Resale Royalties for Fine Artists

dandelions
Like dandelions, the issue of resale royalties for fine artists just keeps coming back. And, like dandelions, it keeps spreading, having most recently migrating from continental Europe to England, and the United States seems poised to take on the issue – again.

In December of 2011, New York Democratic Representative Jerrold Nadler and Wisconsin Democratic Senator Herb Kohl jointly introduced the Equity for Visual Artists Act that would pay artists a percentage of the sale price of their work when it is sold on the secondary market, and the federal Copyright Office solicited comments on the proposal from the public, and the comments have been published online (www.copyright.gov/docs/resaleroyalty/comments/77fr58175). They make interesting reading.

The proposed bill would set aside seven percent of the price of artworks resold at auction for more than $10,000, with half of the money going to the living artist or the artist’s heirs and the other half to a fund for nonprofit art museums. A collecting society would be responsible for collecting and distributing the resale royalty.
The concept of resale royalties is based on the view, codified in the Berne Copyright Convention to which the United States and 62 other countries around the world are signators, that artists maintain an ongoing relationship with the works they create. Intentionally altering, damaging or destroying a work of art may adversely affect an artist’s reputation, and laws in all of these countries (in the U.S., the Visual Artists Rights Act) permit artists to sue the owners of their work for damages. Resale royalties (or droit de suite in France, where the concept was first enacted into law in 1920) continue that idea of the artist’s connection with their work, but in a different direction. The value of the artwork may increase over time as a result of the artist’s rising level of success and prestige. An an example, there would be little market for, or interest in, Picasso’s early work if it weren’t for his later work, which established his significance in the history of art. That early work was sold for very little money and, supporters of resale royalties contend, Picasso — or in this case, his heirs — deserve a percentage of the increased value, because the artist is responsible for the increase. The German resale royalty statute is premised on the view that the increased value represents the amount of money the artist should have received originally: Not paying a royalty to artists punishes them for their prescience. Belgian law identifies the increased value as “unjust enrichment” on the part of the collector. Yet another argument for resale royalties, advanced by its supporters, is that the resale of a work of art like a replay of a song, and therefore the author is entitled to compensation each time it is replayed.

The U.K. adopted an artist resale royalty law six years ago, instituting it in two stages. From 2006 to the end of 2011, the royalty – which was based on a sliding scale based on the value of the resold artworks over €1,000 (starting at four percent for items selling up to €50,000, rising to one-quarter of one percent for pieces exceeding €500,000) – applied only to living artists; as of January 2012, the law expanded to include the heirs and estates of deceased artists.

The law was controversial before and since its enactment, and representatives of the British Art Market Federation has worried publicly that the statute would drive buyers and sellers away from London to other countries where no resale royalty law exists. However, many U.K. dealers have not found the resale royalty law a hindrance on their trade. “Sales have been as healthy as before the law came into effect,” said Glenn Scott-Wright, director of London’s Victoria Moro Gallery. “Clients haven’t indicated that they were unwilling to buy because of the royalty. In fact, there hasn’t really been much discussion of the law.”

According to a spokeswoman for the U.S. Copyright Office, Gayle Osterberg, there may be an additional call-for-comments period if other questions about the legislation are raised, and there also may be public hearings.

The Nadler-Kohl bills are not the first time that artist resale royalties have been proposed in Congress as an amendment to the federal copyright law. The now-deceased Massachusetts Democratic Senator Ted Kennedy offered a bill in the late 1970s, modeled after California’s law that was enacted in 1977, for which there were hearings but no action taken. The California law was struck down as unconstitutional last May by a federal district judge in Los Angeles, Jacqueline H. Nguyen, who ruled that the state’s effort to control art sales “wholly outside the boundaries” of California violated the federal government’s commerce clause. Judge Nguyen’s ruling has been appealed.

Daniel Grant

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