1. The conclusive and indelible identification of an artwork at its point of manufacture or at a defined later point of intervention for artworks which entered the market before being identified and which a consensus of authority considers to be authentic; and
2. The accurate continual linking to the object of verified information about the external events which bear on the object during its existence (decades and centuries) in an Internet of Things (IoT)-like fashion.

Before we discuss the science and technology, let’s first consider why one might want to care about this legal, economic, and cultural problem, followed by a discussion of why only science and technology can solve it.

Importance of the Problem

The importance of art (focusing on the visual arts but not to suggest that the performing arts are any less important) has been expressed in different ways. Art has been described as the cultural record of humankind. Cave drawings as the earliest form of art are considered to represent the key evolutionary moment when humans first recognized the ability to record concepts. Today, along with its aesthetic aspects, art is also regarded as a financial asset. The art industry’s traditional stakeholders include artists, the trade (galleries, dealers, and auction houses), the international museum community, the philanthropic community, and individuals across the socioeconomic spectrum who appreciate and might also collect art. Newcomers to the art world include: the world’s largest financial institutions as well as specialized lenders, which now treat art as a form of collateral for securitized lending; the capital markets, which fund these lenders and have set their sights on secondary market securitization of art loan portfolios similar to the scale of structured financial products prevalent in the real estate industry; hedge and other investment fund structures, which arbitrage art for investors, and alongside financial sector regulators now operate under rigorous alternative asset investor protector regimes;² and financial and trade regulators and customs and border law enforcement authorities who are concerned with everything from baseline money laundering through art (witness 2016’s Panama Papers scandal) to terrorism financing through stolen and laundered art and cultural heritage objects.³

The modern problem of faked and forged art results from: (1) the increasing values of artworks (motive); (2) advancing technologies, which lower the cost to replicate artworks that are virtually indistinguishable from their authentic counterparts (opportunity); and (3) a lack of accurate object identification to distinguish fake from real (execution).

Severity of the Problem

The art industry estimates that 70–90 percent of all artworks that are forensically examined are forged or misattributed, and estimates that as much as 50 percent of artworks in circulation may be fakes or forgeries may be too conservative.⁴ In 2011, Columbia University Law School placed the latter number as high as 40 percent.⁵ Estimates by forensic experts have an inherent selection bias because they are based on artworks presented for examination precisely because of authenticity concerns. Statistics also conflate the distinct concepts of fake, forgery, and misattribution. Misattribution is a different and more neutral issue than being an outright fake or forgery.⁶ Still, many faked and forged artworks go unnoticed and unreported because the market lacks the ability to determine patterns of fraudulent conduct—because of the lack of good information.⁷ Still further, fake art not only consists of dubious “discoveries” of never before seen artworks attributed to a now dead artist who can no longer tell us if the artwork is really his or hers, but also includes the more clandestine schemes of substituting a fake copy for an authentic artwork when the authentic object leaves the owner’s possession, for instance when it is loaned for exhibition.⁸

Compounding the problem is the market’s limited ability to answer the question whether an artwork is a fake or forgery or not. Retrospective forensic scientific analysis can only rule out, or confirm as consistent with, the proposed attribution of an artwork based on materials and imaging analyses.⁹ Forensic analysis adds to transactional cost, so its use is only episodic. Moreover, forensically examining every artwork each time it is transacted—the only way to address the authenticity of an object over its lifespan with continuity and reliability—creates a likely untenable market-wide cost, putting aside the risks to art objects from repeatedly handling and invasively examining them (even microscopically and without unnecessary frequency).

Courts, too, cannot solve the problem. When a court resolves an authenticity dispute between the immediate parties, the market does not much care that the court has found by some legal standard, i.e., a preponderance of the evidence, that an artwork is authentic, if the market still questions its authenticity.

