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Christie’s and Sotheby’s Sued over California Resale Rights

Posted by Nicholas O'Donnell on October 20, 2011 at 5:56 AM

Christie’s and Sotheby’s were sued this week by several artists (including Chuck Close) as class action plaintiffs, alleging violations of California’s Resale Royalty Act. The Resale Royalty Act is one of the few statutes in the United States recognizing artists’ rights to some of the proceeds of the sale of their works, even after the initial sale, a concept known as droite de suite. As noted by the Art Law Report last month, there have been noises at the federal level about reviving droite de suite as it is used in Europe, but to date little concrete change has materialized. A useful definition of the idea can be found, with some irony, at the Christie’s website.

In general terms, the California statute, Civil Code Section 986, requires royalties to the original artist if (a) the artist at the time of the sale is a U.S. citizen or California resident for at least the last two years; (b) the seller resides /the sale is in California; (c) the work is an original painting, drawing, sculpture or original work of art; (d) the sale yields a profit to the seller at a price or fair market exchange of more than $1,000; and (e) the work is sold during or within 20 years of the artist's lifetime. Exceptions exist, however, where the sale is the initial sale of the work by the actual artist with title to the work; the resale is by a dealer within 10 years of the initial sale so long as any sale in between was between dealers; or the sale is of a work of stained glass artistry in a fixed installation on real estate sold with that real estate.

Now the world’s two most prominent auction houses are defendants (the Christie’s complaint is here, and the Sotheby’s case complaint is here). Much skirmishing will follow about whether there is indeed a recognizable class of plaintiffs, and only then will the merits of the royalty claims be resolved.

If nothing else, the case hearkens back to a critical component of the droite de suite debate: so long as there are inconsistent regulatory regimes (i.e. New York and California), uncertainty follows.

Topics: Legislation, Chuck Close, Christie's, Collections, droit de suite, California Resale Royalty Act, Sotheby's

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About the Blog

The Art Law Report provides timely updates and commentary on legal issues in the museum and visual arts communities. It is authored by Nicholas M. O'Donnell, partner in our Art & Museum Law Practice.

The material on this site is for general information only and is not legal advice. No liability is accepted for any loss or damage which may result from reliance on it. Always consult a qualified lawyer about a specific legal problem.

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