Privacy Law Extension Dates

Massachusetts recently responded to an outcry from the business community in regard to the new privacy regulatiosn promulgated by the office of consumer affairs.  An earlier blog entry summarized the new requierements.  Here are the new deadlines:

Deadline Extension

The Office of Consumer Affairs and Business Regulation (OCABR) has extended its January 1, 2009 deadline for compliance with the newly promulgated Massachusetts privacy regulations.  According to OCABR, the extension of time will assist businesses in implementing the required measures during this economically uncertain time. 

The new standards deadlines are:

• May 1, 2009 for general compliance.  This has been changed from the original deadline of January 1, 2009.
• May 1, 2009 for ensuring that third-party service providers are capable of providing safeguards for personal information and for executing contracts with third-party providers to provide such safeguards.  This has been changed from the original deadline of January 1, 2009.
• May 1, 2009 for encryption of company laptops.  This date has changed from January 1, 2009.
• January 1, 2010 to receive written certification from third-party service providers that they have complied with the new Massachusetts privacy regulations.  This will assist businesses in educating their third-party service providers, many of whom may be located outside of Massachusetts, or, replace non-compliant third-party service providers as required by the regulations.  This date has been changed from January 1, 2009.
• January 1, 2010 for the encryption of all other portable devices, aside from laptops, such as memory sticks and PDAs.  This has been changed from January 1, 2009.

Most Museums in Massachusetts and even Museums outside of Massachusetts will need to comply with the regulations.  Any Museum that collects the personal information of a Massachusetts resident is subject to the regulations.  “Personal Information” refers to a Massachusetts resident’s first name and last name or first initial and last name in combination with any one or more of the following:  (a) Social Security Number; (b) driver’s license number or state issued identification card number; or (c) financial account number, or credit card or debit card number.  If you collect any of this information int he course of accepting memberships, accepting donations or from sales in yuor retail shop or online store, you must comply.

Massachusetts Privacy Regs – JANUARY 1, 2009 DEADLINE

PLEASE READ!!  IMPORTANT INFORMATION!!

With little fanfare, or more importantly little notice, the Massachusetts issued a set of privacy regulations which will affect virtually any business dealing with the personal information of Massachusetts residents.  Regulations found at 201 CMR 17.00 of the Massachusetts code of regulations impose a strict set of requirements that must be met by January 1, 2009 to avoid non-compliance with the new privacy regulations.  Most museums will be required to meet the regulations.

Any business who collects deals with Massachusetts residents and collects the first and last name of a resident, or the first initial and last name of an individual, together with either (a) the resident’s social security number, (b) driver’s license or state identification number, or (c) financial account numbers or credit/debit card numbers is subject to these regulations.

The regulations require strict compliance.  A Museum will be forced to:

• Formulate a comprehensive written information security program (WISP), which must include, at a minimum, 12 provisions outlined in section 17.03 of the regulations;
• Meet specific computer system security requirements concerning secure user authentication protocols, secure access control measures, encryption measures, system monitoring measures and security software;
• Maintain an education and training program for all employees on the proper use of the security system and the importance of personal information;
• Ensure that all third party service providers with access to the personal information certify that it has a WISP in place and is capable of securing personal information.
• Update any employment manuals appropriately.

Without compliance, should a security breach occur, an institution could be subject to triple damages, costs and attorneys fees.  With the January 1, 2009 deadline fast approaching, Museums should review their privacy standards to ensure that their institutions meet the minimum regulatory requirements.

Island of Art

The Wall Street Journal has an interesting article today highlighting the opening of the Museum of Islamic Art, which is scheduled for next week.  According to the article, the museum, which is situated on an artificial island in the Persian Gulf is aiming to establish itself as the “Met of the Middle East”.  The I.M. Pei designed museum is slated to house an impressive array of artwork.  The idea is to help build on the idea of art tourism and draw art loves to the island museum.  One of the most daunting tasks for this new museum will be to catalog and properly display and care for the treasures that may lie within.  The museum collection is largely provided as a result of an emir’s buying spree.  The museum’s head of research noticed an 1,100 year old piece lumped in a crowded display case.  She removed the piece to a more prominent location.  The museum staff will be taxed to be completely organized by opening day, it appears.  Time will tell.  The full article appears in the Wall Street Journal, November 14, 2008, page W1.

