Droit De Suite - Auction Houses Prevail In Round 1

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Droit De Suite Round 1: Auction Houses 1/ Artists – 0

Should artists be paid royalties on the resale of their works of fine art in much the same manner that authors and musicians receive copyright royalties on the sale of their works?  In Europe droit de suite laws allow for such royalty payments for artists but the concept has never taken hold in the United States.   But then there is California.

In 1977, California adopted its Resale Royalties Act, a so-called droit de suite law that grants artists a continuing interest in their works of art when it changes hands. The law holds that anytime a work is resold in California, or is resold by a California owner anywhere else in the world, the seller’s agent must pay 5 percent of any sale price over $1,000 to the original artist. The artist must only be a U.S. citizen or California resident to qualify for the California resale royalty.  It is the only federal or state jurisdiction which grants these rights.

It only took 35 years for an artist to act, but finally, the painter Chuck Close and three other artists (or their estates) filed a class action against the big auction houses, Sotheby’s and Christie’s, claiming that artists were owed untold millions in resale royalties.  On May 17, 2012,  Judge Jacqueline Nguyen, a judge on the 9th Circuit Court of Appeals who was sitting by designation in U.S. District Court in Los Angeles struck the claim stating that the Resale Royalties Act was a violation of the Commerce Clause of the United States Constitution.
Round One of the litigation goes to the auction houses but expect an appeal.