I. A (VERY) BRIEF HISTORY OF THE MARKET FOR ART FORGERIES

Since the first claims against the prestigious Knoedler Gallery were filed in 2011 for knowingly selling forgeries,^{Footnote 1} authentication has come to the forefront of the art world. During a time in which the art market is flooded with forgeries, it is essential for buyers to complete due diligence before purchasing art to ensure that they do not fall victim to forgery schemes. In the unfortunate instance that a collector is duped into purchasing a forgery, the legal remedies outlined below are available to aggrieved buyers.

Forgeries are not a new phenomenon, for they have grown in prevalence over the past four centuries as the importance of authorship has increased. Authorship gained significance during the Renaissance.^{Footnote 2} During that period, people began believing that artists injected something of themselves in their works. Buyers no longer desired art, but a work by a recognized “artist.” And with increasing values associated with well-known artists, the number of forgeries increased due to economic incentives. It is during the Renaissance that forgeries enter the market in full force. The redistribution of the world’s wealth after the Middle Ages ushered in a demand by a prosperous mercantile middle class for art objects.^{Footnote 3} Guilds of master artists and students churned out art to fill this ever-increasing demand.^{Footnote 4} This period of time witnessed the increasing size of the art market, as art became a commercial commodity.^{Footnote 5} Conveniently, the sale of state and ecclesiastical art collections created new markets in which art is not purchased directly from the artist,^{Footnote 6} but rather from dealers, galleries, and auctions, creating an opportune time for forgers to saturate the market with fakes. Although common for centuries, by the nineteenth century the presence of forgeries was recognized as a major phenomenon, and by the twentieth century the distinction between the original and a copy became stark,^{Footnote 7} particularly in terms of economic value and record-breaking sale prices.^{Footnote 8}

The art market was on fire during the twentieth century, and the past couple decades have been full of blockbuster sales. Some of the most expensive works of art have been sold during this period.^{Footnote 9} In fact, the increasing value of art has introduced a new wave of investment products for art objects.^{Footnote 10} During the past few decades, the news has been full of front-page headlines reporting the exorbitant prices realized at auction: “The Scream Scares Up $120 Million and Shatters Records at Sotheby’s Epic Impressionist and Modern Sale”;^{Footnote 11} “Giacometti Sculpture Sells for Record $104 Million”;^{Footnote 12} “Relentless Bidding, and Record Prices, for Contemporary Art”;^{Footnote 13} “Why Francis Bacon Deserves to Beat The Scream’s Record-Breaking Pricetag.”^{Footnote 14}

With headlines like these, it is no wonder that the world’s attention has focused on the art market and valuable artworks. Who could ignore the value of these soaring sales? Clearly this reality has not escaped the notice of forgers. As art prices surge, so does the incentive to forge. Now the art market is at a juncture where forgeries comprise a major portion of the market.^{Footnote 15} The number of forgeries are unknown (particularly because the inherent nature of a fake is that its true identity is unknown and often goes undetected), but European law enforcement agents opine that as much as half the art on the international market could be forged.^{Footnote 16}

As the art market expanded so too did the practice of connoisseurship, as collectors turned to experts to lead them with their purchases. Today’s conception of art forgery emphasizes the notion that originals possess certain qualities absent even in the best copies. This framework requires the existence of an expert with a unique ability to distinguish between the two. The emergence of professional connoisseurs coincided with the rise of forgeries.^{Footnote 17} The relationship is circular: as prices escalate, the need for a connoisseur’s opinion rises; and as connoisseurs vouch for works and their authenticity, the works are more coveted, leading art market prices to soar even higher.^{Footnote 18}

II. THE FRONT PAGE LEGAL BATTLE OVER AUTHENTICITY

One very well-known connoisseur, Bernard Berensen, collaborated with art dealer Joseph Duveen who is credited with expanding the market for Renaissance art and creating some of the greatest collections in the United States by selling European works to wealthy Americans.^{Footnote 19} These two men had a secret agreement that provided Berenson with proceeds from sales of works that he authenticated.^{Footnote 20} Berenson and Duveen faced legal issues during their practice together, most famously in a legal dispute brought by André Hahn, related to a Leonardo da Vinci attribution. In Hahn v. Duveen,^{Footnote 21} Judge Black astutely observed the absurdity of the art market and connoisseurship. In 1920, André Hahn, the owner of a painting, sued Duveen. She sued for slander of title, claiming that Duveen’s disparaging statements about the painting damaged her by terminating her negotiations with an art gallery.^{Footnote 22} Ms. Hahn believed that the painting was by the hand of Leonardo. When a newspaper called Duveen for his opinion, the dealer stated that the work was not by da Vinci.^{Footnote 23} This statement triggered a highly publicized nine-year legal battle and four-week trial. Shockingly, Duveen never saw the work, neither in person nor in a photo.^{Footnote 24} He reasoned that the real work with the same title (La Belle Ferronniere) was not in the US, but in the Louvre; therefore, the Hahns could not possibly have an original. Duveen stated that the Hahns’ certificate of authenticity was fake and that their painting was not by Leonardo. Duveen’s statements rendered the work nearly worthless and unsaleable.

