One of the best-known endeavors of celebrated pop artist Takashi Murakami is his collaboration with Louis Vuitton. As part of Murakami's ongoing and controversial exploration of commercialism and art, the artist produced a series of textile patterns for the luxury goods manufacturer that have appeared on handbags, wallets, luggage and other merchandise since 2002.

In 2007-2008, the Los Angeles Museum of Contemporary Art presented a retrospective of Murakami's work entitled ©MURAKAMI. The exhibition subsequently traveled to the Brooklyn Museum. To underscore the artist's signature theme, the show included a functioning Louis Vuitton boutique where visitors could purchase Vuitton merchandise. In addition to items like handbags, the items for sale included a series of 16"x16" stretched canvases with Murakami's versions of the traditional Louis Vuitton pattern. The canvases consisted of the same material that had been used in the manufacture of the handbags. The works were produced in limited edition series of 100 in each of five different patterns and were described in a promotional brochure as being canvases that had been "revisited" by Murakami. Each canvas sold at an average price of $8,000, for an aggregate retail value of $4 million. Accompanying each print was a certificate of authenticity stating that "the Editioned Canvas . . . is an original artwork produced in collaboration between Louis Vuitton and artist Takashi Murakami. This artwork is signed and numbered by the artist on the chassis."

Buyer's Remorse

Art collector Clint Arthur visited the Murakami show at MOCA and, after taking some weeks to review the promotional brochure, purchased two of the canvases. At the time of his purchase, Arthur noticed the canvases were not numbered, even though the certificates of authenticity said they were. He nevertheless proceeded with the purchase.

Over the course of the next week, Arthur sent two letters to Murakami. The first complained about the fact that the canvases were not numbered; the second questioned whether each canvas was actually an "original artwork," as stated in the certificate of authenticity. In response to Arthur's letters to Murakami, Vuitton ultimately offered either to correct the certificates of authenticity or to rescind the sale of the canvases and return the purchase price plus interest to Arthur.

Arthur did not accept either offer and instead, in June 2008, filed a class action lawsuit against Louis Vuitton North America. At base, it appears that Arthur was driven to sue because he became convinced that the canvases were not original art, but merely scraps of canvas previously used to make Louis Vuitton goods. The case is being heard by the Federal District Court for the Central District of California.

The action essentially raises two claims under California law – first, that Vuitton had engaged in fraud in connection with the sale of the canvases, and second, that the canvases and the accompanying certificates of authenticity were in violation of California's Sale of Fine Prints Act.

After Vuitton moved unsuccessfully to dismiss the suit, what appears to have been a very contentious period of pre-trial discovery (the period during which each party discloses information about the facts of the case to the other). In one discovery-related order, the court stated, "if [Arthur] or the lawyers for either side engage in any shenanigans, this Court will not hesitate to impose sanctions." Indeed, the court did later impose sanctions in the amount of $6,000 on Arthur's attorney "to deter dubious lawyering."

In November 2009, Vuitton moved for summary judgment; in other words, it sought to have the case terminated by the court as a matter of law. The court substantially denied the motion, holding that there were sufficient issues of fact to require a trial of the case on the merits.

Was there fraud?

The court first addressed the three different statements that Arthur alleged as the basis of his fraud claim: that the canvases were authentic, limited-edition artworks by Murakami; that they were "original artworks"; and that they were autographed by Murakami.

The court held that Vuitton's failure to disclose that the canvases were made of material that Vuitton had manufactured for use in its handbags could not support a claim for fraud. Specifically, Arthur had not shown that it was misleading for Vuitton to describe the canvases as "Monogram canvases revisited by Takashi Murakami and presented in the form of editioned works" without affirmatively disclosing the exact nature and source of the material used. As the court explained, "The question in a nondisclosure case is whether the defendant knows of material facts, and also knows that those facts are neither known nor readily accessible to the plaintiff." The court said there was no evidence that Arthur could not have readily ascertained the nature of the material used for the canvases prior to purchasing them.

The court also found for Vuitton on the alleged misrepresentation that the canvases were "original artworks." The court cited Arthur's own deposition testimony that the "question of what is or is not art cannot be answered." As such, Vuitton's representation of the canvases as "genuine limited-edition Murakami artworks" was at best a "subjective" one that could not be "proven as fraudulent."

