Lest you think that this is some oddity that does not happen in the US it is an issue in Portland, OR. The Portlandia statue [1] sitting in public display and on a public building. The artist retains copyright. Raymond Kaskey, the sculptor, sued the studio that made Body of Evidence which used the statue in the background of some shots and won. While I can understand the artist's desire that the work of art is respected and the high likelihood that chotchkies and such would not pay to use the likeness. It is at conflict with fair use and parody.
Any art paid for with public funds should be in the public domain. It seems like an unfortunate oversight that the artist was allowed to retain copyright here.
There are many ways around that. Instead of buying the artwork, it could be on a 99 year lease. Or a museum wins a bid to host the artists exhibition for 10 years.
Another question - is there some threshold which triggers the switch to public domain? Eg, if the public pays for 10% of the cost, through taxes, and private donators pay for the rest, then is it still placed in the public domain?
I agree - I think the Portlandia case should not have let the artist keep that restriction on use. But I think it should be done as part of the contract, rather than a blanket rule that any public funds => public domain.
Sony had issues when filming the first spiderman movie; they had to pay likeness rights to landmark buildings (chrysler building, I think) and also had legal trouble over digitally replacing the ads in time square.
[1] https://en.wikipedia.org/wiki/Portlandia_(statue)