Sep 012018

This post originally appeared on Techdirt on 2/22/18.

Last week was a big week for dramatically bad copyright rulings from the New York federal courts: the one finding people liable for infringement if they embed others’ content in their own webpages, and this one about 5Pointz, where a court has found a building owner liable for substantial monetary damages for having painted his own building. While many have hailed this decision, including those who have mistakenly viewed it as a win for artists, this post explains why it is actually bad for everyone.

The facts in this case are basically this: the owner of a run-down, formerly industrial building in a run-down neighborhood aspired to do something to redevelop his property, but it would be a few years before the time would be right. So in the meantime he let some graffiti artists use the building for their aerosol paintings. The building became known as 5Pointz, and the artwork on it soon began to attract attention. The neighborhood also began to change, and with the improvement the prospects for redeveloping the property into residences became more promising. From the outset everyone knew that redevelopment would happen eventually, and that it would put an end to the arrangement since the redevelopment would likely necessitate tearing down the building, and with it the art on the walls. As the date of demolition grew closer, the artists considered buying the building from the owner in order to prevent it from being torn down and thus preserve the art. However the owner had received a variance that suddenly made the value of the property skyrocket from $40 million to $200 million, which made the buyout impossible. So the artists instead sued to halt the destruction of their art and asked for a preliminary injunction, which would ensure that nothing happened to the art while the case was litigated. But in late 2013 the court denied the preliminary injunction, and so a few days later the building owner went ahead and painted over the walls. The painting-over didn’t end the litigation, which then became focused on whether this painting-over broke the law. In 2017 the court issued a ruling allowing the case to proceed to trial on this question. Then last week came the results of that trial, with the court finding this painting-over a “willfully” “infringing” act and assessing a $6.7 million damages award against the owner for it.

It may be tempting to cheer the news that an apparently wealthy man has been ordered to pay $6.7 million to poorer artists for damaging their art. True — the building owner, with his valuable property, seems to be someone who potentially could afford to share some of that wealth with artists who are presumably of lesser means. But we can’t assume that a defendant building owner, who wants to be able to do with his property what he is normally legally allowed to do, will always be the one with all the money, and the plaintiff artist will always be the one without those resources. The law applies to all cases, no matter which party is richer, and the judicial reasoning at play in this case could just as easily apply if Banksy happened to paint the side of your house and you no longer wanted what he had painted to remain there. Per this decision, removing it could turn into an expensive proposition.

The decision presents several interrelated reasons for concern. Some arise from the law underpinning it, the Visual Artists Rights Act of 1990, an amendment to copyright law that, as described below, turned the logic of copyright law on its head. But there are also some alarming things about this particular decision, especially surrounding the application of high statutory damages for what the court deemed “willful” “infringement,” that accentuate everything that’s wrong with VARA and present issues of its own.

With respect to the law itself, prior to VARA the point of copyright law (at least in the US) was to make sure that the most works could be created to best promote the progress of the sciences and useful arts (as the Constitution prescribed). The copyright statute did this by giving creators economic rights, or rights designed to ensure that if there was money to be made from their works, they would have first crack at making it. The thinking was that with this economic incentive, creators would create more works, and thus the public interest goal of having more works created would be realized.

VARA changed this statutory equation for certain kinds of visual works. Instead of economic rights, it gave their creators certain moral rights, including (as relevant for this case), the right to preserve the integrity of their work. This right of integrity includes the right

(A) to prevent any intentional destruction, mutilation, or other modification of that work which would be prejudicial to his or her honor or reputation, and any intentional distortion, mutilation, or modification of that work is a violation of that right, and
(B) to prevent any destruction of a work of recognized stature, and any intentional or grossly negligent destruction of that work is a violation of that right.

Which may sound well and good, but as we see with the costly way the statute plays out, rather than creating economic incentives stimulating the creation of new works, it has now created economic effects inhibiting them, which in the long run will only hurt the artists VARA was intended to help.

The most obvious way it hurts them is by deterring property owners from allowing any art to be installed on their property, because it means that if they do, they may be forever stuck with it. Allowing art to be installed means they will either stand to lose the control they would have had without it (itself a hit to the property’s worth), or potentially be faced with thousands if not millions of dollars in liability if they do what they want with their property anyway. And what property owner would want to chance such dire consequences in order to encourage art?

Granted, some of this risk can be ameliorated with written agreements, which were lacking in this case. But if all public art requires lawyered paperwork, it raises costs and will deter both artist and property owner from pursuing this sort of mutually beneficial arrangement. In this case the property owner had let the artists use his building to create, for free, by unwritten agreement simply because at the time they all agreed that it was good for both of them. It will not be good for creativity if we discourage this sort of symbiotic relationship from taking root.

