), New York

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