Little House – You’re not in Kansas Anymore!

According to KMBC news in Kansas City, a museum in southeast Kansas has been sued by a California production company as a result of the Museum’s name – Little House on the Prairie Museum.  The Museum is a non-profit that takes in about $90,000.00 annually – enough to cover salary and expenses.  The New York firm representing Friendly Family Productions, a California production company and the apparent owner of certain intellectual property rights to Little House on the Prairie, is seeking to (1) stop the use of the Museum name, (2) is seeking unspecified damages and (3) and is seeking any monies derived from the use of the name by the Museum.  They have offered $40,000.00, allegedly, to the Museum to change the name.  The Museum has refused.  We will keep you up to date!  For the complete article see http:www.kmbc.com/news/17710081/detail.html.

“Virtual” Disaster

So you think policing your Museum intellectual property is challenging in the “real world”?  Now Museums need to be concerned about policing the virtual worlds found on the web.  Virtual worlds such as “Second Life” and “Active Worlds” provide simulated computer worlds where users interact with each other and their surroundings by the use of “avatars” (textual, graphic, auditory or sensory representations of a user).  The virtual worlds have developed their own social structure and economic structure.  The detail and complexity of each virtual society is rather astounding.  And as with any successful and vibrant society, art and Museums take a prominent role.

The virtual worlds have spawned an e-commerce niche that is astounding.  According to 2007 numbers posted on Techcrunch.com, it is estimated that 1.5 billion dollars are spent each year in this virtual worlds.  Goods and services are sold by avatars, and have even crossed over into the “real world” and appeared on ebay.  What does this mean for Museums?  Well, do not be surprised to see a part of a Museum collection in a virtual world as a part of a virtual museum.  Avatars may charge others for admission into the virtual museum, thus trading on the collections and property of the “real world” Museum.  Additionally, you may find that posters and prints from the virtual museum may be sold for “real” money to virtual users.  If Museum content, copyright and trademarks are being used in a virtual world for commercial gain, the “real world” Museum must enforce its legal rights against the infringer – virtual or real.  If not policed, infringement on an unprecedented scale will continue to blossom and create real world nightmares for Museums.

If you are approached by someone who wishes to use Museum content in a virtual world, be vigilant in researching the virtual world.  More importantly, any license agreement or any agreement concerning the use of the content of a Museum in a virtual world must be narrowly tailored and made with a real person, not an avatar.  The last thing a Museum needs to fight is whether or not the contract or license was signed by a real or virtual person.  Obtaining the consent of a real live person is hard enough…..

Orphan Works Act Sits in the House

A quick review of the Orphan Works legislation pending before the House:

 

Late on Friday September 26, 2008, the United States Senate passed the Shawn Bentley Orphan Works Act by unanimous consent.  The bill has now been forwarded to the House of Representatives. 

 

The “Orphan Works” Problem

 

Ever since the 1976 Copyright Act, the issue of orphan works – works whose owner cannot be identified or located — has become a significant issue.  Copyrights that have been assigned to companies that are now out of business, copyrights that belong to deceased persons with no heirs or hard to locate heirs, copyrights sold amongst two parties with no registered assignment on record and copyrights that belong to unidentifiable persons all are all deemed “orphan” works.

 

Specifically, the issue of orphan works affects our cultural institutions.  Museums and archives are sometimes hesitant to use certain photographs, film footage or other works unless the copyright owner is identifiable for fear of an infringement action.  Museums and publications become stymied, as the Copyright Office has reported, in their creation of exhibitions, books and websites.

 

This problem can be traced directly to the Copyright Act of 1976 which relaxed the requirements for copyright protection.  While on its face, the lack of registration requirement afforded easier copyright protection for creators, the lack of registration has created a vast number of works with no readily identifiable copyright holder.  Additionally, the expansion of copyright duration equally contributes to the issue.  As the Copyright office points out with the duration of copyright standing at life of the author plus 70 years, a 125 year copyright term is not out of the question.