Consider a recent example of this issue: a caricaturesque Instagram that Mark Grotjahn sent to Phillips when it was about to auction an artwork attributed to him, which he questioned—“Yo Phillips. (.Dm. Me.) I’m not sure I made this. Either way it sucks.”¹⁰ This case exemplifies how insidious the art industry’s fake and forgery problem has become. When considering the chilling effect of risk and uncertainty on a marketplace, the perception of risk is every bit as real as actual risk.¹¹

The Solution Must Be Science-Based

Buyers want to buy artworks that they know are free and clear of another person’s or entity’s claim to it, and that they know are authentic. This is implicit in the IRS’s definition of fair market value of property—what a willing buyer will pay a willing seller to buy the relevant property when neither is under a compulsion to act and each has reasonable knowledge of the relevant facts.¹² This concept applies to buying art at fair market value and to selling art without the risk of incurring liability for transacting art that lacks integrity.

Title is a legal concept—a property right at law (and at one time also equity)—where facts, changing laws, and creative legal theories can generate questions about the ownership status of property. Thus, legal title risk can never be reduced to zero, and the market supports title insurance, first in the real estate industry and now in the art industry, to shift the residual risk for good faith parties of defective (void or voidable) title to a third-party insurer.

Authenticity, by contrast, is a matter of binary fact: an artwork either is or is not authentic. There is no in-between, and any room for debate is untenable for the reasons discussed in the preceding section. Insurance cannot solve authenticity questions because the risk is actuarially unquantifiable. A positive legal conclusion that an artwork is an authentic work created by the attributed artist will turn on competing opinions about what is ultimately a subjective question based on applying a factually imperfect evidentiary burden of proof. Thus, only science and technology can solve this problem, assuming that science and technology can take the question to absolute zero and render it nonjusticiable.

Necessary Ingredients of a Science and Technology-Based Solution

Current advanced and established science suggests that a science-based solution that can render questions of authenticity of artworks nonjusticiable (which can also solve issues of attribution) has two essential elements:

1. Marking permanently (through encryption technologies having no negative physical impact) primary market artworks as these objects are created by the artist or a third-party fabricator and introduced into the industry so as to remove future questions about whether the work is or is not an authentic work created by the attributed artist; and
2. Marking permanently (again through encryption technologies having no negative physical impact) secondary market artworks in a way that will link these artworks to the industry’s existing consensus of authority that the object is an authentic artwork created by the attributed artist and to remove future questions about whether the identified object is the same work earlier considered authentic by the consensus of authority.

To discuss the host of other requirements would necessitate a separate and much longer article, but most important among them is that the solution must also be standards based. An iPhone user is able to communicate with an Android phone user because of telecommunications industry standards on interoperability of related technologies. The pharmaceuticals industry could not address the problem of adulterated drugs until manufacturers, suppliers, distributors, and retailers agreed to common supply-chain integrity standards, including tamper-proof/tamper-evident protocols for even over-the-counter drug ingredients, packaging, and product distribution.

In the context of the art industry, if it says that a technology to mark (object-identify) artworks is safe and will not harm the object, then technical standards (like those of the American National Standards Institute (ANSI), National Institute of Standards and Technology (NIST), and International Organization for Standardization (ISO)) must establish how to define and measure this safety factor. If the market says that the cryptographic threshold of a solution renders it immune to reverse engineering and compromise that would otherwise cast doubt on the autographic nature of the object marked (identified) via the solution, then the encryption threshold may need to be revised in the future based on advances in technology (such as the expected leap in quantum computing in the next 10 years). And, in the context of ensuring that the information linked to an object is accurate information, the necessary redundancy threshold in user- and information-verification protocols must be set to prevent a person in one part of the world from impersonating an artist located in another part of the world as part of a scheme to object-identify and then introduce into the market fake artworks by the artist (today’s geospatial technologies can be readily tricked), or to prevent an artist’s heirs from claiming years after the artist’s death that the artist was not of “sound mind” when he or she allegedly created the putative authentic (completed) artwork.