Nevertheless, the court allowed the fraud action to proceed as to the allegation that Murakami had not personally signed each canvas. The court found that a declaration submitted by Vuitton's Director of International Development of Production did not provide sufficient factual basis for a dispositive finding on the issue. The declaration stated that Murakami had conceived of the canvases and personally signed them, and included a photograph of Murakami signing the canvases. However, the declaration did not say that the Director had personally seen Murakami sign the canvases, so the authenticity of the signatures remained a question of fact for trial.

What is a "Multiple?"

California's Fine Prints Act ("FPA") requires certain information to be listed on a certificate of authenticity, including details about the process by which a "multiple" was produced. The certificates at issue here did not include that information. Vuitton argued that the FPA did not apply to the canvases because they were not multiples. The court disagreed, holding that the canvases constituted "prints" or "similar art objects" that were "produced in more than one copy." The court also rejected Vuitton's argument that the pieces were unique because they had each been hand mounted on a chassis; the court held that the chassis was not part of the artwork and noted that the California legislature probably did not intend for art dealers to be able to avoid the FPA requirements simply by mounting prints onto frames. Moreover, the court said, even if the chassis were part of the artwork itself, works with identical chassis would also qualify as multiples under the FPA definition.

What's at Stake?

Individually, if Arthur prevails on his fraud claim, he has the right to seek actual compensatory damages plus punitive and exemplary damages. Because the two canvases he purchased were among the first 50 of their respective editions, Arthur paid $6000 for each. His actual damages, therefore, are limited to $12,000. While the amount of punitive damages cannot be specifically predicted, California law requires that punitive damages bear some reasonable relationship to the harm suffered by the plaintiff who is actually before the court and not damage caused to others or society as a whole.

Under the FPA, if Arthur prevails, he is entitled to return his canvases to Vuitton and get his money back, with interest – exactly what he was offered by Vuitton in the first place. However, if he can show that Vuitton's violation of the statute was willful, he can also receive punitive damages of three times that amount – or $36,000, plus interest.

If the court ultimately certifies a class in the case (i.e., allows it to proceed as a class action), then the amount of damages at stake will be multiplied by the number of prints sold to the class members.

Lessons learned.

On a very basic level, the court's opinion demonstrates three truths that by now should be self-evident. First, like every other area of commerce, the art market is governed by laws, and it pays to know about them in advance and to comply with them. Had Vuitton included in the certificates of authenticity a description of how the canvases were produced – as required by the FPA – Arthur would not have had a colorable claim under the statute, and a significant amount of legal expense could have been avoided.

Second, one can only assume – or hope – that Murakami did personally sign each chassis, as represented by Vuitton, and that the failure to file a declaration from the artist to that effect to support the summary judgment motion was simply a strategic mistake. The point, though, is that if you represent to someone that something is true, make sure that it is. Period.

Three, sometimes people will bring lawsuits that seem frivolous and frustrating at first, but wind up having legal legs. A state court judge dismissed a related case brought by Arthur, calling it a "prime example" of "opportunistic litigation." The federal judge in this case referred to it in an earlier ruling as perhaps "misguided litigation." Nonetheless, it is a real lawsuit that has to be defended at real cost.

Litigation as performance art.

Setting aside the legal issues for a moment, the lawsuit itself can be seen as an acting out of the very theme of the MOCA show.

It is a rare thing for a museum to have a functioning boutique as part of an exhibition. Museums often have gift shops, but they are not usually located in the middle of the exhibition floor. The inclusion of the shop was not, however, as controversial as one might have expected. Why? Because the boutique was there as a concrete expression of a central theme of Murakami's work – an acceptance of (and enthusiasm for) the blending of art and commerce. Indeed, the theme is proclaimed in the title of the show – "©MURAKAMI."

The canvases that Arthur purchased in that boutique consisted of the same patterns that were on the handbags in the shop. Arthur says that he didn't know at the time of the purchase that the canvases were made from the same material as the handbags – and alleges that this means that they are not original works of art. As a legal matter, the court was right to conclude that Vuitton's failure to identify the source of the material did not constitute a basis for a claim of fraud. The information seems clearly to have been available to Arthur. It also seems that the answer to the more conceptual question – "is it art?" – was also clearly on display. In fact, it was the whole point. One can buy into Murakami's concept or not, but the show, the shop and the canvases all reflected the conflation of commerce and art that is central to the artist's work.

As of this writing, a jury trial is set for February 22, 2011. In the meantime, canvases from the exhibition have sold at auction at Sotheby's and Phillips at prices that range from $10,000 – $13,745.