United States: Artists And Auction Houses Declare Victory Over California Artists' Resale Royalties Statute

Artists and auction houses both declared victory on January 11 when the U.S. Supreme Court denied certiorari in a case concerning the constitutionality of the California Resale Royalties Act of 1976 (CRRA). But curiously, the artists and auction houses were on opposite sides of the case. The CRRA recognizes an artist's "moral right" to the resale value of his or her work and is currently the only legislation in the United States recognizing that right. Under the CRRA, auction houses must pay the artists 5 percent of the resale value of their works that are sold at auction for more than $1,000.

Helping Starving Artists or Helping Famous Artists?

Proponents of resale royalties say that it allows visual artists to fairly hold on to the value of their art in a manner consistent with musicians and authors. Resale royalties are meant to allow artists who sell works that later appreciate in value to share in the windfall that would otherwise benefit only the seller.

Opponents say that artists already have the same rights as musicians and authors in that they collect royalties on reproductions of their works, and that resale royalties serve only to depress the market and enrich already successful artists. The redistributive effects, they say, are imagined.

The Impact of the Supreme Court's Decision

The CRRA, which had been declared unconstitutional by the California District Court, was brought back to life by the Ninth Circuit, which declared that only the provision affecting out-of-state sales violated the dormant commerce clause. Under that ruling, the CRRA survived, but only in California.

Following the denial of certiorari, supporters of artists' resale rights are declaring victory because the statute, which was struck down by the trial court, survives. Opponents point to the inability to enforce the CRRA outside California as a major win for the auction houses.

What's Next?

At least 70 jurisdictions around the world have adopted some form of legislation protecting artists' resale rights, most importantly, all member states of the European Union. But the United States and China — two of the world's most important art markets — have not. A federal version of the CRRA, the Equity for Visual Artists Act, has yet to pass, giving both sides ample opportunity to shape the future of artists' rights in the United States.

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