October 9, 2019

The Artist’s Resale Right in the U.S. & EU | IP Legal Update

After a successful series of back-to-back legal workshop events in Amsterdam, we visited &V, the Vroom & Varossieau street art gallery which is owned by Olivier Varossieau, the brother of our local counsel Lisette Varossieau. We spoke with the crew at &V about the legal issues and rights in the U.S. that European street artists face.

The Question: For the sale of artwork in the U.S., are European sellers obligated to pay artists a certain percentage on each sale as “artist’s resale rights”?

The artist’s resale right, also referred to as droit de suite, guarantees that artists will earn a fair share from the resale of their works. It is a royalty paid to visual artists, such as painters and sculptors, when their works are resold by art market professionals. This is meant to ensure that artists will benefit from the increase in value of their work. Unlike other categories of creators, such as writers and musicians, absent this right, visual artists would not benefit at all when their work was resold, beyond the first sale, which would arguably lead to an unjust outcome.

The resale right has many proponents, as well as opposers, with the first arguing that visual artists should not be treated any different than other artists, and the latter claiming that the price of art varies based on supply and demand, and that galleries incur substantial expenses in promoting artists.

Despite the importance of global recognition and harmonization, the right is not internationally recognized. It is recognized by the Berne Convention for the Protection of Literary and Artistic Works in Article 14ter, but it is not mandatory. Therefore it remains subject to national legislation.

The right has been incorporated in EU law through the Resale Rights Directive (2001/84/EC), which provides that:

“Member States shall provide, for the benefit of the author of an original work of art, a resale right, to be defined as an inalienable right, which cannot be waived, even in advance, to receive a royalty based on the sale price obtained for any resale of the work, subsequent to the first transfer of the work by the author.”

The protection afforded is reciprocal, in the sense that it is extended to third-country nationals only if legislation in the country of which the author is a national, permits the resale right protection in that country for authors from the Member States.

On the other hand, this right is currently not recognized in certain big art markets, notably including the U.S. and China. Specifically, in the U.S. resale rights for visual works are not recognized, so no royalties are paid to U.S. artists or artists whose works are sold in the U.S.Under the Copyright Act (the “Act”), 17 U.S.C. 101 et seq., visual artists, like other authors, are provided a bundle of exclusive rights, including rights to reproduce, distribute and create adaptations of their works. These rights, however, do not affect the disposition of the original work of authorship. Instead, the first sale doctrine, under 17 U.S.C. § 109, generally permits the lawful owner of a copyrighted work “to sell or otherwise dispose of the possession of that copy” and to “display that copy publicly . . .” without the authorization of the creator.

The State of California is the only U.S. State that instituted legislation to establish the rightin 1977 under the California Resale Royalty Act (“CRRA”). However, in 2018, the Ninth Circuit Court of Appeals eradicated the law on the basis that it was preempted by federal law under the 1976 Copyright Act. This decision, therefore, suggests that in order to establish artist’s resale right in the U.S., it must be through federal legislation.

Therefore, if works are sold in major art markets that do not recognize the right, artists and their heirs receive nothing at all. Also, artists from those countries cannot benefit from the right in countries where it does exist. If the works of art are to be sold in the EU, EU artists can invoke the provisions of the Directive, implemented through their national legislation. If, on the other hand, they are to be sold in the U.S. or in other countries where these rights are not recognized, EU artists cannot claim this royalty.

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