in Artprice Press Releases - February 9, 2010

Artprice: Christie's makes another vain attempt to take control of Artprice at a lower price…

With complete transparency, Artprice, represented by its founder Thierry Ehrmann, hereby wishes to inform its 18,000 shareholders and the markets that Christie's Manson and Woods Ltd, Christie's France SAS and Christie's France SNC have launched a civil claim concerning our use of their sales catalogues and corporate identities (which they consider a "brand") and what they call acts of "parasitism" in using the announcements and results of their public sales.

Despite the complete absence of any serious claim from the point of view of intellectual property rights, Christie's has decided - 48 hours before the closure of the trial court's (first instance) pre-hearing preliminary proceedings (February 2010) and nearly two years after the beginning of the case which has not been subject to a court-ordered appraisal - to raise its claim from 2 million euros to 63 millions euros without any shadow of a new or serious increase in motive.

It should be said pointed out that Christie's has a previous history of this type of action. In its new demand, Christie's has taken care not to reveal to the court that already in 2001 it launched a similar claim against Artprice concerning its catalogues (Christie's/ SG Archibald vs Artprice /Cabinet Alain Jakubowicz) which ended with Christie's dropping the claim without any concession from Artprice, whose readiness to defend its copyrights in France and the world has already been amply demonstrated.

At the time, Artprice's principal financial partner was the group headed by Bernard Arnault via Europatweb and Agafin. History is repeating, not by coincidence, just a couple of weeks ahead of the adoption of EU Services Directive 2006/123/CE including the notion of "online auction operators" which France had until 28 December 2009 to apply.

Artprice therefore wishes to communicate a) the details of the completely unfounded claims against it, and b) to inform the public that as a listed company traded on a regulated market without interruption since 2000, Artprice considers this manœuvre a violation of France's Monetary & Financial Code. By contrast, Christie's an opaque and unlisted company, has all the freedom to act without the constraints of a supervisory authority. This information should therefore be considered as a supplement to the chapter "current litigation" (which already mentions this case) published by Artprice each year in its annual report and its regulated half-yearly report.

With respect to point (b) above, Artprice is justified in making a counter-claim for damages equal (at the very least) to the unfounded claim launched by Christie's. Artprice's defence is being organised by one of the best literary and artistic property rights specialists in France, Emmanuel Pierrat.

The auction sales catalogues are not considered as creative works qualifying for copyright protection for the following reasons (amongst others):

Containing highly summarized and simplified information, the auction sales catalogues are documents destined to provide the public with information that the auctioneers have no liberty with (decree n° 81-255 of 3 March 1981 amended by decree n° 2001-650 of 19 July 2001) as stated quite clearly by the Voluntary Sales Advisory in its practical guide for professionals (Guide Pratique, II, C).

As it happens, Christie's is perfectly aware that its catalogues cannot qualify for copyright since, like all the other auction companies, it deliberately elects to apply the normal VAT rate to the sale of its catalogues instead of the 5.5% rate which is applied to creative works (Art. 278 bis, 6° of the French General Tax Code).

In effect, since the French Tax Code gives catalogue publishers the right to opt for the reduced VAT rate in copyright situations or the normal VAT rate where no copyright is applicable, Christie's has knowingly opted for the normal rate and has therefore recognised, despite the extra cost to its clients, that its catalogues are not "creative works".

This choice is moreover in line with the French government's taxation doctrine which expressly excludes from qualification for the low VAT rate catalogues with no creative content, whose essential purpose is the sale of the products presented and, among such catalogues, it specifically mentions sales catalogues for public auctions (bulletin officiel des impôts n° 82 of 12 May 2005, § 12).

Christie's has the nerve to claim Artprice is guilty of "parasitism", causing losses in their business of catalogues when , as officially recorded by Artprice's bailiffs, Christie's gives free access to its online sales catalogues, notably in PDF format, without further requirement nor prior registration.

Moreover, Artprice has detected that these very same catalogues contain information from Artprice's proprietary data sources and econometrics such as indexes, prices and analyses, and has taken measures to have these facts officially recorded. In accordance with its declarations to the independent French National Commission for Information Technology and Civil Liberties (CNIL), Artprice possesses logs of the connections by all its clients such as Auctioneers, Valuers and experts, Art Institutions, Collectors, etc.

Unlike the auction houses, which just offer visitors to their websites the possibility to download their catalogues, Artprice dissects these catalogues in order to analyse the data within a specific industrial process and then restructures the analysed data into several variable fields constituting Artprice's original databases which are protected by sui generis copyright protection laws.

The sui generis law (L341-1 et seq. Intellectual Property Code.) was designed in Europe and in French domestic law to protect the substantial investments in databases (financial, material and/or human) that such an enterprise implies. The protection is granted to the producer of the database. It protects against the unauthorised retrieval and re-utilisation of all or a substantial part of the database. Violation of the sui generis law is punishable in the same terms as the crime of forgery. Artprice has regularly taken legal action against non-contractual usage of its databases and intends to exercise its rights in the framework of the case brought by Christie's.

Artprice then makes these enriched databases available online accompanied by commentaries by its own experts and historians which are protected by the law of 11 March 1957 on Literary and Artistic Property.