One initiative tackling these complex, standards-based issues is the Global Center of Innovation for the i2M Standards (i2M standing for “intelligent integral mark”) headquartered at the State University of New York’s flagship campus in Albany. This initiative brings together a host of scientific disciplines ranging from biosciences and microfluidics to advanced informatics, data technologies, and quantum computing in collaboration with experts in art conservation science and jurisprudence.¹³

Because standards cannot be developed in a factual vacuum, they are being developed and tested in the context of a first i2M standards-compliant technology based on bioengineered DNA. i2M is a standards-based approach to efficacy, safety, cryptographic, data verification, and data integrity solutions needed to address the art industry’s authenticity challenges—developed in a first context of bioengineered DNA-based markers having forensic-level cryptographic, data verification, and user-interface thresholds. Bioengineered DNA is distinguished from human (including the artist’s), animal, or botanical-based DNA, the three latter of which have identifiable starting reference points.¹⁴ This technology takes the form of an advanced small label that can be unobtrusively applied to an artwork, such as the reverse side of the canvas of a painting or on the base of a sculpture, with an outward-facing spectral signature (having its own multiple forms of encryption) for the market to interact with the object based on scanning the outward-facing side of the label through use of a simple iPhone app. The i2M-based technology involves a leap in encryption science by, among other things, enhancing previously understood DNA amplification and sequencing technologies to a measurable encryption level of 10⁵⁰⁰.This number represents possible combinations of encoded strands of bioengineered DNA that a fraudulent actor would have to attempt to reverse engineer, even if the actor could find them among other technology-based camouflaging techniques, to break the encryption. For perspective, just one encrypted micro-DNA well among numerous micro wells in the label has an encryption level of 1.8 x 10⁹⁹. The number of grains of sand on earth (which scientists have calculated) is represented by the number 7.5 x 10¹⁸.

The importance of standards can be seen in the recent events surrounding Bitcoin as the original application of blockchain. Bitcoin has now split into two groups that advocate fundamentally different approaches and where neither group is prepared to interact with the other.¹⁵ Solutions to systemic problems require stakeholders to have confidence that each other stakeholder will adopt a same solution or different solutions having a common reliable approach in order to create a virtuous circle of industry-wide adoption.

Current science-based efforts to address the art industry’s authenticity risk fall into four basic categories:

Verified

Data

Additive

Mark

Verified

Data

Inherent

Mark

Unverified Data

Additive

Mark

Unverified Data

Inherent

Mark

To render authenticity disputes nonjusticiable in today’s art industry requires solutions that are based on verified data and methods to mark or identify objects that are additive to (independent of the object).¹⁶ The exact technologies that meet these requirements will change over time as technologies advance and as the market’s bad actors stay one step behind to try to break each generation of technologies. To illustrate these advances, the use of the carbon allotrope graphene to deliver nanosized therapeutic agents in cancer treatment has coincidentally revealed the existence of unique, previously unknown (within the electromagnetic spectrum) and considered nonreplicable spectral signatures, which someday may be commercially transformable into encrypted reference points for object-identification purposes. One of the virtues of bioengineered DNA, which remains the most complex basis for encrypting known today,¹⁷ is that it is well understood jurisprudentially, so it does not present risks (e.g., Daubert risks or room for expert debate) that are attendant to any still cutting-edge technology.¹⁸ The key for the art industry is that each technology-based solution to object-identify artworks be standards based.

Conclusion

The concept of standards to support solutions that solve industry-wide problems is nothing new, but it is new for the art industry, which has historically viewed itself with insularity. The pharmaceutical and telecommunications industries both adopted standards-based solutions to solve their systemic problems.

