Copyright, conflicts of interest, and how to deal with Uncle Sam

US museum lawyers met last month to discuss the most pressing issues they are currently facing

Over 200 museum employees, lawyers and interested parties convened in Scottsdale, Arizona, for the 36th annual conference on Legal Issues in Museum Administration in April.

The course, which brings legal know-how to museums without lawyers on staff, is offered by the American Law Institute-American Bar Association, and is co-sponsored by the Smithsonian Institution with the cooperation of the American Association of Museums (AAM).

In an address on the state of museums, AAM president Ford W. Bell told the group that museums are facing challenges including tight government budgets, a perception that charities serve the rich and negative press about perceived abuses at certain museums. The conference discussed new ways of dealing with intellectual property in the digital age, museum policies on corporate governance and conflicts of interest under increasingly probing government scrutiny.

The Second Life syndrome

Sharon Farb, associate university librarian at UCLA Library in Los Angeles, said that as museums put more images and content online, more users will ask to use it; she advises that museums not require licences for everything. Instead, they should make clear on their websites which content can be reproduced without permission, and should post all licence forms for those objects which require them. Virginia Rutledge, Vice President and General Counsel of the non-profit Creative Commons, San Francisco (CC), described the CC licence which piggybacks on existing copyright law to let copyright holders “signal when it is just fine” for a user to copy, or even alter, a work. The New Museum in New York, for example, uses CC licences to permit copying. The CC website posts six different licence forms to choose from, and tells you how to mark your content so users will know what copyright rules apply (http://creativecommons.org).

As web users find new applications for museum images, including those possibly obtained without permission, how should museums respond? Phoenix lawyer Connie J. Mabelson described websites which regularly violate copyright laws, although the usual copyright enforcement steps still apply. At Second Life or similar sites, virtual art—the hard copies of which may be owned by real museums—is being bought and sold by paying participants for virtual money, which can be exchanged for real dollars.

Visitors create an avatar which can enter a virtual, 3-D rendition of a famous bedroom scene painted by Van Gogh or buy furniture inspired by Frank Lloyd Wright’s designs. If the original work is protected by copyright, Ms Mabelson asks, should a museum take steps to enforce it, or do the virtual reworkings fall within a “fair use” exception to copyright infringement? (Perhaps the issue will be debated at Second Life’s virtual bar association, which does exist.) Ms Mabelson advises that a museum’s fair use policy should address what the museum should do if a museum image appears on a wiki, an online site where any user can add content.

The museum comes first

Recent scandals over alleged misconduct by top US museum officials have caused museums to review their conflicts of interest policies regulating board members and employees. Conflicts arise when a trustee’s duty of loyalty to the museum is compromised, says Lori Fox, acting vice president, general counsel and secretary at the J. Paul Getty Trust; she advises that museums have a well-written conflicts of interest policy that defines the trustees’ duties, prohibits potential conflicts, and provides a way to resolve them.

For example, conflicts can arise if a trustee collects art that the museum might collect; trustees should be forbidden to buy deaccessioned art, or to use inside information for their own benefit, such as to buy an artist’s work before the museum announces its purchase of art by the same artist, which could drive up prices. Museums should also require annual disclosure forms from trustees and some employees to identify possible conflicts, including asking about the trustee’s art acquisitions and whether the trustee has received gifts from museum staff or anyone the museum does business with. For example, trustees may seek favours from museum staff, such as asking a conservator to restore a privately owned manuscript, which would take the conservator away from his duties. While this may be a way to cultivate donors, the Smithsonian Institution prohibits using staff time and services for private uses.

When a conflict with a board member arises, the trustee’s interest in a possible transaction should be disclosed and the trustee must be excluded from the decision, which the board’s audit committee or even the state attorney general can be asked to review. The board must still ask whether the proposed transaction is in the museum’s best interests, which it might be, says Frederic Goldstein, general counsel to the Los Angeles County Museum of Art. Each situation should be reviewed on its facts: while an exhibition of a trustee’s collection of local maps by a small museum may increase the collection’s value, the benefits to the museum and its community may be so great that the display is still in the institution’s best interests.

Government scrutiny

Congress is seeking to stop perceived abuses in the non-profit world, and is using the tax law to do so. The new revision to the annual tax return for non-profit organisations, Form 990, seeks significantly more information about how museums are run. Organisations will first file the return for tax years beginning this year. The form “shows the government’s increased role in governance and conflicts of interest”, says Marsha Shaines, deputy general counsel to the Smithsonian Institution. The information that charities provide on the forms will be publicly available. The museum must summarise its missions and activities, changes in its programmes and its achievements of its exempt purpose.

New questions about governance and management mean that the museum should have policies in place before the form is filed, Ms Shaines advises. For example, the form asks whether the board and committees contemporaneously documented their meetings during the year, whether the organisation has a written conflicts of interest policy, and whether officers, trustees and key employees are required to disclose annually any interests that could give rise to a conflict. The form asks whether the charity enforces its conflicts policy, and whether it has whistleblower protection and document retention and destruction policies. Museums must further disclose whether they determined director compensation using an independent review and comparability data, and contemporaneously substantiated their decision-making process. The form also requests the dollar details on first class travel, travel for companions, and housing allowances for directors and trustees.

While it is not clear whether the Internal Revenue Service will be able to process all this information, the public and press will now be able to review it.

Don’t get political

US charities are prohibited from participating in political campaigns, and cannot attempt to influence legislation. The rules are complex, and stiff penalties can apply. For example, museums cannot tell people to urge their congressmen to vote in favour of art funding.

A conference participant asked anonymously if a museum can host an exhibition on the anti-war movement within the Democratic Party? Under the law, a “facts and circumstances” test applies. The test is used to determine whether a non-profit is participating in a political campaign, and one factor could be how close in time the activity is to the campaign. The anti-war exhibition could raise an issue if it includes present-day events and differentiates between political parties. Both political parties should be covered, or the subject should be restricted to the past, says Marcus Owens, a lawyer at Caplin & Drysdale in Washington, DC. “If you think a political statement is going to pop out of a visiting artist’s mouth at a lecture, you might want to start the programme with a disclaimer.” n

o The 2008 course book “Legal Issues in Museum Administration,” containing licence forms, conflicts of interest policies, employee standards of conduct and other materials, can be obtained from ALI-ABA at www.ali-aba.org or %: +1 800 253-6397

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