In fact, all the industrial processes involved in "Artprice Catalogs Library ®" are patented and protected by the Agency for the Protection of Programmes (A.P.P). These industrial processes analyse each broken-down page of a sales catalogue that has been reviewed by an Artprice writer. In addition, each of the text fields of the sales catalogue is linked by referential integrities to the different databases which standardise the art market (artist ID, works ID, catalogue raisonné ID, bibliography ID, estimates / econometrics ID etc.).

This entire unique process is perfectly described in the video entitled Alchemy and the Future of Artprice at http://web.artprice.com/video/

We might add that since the end of 2007 Artprice has opened a new service relying on its databases: Artprice Images®. This service offers access by lot and by artist to a database of international public sales catalogues from 1700 to the present day for which Artprice pays royalties to the ADAGP (French society for collective management in the visual arts) representing 43 copyright societies in different countries.

Artprice is one of the ADAGP's best clients in terms of the payment of copyright fees. The international press sees this agreement as a veritable success reconciling respect of copyright law with the globalisation of art market information, ensuring a fair remuneration of the authors, or their beneficiaries, who are members of the ADAGP.

This innovative legal approach proves that Artprice has always made every effort to comply with copyright laws. Indeed Artprice's approach is regularly cited as exemplary by different government Ministers and it is perfectly in line with the Minister for Culture Frédéric Mitterand's ambition to foster proper enforcement of copyright laws in the internet era.

The real difference compared with Christie's is that Artprice is the global leader of art market information, owns hundreds of copyright protections under the sui generis law on databases, and continually applies for copyright protection for its commentaries and newsflashes that are distributed to 6,300 media organisations around the world.

Another particularly surprising aspect of this case is as follows: 3,600 auction houses around the world have been working in complete confidence with Artprice for 23 years and consider rely on Artprice as a vector of market acceleration and as contributing to the credibility of their promotions for public auctions, implemented by artists watch alerts to 1.3 million Artprice subscribers (member log in). Artprice therefore wonders what motives are pushing Christie's, which has not suffered any prejudice, to try to swim against the very clear direction that history is taking?

Francois Pinault's attempts to portray himself a swashbuckling filibuster have been irrevocably undermined by numerous books and reports in the French and international press. The heavy and lengthy litigation history associated with François Pinault and his Artemis holding company (Executive Life, etc.) that owns Christie's allows a very clear interpretation of the motives behind this latest attack on Artprice.

Thierry Ehrmann, founder and CEO of Artprice, confirms that the translation into French law of the EU Directive 2006/123/CE on Services, including the notion of online operators of electronic auctions, is perfectly in accordance with the different governmental projects and commissions to which Artprice has already given its support and its data.

On 28 October 2009, the French Senate adopted a bill proposed by the UMP senators Philippe Marini and Yann Gaillard liberalising voluntary auction sales in order to "foster greater competition, notably to the art market" according to the AFP (Agence France-Presse). During the debate, the Senate made frequent reference to Artprice and the different reports that our group has contributed to the parliamentary work on the reform.

Lastly, the adoption by the 27 Member States of the European Union of the Treaty of Lisbon that came into force on 1 December 2009, considerably strengthens Artprice's legal and judicial position as well as its economic capacity to defend itself against the sort of ultra-minority protectionist reflexes that Christie's has embarked upon.

Artprice's standardised and IP protected market place has therefore allowed our company to test and implement its online model since 2004 and to be ready to switch to online auctions, mainly as an operator, for the 3,600 Auction Houses.

In addition, the auction houses of 72 countries, in the framework of specific agreements, send Artprice more than 68% of their catalogues and data on our Secure Intranet (up 18% in just 6 months). This reflects, better than any other demonstration, the trust and confidence that characterises Artprice's relations with the Auction Houses. Likewise, thanks to Artprice's database on valuers (a large number of whom organise auctions themselves) there are no less than 7,400 key art market players that Artprice is gradually connecting to its standardised marketplace.

As a result of the global economic and financial crisis, nearly all the auction companies around the world are moving closer to Artprice (which has been working in close collaboration with them since 1987) in order to organise their auctions online as soon as the Directive is adopted, thanks to Artprice's standardised marketplace and its 1.3 million members. Artprice owns the largest "Fine Art" client portfolio in the world. For the art market, these client behaviour databases constitute the basis for the success of catalogued auction sales.

Christie's and its owners François Pinault and Artemis have understood that the Services Directive will allow the 3,600 auction houses and 7,400 valuers around the world to access Artprice's 1.3 million clients through its standardised marketplace protected by sui generis law at an infinitely smaller cost than the current premium rates (36% to 37.5% - source: CVV). The old lady from the Victorian era should wake up to the internet revolution rather than seeking to engage in bogus conflicts.

Francois Pinault being also a collector and a patron of the arts, according to his famous and explosive interview in: "The Book of Vanities" p. 32 by Elisabeth Quin, would have real reasons to exchange with Thierry Ehrmann who is also a sculptor and an artist with his Abode of Chaos and his Vanities, on "their religion of art" rather than through their lawyers.

Source: www.artprice.com ©1987-2010 thierry Ehrmann