At trial, two questions were presented: (1) Were Duveen’s statements false? and (2) Was this statement made with actual malice? To show actual malice, Hahn would need to prove that Duveen either had knowledge that his statement was false or that he made the statement with reckless disregard to its falsity. Essentially, to win her case Hahn needed to prove that Duveen made a false statement. But with Berenson as Duveen’s partner, this was a tremendous hurdle. How could André Hahn disprove the expertise of the world’s best known art expert and his partner? As the case progressed, both parties relied on expert testimony related to scientific evidence and historical documents about the work. Equally qualified experts disagreed on the attribution.^{Footnote 25} Judge Black recognized the difficulty inherent in Hahn’s burden of proving that Duveen made a slanderous statement. He writes, “in order for a plaintiff to recover, she must prove that her property is what she claims it to be, because until she establishes the genuineness of her own property she cannot prove that defendant’s statement.”^{Footnote 26} Not surprisingly, the result was a hung jury.^{Footnote 27} Duveen filed a Motion to Dismiss which was ultimately denied; while awaiting retrial, the parties settled.^{Footnote 28}

Hahn v. Duveen is a cautionary tale for art experts and art collectors, and is interesting for the judge’s insightful observations about the art market, valuation, and authenticity. Judge Black’s opinion harshly critiques the art market and the processes used by connoisseurs.^{Footnote 29} He refers to experts as those “who claim to have a sixth sense which enables some of them after they have seen a picture even for five minutes to definitely determine whether it is genuine or not.” He also warned the jury, “An expert is no better than his knowledge. His opinion is taken or rejected because he knows or does not know more than one who has not studied a particular subject….Because a man claims to be an expert, that does not make him one.” Judge Black summarizes the case, “the real point is whether a dealer or an expert, however famous…can, without seeing a picture, declare that it [the painting] is not the product of a certain master.”^{Footnote 30}

Judge Black’s insights are just as astute today. The thing about a sixth sense is that it is unexplainable, it cannot be questioned or cross-examined and without any type of definitive and objective standard, how can someone disprove the expertise of a well-known expert? Equally qualified experts often disagree on attribution.^{Footnote 31} An owner with any authenticity doubts may be hesitant to sell a work out of fear that he will be later sued for circulating a forgery and then implicated in a criminal fraud matter. In cases where a work cannot be definitely authenticated, the art remains in limbo. Once art collectors become aware of the time-consuming nature and exorbitant costs of litigation, it becomes clear that they should complete extensive due diligence prior to making a purchase. In fact, with some purchases for extremely expensive art, it may be advisable for clients to hire multiple experts to complete research to ensure authenticity.

III. THE Twenty-first CENTURY LEGAL BATTLE OVER AUTHENTICITY

The modern forgery case that sent the art world into a tailspin, Lagrange v. Knoedler Gallery, was filed against the well-known New York gallery in late 2011.^{Footnote 32} The Knoedler Gallery traces its origins to 1846, when French dealers opened a gallery branch in New York.^{Footnote 33} On 1 December 2011 well-known Belgian hedge fund manager and financier Pierre Lagrange alleged that the Knoedler Gallery was selling forgeries.^{Footnote 34} Lagrange purchased an untitled Jackson Pollock painting from the gallery in November 2007 for $17 million. Although not listed in the artist’s catalogue raisonné, the gallery assured Lagrange that the painting would be included in the newest supplement.^{Footnote 35} However, when the collector attempted to sell the work at auction, Sotheby’s and Christie’s rejected it. At that point, Lagrange hired a forensics company to test materials in the painting. The results suggested that the work was not done by “Jack the Dripper,” as anachronistic elements were found in the painting—there were pigments in the painting that had not been available prior to Pollock’s death.^{Footnote 36} Lagrange provided this information to the Knoedler Gallery on 29 November 2011. The next day, the gallery announced its closing.^{Footnote 37}

