The online secondary market: resource or parasite?

Art Business News, March, 2005 by Joshua Kaufman

Additionally, to give a purchaser comfort that they are buying an authentic piece, these sites usually either implicitly imply, or explicitly and falsely state, that they are an authorized dealer or some how affiliated with the artist or the publisher. To do so is a violation of federal trademark law, specifically Section 43(a) of the Lanham Act. This federal trademark law (most states have similar state laws) states that "one may not create a misdesignation of association or affiliation with an entity (i.e., the artist or publisher) when none exists." The test for violating this federal law is the likelihood of confusion by the public regarding association or affiliation. Therefore, all the secondary sales Web site needs to do to violate the law is give the impression that it is associated with the artist. Even an inference, if it is likely to confuse the average art buyer into thinking that there is a relationship between the Web site and the artist, will cause a violation of Section 43(a) of the Lanham Act.

The artist's name and signature are often trademarked. They may be registered or not; it doesn't matter for infringement purposes. Using the artist's name or signature is also likely to be a separate trademark infringement. Once again, the test for this type of trademark infringement is the likelihood of confusion on the part of the public. Actual confusion does not have to be shown, so the use of an artist's distinct signature or name in a way that identifies the source of the art would violate trademark law.

The posting of a price list can often also be actionable. Generally, the lists are not made publicly available (they are not posted on the publisher's Web site or generally handed out) but are only provided to authorized dealers in proper circumstances; these lists can be considered proprietary, and their disclosure by publishing them on the Web site can violate trade secret and other similar laws. [Note to artists and publishers: If you do not wish to see your price lists on Web sites, stamp them "Confidential" and ensure that when you send them out to galleries the cover letter accompanying the materials states that "the list is proprietary information and may not be published or shared with third parties."] Posting propriety information, if it violates trade secret law, is actionable in every state in the United States.

Finally, it is illegal in most major jurisdictions for an art merchant to sell, or even offer for sale, a limited edition print or photograph--and in some states, sculptures--without providing a certificate of authenticity. Several states also require a dealer to provide the information contained on the actual certificate at the time the work is offered for sale.

If the secondary market dealer, who in most states would be considered an art merchant, does not provide a certificate of authenticity, it would mean a violation of the numerous print disclosure laws enacted by the states. If the print the dealer is selling does not come with a certificate, he would be hard pressed to obtain the necessary information required to be disclosed. In several jurisdictions, for example New York and California, among others, it is illegal to even offer the piece for sale on a Web site without providing the information contained in the certificate of authenticity on the Web site along with the offer. Even if a secondary dealer obtained a certificate of authenticity from sources prior to the sale, the dealer probably would not have that information until he acquired the print and the accompanying certificate. Thus, the dealer would be offering the prints for sale without the required information, a violation of the various print disclosure laws.