The story is as old as the art market itself and familiar to anyone who collects art. An emerging artist catches the eye of a reputable collector who, along with other art world insiders, purchases the entire body of work at a relatively inexpensive price. Demand skyrockets, and the collector resells the work a couple of years later at auction for ten times what she bought it for from the artist. This is either a good investment or an aberration, or both, depending on how you view the notion of an artist’s resale royalty.
An artist’s resale royalty generally entitles the artist of the work to receive a percentage of any resales of the work. Depending on the country, droit de suite, “right to follow” in French, is a right granted to artists or their heirs to receive a fee on the resale of their works of art. Artist resale rights are already observed in over 70 other nations in accordance with the Berne Convention for the Protection of Literary and Artistic Works. The right was incorporated into United Kingdom law through the Artist’s Resale Rights Regulations (ARR) in 2006. In the European Union, such royalties are payable for up to 70 years after the artist’s death. France introduced the resale royalty in 1920.
A relatively recent French Supreme Court decision has shifted the burden for paying the royalty to the buyer. Controversy over who shoulders the costs of droit de suite in France goes back to a 2009 case involving Christie’s and an association of French antique dealers called the Syndicat National des Antiquaires. In that case, Christie’s requested that buyers foot the royalty costs of its Yves Saint Laurent and Pierre Bergé collection sale. Eventually, the French Supreme Court agreed that Christie’s had the right to demand such a royalty be shouldered by the buyer.
Despite wide adoption throughout the world, the United States has no similar law that ensures that an artist and their heirs receive a royalty upon subsequent resales of the work.
Advocates of droit de suite laws say that unlike music or literature, a visual artist’s works cannot be downloaded, licensed, or recopied. In other words, some say that there are very, very few paths to commercially exploit a visual artist’s work as opposed to, for example, a record full of hit singles. Advocates argue that reproduction of a specific artwork is impossible. They contend that an original piece of artwork has only one unique copy, and the value of that work exchanges from the artist to its first owner. Proponents say that resale royalties provide an artist with a means of benefiting of this ongoing change in value when their works are sold at auction for a higher price than the original sale. Oftentimes, the value of artist’s works increases much later on in their career, or posthumously, further justifying droit de suite legislation.
So, why wouldn’t the US Congress enact a law like the ones that have passed elsewhere in the world?
There are 3 reasons that most opponents raise on the legislative floor. First, some academics and economists argue that a resale royalty hurts the art market because collectors might be dissuaded to purchase a work that is subject to a royalty since the royalty would arguably take the work to a price above fair market value (once the royalty is added). Second, some argue that a resale royalty would change US Copyright law in a manner that dilutes protection for private property. Should an architect or jewelry designer be entitled to the same type of royalty? It’s, as legal commentators often suggest in similar contexts, a very slippery slope. And third, some say that a resale royalty only benefits the most successful artists whose work sells at auction. So, the argument goes, the benefit only applies to the top 2%-3% of artists.
Conceptually, a resale royalty for artists is a good idea. The artist is largely responsible for the increase in value, and so they should benefit from those efforts. But the United States is a long way from instituting such a royalty, in large part due to the challenge in redrafting the Copyright Act in a manner that doesn’t have unintended effects for other kinds of works, not to mention strong opposition from very wealthy collectors who will lobby against such legislation.
Vivek Jayaram is the founder of Jayaram Law. He advises creatives, entrepreneurs, and brands on a range of intellectual property matters, corporate transactions and business disputes. He collects art, runs a record label called Sweat Records Records, and is based on Miami Beach. This article was originally published in “The Innovator,” a quarterly publication produced by Jayaram Law.
Minor edits by A+C.