Friday, October 28, 2011

Everything depends on execution: art claims fail

S.A.R.L. Galerie Enrico Navarra v. Marlborough Gallery, Inc. --- F.Supp.2d ----, 2011 WL 2623460 (S.D.N.Y.)

Plaintiffs (Navarra) sued Marlborough for unfair competition and attempted monopolization of the global market for the sale of ceramic artwork by the renowned artist Chu Teh-Chun, whose work has been exhibited in over 100 solo shows and is a part of at least 25 museum collections. Navarra is a private, high-end art gallery with space in Europe and the US. Navarra pled that the market for high-end art is small, specialized, and global, with submarkets for works by particular artists and aspects of an artist’s body of work.

Chu is primarily known for his work as a painter. In 2003, Navarra entered into a Fabrication Agreement with Chu and a French ceramic foundry, La Tuilerie. Chu designed 24 plates, each with an original painting by Chu. Following Chu's final approval (including a signed template or bon-à-tirer that was not supposed to be sold), the plates were reproduced in multiples of 40, with a total of 960 produced. The plates sold at auction for $1,700 to $2,100 each.

In 2006, Marlborough began working with Chu, commissioning a series of 57 hand-painted ceramic vases. They sold for about $280,000 each. Navarra argued that its plates were a barrier to sales of the vases, and that Marlborough therefore engaged in a covert campaign to destroy Navarra.

Navarra alleged that on February 29, 2007, Chu's attorney Bourdon sent a C&D to Navarra and the foundry alleging that they were violating the fabrication agreement, demanding that the plates be returned to Chu, and demanding that all exhibitions and sales of the plates cease. Navarra asserted that the letter was actually written and sent at Marlborough's behest and with its participation and substantial assistance. Navarra didn’t comply with the C&D, and Chu sued in France a little over a month later. Navarra also claimed that the still-pending French lawsuit was actually brought at Marlborough's behest and with its participation and substantial assistance.

In May 2008, Navarra attempted to auction a number of its pieces through Christie's in Hong Kong. Nine days before the auction, Chu’s lawyer sent an email to Christie’s stating that the Navarra-commissioned ceramics were the subject of litigation in France and that Chu "has the greatest reservations about the authenticity" of the ceramics and demanding that the auction be cancelled. Christie’s complied. Navarra alleged that these statements were knowingly false and defamatory, and also written and sent at Marlborough's behest.

Navarra also blamed Marlborough for an Oct. 3, 2008 ad in the Journal des Arts, "A Public Warning from Mr. Chu Teh-Chun." “It warned that the Navarra-commissioned ceramics were not genuine and that the Christie's Hong Kong auction was cancelled.” Navarra also alleged that Marlborough republished the ad to media outlets around the world. Navarra sued the Journal des Arts and Chu in France for defamation in 2008; the suit against the Journal des Arts settled and the case against Chu is pending.

Additionally, Navarra alleged that Marlborough exhibited the vases at the Musee Guimet, the French national museum of Asian art, as part of its sales strategy. The Managing Curator, Jean-Paul Deroches, was allegedly a frequent Marlborough collaborator. An illustrated catalogue, De Neige, d'or et D'Azure was produced, written by Deroches. Navarra alleged that the content was provided by Marlborough and that Desroches was enlisted to "pose" as the author. Navarra objected to the following text in the published De Neige: “Over a thousand canvases predated Chu Teh-Chun's rendezvous with the Sevres porcelain manufactory, as did an even greater number of ink drawings and watercolors. Nevertheless, in that time he has conducted only a few experiments with ceramics, notably in a workshop outside of Taipei in 1998 and in another in Treigny, France in 2002. But these modest explorations were not pursued ....”

Relatedly, in 2009, Marlborough allegedly influenced the publisher (La Martiniere) to put a very similar statement on its website. Though it was purportedly a quote from Deroches, Navarra alleged that Marlborough was the actual author, and that the statement was misleading and defamatory because it doesn’t include the Navarra-commissioned ceramics as genuine works of Chu’s art. Navarra alleged that such a statement was understood by members of the art community as a denial of the authenticity of the Navarra-commissioned ceramics. When Navarra complained to the publisher, it allegedly told Navarra that Marlborough had given warranties as to the accuracy of the relevant statement.

Navarra argued that its ceramics had been given a false taint of inauthenticity, causing millions in lost profits and reputation.

The court first found that Navarra couldn’t sue for attempted monopolization under the Sherman Act, because the market definition was insufficient as a matter of law. The two types of Chu works were very different; one involved multiple copies and the other involved unique, original works by Chu, and the latter sold for more than 140 times the former. Thus, the products were not reasonably interchangeable nor was it plausible to suggest cross-elasticity of demand.

The Lanham Act claims also failed because Navarra didn’t allege any false statements in commercial advertising or promotion. The paragraph in De Neige was a subjective claim that couldn’t be proven true or false and thus not actionable, and indeed protected by the First Amendment. “Deroches's description of Chu's previous ceramic work as a ‘modest exploration[ ]’ merely places the works within the context of Chu's career as an artist,” and was clearly just opinion. Even if solicited by Marlborough, the statements in the book and on the publisher's website constituted mere expressions of non-actionable opinion.

Moreover, “the statements by Deroches are those of a disinterested third party. Plaintiffs do not allege that Deroches has any financial interest in the sale of the Chu vases.” Navarra merely speculated that Marlborough ghost-wrote De Neige. “It is implausible that the managing curator of the Musee Guimet would lend his name to a publication in order to insert a vague reference that arguably diminishes the Navarra-commissioned ceramics.”

The state law claims (defamation, product disparagement) failed for similar reasons. Navarra had nothing beyond mere speculation that any of the harmful statements or acts were attributable to Marlborough. In addition, the statements were either non-actionable expressionof opinion or arguably privileged statements made in contemplation of or during the French legal proceedings. (I have no idea how the privilege applies to foreign cases; I’m not sure I’ve ever encountered this situation before and the court didn’t cite any cases, but that sounds plausible.)

Nonetheless, the court declined to find this an exceptional case and therefore didn’t award Marlborough its attorneys’ fees.

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