Copyright Office Seeks Input on Visual Art Resale Royalty Bill

By Joseph Mandour on September 21, 2012

paint-palette Los Angeles – The U.S. Copyright Office said Wednesday it is kicking off an inquiry at Congress’s request into how current copyright law affects and supports visual artists, and how a federal resale royalty right for visual artists could affect the art marketplace.

The office will take comments from the public until Nov. 5 on the means visual artists have to exploit their works under existing law, as well as any issues and obstacles that may be encountered when considering the enactment of a federal resale royalty right in the U.S., the office said in a Federal Register notice.

The inquiry comes in response to a letter sent in May by U.S. Senator Herb Kohl, D-Wisconsin and U.S. Representative Jerrold Nadler, D-New York, in support of their proposed legislation to establish a resale royalty right in the U.S.

Artist resale royalties provide artists with an opportunity to benefit from the increased value of their works over time by by granting them a percentage of the proceeds from the resale of their original works of art. The practice arose in France in the 1920s and is widespread throughout Europe, but is not codified in current U.S. copyright law.

Artists, like other authors, are provided a bundle of exclusive rights under the Copyright Act, including rights to reproduce, distribute and create adaptations of the works. Federal copyright law, however, does not generally grant artists or authors rights to control the subsequent use of the original work. The first sale doctrine generally permits the lawful owner of a copyrighted work to display, sell or dispose of the work without the authorization of the creator under most circumstances.

“A sculptor or painter may spend months or years creating one work of art and when that work is completed it is a unique and singular representation of the artist’s intent,” the Copyright Office’s notice said. “Unlike books, DVDs or songs, the value of the work is based on its originality and scarcity. This means that over time, it may be a collector or other downstream entity that will derive the most financial benefit.”

California developed its own state law on resale royalties partially as a result of the indignation felt by many within the artistic community when Robert Rauschenberg’s 1958 painting ‘‘Thaw,’’ which was originally sold for $900, was resold at auction fifteen years later for $85,000 without compensation to the artist, the Copyright Office noted.

A federal district in California recently declared the California Resale Royalty Act unconstitutional under the Commerce Clause. The court concluded that the state statute impinged on the federal government’s authority to control commerce among the states because it regulated sales occurring wholly outside of California.

In 1991 Congress asked the Copyright Office to conduct a study on the feasibility of legislation that would require purchasers of works of art, following the initial sale of the work, to pay the artist or the artist’s heirs a percentage of the sale price.

The resulting Copyright Office report, published in December 1992, concluded that there was insufficient economic and copyright policy justification for enacting resale royalty right legislation in the U.S.

In December 2011 Kohl and Nadler introduced bills in the 112th Congress titled the Equity for Visual Artists Act of 2011. The EVAA would require a resale royalty right, under certain circumstances, to be collected from the art seller.

The proposed royalty would be triggered when a work of visual art is sold at auction for at least $10,000 by someone other than the authoring artist. Following the sale, the entity receiving the proceeds would pay a royalty of 7 percent to a qualifying visual artists’ collecting society.

The collecting society would be required to distribute 50 percent of the net royalty to the artists or successor as copyright owner and place the other 50 percent of net royalty into an escrow account to support U.S. nonprofit museums in their future purchases of visual art created by living artists domiciled in the United States.

Kohl and Nadler wrote a letter to the Copyright Office in May requesting that it ‘‘assess how existing law affects and supports visual artists, and how a federal resale royalty provision would affect copyright law, visual artists and those involved in the sale of art work.’’

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