It also will not be good for future artists whose economic interests might have benefited from other such opportunities like those 5Pointz offered. Even in this case the court noted all the evidence presented in “Folios”, showing that being able to paint the building had opened up all sorts of doors for the artists to reap further economic rewards for their art. Artists will have fewer opportunities for that sort of career-enhancing exposure if landlords are deterred from giving it to them.

There is an implicit argument present in the plaintiffs’ case that some of the rise in the value of the building was due to the artwork, and that it would therefore be just to share some of that windfall with them. But by this same logic, the building owner would have been similarly responsible for, and thus entitled to a portion of, the rise in value of the work of the artists whom he had allowed to exhibit. It would not be good for artists in the long run if they should find themselves needing to share their good fortune with their benefactors – or be potentially liable for any loss in their property value, should the presence of their work diminish it.

This case also stands to have some directly chilling effects on artists. While this case is not about graffiti artists suing each other for painting over each other’s works (as the court noted, up to now graffiti artists have routinely painted over each others’ works without any more severe penalty than social approbation, if even that), it’s not clear why, if the decision stands, the next case couldn’t be. The decision found that a VARA claim could be vindicated regardless of whether a work was temporary or permanent, and instead focused on whether a work had achieved the stature needed to be entitled to protection under the statute. It won’t be good for artists if they have to fear being tied up in litigation with their peers due to the transient nature of their medium (or locked out of being able to create at all because others have already used all the good spaces first), or caught in a judicial cage match to determine whose work has the stature to be more deserving of protection.

It is possible that the court erred, and transient art falls outside VARA’s purview. But there is enough ambiguity in the statute to potentially extend to it, and in any case, the statute’s deterring effects would apply to all sorts of art, not just aerosol-painted art. Unfortunately at no point does the decision contemplate these effects, or its effects on other important policy values such as urban planning and affordable housing, if VARA is able to trump other forms of law, such as property law, that normally speak to what a building owner may do. The decision also largely ignores that the building owner had let the artists paint there in the first place, when he didn’t have to. And it ignores that the building owner had done this apparently now wrongful painting-over of the art on his walls after this very same court denied an injunction that would have told him not to. None of these factors mattered to the court.

But all of them should matter to us, as should the extremely troubling way the court found his “infringement” (in other words, the painting-over) “willful,” and thus subject to heightened damages. This is where the decision not only encapsulates the policy flaws of VARA, but also threatens to be seriously distorting to copyright doctrine (and other law) generally.

One troubling aspect is the punitive attitude by the court towards the building owner for having painted over the art after the very same court had denied an injunction preventing it. In between its order of November 12, 2013 denying the preliminary injunction, and its November 20, 2013 decision explaining its order (embedded below), the building owner had gone ahead and done the painting-over. This act appears to have outraged the court, whose November 20 decision reads more as an explanation for why it probably should have issued the injunction, now that in the intervening time the owner had painted over it.

As the court correctly observed in this 2013 opinion, preliminary injunctions exist so that courts can prevent irreparable harm at the outset that a court is likely to later rule needs to be prevented, if it would be too late to unring the bell at that point. In fact the language the court cited for the injunction is so standard that when the naked order denying the preliminary injunction was issued, it was perfectly reasonable for the building owner to presume that either (a) he was likely to win the case and be able to do what he wanted to the building, or (b) it wasn’t such a severe harm if he removed the art now and later the court decided he shouldn’t have, or (c) some combination of both. So it reads as a serious miscarriage of justice for the court’s 2018 decision to punish him for going ahead and removing the art, or “recklessly disregard[ing] the possibility” that removing it would be wrongful, as the court put it.

Furthermore, if the court is right in its 2018 decision that the painting-over raised a valid VARA claim, then it was wrong to deny the injunction in 2013. Problematic though it is for VARA to introduce non-economic rights into copyright law, the whole point of one of them – the right to maintain the integrity of the work – can only be vindicated with an injunction. If this right were something that could be adequately compensated for by monetary damages, then it would start to look a lot more like an economic right. That’s not what VARA was ever intended to create, but it is what the court effectively created back in 2013 when it refused the injunction and deemed monetary damages sufficient to address any harm should the VARA claim later prevail.

As it wrote in a confused passage in its 2013 decision:

Although the works have now been destroyed—and the Court wished it had the power to preserve them—plaintiffs would be hard-pressed to contend that no amount of money would compensate them for their paintings; and VARA—which makes no distinction between temporary and permanent works of visual art—provides that significant monetary damages may be awarded for their wrongful destruction. See 17 U.S.C. §§ 501-505 (providing remedies for VARA violations). In any event, paintings generally are meant to be sold. Their value is invariably reflected in the money they command in the marketplace. Here, the works were painted for free, but surely the plaintiffs would gladly have accepted money from the defendants to acquire their works, albeit on a wall rather than on a canvas.

