Six years ago, a resale royalty law was passed in the United Kingdom requiring a percentage of profits from secondary-market art sales to be paid to the artist or her estate.  Some cried that the law would cripple the British art market, positing that collectors would not buy contemporary art if they also had to pay a resale royalty on top of already skyrocketing prices.  But these fears have not been realized, as demonstrated by the continuing trend of healthy sales for modern and contemporary works.  A Christie’s spokesman said that the royalty law has, in fact, proven to be “pretty irrelevant” and not much of a topic for discussion in the art world.

Resale royalty laws have been a topic of discussion in America too.  Earlier this year, a California federal judge ruled unconstitutional that State’s Resale Royalties Act, which provides that “[w]henever 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.”  Cal. Civ. Code § 986(a).  In handing a defeat to artists, the court held that the CRAA violated the Commerce Clause of the United States Constitution by improperly attempting to collect royalties from transactions between non-California parties occurring outside California.  See Estate of Graham v. Sotheby’s Inc., 860 F. Supp. 2d 1117 (C.D. Cal. 2012).

Any perceived victory by auction houses may potentially be short-lived, however, in light of proposed legislation introduced by the United States Congress last year.  The Equity for Visual Artists Act of 2011 (“EVAA”), sponsored by Rep. Jerrold Nadler (D-NY) Sen. Herb Kohl (D-WI), provides for a nationwide artist resale royalty on somewhat similar terms as California’s statute.  The EVAA would require auction houses to set aside seven percentage of any sale larger than $10,000, with half of that money going to the artist who created the work and half going to nonprofit art museums.  Time will tell whether the statute withstands political and/or legal challenges.   Perhaps equally important is what effect the statute does have if it is upheld—if Great Britain’s statute is any indication, then the answer may be, not much.