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California Artists’ Resale Royalty Law Survives Court Ruling, with Small Change

A drawing by Ad Reinhardt from the 2013 exhibition 'Ad Reinhardt' at David Zwirner (photo by the author for Hyperallergic)
A drawing by Ad Reinhardt from the 2013 exhibition ‘Ad Reinhardt’ at David Zwirner (photo by the author for Hyperallergic)

On Tuesday the US Ninth Circuit Court of Appeals delivered its ruling on the California Resale Royalty Act (CRRA), deeming it unconstitutional but, unlike the District Court that examined it back in 2012, deciding that the offending clause could be removed without having to strike the entire act. The decision is being heralded as victory by resale royalties advocates, who are hoping that similar legislation can be implemented at the federal level; most developed countries have laws in place to ensure that visual artists are compensated when their works are sold at auction.

The California law has been on the books since 1976 and requires sellers to pay artists 5% of the sale price when an artwork is sold at an auction in the state, or at an out-of-state auction by a seller based in California. It came under examination after artists Chuck Close and Laddie John Dill and the estate of sculptor Robert Graham filed a lawsuit against Christie’s and Sotheby’s demanding resale royalties from past auctions. Both the Ninth Circuit Court of Appeals and the District Court found that the provision that applies to all sellers based in California regardless of where the sale took place violates a clause in the US Constitution that prevents one state’s laws from affecting interstate commerce.

“For example, if a California resident has a part-time apartment in New York, buys a sculpture in New York from a North Dakota artist to furnish her apartment, and later sells the sculpture to a friend in New York, the Act requires the payment of a royalty to the North Dakota artist — even if the sculpture, the artist, and the buyer never traveled to, or had any connection with, California,” wrote Judge Susan Graber in the Ninth Circuit Court of Appeals decision. “We easily conclude that the royalty requirement, as applied to out-of-state sales by California residents, violates the dormant Commerce Clause.”

However, while the District Court claimed that this made the entire CRRA unconstitutional, the Ninth Circuit Court of Appeals decided that the six offending words — “the seller resides in California or” — should be stricken, rather than striking the entire act.

“ARS (Artists Rights Society) has every reason to believe that the California Resale Royalty Act will survive as amended,” said ARS founder and president Theodore Feder in a statement on Wednesday. “It follows in our view that a Resale Royalty Act should be instituted on a federal level, and for that reason we are ardent supporters of the measure introduced by Congressman Jerrold Nadler of New York, called The Art Act, which would apply the royalty to all the states.”

Indeed, federal legislation requiring that sellers pay visual artists royalties from auction sales of their work has been put before Congress repeatedly since the late 1980s, the latest version being Congressman Jerrold Nadler‘s (D-NY) American Royalties Too (ART) Act. On Monday Feder and other members of ARS held a luncheon in Midtown Manhattan in support of Nadler’s bill. In attendance were representatives of the estates of Roy Lichtenstein, Mark Rothko, and other artists, as well as the International Confederation of Societies of Authors and Composers (CISAC), VAGA, and other artists’ rights groups that have a stake in getting the bill passed.

As Nader explained, recent developments like the United Kingdom’s adoption of resale royalties legislation and the US Copyright Office’s recommendation that the ART Act be signed into law suggest that the tides are turning. He stressed that in spite of Sotheby’s and Christie’s lobbying efforts against the ART Act, the greatest roadblock to its passage is how little most people and politicians know about the issue. “Inertia is always an obstacle to new legislation,” the congressman said before adding: “I think we will be successful, one day.”

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