It continued more bizarrely:

Moreover, plaintiffs’ works can live on in other media. The 24 works have been photographed, and the court, during the hearing, exhorted the plaintiffs to photograph all those which they might wish to preserve. All would be protected under traditional copyright law, see 17 U.S.C. § 106 (giving, inter alia, copyright owners of visual works of art the exclusive rights to reproduce their works, to prepare derivative works, and to sell and publicly display the works), and could be marketed to the general public—even to those who had never been to 5Pointz.

In the court’s defense, it is correct that VARA does allow for infringements of moral rights to be compensated by monetary damages. But it shouldn’t be the primary form of relief, and the court’s punitive use of the highest amount of statutory damages to compensate the artists exemplifies why. Statutory damages are normally for when it is hard to measure economic loss and so we have to instead make some presumptions about how much compensation that loss deserves. There are already plenty of problems with these presumptions tending to allow for the recovery of far more than what actual losses would have been, but this decision magnifies their problematic nature by allowing statutory damages not only to overcompensate economic loss but to overcompensate non-economic loss. In other words, congratulations, we now have “pain and suffering” in copyright cases.

Perhaps in a way we always have – the overuse of statutory damages has always suggested that is really a retributive, rather than truly compensatory, damages measure. In this case, the court is perfectly frank that’s what it’s doing:

If not for Wolkoff’s insolence, these damages would not have been assessed. If he did not destroy 5Pointz until he received his permits and demolished it 10 months later, the Court would not have found that he had acted willfully. Given the degree of difficulty in proving actual damages, a modest amount of statutory damages would probably have been more in order.

But courts have always maintained the facade that compensation for emotional harm is unavailable in copyright cases. The 5Pointz court even acknowledges this limitation in footnote 18 of its 2018 decision:

Plaintiffs contend that they are entitled to damages for emotional distress. Under traditional copyright law, plaintiffs cannot recover such damages. See Garcia v. Google, Inc., 786 F.3d 733, 745 (9th Cir. 2015) (“[A]uthors cannot seek emotional damages under the Copyright Act, because such damages are unrelated to the value and marketability of their works.”); Kelley v. Universal Music Group, 2016 WL 5720766, at *2 (S.D.N.Y. Sept. 29, 2016) (“Because emotional distress damages are not compensable under the Copyright Act, this claim must also be dismissed.”). Since VARA provides damages under “the same standards that the courts presently use” under traditional copyright law, H.R. Rep. No. 101-514, at 21-22 (1990), emotional damages are not recoverable.

But the outright hostility the court repeatedly shows the defendant, in the language in both decisions, makes it clear that statutory damages are being used to compensate for what is otherwise a purely emotional harm. From the 2018 decision:

The whitewash did not end the conflict in one go; the effects lingered for almost a year. The sloppy, half-hearted nature of the whitewashing left the works easily visible under thin layers of cheap, white paint, reminding the plaintiffs on a daily basis what had happened. The mutilated works were visible by millions of people on the passing 7 train. One plaintiff, Miyakami, said that upon seeing her characters mutilated in that manner, it “felt like [she] was raped.” Tr. at 1306:24-25.

There are good reasons why we do not allow copyright to remediate hurt feelings, not the least of which being that they are likely to run raw on both sides. From an article from last year (before the $6.7 million judgment):

Wolkoff feels betrayed by the artists he thought he was helping by lending them his wall to bomb. He cried when the building came down, he confessed, and said he would bring back more street artists to paint at the location after the renovation—just not those who sued.

Notably in its 2017 ruling (also embedded below) allowing the VARA claim to go forward, the court dismissed the artists’ claims for intentional infliction of emotional distress, despite the strong emotions the case had engendered.

Because the defendants destroyed 5Pointz only after the Court dissolved its temporary restraining order and did no more than raze what they rightfully owned, the defendants simply did not engage in the kind of outrageous and uncivilized conduct for whose punishment this disfavored tort was designed.

And therein lies the rub: the building owner did no more than what other law clearly allowed. But by allowing artists to bring claims for the “intentional distortion, mutilation, or other modification . . . [of works that] would be prejudicial to [the artist’s] honor or reputation” the court has set up a direct conflict between VARA and what traditional copyright law, and traditional property law, have allowed. And it has done this without addressing any of the implications of this new policy collision.

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