According to Lagrange’s complaint, the gallery and its former president, Ann Freedman, knowingly sold multi-million dollar forgeries.^{Footnote 38} Following Lagrange’s filing, a stream of other buyers filed against the gallery.^{Footnote 39} The gallery initially claimed the works were real,^{Footnote 40} but through the legal proceedings, a complex fraud was uncovered. The FBI was brought in, and it was revealed that the gallery sold approximately forty forged works supplied by Glafira Rosales.^{Footnote 41} Her story was simple: she was a dealer, selling never-before-seen works for her client who had inherited the paintings from his father and insisted on anonymity.^{Footnote 42} Once investigators delved into her past, the story unraveled.^{Footnote 43} Rosales was not associated with a major art collector, but rather, she was working with a forger to create forgeries.^{Footnote 44} According to a federal grand jury indictment, the painter made sixty-three forgeries over the course of twenty years.^{Footnote 45} Rosales admitted that from about 1996 until 2009 she “falsely represented authenticity and provenance” on works sold as being by the Abstract Expressionists,^{Footnote 46} and she is facing criminal charges for those actions, with the possibility of ninety-nine years of imprisonment.^{Footnote 47}

From the outset of the gallery’s demise, Ann Freedman has asserted that she was unaware that the works were fake. But is this a reasonable and credible defense?^{Footnote 48} Victims of the scheme claim that Freedman was cognizant of authenticity issues, but concealed them. It is alleged that Freedman knew of problematic forensic testing results, but the gallery rejected those experts’ conclusions and withheld that information from potential purchasers.^{Footnote 49} Moreover, Freedman actively avoided certain experts from fear that the works would be rejected.^{Footnote 50} In fact, the federal district court in Manhattan rejected a motion to dismiss two lawsuits against Freedman, Rosales, and the Knoedler Gallery.^{Footnote 51} Judge Gardephe stated, “The complaints also plead facts more broadly demonstrating that Freedman likely knew… that her statements were false.”^{Footnote 52}

Pierre Lagrange and the Knoedler Gallery settled for an undisclosed amount in October 2012, ten months after he initiated litigation in December 2011. But not all of the other lawsuits brought against the once prominent gallery and its former president have been resolved.

One disturbing aspect of this case is the gallery’s role in the sale, and the concern that this type of behavior is wide-spread in the art market.^{Footnote 53} How could the gallery have overlooked such glaring problems with provenance? How could collectors blindly believe a dealer, even one at a well-known establishment? And even more troubling is the way in which Ann Freedman, an art market professional with decades of experience, did not recognize troubles with the works, or even worse, assisted in the sale of problematic paintings. Moreover, why hadn’t collectors completed due diligence before making major purchases? Just as forensics testing after the purchases revealed anachronistic elements in the works, the same testing could have revealed problems in the paintings prior to sales. Furthermore, other works from Rosales’ forger are most likely still on the market. Buyers must be cognizant of problematic works on the market and so should protect themselves from these purchases by completing due diligence. The Knoedler Gallery matter was cut and dry: a gallery had been knowingly or innocently involved in a scheme selling high-priced forgeries to well-known clients.^{Footnote 54} The forger and middleman were identified and a list of forged works have been provided to the FBI. But not all forgery cases are so clear.

IV. DUE DILIGENCE

To protect collectors from schemes like the Knoedler Gallery fiasco, it is necessary that buyers complete due diligence. As the art market is one of the largest (if not the largest) unregulated markets,^{Footnote 55} what can owners do to protect their investments? It is essential that clients conduct their own authentication investigation by completing due diligence prior to a purchase in order to avoid forgeries sold at galleries like the Knoedler Gallery. There are 3 types of authentication procedures available to buyers.^{Footnote 56} Authentication has been likened to a three-legged stool which relies on three prongs, bearing the weight on each leg: (1) forensics, (2) provenance; and (3) connoisseurship.^{Footnote 57} Art market professionals, such as art attorneys and trusted art advisors, can direct clients to reputable experts in each of these areas.

V. AUTHENTICATION ISSUES FACING FOUNDATIONS AND EXPERTS

Amongst other organizations, the Warhol Foundation, Calder Foundation, and the Haring Foundations, have all been sued for authentication disputes.^{Footnote 85} Private experts have also been the target of litigation. As a result, some artists’ foundations and boards have disbanded or now refuse to authenticate works.^{Footnote 86} At the same time, some experts refuse to render opinions out of fear of costly lawsuits. The situation is difficult because authoritative authentication is necessary for the art market to operate effectively and legitimately. Consequently, this silence enables fakes and forgeries to enter and trade on the high-priced market since experts do not want to risk speaking out against an object.

