Document Type

Article

Publication Date

2014

Abstract

Répétition d’un Ballet, the famous painting by French artist Edgar Degas, sold for $401,000 in 1965. The jubilant seller bragged that Degas originally asked a mere $100 for the painting. In his early career, celebrated American artist Norman Rockwell sold original works like Homecoming Marine and Breaking Home Ties for a few hundred dollars each. In the last decade, these paintings were resold for $9.2 million and $15.4 million at Sotheby’s auctions, but the Rockwell estate received nothing in these transactions. Over the centuries, great wealth in the arts has rarely translated into great wealth for the artist. Since its inception in France, the resale royalty known as the droit de suite has aimed at remedying this perceived injustice.

Although a resale royalty right is currently recognized in seventy-nine jurisdictions, California is the only American jurisdiction to have adopted it. The California Resale Royalties Act (CRRA), enacted in 1976, grants visual artists the right to collect a 5% royalty on the total sales price each time their works are resold in California or by a resident of California. The fate of the California Resale Royalty Act, however, currently rests with the U.S. Court of Appeals for the Ninth Circuit.

Unfortunately for the artists who have sued eBay, Sotheby’s and Christie’s to collect royalties under the law, the California Resale Royalty Act violates the U.S. Constitution. The CRRA requires a 5% royalty to be withheld from the sales price for the artist of any work of art that is sold by a California resident, irrespective of where that sale takes place. Granting the auction houses’ motion to dismiss, the District Court for the Central District of California ruled that the law exceeds the constitutional limitations on a state’s ability to regulate transactions occurring outside its borders. The California legislature recognized that “were the CRRA to apply only to sales occurring in California, the art market would surely have fled the state to avoid paying the 5% royalty.” Yet this extraterritorial feature of the CRRA has led to its undoing. State laws that reach beyond their borders to regulate sales in other states are subject to scrutiny under the Supreme Court’s dormant commerce clause jurisprudence. As the California governor and legislature were warned before signing the bill into law, the CRRA’s extraterritorial reach is an affront to the U.S. Constitution.

On the other hand, all hope is not lost for an American droit de suite. Perhaps recognizing the futility of state-level legislation, the Copyright Office recently retreated from its prior disapproval of federal droit de suite legislation. The Copyright Office now “believe[s] that Congress may want to consider a resale royalty,” and has issued a comprehensive report with a succinct list of practical recommendations for effective implementation and enforcement. Although artists may have lost the battle with the CRRA, the Copyright Office’s report indicates that they may yet be able to win the war for a resale royalty.

Comments

Winner of the 2014 Andrew D. Fried Memorial Prize.

Download

Share

COinS