The artists Sherrie Levine, Louise Lawler, Richard Prince, and Elaine Sturtevant are all key contributors to the same movement – appropriation art – often described as the ‘deconstruction and recontextualization’ of existing artworks (e.g. Ames 1993, Irvin 2005, Evans 2009, Welchman 2013, Schaumann 2015). Iconic examples are the famous Cowboy Series from Richard Prince, with re-photographs of Marlboro cigarette advertisements2 or Sturtevant’s Warhol Flower series.2
Appropriation artists risk creating novel works that infringe upon the rights of upstream artists. However, this risk of litigation has broader implications. It can apply not only to the appropriation artists themselves, but also to the intermediaries in the visual arts market that host, showcase, or sell their work, including galleries, museums, and auction houses.
Our research (Cuntz and Sahli 2021) builds on previous work studying the effect of copyright regimes on follow-on innovation and (cumulative) creativity (Giorcelli and Moser 2020, Heald 2014, Nagaraj 2016, Watson 2017b, Reimers 2019, MacGarvie et al. 2018, Biasi and Moser 2016) and the economic effects of indirect liability on intermediaries (Landes and Lichtman 2003). It asks if copyright regimes can have secondary market effects (based on the indirect liability rules they implement) or whether these can push trade to jurisdictions that offer more favourable conditions to intermediaries in the visual art market. Also, with the rise of digital tools and software, an ever-growing number of artists are using new technologies at lower cost and developing new styles – such as ‘internet art’ or ‘net art’ – to recontextualise existing artworks (Adler 2018).3 Accordingly, instances of ‘follow-on innovation’ in the visual arts might increase in the near future.
In 2013, the eyes of the art world focused on a high-profile litigation case between the well-known contemporary artist Richard Prince and the photographer Patrick Cariou (Francis 2014, Agarwal 2017), referred to as a landmark case in fair use (Adler 2018). Interestingly, not only was Prince held liable for copyright infringement, but the prestigious New York based gallery that represents him was deemed ‘vicarious and contributory’ liable (Adler 2016). The court decision was not well-received in the wider art scene. The New York Times called it “one of the most closely watched copyright cases ever to rattle the world of fine art”, one that “set off alarm bells . . . in museums across America that show contemporary art” (Kennedy 2011). Given the perceived legal uncertainty the decision created in the US, we ask if the risk of possible litigation made appropriation art less appealing to art-market intermediaries such as auction houses.
New evidence on secondary market effects: Appropriation artists see fewer auctions and sell less often, but prices do not change
The empirical strategy exploits the 2013 court decision as an exogenous institutional shock using a differences-in-differences design (Kretschmer and Peukert 2014, Watson 2017b) based on a unique dataset from the online artists classification service Artsy4 and historic auction records from Artprice.5 Figure 1 depicts time trends in auction trade for appropriation artists and for a control group of similar artists.
Based on the panel data analysis, Figure 2 illustrates that appropriation artists entered fewer auctions following the 2013 Cariou v. Prince decision: On average, they saw 66 fewer auctions per year than similar artists in the control group. Taking the 1,025 appropriation artists from the total sample into account, and combining this with the median sales price of $4,500 for their artwork, back-of-the-envelope calculations yield an estimated global trading loss of around $304 million for this type of follow-on innovation artwork.
Findings further suggest that there was a decrease in immediate demand for appropriation artworks following the 2013 decision; we argue this was due to the higher perceived litigation risk in the secondary market. We find that the probability of an appropriation artwork listed in an auction actually being sold declined by around 2% after Cariou v. Prince. Although fewer listed works were successfully auctioned, we do not find any significant changes in average auction prices for appropriation artworks sold after the landmark decision.
One plausible explanation, which we turn to next, is that some auctions have relocated abroad, which would limit the supply of works in the US and subsequently keep art prices stable.
Figure 1 Trade date: Total number of auctions by appropriation and similar artists
Note: This figure shows the yearly total number of auctions (frequency) of the appropriation artists (black line) and similar artists (blue line). The vertical red x-line indicates the 2013 court decision of interest, and the dashed red x-line indicates the first court decision in 2011 (n= 371’680) (Cuntz and Sahli 2021).
Is there a relocation of trade after the decision?
To date, empirical studies have documented how differences in national copyright laws can push trade to foreign jurisdictions, looking in particular at the economic effect of resale rights (Watt et al. 2014, Ginsburgh et al. 2005, Ginsburgh 2005, Banternghansa and Graddy 2011). To the best of our knowledge, however, our approach is one of the first to document a shifting trade effect caused by the increasing complexity of the fair use doctrine and the greater legal uncertainty it created in the visual arts market.
Findings illustrated in Figure 2 (top right panel) suggest that the percentage share of US art auctions for appropriation artists decreased by close to 3% after 2013, and hence some artworks relocated to auction houses in other parts of the world. Again, back-of-the-envelope calculations reveal that this relocation shift equates an approximate annual auction market value of $29.4 million.
Figure 2 Trends for appropriation and control artists before and after 2013
Note: This figure shows the average annual numbers for appropriation artists (treatment group, black line), and similar artists (control group, blue line). The top left panel shows the total number of auctions, the percentage of US auctions an artist had compared to all auctions (top right), the log-transformed hammer price (bottom left), and the probability of not-sold lots (bottom right). The vertical red x-line indicates the 2013 court decision of interest, and the dashed red x-line indicates the first court decision in 2011 (Cuntz and Sahli 2021).
Broader implications for follow-on innovation and contributory liability in copyright law
Although copyright limitations in other jurisdictions may not be as favourable to appropriation art as the US fair use defence can be (Geiger 2020, Lucas and Ginsburg 2016), our results point to the causal economic impact that doctrinal complexity and legal uncertainty created around US fair use following the 2013 court decision.
At one stretch, art market intermediaries like auction houses can also be held liable for artworks catered to markets that infringe copyright. Our analysis demonstrates that the risk of liability influences what these intermediaries will supply and curate to markets. This finding might also generalise to other market intermediaries in the visual arts, such as museums, as well as to intermediaries in other creative industries, such as a music. However, it will require more quantitative research to confirm this intuition.
More generally, at least in the medium term, changes in legal practices might not have helped to promote economic efficiency around licensing in the US (as intended by the fair use doctrine) because the criteria to enter fair use in the first place seemed less clear, and laws seemed less predictable after the court’s decision (Landes 2000, Adler 2016).
Authors’ note: The views expressed are those of the authors, and do not necessarily reflect the views of the World Intellectual Property Organization or its member states.
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1 www.phillips.com/article/13963582/re- contextualizing-commercialism-richard-prince-s-cowboy-series