About the California Art Resale Law
(facts + opinion)
According to the law of California, when certain artworks are resold, the original artist must be paid 5% of the resale price. This applies when either the seller of the artwork lives in California or the sale itself occurs in California.
It has long been an issue for artists and other creative professionals that they are at a disadvantage in the commercial world because of the lack of royalties on resold work. The average artist does not make a lot of money in comparison to the amount of labor expended. Once a work is sold, the artist's economic stake in the original work ends. (Excluding copyright issues). However, sometimes the value of the artwork rises substantially over time. This often results because the artist’s later works are commercial successes or because of the success of the larger artist community of whom the individual is a member. One concept that is recognized through moral rights is the ongoing relationship that artists have with their work after it has been sold. Regardless, artists do not always benefit from a subsequent rise in value even though the work would not exist without their thought and effort. Considering these conditions, it seems only fair that the artist, who is responsible for the increase in value, should be compensated for a percentage of that increase.
The U.S. Constitution gave the ability to grant copyrights (and patents) to the Congress for the purpose of promoting "… the progress of science and useful arts...” (U.S. Constitution, Article I, Section 8). In terms of policy and in the context of the resale law, the concept of progress might be conceived as the ability of artists to create more work, further enhancing the development of visual communication and the evolution of related media. Artists are often more active (prolific) when they receive economic support, permitting more time and resources to be directed towards creating artwork. The more artwork and working artists; the more opportunity for advancement. The artworld is subsequently enhanced by a greater production of work; artistic communication benefits society and culture. From this perspective, progress occurs in the arts when artists are adequately supported for their social contribution.
The California law is a small, but somewhat flawed step in the direction of recognizing artists’ contribution to advancement of culture. Nevertheless, it is an attempt to rectify the disadvantages that artists face in the marketplace. Unfortunately, the law is confined to certain defined forms of "fine art" and does not apply to all works of art, only painting, sculpture, drawing and glass works. Nor does it apply to artworks that were resold for prices less than $1000.
The law is also limited to certain artists. Only artists who are either U.S. citizens or California residents -- residents who have lived in California for at least 2 years (at the time of the resale) can enforce the royalty payment. This obviously creates a disadvantage to foreign born artists, including legal resident aliens living outside of California, and those that moved to California less than 2 years prior. (All citizens, no matter where they reside are covered). It is peculiar that a law with a progressive agenda would have these limitations. The residency requirement most likely reflects political considerations at the time the law was drafted and a narrow attention to Constitutional requirements. It may also reflect a fear that foreign artists would move to California spontaneously to benefit from the law. (Not likely considering immigration issues). It should be noted the law does not appear to be in conflict with the anti-discrimination provisions of Berne Convention Treaty because it is concerned with only the physical artwork and not the copyrights.
However, it is to be hoped that California will strengthen this law by making it more inclusive to both the diversity of visual art forms (photo, digital, non-sculpture installation, video, multiple prints) that exists and artists regardless of residency status. In the interest of progress, it is also to be hoped that other states will enact art resale royalty laws to promote the arts and support artists. Artists that live in states without royalties laws, and California artists that would like to see enhancements to the present law, may consider contacting their state congressional representatives and encourage them to sponsor such bills, or utilize state poltical systems, such as petitions and ballot propositions. It should also be noted that art organizations (and individual artists) involved in selling artwork could include provisions in sales agreements that incorporate a resale royalty much like the law, but being inclusive of diverse art media and artists.
The text of the California law follows (emphasis added):
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(a) Whenever a work of fine art is sold and the seller resides in California or the sale takes place in California, the seller or the seller's agent shall pay to the artist of such work of fine art or to such artist's agent 5 percent of the amount of such sale. The right of the artist to receive an amount equal to 5 percent of the amount of such sale may be waived only by a contract in writing providing for an amount in excess of 5 percent of the amount of such sale. An artist may assign the right to collect the royalty payment provided by this section to another individual or entity. However, the assignment shall not have the effect of creating a waiver prohibited by this subdivision. |
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(b) Subdivision (a) shall not apply to any of the following: |
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(c) For purposes of this section, the following terms have the following meanings: |
(This version current on January 3, 2008. Subsequent revisions may have/will occur.)
Notes and Criticism:
The law only applies to art (re)sold for $1000 or more and works sold for more than the original sale price paid by the seller. No royalty payments are required for works that have gone down in value, or at least for those that are sold for less, regardless of actual value. (See paragraph b (4)). In the author's opinion, this $1000 bar creates a loophole for potential fraud (on the part of sellers) and also disadvantages artists in their early careers.
If the artist can’t be found by the seller, then the payment amount is transferred to the Arts Council. (See paragraph (a)(2) above). However, there is no specification for diligence required of the seller. This may result in the payment being made to the Arts Council simply because the seller does not want to expend time and money to locate the artist.
If the royalty payment isn’t made properly, the artist may sue the seller for the amount. (Paragraph (a)(3)). There is a time limit on the ability to sue for royalty payments. The limit is presently 3 years from the date of sale or 1 year after the artist learns of the sale, whichever is longer (as of January 2008). A lawsuit must be filed within these time limits to enforce the rights contained in this law. However, it should be considered that the winning party, either the artist or the seller, may be able to claim attorney costs from the losing party. In this author's opinion, the possiblility of the (likely economically disadvantaged) artist being responsible for the other party's attorney costs presents an unfair burden on the artist and a dampening on the pursuit of rightful payment. Preferrably, the cost of attorney fees should only be imposed upon the artist if the suit was filed in bad faith, but this is not contained in the text of the law. Also, it would be preferrable if there was a low cost alternative for these disputes, such as mediation.
Resources:
More California statues can be researched here: http://www.leginfo.ca.gov/calaw.html. For laws on art, check “civil code” and type in key words, such as “fine art.” Alternatively, to confirm that the above text is still the valid version, check civil code and type “986” in the box; scroll down the page to section 986.
California Arts Council and the search list for artists owed royalty payments under the law.
Also, see Morseburg v. Baylon
