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February 20th, 2014
Legislature to Introduce Bill Affording Resale Royalty Right to Visual Artists
In early 2014, Congressman Jerrold Nadler intends to introduce to Congress a revised bill to amend the United States Copyright Act (the "Copyright Act") to provide visual artists a resale royalty right (also known as droit de suite). The new bill will replace a prior version of a bill for the Equity for Visual Artists Act, which was originally introduced by Rep. Nadler in 2011, but stalled in Congress. If the bill passes, the United States will for the first time require a royalty to be paid to artists for sales of artwork on the secondary market.
The revised version of the bill will reflect many of the findings contained in a December 2013 report prepared by the United States Copyright Office (the "Copyright Office"). In that report, the Copyright Office stated that it now supports a resale royalty right for visual artists. That analysis is a change of course for the Copyright Office, which in 1992 issued a report opposing the enactment of a resale royalty right. In the 2013 report, the Copyright Office noted that seventy countries have enacted resale royalty provisions in their laws, and over thirty of them have enacted those laws since 1992, including the United Kingdom, which has one of the world's most significant art markets. The Copyright Office also opined that, by contrast to other authors such as writers and musicians, visual artists "are disadvantaged as a practical matter by certain factors endemic to the creation of works that are produced in singular form (or in very limited copies) and are valued for their scarcity."
- In its report, the Copyright Office recommended that any legislation for the enactment of a federal resale royalty right:
- Apply to sales of works of visual art by auction houses, galleries, private dealers, and other visual art merchants;
- Include a relatively low-threshold value to ensure that as many artists as possible benefit from the royalty;
- Establish a royalty rate of three to five percent of the work's gross resale price, and apply it only towards those works that have increased in value;
- Set a cap on the amount of the royalty payment available for each sale;
- Apply only prospectively to the resale of works acquired after the law becomes effective;
- Provide for collective management by private collecting societies, with general oversight by the Copyright Office;
- Require copyright registration as a prerequisite to the receipt of royalties;
- Limit remedies to a set monetary payment rather than actual or statutory damages;
- Apply only for a term of the life of the artist (at least initially); and
- Require a study by the Copyright Office of the effect of the royalty on artists and the art market within a reasonable time after enactment.
Opponents of a federal resale royalty right advance several arguments against the enactment of legislation affording such a right to artists. Many argue that a resale royalty is bad economic policy, as it would harm the United States art market by driving sales to countries that lack such a right, and would only benefit a handful of already prominent artists. Others argue that a resale royalty right is inconsistent with core concepts of copyright law. First, they argue that a resale royalty right would offend the fundamental principle of free alienation of property underlying the first sale doctrine, which allows the legal owner of a copy of a work to sell the work without the authority of the copyright owner. Second, they argue it is not the role of copyright law to ensure market parity among authors. In light of the opposition to resale royalty legislation, there can be no certainty that the proposed legislation will pass into law.
If you have any questions about resale royalty rights or any other copyright or art-related legal issues, please contact Amelia Brankov at (212) 826 5574 or firstname.lastname@example.org or any other member of the Frankfurt Kurnit Art Law Group or Intellectual Property Group.
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