Art law News USA

Copyright Office reverses its position on droit de suite in the US

The organisation recommends that Congress enact a resale royalty for visual artists

US Copyright Office says "the art world is becoming less an exclusive club and more a general market"

In a report published on Friday, the US Copyright Office has encouraged Congress to consider enacting a resale royalty, or droit de suite, for visual artists. The recommendation, which is the result of a year-and-a-half-long review, is a volte-face for the organisation. In 1992, when it last considered the subject, the office was “not persuaded that sufficient economic and copyright policy justification exists to establish droit de suite in the United States”.

Several factors contributed to the reversal, the office wrote in its 124-page report. First, the art market has grown exponentially since the early 1990s (from around $9.7bn in 1991 to $59bn in 2012). “The art world is becoming less an exclusive club and more a general market,” the office writes. Second, the increase in online art databases and analytics makes it easier to predict how a resale royalty might affect the art market as a whole.

Most importantly, more than 40 foreign countries have adopted a resale royalty provision since 1992, including the United Kingdom and the European Union. Studies show that “the adverse consequences predicted in the 1992 report”—including a loss of market share in the global auction business, decreased incentive for artists to produce new work and a negative ripple effect on the primary market—“have not materialised for countries who have adopted droit de suite”.

Because it is still unclear exactly how a resale royalty might affect the art market, the copyright office recommended that the royalty only be applied proactively and only for the duration of the life of the artist. The estates of deceased artists like Picasso, for example, would not benefit from the proposed royalty. This differs from the European model, where droit de suite is applied for the artist’s life plus 70 years.

The office’s recommendations are timelier than ever. A revised bill for the Equity for Visual Artists Act, which would enact a resale royalty for visual artists in the US, is due to be introduced in the Capitol in January. The new legislation, which succeeds a 2011 version that stalled in Congress, proposes a slight reduction in the amount that would be put aside for artists when their work is resold at auction, from 7% to around 5%. The copyright office recommends that figure be reduced further, to 3% to 5%, bringing it in line with Europe, where the fee is calculated on a sliding scale starting with a maximum of 4%.

Speaking at an event hosted by the International Foundation for Art Research (Ifar) last month, Congressman Nadler, who is sponsoring the bill in the House, said the new legislation would only apply to auction houses, to eliminate any additional opposition from dealers. However, the Copyright Office recommends the royalty be applied to commercial galleries and private dealers as well as auction houses, in order to ensure the maximum number of artists benefit from the scheme. “A law limited to public auction transactions would exclude vast numbers of artists from royalty eligibility given that fewer than half all art sales are made through public auction,” the office writes.

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Comments

6 Jan 14
17:19 CET

ALEX NOVAK, CHALFONT, PA

More bureaucracy that only benefits well-known and already rich artists. There is no real rationale for droit de suite. Should Sears be allowed to collect for one of their refrigerators that sold second-hand? It's ridiculous. Smaller dealers and galleries are already on the edge and this will push them off it. In Europe the dealers all just ignore the law. Only the auction houses are doing it and they are charging their consignors, not their buyers, for the most part.

6 Jan 14
17:21 CET

JOHN R WALKER, AUSTRALIA

The report has not actualy 'endorsed' resale royalties at all. "...As to the second issue-the likely benefit to U.S. artists – the evidence is less obvious."Accordingly, while the Copyright Office finds no significant legal or policy impediments to adoption of a U.S. resale royalty, and indeed supports consideration of a resale royalty right as one option to address the historic imbalance in the treatment of visual artists, it is less persuaded that such legislation represents the best or only solution." And "We note, however, that at the time of this report’s publication, at least two resale royalty jurisdictions – the EU and Australia – are in the process of completing updated analyses of the effectiveness of their own resale royalty schemes.449 Congress may wish to forego legislative action pending the release of those studies, which may fill in some of the information gaps noted here." Australia's scheme is a unpopular debacle, the review of it should be out soon.

18 Dec 13
20:45 CET

CRAIG LUCE, ATL

Thanks for this coverage of a topic that might otherwise headline only in Forbes.

17 Dec 13
16:31 CET

BERNARD COHEN, NEW YORK

About time. A big but only first step. However, I believe the royalty should be in perpetuity.

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