Nguyen defused the threat on Thursday in fascinating fashion. The judge agreed with lawyers for the auction houses (Skadden, Arps, Slate, Meagher & Flom for Christie's; Morrison & Foerster and Weil, Gotshal & Manges for Sotheby's) that California's law violates the Commerce Clause of the U.S. Constitution because it's an attempt by one state to control commerce outside of its borders. "Under its clear terms, the (Resale Royalties Act) regulates transactions occurring anywhere in the United States, so long as the seller resides in California. Even the artist -- the intended beneficiary of the CRRA -- does not have to be a citizen of, or reside in, California," Nguyen wrote. "For these reasons, the court finds that the (law) has the 'practical effect' of controlling commerce 'occurring wholly outside the boundaries' of California even though it may have some 'effects within the state.' Therefore, the (law) violates the Commerce Clause." (Skadden's Jason Russell made the Commerce Clause argument for the auction houses at oral arguments before Nguyen in March.)

The curious thing is that it took 35 years for the Resale Royalties Act to be struck down as unconstitutional. As Nguyen recounts in her ruling, California's legislative counsel wrote an opinion letter way back in the 1970s, when the state was drafting the law, noting that if California attempted to extend resale royalties to sales outside of the state, the act would be invalid under the Commerce Clause. (The state's concern, however, was that if it limited resale royalties to sales within the state, art dealers would stop doing business in California.) Though commentators on California's law often mentioned the Commerce Clause, defenses based on federal pre-emption and the Fifth Amendment's takings provision tended to get more attention.

Luxury brands expanded their presence with new stores, e-commerce and extensive advertising.

Having endured several years of economic difficulty, North Americans and Europeans who could afford luxury indulged. More people of average means engaged with luxury brands, purchasing an affordable item, if possible. And luxury brands continued to enjoy healthy sales in China and other fast growing markets with expanding middle classes.

Increased urbanization also contributed to the demand for luxury. And in both developed and developing markets, luxury increasingly was less about bling and more about appreciating craftsmanship and sharing the pleasure. Consumers focused less on collecting luxury labels and more on creating a unique personal look that often mixed luxury brands with more affordable options.

International travel increased the appetite for luxury in fast growing markets and drove category sales. The impact was large enough to earn the label TLC, Traveling Luxury Consumer. Travelers purchase about half of all the luxury goods sold in Europe, according to Goldman Sachs, with Chinese travelers accounting for about 18 percent of European luxury sales.

Although luxury goods predominately remained the domain of European and North American brands, several luxury brands originated in Brazil and Russian luxury brands started to appear. Even in China, where the upwardly mobile display luxury to denote status, consumers demonstrated a high level of brand knowledge and appreciation for craftsmanship.

Meanwhile, luxury brands continued to struggle to reach the right balance between protecting the exclusivity that to an extent defines luxury, and making the brand experience accessible to a wider audience.

Also important is the evident gap between the crown molding and the upper case — it sits “loosely” on the top, and it is neither integral nor attached.  Again this is what one wants to find, as from about 1765 onwards all crown moldings were separated from the upper case. With time it had become clear that all sorts of problems were developing by nailing the crown to the case. Splitting and other wood movement problems developed because all wood only shrinks across the grain — problems because the shrinkage of the case was from front to back, while the molding was shrinking top to bottom.  The integral crown was abandoned and replaced by the detached crown.

I always like to share my personal learning experiences. Were I in a client’s home, conscious of the balance of reasonable time spent for the value of a piece, I would have gone no further in my appraisal examination than a “let the fingers do the walking” examination of all outer edges for softness — the dulling of the original sharpness. That examination combined with all the other discovered consistencies would lead me to list it as authentic and place a value and move on. Buying a piece to sell in an antiques shop is not dissimilar in process from appraising — dozens of pieces must be examined in a day and only a few “winners” will be purchased, which can lead to the occasional “OOPS!”  This chest-on-chest we are discussing was purchased to sell in our Chapel Hill, North Carolina, shop. When it arrived, I walked behind it and nearly had a minor stroke — the next photo shows why.

Two problems leapt out, and they had to be researched in the authentication process. There is a vast change in the color of the oxidation across the back, and additionally the back of the detached crown is a very different color — yet all of the wood is deal and it is, if the piece is not a marriage, all of the same age and has been oxidizing (darkening) all at the same rate. The technical description is that there are two different oxidation problems:  disturbed oxidation and inconsistent oxidation.  Time to explore.

It is always helpful to start with what is right before pursuing answers to problems.  All woods exposed to equal amounts of air and dirt oxidize at the same rate, assuming they are the same type of wood. The back of the upper and lower case is deal. Furthermore the construction is identical:  two large boards overlapped by a smaller board — perfect consistency top to bottom.

Kevin Ching, chief executive officer of Sotheby’s Asia, said on Friday that mainland Chinese buyers accounted for only 20-25 per cent of the $316m sales from last month’s spring auctions, which he blamed on the country’s moves to tighten access to credit. Just six months ago, mainland buyers accounted for 44 per cent of the $411m sales recorded in Sotheby’s autumn auctions in Hong Kong.High quality global journalism requires investment.

“There used to be five to six mainland Chinese individuals who would bid like crazy here but they did not make any offer in the spring sales,” Mr Ching said at the opening of the new Hong Kong gallery, which coincided with the city’s annual art fair.