 

The Legislative Solution

 

Both branches of Congress have each proposed their own version of an Orphan Works Act. (Senate – S. 2913l House – H.R. 5889).  While a welcomed relief for many corporations, museums, archives and libraries, the Senate Bill, S. 2913, which has recently passed, has raised significant concerns among copyright creators throughout the country.  For instance, the National Press Photographers Association recently forwarded an alert urging opposition to the bill stating that passage of the bill by the full Congress will “eviscerate any real copyright protections for our images and those who infringe upon our livelihoods.”  This all means that House passage may meet with some additional resistance.

 

Some of the key components of the bill that will prove beneficial to museums include:

 

1.       Limitation of damages to “reasonable compensation”. “Reasonable compensation” is the damage cap if the infringer takes advantage of the safe harbor provisions provided by the bill.  “Reasonable compensation” is defined as the amount on which a willing buyer and willing seller in the positions of the infringer and the owner of the infringed copyright would have agreed with respect to the infringing use of the work immediately before the infringement began.

 

This eliminates statutory damages, actual damages and attorneys fees from the equation – good news for museums.

 

2.       Safe Harbor Provisions.  Although there are certain intricacies involved in the bill, in general terms, in order to take full advantage of the damage limitation, an infringer needs only prove by a preponderance of the evidence that before the infringement begins, the infringer (or agent) :

 

-         performed and documented a qualifying search in good faith for the owner of the infringed copyright

 

-         was unable to locate the owner of the infringed copyright or provided attribution in a reasonable manner under the circumstances to the owner of the copyright, if known to a reasonable degree if certainty, based on the qualifying search

 

3.                 Additional insulation for museums, libraries educational institutions,

archives, and public broadcasting entities

.  The bill eliminates even reasonable compensation against museums, libraries, educational institutions, archives and public broadcasting entities and their employees if such an infringer proves by preponderance of the evidence that:

 

-         the infringement was performed without purpose of direct or indirect commercial gain

 

-         the infringement was primarily educational religious or charitable in nature; and

 

-         after receiving notice of the claim and good faith investigation, infringement ceased.

 

          There is a minor exception allowing for a small degree of damages of an actual profit is earned that is directly attributable to the infringement.

 

4.       Effective Date.  The bill theoretically covers infringements on the earlier of either (i) January 1, 2009, or (ii) 30 days after the date the Copyright office certifies 2 independent searchable electronic databases allows those searches, or (iii) January 1, 2013.

 

Potential Legislative Problems

 

          While the above provisions are beneficial to museums, here are some of the hurdles that may slow the passage:

 

1.       Coerced registration

 

The effect of the legislation is to force creators to register copyrights – something not required under the 1976 Copyright Act.  Without registration, a creator risks an infringer taking shelter in the safe harbor regulations and severely limiting the available damages, costs and attorneys fees.  This can put professionals and private persons alike at significant disadvantage in the realm of copyright protection.  Without registering in the new databases, professional photos and vacation photos could easily be termed orphaned works.  The Copyright Office has itself suggested that the failure to file = automatic orphan work.

 

2.       International Impact

 

The bill may very well violate several intellectual property treaties.  By imposing registration as a means for protection, the bill may violate the Berne Convention.  Additionally, a violation of Agreement on Trade-Related Aspects of Intellectual property 3 step analysis to allow limitations of exclusive rights:

 

3.       Allows infringer to Copyright Derivative Work

 

The bill, incredibly, prohibits a copyright holder from stopping the use of a derivative work by the infringer.  If an infringer creates a derivative work, the infringer will only need to pay a fee to the copyright holder.  The infringer will NOT be enjoined from using the derivative work. 

 

While the act may actually provide some insulation for museums who execute a diligent and reasonable search for the copyright holder, the bill may need some tweaking to pass the House and provide the relief that is needed to address the orphan works problem.  Stay Tuned!!

Partial Deaccession

Anschutzian Deaccession

Having Your Cake and Eating it Too?

 

In late spring of 2008 the Denver Art Museum (DAM) and Colorado businessman and art collector Philip Anschutz assisted DAM in the acquisition of Thomas Eakins’ “Cowboy Singing”.  The potentially controversial and precedent setting portion of the agreement grants Mr. Anchutz a fifty (50%) percent ownership stake in a piece of the DAM’s existing collection, Charles Deas “Long Jakes (The Rocky Mountain Man”) – or what has been coined a partial deaccession.

