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From Antitrust Law Daily, March 9, 2015

Foundation’s refusal to authenticate artwork not antitrust violation, false advertising

By Greg Hammond, J.D.

The purported owner of 111 pieces of Keith Haring artwork failed to state adequate antitrust and false advertising claims against The Keith Haring Foundation, Inc. under the Sherman Act, The Donnelly Act, and the Lanham Act, the federal district court in New York has decided. In dismissing the complaint, the court determined that the owner did not demonstrate that the Foundation—which refused to authenticate the artwork—conspired to restrain trade, had unlawful monopoly power, or falsely advertised through a press release and court complaint (Bilinski v. The Keith Haring Foundation, Inc., March 6, 2015, Cote, D.).

Background. Keith Haring, who died in 1990, was an artist and social activist whose work responded to the New York City street culture of the 1980s. Plaintiff Elizabeth Bilinski allegedly owns 111 pieces of Haring work she believes to be authentic, and submitted various transparencies to the Foundation in 2007 for authentication. The Foundation rejected the works as “not authentic,” and later accused Bilinski of selling items represented as “original works by Keith Haring.” Although various auction houses believed the works to be original, they were unwilling to sell the pieces without the Foundation’s authentication. Bilinski sought to resubmit the pieces to the Foundation for authentication in 2011, but the Foundation informed Bilinski that it would not reconsider its judgment.

The Foundation later filed suit against Michael Rosen and Colored Thumb Corp. and sought a temporary restraining order for featuring Bilinski’s Haring works in Miami. Colored Thumb agreed to the removal of all but ten works from the exhibition and to remove and destroy all copies of the brochure and catalog for the exhibition. Bilinski and others filed suit against the Foundation, alleging, in part, antitrust claims under the Sherman and Donnelly Acts and false advertising under the Lanham Act.

Conspiracy to restrain trade. Bilinski alleged that the Foundation and its allies in the art world who sell Haring works engaged in a group boycott, excluding Bilinski from that market and resulting in supracompetitive prices for Haring artwork. The court determined that Bilinski’s third amended complaint failed to state a claim under Section 1 of the Sherman Act, finding that she failed to allege sufficient information concerning the conspiracy to give the defendants fair notice of the claim, or sufficient facts that would support the inference of interdependent, rather than independent, conduct by the alleged conspirators.

Specifically, the court found that under Bilinski’s theory, any refusal by an auction house or gallery to sell a Haring without authentication by the Foundation could be a conspiratorial act, which was deemed over broad and did not give the defendants fair notice of the claim against them. Further, the refusal of auction houses and others to accept Bilinski’s works could be explained by unilateral decisions motivated by entirely lawful goals, because Bilinski admitted that a market for unauthenticated work exists. Lastly, the court noted that the Foundation ceased its authentication activities in 2012 and could therefore not be plausibly alleged to control authentication of haring’s work. The Section 1 claim and corresponding Donnelly Act claim were consequently dismissed.

Monopolization. In support of her monopolization claim, Bilinski defined the relevant market as the worldwide market for the sale of Haring works. However, Bilinski failed to allege facts concerning the defendants’ market share or even that they participated in the market more recently than 2011. The only fact alleged in support of the monopolization claim was that the defendants possess intellectual property rights in Haring works and initiated lawsuits asserting those rights. The court, in assuming that some of the lawsuits were brought in bad faith, determined that this does not establish unlawful monopoly power. The Section 2 Sherman Act claim and corresponding Donnelly Act claim were therefore dismissed.

Lanham Act. Bilinski also brought a Lanham Act false advertising claim against the defendants, alleging that a press release and the Miami Complaint were commercial in nature because they were published with the intent of preventing sales of the plaintiffs’ works and of increasing the value of defendants’ artworks at Bilinski’s expense. The court rejected this argument, finding that it failed to provide sufficient connection between the press release or Miami complaint and a proposed commercial transaction, and therefore failed to allege the essential elements of a Lanham Act violation. The Lanham Act claims were therefore dismissed.

Sanctions. In addition to the antitrust and false advertising claims, the plaintiffs’ state law claims—including defamation, conspiracy to defame, tortious interference with prospective business relations, trade libel, intentional infliction of economic harm/prima facie tort, and unjust enrichment—were dismissed. The court rejected the defendant’s motion for Federal Rule of Civil Procedure 11 sanctions, finding that the defendants failed to show that the plaintiffs’ claims were so objectively unreasonable that sanctions were warranted. Specifically, the court found that the only basis for finding an improper motive or bad faith was the fact that the plaintiffs pleaded their claims three times, but did not sufficiently amend their complaint to survive dismissal. That basis was not sufficient to demonstrate bad faith or improper motive.

The case number is 1:14-cv-01085-DLC.

Attorneys: Brian C. Kerr (Brower Piven) for plaintiffs. Margaret Antinori Dale (Proskauer Rose LLP) for defendants.

Companies: The Keith Haring Foundation, Inc.

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