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Artists’ Resale Royalty Bill to Be Reintroduced

posted by Linda Downs — Nov 26, 2013

Representative Jerrold Nadler (D, NY) announced on Monday, November 22, 2013 his intent to introduce a revised Equity for Artists bill early in 2014. He and Senator Edward J. Markey (R-Mass) who will co-sponsor the bill finished a draft on Monday and support has already been committed by Senator Tammy Baldwin (D, Wis). The bill is similar to HR 3688 introduced last year and not acted upon by the Judiciary Committee. This bill maintains the 5% of the sales price for works auction for prices at $5,000 and above for living artists and those deceased plus 70 years, which follows the copyright law. The motivation for the bill is to ensure that artists do not lose out on any increase in value for future sales and provides reciprocity with the 70 countries that already have adopted similar legislation. The new bill eliminates the portion allocated in the first bill to art museums for new acquisitions. The AAMD requested that this clause be eliminated. Only those sales through auction houses are included in the bill. Nadler indicated that galleries were not included at this time in order to provide greater opportunity to get the bill passed.

Nadler spoke on Monday as part of a five-person panel sponsored by the International Foundation for Art Research (IFAR) at Scandinavia House. In addition to Nadler the panel included Philippa S. Loengard, Assistant Director and Lecturer in Law, Kernochan Center, Columbia Law School; Karyn Temple Claggett, Associate Register of Copyrights; Director of Policy and International Affairs, U.S. Copyright Office; Theodore H. Feder, Ph.D., Founder and President, Artists Rights Society (ARS); and Sandra L. Cobden, General Counsel, Dispute Resolution and Legal Public Affairs, Christie’s. Loengard provided the historical context of artists’ resale royalty rights from the 1920s in France and the 2006 updated legislation of the European Union to the most recent legal action in the U.S. regarding the California resale royalty law originally instituted in 1976 and ruled unconstitutional by California Judge Nguyen. This case is currently on appeal brought by Chuck Close and other artists in the 9th U.S. Circuit Court and is expected to be decided early in 2014 http://clancco.com/wp/2012/05/art-law-droit-de-suite/.

At the request of Congressman Nadler the U.S. Copyright Office undertook an extensive study and analysis of the status of artists in regard to copyright and in relation to other artists such as writers, actors, screen writers and musicians who receive residuals for their work and whether artists are fully exploiting their rights within the current copyright law. The Copyright Office will issue their findings on or before December 12th. The issues they addressed were 1) financial—are visual artists benefiting within the allowance of the copyright law; 2) morality issues—are visual artists benefiting as well as other artists; 3) fairness—would this benefit a large number of professional artists, is the proposed amount reasonable and are the administrative aspects a burden; 4) limitations—what regulations or limitations should be put in place considering that the art market is generally unregulated. The Copyright Office requested formal comments in March and 59 individuals and organizations sent formal comments. On April 23, 2013 the Copyright Office held a hearing in which among other organizations, CAA made its case for the artists resale royalty represented by Anne Collins Goodyear, President. The Copyright Office also reviewed all the government studies on the effectiveness of the European Union system of resale royalties.

While many of the specifics of the Copyright Office could not be presented until it is published in December the following general observations were shared by Claggett: 1) Of all the world art markets, only China and the U.S. (the two largest art markets) do not have resale rights programs; 2) government studies indicate that these programs have no negative impact on the art market; 3) it is difficult to grasp how artists are hindered by current law and practice and the Copyright Office questions whether the resale royalty law is the best solution; 4) opposing parties are using the same statistical information to “prove” opposing perspectives on the legislation. The Copyright office staff refers to this as the “Rorschach Test.” Claggett stated that given the different perspectives on this issue that the Copyright Office report will not make any of the interested parties happy.

Ted Feder from ARS pointed out that this is only visual artists who currently do not get royalties and cited the current rates that Christie’s “taxes” buyers, from 20% to 25% and sellers from 1% to 10% depending on the price of the art work. He believes that the small percentage increase in sales required by the resale royalty legislation would be negligible to Christie’s clientele.

Sandra Cobden from Christie’s stated that while the auction house supports the rights and interests of artists it believes that the proposed resale royalty legislation is a “broken model.” She cited the study commissioned by Christie’s of the impact of the EU art market after the latest 2006 legislation where the art market in the EU grew 32% while that in the US grew 120% and China’s grew 121% in the same period. This was countered by Nadler who  indicated that the EU at that time was in a general economic slump. She also suggested that this legislation is unconstitutional since it would only require auction houses and no galleries or ecommerce sites to institute this system. Her solution is to abandon this legislation and amend the tax laws so that artists may deduct the sales price when donating works to art museums and non-profit institutions.

Watch

Art for Sale? Bankruptcy and the Detroit Institute of Arts from Sharon Flescher on Vimeo.