Is the nation ready for a federal resale royalty rate? Congress has asked the U.S. Copyright Office to review how current copyright law affects and supports artists and public comments will be taken until close of business on Nov. 5. At issue is whether visual artists who can sell and profit from an original work should do so in a fashion more akin to other creative types (musicians, authors, filmmakers) who financially benefit from every copy of their work sold.
Artist resale royalty, sometimes known as droit de suite, is a right granted to artists or their heirs to receive a fee on resale of their works each time a piece is re-sold during the artist’s lifetime. It also applies for a fixed time after artists’ deaths — two decades in California.
The Golden State’s Civic Code provides that “Whenever a work of fine art is sold and the seller resides in California or the sale takes place in California, the seller or the seller’s agent shall pay to the artist … 5%of … the sale.” [See Section 986.]
Resale royalty laws exist in more than 30 countries, but in the United States, California is the only state to have enacted legislation.
This is a contentious issue and debate ragesover entitlement, enforcement, loss of competitive edge, length of term and other aspects of droit de suite. In Estate of Robert Graham v. Sotheby’s, a Ninth Circuit judge, serving in the Central District Court of California, found that Section 986 violates the Commerce Clause. The judge found it unconstitutional because it “has the ‘practical effect’ of controlling commerce occurring wholly outside the boundaries of California.”
Of course the matter isn’t over in California, it’s just beginning for the nation. A federal resale royalty will impact auction houses and not dealer sales but could create even greater divisions between East Coast (New York) and San Francisco and Los Angeles operations of such enterprises.