So did the global timber industry, which was once plagued by the problem of illegally deforested timber. Helveta in the Netherlands was one of seven companies worldwide to receive the Financial Times’ “Boldness in Business” award in 2012 for inventing and implementing a supply chain–management and traceability platform for the global timber industry. Helveta has since expanded its supply traceability and digital passport technologies to include biofuels, mining and minerals, and agricultural products. As the market observed in this timber industry context: “The appeal is multi-fold: manufacturers that can prove provenance can potentially demand a premium price; governments can make sure the appropriate taxes are paid; and stakeholders ranging from regulators to environmental watchdogs to consumers can be assured that raw materials are being extracted responsibly.”¹⁹

For the global art industry to solve its authenticity problems, it will have to decide whether it wants to move from a nontransparent market to a transparent one where clear object identification with IoT-like continuity will defracture the market.

Any standards-based solution must mark or identify artworks accurately and must associate verified information about the events surrounding the artwork over its lifespan to the exact object. Each person who generates information must own that information (from the creating artist, dealer, and collector to the shipping firm, storage firm, secured lender, and so on) and be able to control who else sees what part of that person’s information under complex data-privilege setting and data-sharing protocols. A standards-based solution requires a trusted custodian to organize and maintain these protocols and information. Such a custodian must be perpetual in existence by law, government regulated, and market-neutral to the information, and have a rational reason to invest the millions of dollars that will be required successively over time in order to have the market’s trust and to act with legal responsibly. These information-custody requirements are particularly important in a globalized market that operates under increasingly rigorous, complex, rapidly changing, and sometimes conflicting international data privacy and protection laws. The implementation of these standards-based solutions can also go a long way to help curb illicit trade and use of illicit funds in the international art industry. u

Endnotes

1. U.S. Const. art. III, § 2, cl. 1. See generally F. Andrew Hessick, Cases, Controversies, and Diversity, 109 Nw. U. L. Rev. 57 (2015); Cameron Sim, Non-Justiciability in Australian Private International Law: A Lack of “Judicial Restraint,” 10 Melb. J. Int’l L. 102 (2009) (examining the doctrine of nonjusticiability as adopted in the United Kingdom and applied in Australia, the political question doctrine of the United States, and the merits-based approach followed in Canada).

2. See, e.g., Directive 2011/61/EU of the European Parliament and of the Council of 8 June 2011 on Alternative Investment Fund Managers and amending Directives 2003/41/EC and 2009/65/EC and Regulations (EC) No 1060/2009 and (EU) No 1095/2010, 2011 O.J. (L 174) 1.

3. See Deloitte Lux. & ArtTactic, Art & Finance Report 2014 (2014), https://www2.deloitte.com/content/dam/Deloitte/global/Documents/Finance/gx-finance-art-and-finance-report-08092014.pdf; Deloitte Lux. & ArtTactic, Art & Finance Report 2016 (2016), https://www2.deloitte.com/content/dam/Deloitte/at/Documents/finance/art-and-finance-report2016.pdf (reporting art monetization trends in the art industry); see also Preventing Cultural Genocide: Countering the Plunder and Sale of Priceless Cultural Antiquities by ISIS: Hearing Before the Task Force to Investigate Terrorism Fin. of the H. Comm. on Fin. Servs., 114th Cong. 96 (2016), https://financialservices.house.gov/uploadedfiles/114-83.pdf (statement of Lawrence M. Shindell, Executive Chairman, ARIS Title Insurance Corp., on money laundering and terrorism financing through stolen and laundered art and cultural heritage objects).

4. See Nina Larson, Fine Arts Experts Institute: Lab Sleuths in Geneva Help Art World Uncover Fakes, ArtDaily (Oct. 13, 2014), http://artdaily.com/news/73562/Fine-Arts-Experts-Institute--Lab-sleuths-in-Geneva-help-art-world-uncover-fakes; Over 50 Percent of Art Is Fake, artnet News (Oct. 13, 2014), https://news.artnet.com/market/over-50-percent-of-art-is-fake-130821.

