Effective January 1, 2017, art dealers operating in California will have a new certificate of authenticity requirement. AB 1570, recently signed into law by Governor Brown, requires a certificate of authenticity for all autographed items sold for over $5. The new law is an expansion of CA Civil Code §1739.7, which had regulated autographed sports memorabilia. AB 1570 removes the “sports” limitation, potentially bringing all non-sports autographs, including art, within its purview.
How is this different from current requirements?
California art dealers are already familiar with certificate of authenticity requirements through the Farr Act, which requires a certificate of authenticity for the sale of all fine art multiples. Those certificates must contain information such as the number of multiples produced and whether the multiple is a reproduction. Failure to do so could lead to civil penalties, including refund of the purchase price, or in the case of willful violation, treble damages.
In contrast, some of the information AB 1570 requires on the certificate include:
An express warranty by the dealer of the autograph’s authenticity;
A statement whether the dealer is surety bonded;
The name & address of the third party the dealer obtained the item from; and
Indication whether the item was autographed in the dealer’s presence.
The rest of AB 1570’s requirements can be found here.
AB 1570 also differs from the Farr Act in its enforcement. While the Farr Act has a statute of limitations requiring suit to be brought within three years of the item’s sale, AB 1570 has no such limitation. More importantly, AB 1570 creates a civil penalty of ten times actual damages if a buyer is ever injured by failure to receive such a certificate of authenticity. This creates a much more drastic punishment than the Farr Act and thus merits more attention.
Does this actually apply to the art market?
Although originally intended to combat fraud in entertainment memorabilia, AB 1570, as written, contains broad enough language to also encompass artwork. The new law defines a “collectible” requiring a certificate of authenticity as any autographed item selling for over $5. “Dealers,” on the other hand, are defined merely as any person “principally in the business of selling or offering for sale” such autographed items. Artwork often contains the original signature of the artist, which would place it under the scope of this law.
The bill’s author, former Assemblywoman Ling Ling Chang, dismissed concerns over the bill’s overbreadth by clarifying that the law was not meant to affect the autographed book and art market. However, California courts most likely will not give credence to statements by the former Assemblywoman to that effect.
In defining their rules of statutory interpretation, California courts have said that the motive of the bill’s author is irrelevant in looking at legislative intent. See California Teachers Assn. v. San Diego Community College Dist. (1981) 28 Cal.3d 692, 700. This is because the author’s opinion may not be reflective of the intent of the other legislators when they voted the bill into law. Rather, courts will only look at statements that were made as part of the official record or that constitute a summary of the Legislature’s discussion on the bill. Unfortunately, the legislative history of this bill is silent as to its scope. Because Assemblywoman Chang’s remarks were made after the bill was passed, it carries no relevance as to the Legislature’s intent and thus would probably not be considered if an art dealer were to challenge the statute’s application in court.
However, AB 1570 limits the rule to instances where the dealer “provides a description of that collectible as being autographed.” Technically then, dealers would not be required to provide a certificate of authenticity if they do not market the artwork as autographed/signed. Thus, art dealers could choose to merely not advertise the artwork as signed if doing so would not significantly increase the artwork’s desirability. However, because artwork’s value can greatly increase with the artist’s signature, especially for prints, dealers may find it necessary to adhere to AB 1570.
Steps to Take Now
Although it is unclear how courts will enforce this new law, it is certainly safer to start producing certificates of authenticity for all artwork dealers plan on advertising as signed. Because of AB 1570’s detailed requirements for the certificate, dealers should familiarize themselves with all the information that needs to be provided. To avoid executing a false certificate, dealers should also attempt to verify the authenticity of the signatures on artwork.
Additionally, art dealers now need to be more careful on what they market as “signed” artwork. Even though plate signing or a stamp of the artist’s signature might be considered “signed” in the marketplace, AB 1570 only considers hand-signed signatures as legitimate.
To avoid privacy suits, when purchasing signed artwork from private party sellers, dealers should warn the seller that their contact information will be posted on a future certificate of authenticity.
The threat of a civil penalty of 10x damages should not be taken lightly. Although the scope of enforcement of AB 1570 may be up in the air, art dealers should not wait to learn the law applies to them until it is too late.