 

The Issue

 

The rub in this transaction is whether or not the transfer of a 50% interest in a work already a part of a museum’s collection triggers a deaccession.   In fact, DAM director Lewis Sharp acknowledged the question in an interview with Tyler Green of Modern Art Notes.  Dr. Sharp indicated that:

 

“It seemed to me that probably falling on the safe side, I decided to use the inflammatory phrase deaccessioning.  Deaccessioning is a technical term and it simply means that you’ve taken it off the registrar’s [list] at the museum—and we haven’t, because we still have fifty percent….If I have the whole thing to do again, I probably would remove the term deaccessioning.”

 

But should he?  After all, while technically, the work has not been removed from registrar, it has, to a degree been partially removed from the collection for 6 months of the year (The Anschutz agreement allows the painting to be in the possession of DAM for 6 months and by Mr. Anschutz for 6 months).  Additionally, the original Donor’s intent in providing the work to the museum most likely did not anticipate a fractional ownership arrangement between DAM and a private collector.  A key component to any museum deaccession policy and any analysis into the authority of a museum to engage in a deaccession is the consideration of the Donor’s intent.  And isn’t one of the accepted rationales for deaccession the procurement of art to update the collection and further the mission of a museum?   

 

At present, the Association of Art Museum Directors (AAMD) is scrutinizing the deal in light of its Professional Practices in Art Museums.  Although the strict standards of the AAMD specify that deaccessioning funds are to be used only for the acquisition of new works, which occurred in the DAM case, the AAMD will undoubtedly look into whether or not the preferred methods of sale standards (publicly advertised auction, sale to an established dealer or other public institution) were violated, and whether or not the public benefit outweighs the benefit to a private collector.  The AAMD decision may provide insight into the future of partial deaccessioning.

 

Protective Steps

 

While we all await the AAMD comments and the final resolution of the Anschutz transaction, there are steps that museums may take to help avoid a messy public debacle.  Most often, the loudest opponents to a deaccession event are members of the public who are generally of the opinion that museums should acquire art, not dispose of art.  As a result, whenever a piece of art is deaccessioned, museums must, and most do, take detailed steps to strictly follow their own deaccession policies and involve patrons, donors and the public to the extent necessary.

 

In light of the potential burgeoning market for half-deaccessioning, or for lack of a better term, Anschutzian Deaccessions, museums should consider taking certain precautionary steps:

 

1.                 Deaccession Policy Revision.  Museums should revisit their deaccession policies and determine whether the policies address a partial deaccession.  If the Anschutzian Deaccession is attractive, any museum looking to model a transaction as a partial deaccession should provide proper language in their policy so that the public, donors and patrons are aware of the policy from the outset.

 

2.                 Donor Documentation Revision.  All agreements with donors regarding accession transactions should make reference to the possibility of either a full deaccession or partial deaccession in accordance with the terms and conditions of the museum’s deaccession policy.  Donors should be the first to be contacted about a partial deaccession.

 

3.                 Public Reaction Management.  As with an deaccession, there is certain to be public dismay with the museum action.  Educating the public, donors and patrons of the museum as to any potential partial deaccession with a private party, including public notice, should be seriously considered.  Technically, the AAMD regulations prefer a sale through a publicly advertised auction, sale to another public institution or sale to a reputable dealer.  Any sale that falls outside of the preferences should be communicated to the public, donors and patrons through advertising and proper notice.

 

4.                 AAMD Clearance.  Although not required in any deaccessioning, until the AAMD issues new regulations or a clarifying memorandum, a musem may want to consider presenting a potential partial deaccession transaction to an AAMD committee for comment.  This may help protect the museum in the event of any third party action as a result of the deaccession.  Although certainly not dispositive of the issue, the blessing of an industry association can have an important impact on a legal analysis of the legality of a deaccession.

 

As the price and competition for important pieces of art increases, museums must become creative in acquisition strategy.  Anschutizian Deaccessions may be a vehicle to provide much needed funding for museums while allowing museums to keep a piece of work in its catalog for public display.  How such deaccessions will be received by the public, donors and patrons remains to be seen.  However, museums may be able to strike a delicate balance with such deaccessions and have their cake, and eat it too.

 

 

 

 

 

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