Melissa Bernheim of AXS Law Group..

As the cranes continue appearing across the Magic City skyline, so too do the amount of residential and commercial buildings that serve as canvas and gallery, documenting the popular “marriage” of the artist and the property developer. So, what happens when this marriage hits a rough patch and is headed for divorce? While both property developers and artists will usually share a desire to beautify a space, there often exists an inherent dichotomy of interests when it comes to building development and the resulting potential demolition of integrated artwork.  The artist will seek to preserve the integrity and “recognized stature” of their work and the developer will most often look to maximize its financial potential.

In 1990, Congress amended the Copyright Act to include the Visual Artists Rights Act (VARA).  With the passage of VARA, visual artists have a legal cause of action to protect their work from mutilation, misattribution, or destruction, collectively known as “moral rights.” VARA extends rights to artists to protect the destruction of artwork integrated into a building if the work is of “recognized stature,” meaning that the artwork must be both meritorious and recognized by members of the artistic community. Pursuant to VARA, the limitations placed on the developer's ability to remove integrated artwork depends on how the work is installed and whether it can be removed without altering, mutilating or destroying the work. If safe removal is possible, then VARA directs the developer to make a diligent, good-faith effort to notify the artist of the intended removal. The artist has 90 days following notification to remove the artwork.  If the artist fails to do so, only then can the developer proceed with removal but can never damage, alter or destroy the artwork in the process.

Perhaps the best test of VARA to date is the recent decision in Cohen. v. G&M Realty, commonly referred to as the “5Pointz” case. On Feb. 12, 2018, Judge Frederic Block ruled that Gerald Wolkoff, a New York property developer, violated VARA for painting over the work of a group of graffiti artists without warning at a warehouse complex in Long Island City, popularly known as 5Pointz. Wolkoff, who owned the buildings for over 20 years, had actively encouraged the artists to canvas the warehouses with their artwork, all the while making it known to them his intention to eventually tear down the buildings to develop condominiums. In 2013, after seeking injunctive relief under arguably false pretenses, and without providing the notice and opportunity for the artists to remove or document their work as required under VARA, Wolkoff whitewashed the building overnight. Finding that the destroyed artwork was of “recognized stature” pursuant to VARA, the court found in favor of the artists, awarding them $6.7 million in damages.

In light of a decision such as 5Pointz, the question becomes what options are available to protect the interests of both developers and artists in post-VARA “marriages” of art and property development. For both parties, it is critical to reduce an agreement to paper that clearly outlines the terms of the relationship and an exit plan in the event of a divorce.

From the developer's perspective, the best approach is to have the artist waive any claims it may have to the moral rights protected by VARA. This can be accomplished through a “commission” agreement incorporating the waiver—which VARA mandates be specific and in writing.  In addition, by outlining the terms of the commission for the art to be integrated into the building, the developer can specify whether the artwork is a “work made for hire” under which the artist is paid, thereby transferring the copyright, and enabling the developer to freely utilize the image without worrying about intellectual property rights issues.

For the artists, removal or destruction of the artwork is not the only issue to be wary of. Because a “work for hire” agreement acts to transfer the rights of ownership in the artwork from the artist to the developer, artists need to be very exacting in how they document the relationship. If the artist wants to retain their copyright and control over the reproduction of images of and the potential licensing of the art, the contract should not include a transfer or waiver of copyright. Moreover, the artist may request that the contract specifically delineate the location and manner in which the artwork will be displayed on the building as well as the duration of the display. Additionally, artists should attempt to incorporate VARA directly into the contract by including the statutory notice and damage provision in the contract. Finally, it is important that the artist protect their intellectual property by registering their work with the U.S. Copyright Office.

Melissa Bernheim is an attorney with AXS Law Group. She focuses her practice on franchise law, licensing, business transactions, commercial litigation, intellectual property and real estate matters.  She may be reached at: [email protected].