The War:

A bunch of artists, including Chuck Close and the Sam Francis estate, sued Christies and Sotheby’s for millions of dollars in back royalties under the California Resale Royalty Act. This law obligates the buyer and dealer in a fine art sale to pay the artist 5% of the sale price.This law is the only one of its kind in the U.S.

The Winner:

Sotheby’s, Christies, Art Dealers Everywhere won (so far).

The federal District Court judge found the statute pushes its tentacles too far into interstate commerce, violating the “dormant” Commerce Clause.  Because the statute applies to transactions where either the artist lives or the sale takes place in California, she found its offending provisions too encompassing to save the statute. It didn’t help that the California legislators who created the law were on the record trying to impose royalty obligations on out of state sales.  The law – for now –is gone. Appeals may be on the way.

Moral of the Story

Galleries, Dealers and Auction Houses: Relax – you probably don’t have to pay royalties under the California Resale Royalty Act anytime soon.

State legislators: If you hope to regulate stuff outside your state, you don’t help your cause by sticking your hopes in the legislative record.

Here is the Opinion.

We help people make, sell and monetize art, and we back our clients in fights over art. Our team of 40 people helps art happen around the world.

Scott Hodes has been in active practice for more than four decades. As a corporate lawyer, he represents clients in sophisticated corporate transactions from structuring of corporate entities to financing at all levels from private placements to public offerings, and frequently, to counseling clients in merger and acquisition activities. He also handles complex financing transactions as counsel for a variety of large Chicago banks.

Mr. Hodes also practices in the field of art law and represents a number of prominent artists, dealers and collectors in all aspects of their business. He has published three books on art and the law, and has written and spoken extensively on this subject.

His areas of expertise include:

• Transactions
• Gallery/dealer sales
• Museums
• Artist representation
• Consignments
• Monetize IP
• Art security financing
• Fine art publishing
• Art expos and conventions
• Public art installations
• Art investment funds
• Insurance coverage
• Art appraisal issues

Scott works in the firm’s Chicago office. He can be reached by email or at (312) 602-5030.

Coco S. Soodek is a deal lawyer who helps creative people of all types make things and make money from those things.

Specializing in commercial contracts and protection and exercise of intellectual property rights, Coco helps artists produce monumental works of public art, consign and sell their works, resolve disputes with dealers and protect their ownership and moral rights in their work. Coco also helps dealers and collectors structure and document their commercial relationships.

 Specifically, Coco has:

• Negotiated with major American city governments to facilitate production of massive works of public art
• Represented one of the first V.O.D. providers in content aggregation, licensing and technology distribution.
• Handled advertising and branded entertainment deals.
• Drafted talent releases and talent appearance agreements.

Her areas of expertise include:

• Transactions
• Gallery/dealer sales
• Museums
• Artist representation
• Consignments
• Monetizing IP
• Art security financing
• Fine art publishing
• Art expos and conventions
• Public art installations
• Insurance coverage
• Art appraisal issues
• Valuation

Coco’s favorite artists are:

• Barbara Hepworth
• Chris Jordan
• Lincoln Schatz
• Bernard Buffet
• Christo & Jeanne-Claude

Coco works in the firm’s Chicago office. She can be reached by email or at (312) 602-5120.

John Barrie’s practice focuses on federal and state tax controversy and transactional matters. He regularly represents individuals and business entities art ownership and valuation tax issues.

His areas of expertise include:

• Transactions
• Estate, tax, govt
• Estate planning
• Disputes re: estate taxes
• Estate planning for artists
• Valuation

John works in the firm’s Washington, D.C. office. He can be reached by email or at (202) 508-6051.

Charlotte Ito specializes in estate and charitable planning and administration. She helps individuals and families plan their estates, maximize their art collections and preserve the value of their estates. Charlotte represents estates in the valuation and taxation of art collections and assists collectors to create and implement charitable gifting programs.

John-Paul (JP) Benitez is a young corporate deal lawyer who helps Coco and the rest of the Art Law Team make things and make money from those things.

 
Specifically, JP has:

• Worked and negotiated with advertising agencies and their clients. Represented an audio-visual artist negotiate a cooperation agreement with a state institution for a documentary film. 
• Managed relationship and operational needs of promoters and producers of live music events.
• Drafted talent releases, IP licenses and artist appearance agreements.

JP’s areas of expertise include:

• Copyright and Trademark advice and management
• Transactions
• Artist representation

JP’s favorite artists include: 

• Lincoln Schatz
• Banksy
• Christo & Jeanne-Claude
• Velazquez
• Tony Clifton
• Botello

JP works in the firm’s Chicago office. He can be reached by email or at (312) 602-5017.

Jason Berne specializes in banking and finance and has extensive experience helping banks and borrowers collateralize loans with works of art and antiquities.

His areas of expertise include:

• Transactions
• Art security financing

Jason works in the firm’s Chicago office. He can be reached by email or at (312) 602-5043.

Evan Chuck is a commercial lawyer specializing in cross border transactions. Splitting his time between Los Angeles and Shanghai, where he leads that office for Bryan Cave, Evan has managed deals in China, Philippines, Malaysia, Taiwan, South Korea, Singapore, Japan, Thailand, Italy, Germany and Mexico, and the US. He helps exhibitors navigate trade laws to import and export works. Evan has rare experience in art exchanges between organizations in the US and China. 

 His areas of expertise include:

• Transactions
  • International/cross border transactions
  • Export controls
  • International trade

Evan works in the firm’s Los Angeles office. He can be reached by email or at (310) 576-2126.

Anita Esslinger specializes in commercial and corporate deals across the world. Having emigrated to the UK from the US, Anita has unique and invaluable knowledge and perspective on doing business in countries around the world. As an art lawyer, Anita helps people comply with UK Export Controls and Customs Issues involving artworks and antiquities.

Her areas of expertise include:

• Transactions
• Gallery/dealer sales
• Museums
• Art expos and conventions
• International/cross border transactions
• Export controls
• International trade

Anita works in the firm’s London. office. She can be reached by email or at 44 20 3207 1224.