The boom in Chinese demand has helped the top end of the art market recover to 2008 prices after the global financial crisis, and is the main reason why Hong Kong has become the world’s third largest art auction market by sales. In 2010, nearly half the buyers at Sotheby’s Hong Kong auctions were mainland Chinese.

Both Christie’s and Sotheby’s set new records for top lots in New York sales recently but fears that the art world would be hit by a slowdown in the Chinese economy and the eurozone crisis have sent Sotheby’s shares down 25 per cent this month. The only publicly traded big auction house reported a $10.7m net loss for the first quarter.

Despite China’s monetary tightening, it is unusual to find an example of the country’s wealthiest spending less. Luxury retail and Macau’s casinos, which rely on Chinese high rollers, are still booming. Macau’s April gaming revenue was up 22 per cent from a year earlier.

Cool and Dry: The Care and Preservation Of Photographs
The preservation of photographic prints has been a concern among photographers and collectors since the earliest decades of the medium.  This article discusses how temperature, relative humidity (RH), light, pollutants, handling and enclosures affect any collection of photographs.

http://www.chubbcollectors.com/Vacnews/index.jsp?form=2&ArticleId=294

Antique Furniture and Diminished Value
One of the most commonly raised questions amongst art appraisers is how to best approach diminished value with works of art that have been damaged and subsequently conserved or restored. This article will explain some points to be aware of when an unfortunate damage occurs within the furniture collecting field.

http://www.chubbcollectors.com/Vacnews/index.jsp?form=2&ArticleId=295

Asian Textiles: A Guide To Fineness For Appraisers
Professional textile appraisers identify characteristics keyed to the Getty Identification Standard such as description, origin, size and material, but they must also judge various quality and value characteristics. This article suggests ways to look at the textiles of Korea, China, Japan, India, Southeast Asia and Indonesia with regard to degree of excellence, pointing out where an object may have a far higher value and warrant the help of an expert.

http://www.chubbcollectors.com/Vacnews/index.jsp?form=2&ArticleId=296

Confidence in the Chinese Contemporary art market drops 6% as market growth comes off the boil

The confidence in the Chinese Contemporary art market has been increasing since ArtTactic launched its first Chinese survey in February 2009. However, recent findings could suggest that the market is slowing down after 3 years of rapid growth.

The ArtTactic Confidence Indicator has decreased 5.7% from 80 in November 2011 to 76 in May 2012. The Confidence Indicator remains firmly above the 50 level equilibrium level where positive and negative sentiment is in balance. This positive level confirms that the majority of experts remain optimistic towards the Chinese Contemporary art market, even though uncertainty surrounds the rate of growth over the upcoming 6 months.

In addition, the ArtTactic Economic Indicator has also shown a drop of 6.7% from last November, on the back of increasing concerns about the Chinese economy’s slowing growth rate.  In the first quarter of 2012, China’s annual rate of economic growth eased to 8.1%, its fifth successive quarter of decline.  This value marks China’s lowest rate of growth in nearly three years.

For the three months ended March 31, 2012, operating revenues totaled $105.0 million, a $14.6 million, or 12%, decrease from the prior period. This decline is primarily due to a $172 million, or 29%, reduction in net auction sales. In 2011, Sotheby's had unusually strong first quarter auctions, led by Looking Closely, the exceptional single owner sale in London of Impressionist and Contemporary Art which alone totaled $132 million in net auction sales. Partially offsetting the decline in net auction sales is an improvement in auction commission margin, from 16.4% in the first quarter of 2011 to 18.1% in the first quarter of 2012. This margin recovery is primarily attributable to the sales mix, as there was a 23% decrease in the number of lots sold with a hammer price over $1 million, as well as an increase in the average seller's commission rate earned in the current period and a lower level of shared auction commissions. In addition, private sale commission revenues improved by $7 million, or 85%, primarily due to increased sales of high value property.

Net loss for the three months ended March 31, 2012 was ($10.7) million, or ($0.16) per diluted share, as compared to net income of $2.4 million, or $0.03 per diluted share in the prior period. This decrease is largely due to the aforementioned decline in net auction sales and revenues, as well as a 5% increase in operating expenses, in large measure attributable to investments in support of Sotheby's strategic initiatives, including the development of Sotheby's presence in growth markets. The comparison to the prior period is also impacted by a $3 million recovery recognized in the first quarter of 2011, resulting from the favorable resolution of a legal matter.

Because of the seasonal nature of the art auction market, first and third quarter results have historically reflected a lower volume of auction activity when compared to the second and fourth quarters and, typically, a net loss due to the fixed nature of many of Sotheby's operating expenses. As a result, first quarter results are typically not indicative of expected full year results. Management believes that investors should focus on results for six and twelve month periods, which better reflect the auction market business cycle.

"As the excellent results of our May auctions make abundantly clear, the first quarter results are in no way reflective of a slowdown in demand for works of art around the world," said Bill Ruprecht, President and Chief Executive Officer. "Our first quarter results are largely comparable year on year were it not for the exceptional single owner sale Looking Closely in the prior year.

"Art continues to be viewed as an attractive asset class by collectors around the world," continued Mr. Ruprecht. "Particularly encouraging, private sales showed good momentum in the first quarter, with commission revenues up by 85%. Going forward private sales will continue to be an area of strategic focus, as will the web and our presence in high growth global markets where we are already seeing meaningful results."