Dumb California Resale Royalty Act Struck Down By Smart New Ninth Circuit Judge
Federal Court Judge Jacqueline Nguyen has declared the 30 year old California Resale Royalty Act unconstitutional. All you need to know about this law can be gleaned from the picture at the signing. In it, the 1976 version of Governor Jerry Brown is trying to show how hip he is by sponsoring terrible legislation that ultimately hurt the very people it was trying to help. Sounds familiar, I know.
It purported to right the injustice that occurred when a fat, wealthy, monocle-wearing art dealer sold some poor slob's work at an enormous profit while the artist toiled away unrewarded and unrecognized until long after his death. We've all heard this story. The problem is that there was no problem. Like most governmental intrusions in the free market, it was legislation (and photo-ops) in search of a problem. The act required a five percent royalty on profitable art sales to go back to the original artist if the sale occurred in California or the seller resided in California.
First, most art dealers are dedicated to raising the profile and financial well-being of artists. They are not disinterested speculators. They are, for the most part, risk-taking patrons who take loss after loss until they finally hit it big with one piece or another--maybe.
If the art starts creeping up in price (or if it skyrockets), the free market creates a scenario where the artist will benefit with his or her new works. No one is going to get screwed here. Now enter the government. The poorly-drafted legislation slowed down the art market and hurt risk takers' ability to help deserving artists. True art supporters and gallery owners I spoke with (who don't want to be named) said this law only caused problems for both gallery owners and artists. For every surprise check an artist received, the artist was actually being hurt in the long run because it just became a hassle to let the free market truly drive up prices.
Justice Nguyen did not rule on the act's fairness to artists. To her credit, she saw state legislation that attempted to regulate commerce in another state and rightly struck it down. She is now on the Ninth Circuit. Good for her--and good for the region if she keeps up this common sense.