Resale Royalties: Beating Back the Bad

This past Friday the 9th Circuit (!) did an unexpectedly rational thing and struck down most of a California law which had established a state-wide system of artist royalties. The court found that the California law was in conflict with Federal law which, under the Copyright Act, does not recognize the right of an artist or their estate to receive a payment each time one of their works is resold to a new buyer. As a result, auctioneers like Sotheby’s, Christie’s, and Ebay can breathe easily for the time being. However, I suspect that in the end, this is a battle which they may ultimately lose.

The concept of droit de suite is something that has fascinated me for nearly two decades now, because even with this victory for common sense, I see it hurtling toward us in all of its ridiculousness. The basic premise is that artists or their estates are entitled receive royalties every time a work of theirs is resold, at a certain percentage or amount, up to a fixed period of years. In France, the term is for the life of the artist plus seventy years, but the time periods vary from country to country.

While originally designed to help the prototypical starving artist in his Parisian garret, the real effect was to make already wealthy artists and their estates or foundations even wealthier. Picasso, for example, has been dead for 45 years and died one of the wealthiest artist in history, but his beneficiaries are still collecting droit de suite payments every time a work of his is sold in France. Legislation proposed in Congress a few years ago, which I wrote about at the time, would have established an American version of this practice, but fortunately for everyone it died.

Among those who brought the case which ended up in the 9th was Contemporary Artist Chuck Close. Mr. Close, as it happens, is one of the richest artists in America, with an estimated net worth of $25 million. I don’t imagine the payments made much difference to his bottom line, but then without thinking about how the market actually works – wherein young, starving, unknown artists have to sometimes wait decades before their works command high prices, if they ever do in their own lifetimes – does not seem to have been either his or the other plaintiffs’ strong suit.

The interesting twist here for the future is the fact that the court’s decision turned on the issue of the federal law preempting the state law. Since the Copyright Act does not recognize droit de suite, the court reasoned, California could not impose it once the Copyright Act went into effect. However, anyone who works in intellectual property will tell you that the Copyright Act is ripe for revision, particularly because technology has changed rather dramatically since it first went into effect. Moreover, as I reported several years ago, the Copyright Office itself has come out in favor of establishing droit de suite for American artists.

Chances are, one day we will end up with an American version of droit de suite. But, if I may be so nerdy as to say so, it is not THIS day.