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A California district court lifted a big, multi-million-dollar burden off the backs of galleries and auction houses in May when it struck down the state’s 36-year-old Resale Royalty Act. Many artists and dealers had never even heard of the law until two years ago, when Mark Grotjahn sued collector Dean Valentine for allegedly reselling the painter’s work without ponying up five percent in royalties, the amount owed artists for original works resold in California under the act.
But those in the art investment business shouldn’t sit back just yet. The U.S. Copyright Office announced yesterday that it’s opening an inquiry into a possible federal resale royalty law. The move comes after pressure from the Library of Congress and the senate, which is considering a proposed set of “equity for visual artists” bills.
“I think the Copyright Office put off the inquiry for some time,” said Los Angeles art law attorney Christine Steiner in an email. And while it is in its early stages, “I would note that this issue may have some legs.”
The office raised the same question 20 years ago, finding then that there was “insufficient economic and copyright policy justification” to enact federal regulations. Indeed, California’s law, which has been on the books since 1976, had since realized only “mixed success,” the report noted. Artists, too, haven’t had much luck realizing this long-squandered revenue stream: Chuck Close had his class-action suit against Christie’s and Sotheby’s dismissed last year, Grotjahn and Valentine settled and, in the end, the district court found the California law unconstitutional under the commerce clause. (It’s currently awaiting appeal in a higher court.)
But the art market today is a different beast than it was in the 1990s. The number of countries who have gotten on board with resale royalty laws has doubled since then to more than 60, including the U.K. According to Steiner, the copyright office promised it would revisit the issue if there were any major shifts in the landscape, and “the European harmonization provided just that change.”
But not everyone agrees that a European model will work in the U.S. One New York attorney who has argued many artists’ rights and intellectual property cases said that the U.S. legal framework doesn’t account for artists’ “moral rights.” Here, “art is, in legal terms, just a commodity, a piece of personal property to be bought and sold. In Europe, where art is considered an extension of the artist’s personality, it’s much easier to protect the artist’s rights to prevent any invasions to that personality.”
The current senate proposal, introduced by Wisconsin’s Herb Kohl and New York’s Jerrold Nadler in December, recommends that a seller pay a 7% royalty on any work resold for at least $10,000 at auction. Half of that would go to the artist and the other half into a U.S. escrow account designated for arts charities.
The public is invited to weigh in to the copyright office’s inquiry, and can leave comments here.
— Rachel Corbett
This story originally appeared on Market Watch, ARTINFO’s art market news blog.