As a result, a bill providing protection to experts was introduced to NY state legislature.^{Footnote 87} The New York City Bar Association began to work on the bill after the Knoedler Gallery scandal came to light. Bill S. 6794 would amend § 13.04 of New York’s Art and Cultural Affairs Law to provide protections for authenticators rendering opinions regarding the authenticity or attribution.^{Footnote 88} In addition, the legislation would prevent collectors from forcing art experts to provide positive opinions about authorship, attribution, or authentication. If the bill passes, it would require plaintiffs to do three things in a suit against an art expert. First, the plaintiff must meet a heightened pleading standard by pleading with particularity the facts supporting the assertions of wrongdoing. This is the standard applied to fraud claims under Rule 9(b) of the Federal Rules of Civil Procedure, and it discourages the filing of frivolous suits. Second, the plaintiff must prove the elements of a claim by clear and convincing evidence (rather than a preponderance of the evidence, the standard in most civil cases), proving that a claim is substantially more likely true than not. As with the first requirement, this prong is intended to discourage frivolous lawsuits. And third, the plaintiff must pay costs, expenses, and attorneys’ fees, in the instance that an authenticator prevails.^{Footnote 89}

By raising the standard of evidence, the law favors experts providing opinions in good faith, as claimants have the daunting task of proving by clear and convincing evidence that the art expert erred. The bill was partially motivated by the desire to bring about a more transparent art market.^{Footnote 90} If the bill is passed, it will encourage scholars to voice their opinions if they discover a forgery or misattributed work, helping to limit the number of fakes on the market.^{Footnote 91} Not only will art experts gain protection by the hurdles facing plaintiffs, but experts will also be given economic reimbursement in cases where they are victorious. Typically US law does not provide costs and attorney’s fees, except in the most extreme cases. Called the “American Rule,” each party in a lawsuit ordinarily bears its own attorneys’ fees, unless there is express statutory authority to do otherwise.^{Footnote 92} However, providing art experts with financial protection will encourage authenticators to speak freely, providing the art market with the necessary information to assist buyers and sellers with their transactions. In light of major fraud scandals recently featured in the news, proponents of the bill point to the need for experts to provide opinions without fear of baseless and frivolous lawsuits.^{Footnote 93} The pending bill will provide authenticators with protection against collectors attempting to strong-arm experts into providing favorable opinions or withholding detrimental information.

VI. WHAT CAN CLIENTS DO AFTER ARTWORK IS DEEMED FAKE?

As an attorney working with art collectors, one of the most valuable pieces of advice that I provide is that a client should complete due diligence with independent third parties prior to a purchase. It is easy for dealers to find experts who will support their authorship claims, so it is necessary for clients to complete their own due diligence before a major purchase. Some clients spend exorbitant amounts of money on artwork, spending millions of dollars on a single canvas. Just as home buyers hire title search companies and inspectors to complete research on a home purchase, the same is necessary for art purchases, particularly because many high-end art clients buy works many times more valuable than the average piece of real estate.

Judges are cognizant of the realities of the art market, and more and more often courts expect art collectors to complete due diligence by hiring experts to examine authenticity.^{Footnote 94} In cases involving both auction houses and private dealers, courts have articulated the need for buyers to investigate the true nature of a work before purchasing the good. In addition, buyers should also investigate the sellers and dealers. A dealer’s reputation and legal history may help inform clients as to whether they can rely on a seller’s promises. Rather than relying on experts supplied by a seller, a potential buyer should complete due diligence by hiring his own connoisseur, a forensics scientist, and provenance researcher. However, even with the advice of experts, it is advisable to include warranty clauses in the contract for sale. Some dealers include limited liability clauses in their sales agreements. These clauses may state that the dealer or seller does not make any warranties as to the authorship of a work and that liability is limited in reference to authenticity. Dealers may also include “as is” clauses that state that the work is bought “as is,” meaning that it comes without any warranties as to its authenticity. Art purchasers should not sign agreements with these clauses because they make it difficult, or sometimes impossible, for a buyer to sue based on authorship disparities.

It is advisable to include language that allows a purchaser to rescind a sale, in the case that a work is later discovered to be a forgery. Many of the reputable auction houses include this type of language, allowing purchasers to return works within a given amount of time.^{Footnote 95} This is a necessary clause to include in a contract to ensure that a client is not stuck with a worthless object after a sale. This is particularly important because not all forgeries are detected prior to purchase, but are only discovered once they are in the possession of a collector.^{Footnote 96} Buyers also should not sign purchase agreements that include arbitration clauses as these limit the available remedies when works are discovered to be forgeries. Without the fear of litigation and negative publicity, some sellers may not be cooperative once a forgery is detected.

VII. THERE MAY NOT BE AN ABSOLUTE TRUTH IN TERMS OF AUTHENTICITY

Back in 1929, Judge Black recognized that there might not be an absolute truth, and there may not be a consensus for particular works of art, writing: “A new situation exists in the world of art….Frequently, as antiques passed from family to family or from government to government, their authenticity was frequently questioned. Finally, the pendulum of artistic criticism swung slower and slower, until it usually stopped at an opinion which remained practically standard. But it was also subject to a renewal of criticism in books or in the press whenever a critic leveled his attacks at a certain work.”