Law

New law to root out counterfeit artwork in Korea

The Ministry of Culture, Sports and Tourism announced Thursday that it will legislate a new law regarding artwork distribution in an effort to root out the distribution of counterfeit works, recover public trust in Korea’s art market, and establish a healthy trading platform for creative crafts. The law will be implemented in August 2017.

The new law will divide art distribution into three major categories: art galleries, which will be subject to a registration system; art auctions, to a permit system; and other sales of artworks, to a reporting system.

Currently, art galleries or art auction houses can operate with only a business license, and without official registration or approval, which led to criticism that they lacked transparency and engaged in unfair practices in their art distribution process.

With the new law, however, art galleries will have to submit plans to prevent counterfeit artworks as well as a list of all of their affiliate artists. Auction firms will also have to provide counterfeit prevention measures, while possessing certain qualifications including at least 200 million won in capital, an official auctioneer, and an auction house.

Furthermore, artwork distributors will be obliged to maintain records for each of their artworks, and issue an official warranty when they’re sold. Failure to do so will also be result in fines and cancelled business licenses.

The law will implement stronger punishment for counterfeit crimes as well, by stipulating that these types of crimes be punishable by up to five years in prison or 50 million won in fines. The ministry will also consider the potential implementation of special judicial police specific to artwork fraud.

Meanwhile, the ministry is to establish a national body for artwork authentication, which will function as the official agency responsible for developing new authentication technology and professionals in related fields.

“The institute will be operated not as a government agency but as a public one, and will help improve Korea’s art authentication technology, as well as aiding with crimes, investigations, and trials related to counterfeit artwork,” said Jung. “It will be staffed by professional researchers and appraisers.”

The full details of the law are to be revealed in the first half of 2017.

Jeff Koons' Gazing Ball sculpture at centre of legal tussle between art dealers

Lawyers for Blue Art Limited filed an amended complaint Wednesday night  against David Zwirner and his gallery, which Fabrizio Moretti says failed to deliver a work of art he bought for $2m. The new complaint comes after Zwirner’s motion to dismiss named the previously anonymous purchaser and called the lawsuit “a case of buyer’s remorse”. In response, Moretti’s recent court filings reveal the work at the heart of the case—Jeff Koons’ Gazing Ball (Centaur and Lapith Maiden) (2013), from the gallery’s show that year. And while he previously asked for the original purchase price for the work plus fees, Moretti’s updated suit seeks $6m in total damages.

In the new filing, Moretti’s lawyers say Zwirner and the gallery played “a kind of ‘three card monte’ in which the numbered casts of the sculpture”—an edition of three, plus an artist’s proof—“were distributed to their buyers willy-nilly”.

On 24 June 2014, according to the complaint, Moretti made a purchase agreement and soon put down a deposit of $400,000 on edition 2 of 3, his lawyers say. By early 2015, the gallery told Moretti that the sculpture was nearly complete and the collector started paying off what he owed. In April 2015, the work was ready but instead of being delivered to Moretti, it was labelled as edition 3 of 3 and taken to the Contemporary Art Evening Auction at Sotheby’s in May, where it carried an estimate of $1.5m to $2.5m—and failed to sell.

On 29 June 2015, the court papers say, Moretti paid the final $200,000 he owed and around that time, another sculpture was completed. This one, however, was labelled edition 1 of 3 and went to another buyer, who still owed the gallery $1.6m. Moretti, faced with a bad art market and a sculpture from a series that had now been unsold at auction, says he still had not received his piece by the time he filed his lawsuit on 4 August this year.

Further complicating matters is the fact that the editions that were made are not the same as the one shown at the Gazing Ball show at David Zwirner Gallery in May 2013, the complaint says. That is now classified as a “prototype” and the dimensions of the sculpture ready for collection by Moretti are different from the object he purchased, the collector says.

Moretti’s amended suit alleges that Zwirner’s dealings violate the New York Arts and Cultural Affairs Law, updated in 1991 to “augment the laws protecting art purchasers from the slippery practices of some art dealers”, according to the court papers, and to outline the information that must be provided to the buyer of a sculpture. Moretti is seeking additional damages because Zwirner violated the law in the vagueness of the purchase agreement and in the editioning, the court documents state. The complaint also accuses the dealer and gallery of breach of contract and fraud, among other charges.

How not to sell stolen art

Art dealer Kenneth Hendel recently found himself in a sticky situation: He was in possession of stolen art. The Florida-based dealer purchased a painting by Picasso after it failed to sell at auction. After the purchase, Wilma “Billie” Tisch, the rightful owner, discovered the painting’s whereabouts and demanded its return. Hendel claims that he is now the rightful owner. The dealer is confident that he will not be forced to return the work because he is working under the assumption that Florida law protects his purchase. He claims that “the piece belongs to the last person who purchased it if it has passed through at least two people since the theft.” This is simply not true.

While it is true that certain aspects of the law in Florida are more forgiving towards current possessors than would be the case under New York law, there are major misconceptions in Hendel’s analysis. There is no law, in any state, that allows someone to gain title over a work after it has passed through a requisite number of exchanges. In fact, a work can be sold by a hundred dealers and yet still belong to an original owner.