5. For Real? Legal and Economic Perils of Art Authentication, Colum. L. Sch. (Nov. 29, 2011), http://www.law.columbia.edu/media_inquiries/news_events/2011/november2011/kernochan-art-authentication.

6. A fake artwork is a fabricated artwork that has been intentionally attributed to a given artist knowing that the attribution is false. A forgery is an authentic (real, original) artwork on which a forged artist’s signature has been placed when the work was originally unsigned or on which a forged signature has been placed over the legitimate signature to reidentify and misidentify the artwork. Misattribution asks (most frequently the context of Old Masters artworks) by whose hand an authentic artwork was created.

7. The collapse of New York’s 165-year-old Knoedler Gallery followed a 15-year-long forgery scam involving some 63 artworks represented to be by numerous major post-war and modern artists, many of which were fraudulently sold or consigned at a combined loss of $80 million to many of the industry’s most sophisticated collectors; that the scale of the problem came to light only after years of percolating questions is apropos. See Anderson Cooper, $80 Million Con, CBS News (May 22, 2016), https://www.cbsnews.com/news/60-minutes-80-million-art-fraud-anderson-cooper/; Eileen Kinsella, Glafira Rosales Ordered to Pay $81 Million to Victims of the Knoedler Art-Fraud Scheme, artnet News (July 10, 2017), https://news.artnet.com/art-world/glafira-rosales-knoedler-art-fraud-1018190; M.H. Miller, The Big Fake: Behind the Scenes of Knoedler Gallery’s Downfall, ARTnews (Apr. 25, 2016), http://www.artnews.com/2016/04/25/the-big-fake-behind-the-scenes-of-knoedler-gallerys-downfall/. As observed by the New York Times regarding a similar post-Knoedler scandal in Spain, art swindles depend on “a network of people, sometimes unwittingly, repeatedly [helping to] lend these fake paintings a veneer of credibility,” combined with “the industry’s ubiquitous lack of transparency [which] prevent[s] anyone from discerning a pattern.” Patricia Cohen, Selling a Fake Painting Takes More Than a Good Artist, N.Y. Times, May 2, 2014 (emphasis added), http://mobile.nytimes.com/2014/05/03/arts/design/selling-a-fake-painting-takes-more-than-a-good-artist.html.

8. Reported examples include Caracas’s Contemporary Art Museum (2000, substitution of fake; facts coalesce in 2012); U.K. National Museum (2001, loan to Ukrainian government; now competing claims that originals swapped, no loaned works were fakes); National Museum of Poland (2000, substitution of fake; facts coalesce in 2010); Brigham Young Museum (1986, substitution of fakes during third-party examination); Norman Rockwell Museum (original Breaking Home Ties, sold for $15.4 million in 2006, hidden in 1970s to prevent estranged wife from taking possession; for decades fake version loaned for exhibition to numerous institutions including Norman Rockwell Museum); Vietnamese National Museum (competing claims by museums in Singapore and Japan over which has original of over 20,000 artworks and artifacts held in the Vietnamese National Museum due to Vietnam wartime good faith practice of displaying copies to safeguard originals from damage during raids, and failure to document or have an oversight process to track movement and location of fakes versus originals).

9. This leaves the positive authentication of an artwork to connoisseurship opinion where today the risk of rendering an opinion is sufficiently high that virtually all non-forensic science authorities have stopped giving an opinion, including the artists’ foundations or estates of Jean-Michel Basquiat, Alexander Calder, Keith Haring, Willem de Kooning, Lee Krasner, Roy Lichtenstein, Robert Motherwell, Jackson Pollock, Robert Rauschenberg, and Andy Warhol. Efforts to attenuate this situation include protective and fee-shifting legislation introduced for instance in the state of New York. See, e.g., S. 1229A, Assemb., 2015–2016 Reg. Sess. (N.Y. 2015) (“An act to amend the arts and cultural affairs law, in relation to opinions concerning authenticity, attribution and authorship of works of fine art”).

