The ART Act: New Legislation Proposes Royalties for Visual Artists Based on Secondary Sales

When music is sold, or a poem or novel is purchased, the composer or writer receives a portion of the initial sale or royalties on future sales of copies of the work. The more copies of a song, composition or book that are sold, the greater the royalties the composer or writer may receive. However, this is not true for all copyrightable material, particularly certain works of visual art such as contemporary paintings or sculptures. Unlike music and written works, that are mass produced and distributed, visual art, as noted by United States Copyright Office, “are produced singularly and valued for their scarcity.” The artist may receive a one-time fee or commission for their original work, but such works are often resold at auction with the artist rarely receiving any additional payment.

On February 26, 2014, a bill introduced by New York Congressman Jerrod Nadler proposes to balance this inequity by requiring the payment of royalties on certain secondary sales of visual art. First introduced in 2011, this revised bill requires that artists receive 5% of the secondary sale price realized at a public auction if the work of art is sold for more than $5,000. The original bill, called the Equity for Visual Artists Act of 2011, had been similarly proposed by Congressman Nadler. This revised version, named the American Royalties Too Act (“ART Act”), lowers the 2011 proposed royalty from 7% to 5% and sets a cap of a maximum royalty of $35,000. In its current version, the bill now has senatorial support through the co-sponsorship of Senators Tammy Baldwin (WI) and Edward J. Markey (MA).

The revised bill follows a December 2013 report published by the United States Copyright Office, which examined issues surrounding visual artists and resale royalties in the United States. The report updated a 1992 report and notes the change in laws worldwide over the two decades since the office last examined the issue of royalties for visual artists. The December 2013 report notes that more than 70 countries have enacted some form of resale royalty provision. Opponents of the law argue that artists are not likely to gain from the law, as secondary sales will be driven to areas not covered by the law, specifically private gallery and individual sales or to jurisdictions that do not have such laws, a number of which host large international art fairs that are becoming increasingly popular. The royalty requirements of ART Act would only apply to sales occurring at auction houses and online action sites whose visual art sales totaled one million dollars or more in the prior year.

Frequently referred to by its French term, droit de suite, the concept that an artist or the artist’s heirs should receive royalties on the resale of works of art dates back to the early twentieth century. The European Union issued a directive in 2001 that provided for the implementation of droit de suite laws in all its Member States. Full implementation was required by January 2012. As a result, nations such as the United Kingdom, which prior to 2001 did not require a resale royalty, began requiring such royalties in 2006. Those royalties initially were limited to living artists, and were extended to the heirs and estates of artists in 2012. Proponents of the ART Act note that the law would bring the rights of artists in the United States in line with the changing trend internationally to provide some equity to visual artists through the requirement of resale royalties.

 

Catherine M.C. Farrelly, a former Director in the Gibbons Intellectual Property Department, co-authored this post.
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