10. Nate Freeman, Phillips Pulls Work from “New Now” Sale after Mark Grotjahn Says “I’m Not Sure I Made This,” ARTnews (Sept. 15, 2017), http://www.artnews.com/2017/09/15/phillips-pulls-work-from-new-now-sale-after-mark-grotjahn-says-im-not-sure-i-made-this/; see also Patrick M. O’Connell, Judge Rules Famous Artist Did Not Paint Landscape at Center of Lawsuit, Chi. Trib., Aug. 23, 2016, http://www.chicagotribune.com/news/local/breaking/ct-peter-doig-painting-ruling-met-20160823-story.html (reporting that artist Peter Doig had to prove the negative in court proceedings that he did not create an artwork that another person claimed was the artist’s authentic work).

11. For a leading work on this subject, see Anna M. Dempster, Risk and Uncertainty in the Art World (2014).

12. See 26 C.F.R. § 20.2031-1.

13. See the content and white papers at https://www.i2mstandards.org.

14. Bioengineered DNA neutralizes or synthesizes naturally occurring DNA such that it retains the physical properties of DNA absent the unique elements that distinguish among humans, plants, and animals, leaving the billions of nucleotides that constitute DNA’s base pairs as a means to create unique identifiers.

15. See Frank Chaparro, Bitcoin Splits in 2, Bus. Insider (Aug. 1, 2017), http://www.businessinsider.com/bitcoin-price-fork-happens-2017-8 (describing the debate between the need for smaller bitcoin blocks that are less vulnerable to hacking and larger blocks that will make the network faster and more scalable).

16. Solutions premised on capturing an image of an aspect of an artwork not recognizable by the naked eye aid in baseline art collection management and similar purposes but have limited forensic utility when one factors in the nature of nefarious behavior and expected technology advances such as quantum computing. Image recording technologies can also be used to replicate the artwork based on the image, and can be challenged based on inherent variability (e.g., anomalies when the same device images the same object multiple times or is not properly calibrated) to create doubt in the market and judicial proceedings (as occurred for instance with early breathalyzer and speed radar gun tests). Other technologies, such as blockchain, particularly as a stand-alone solution, present issues of long-term data legacy, lack of standards to intermediate with blockchain data via private service providers, and data privacy/data integrity issues: for instance, blockchain has been hacked, see Joseph Adinolfi, Bitfinex Hack Shows How Bitcoin’s Blockchain Can Be a Liability, MarketWatch (Aug. 4, 2016), http://www.marketwatch.com/story/bitfinex-hack-shows-how-bitcoins-blockchain-can-be-a-liability-2016-08-03; Bitcoin Server Hacked: What That Means for the Future of Blockchain in CRE, Buildout (Aug. 2, 2017), http://blog.buildout.com/bitcoin-server-hacked-future-of-blockchain-in-cre/; and blockchain data has been seized by the government in the course of anti-money laundering enforcement, see Stephen Foley, US Seizes Accounts of Bitcoin Exchange, Fin. Times, May 15, 2013. There are also concerns about computational requirements to access and render blockchain data useful with its forecasted long-term scale and verification of information to prevent problems of “junk in, junk out” data.

17. See Mike Murphy, Scientists Say All the World’s Data Can Fit on a DNA Hard Drive the Size of a Teaspoon, Quartz (Feb. 17, 2015), https://qz.com/345640/scientists-say-all-the-worlds-data-can-fit-on-a-dna-hard-drive-the-size-of-a-teaspoon/.

18. See Daubert v. Merrell Dow Pharm., Inc., 509 U.S. 579 (1993) (announcing standards to determine admissibility of expert testimony in U.S. federal courts and to ferret out inadmissible “junk science,” later codified into the Federal Rules of Evidence).

19. Rose Jacobs, Chipping Away at Deforestation, Fin. Times, Mar. 21, 2012.