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CAA News Today

Yesterday, Congressman Jerrold Nadler (NY-10), the Ranking Member of the House Judiciary Subcommittee on Courts, Intellectual Property and the Internet, delivered an opening statement at the subcommittee’s hearing of “Moral Rights, Termination Rights, Resale Royalty, and Copyright Term.” Congressman Nadler introduced the American Royalties Too (ART) Act, which will be discussed at the hearing, in order to ensure visual artists are compensated when their original artwork is resold.  His legislation would bring fairness to American artists who, unlike their fellow visual artists in 70 countries, do not receive any compensation when their works are resold at public auction.

“I firmly believe that the time has come for us to establish a resale royalty right here in the United States.  By adopting a resale royalty, the United States would join the rest of the world in recognizing this important right.  The ART act would ensure that American artists also benefit whenever and wherever their works are sold, whether in New York, London, or Paris,” said Congressman Jerrold Nadler (D-NY). “I thank Chairman Coble and Chairman Goodlatte for including this issue as part of the Subcommittee’s review of the Copyright Act.”

The following is the full text of Congressman Nadler’s opening statement (as prepared for delivery):

“Today we consider a broad range of existing legal protections for artists and creators, including the moral rights of attribution and integrity, the right to terminate a transfer or license of one’s works, and the copyright term.  Congress has taken some steps to address these issues, and I welcome this opportunity to hear from our witnesses about how our current laws are working and what, if any, changes might be necessary and appropriate.

“I also welcome this chance to examine resale royalties for visual artists.  To date, Congress has failed to adopt a resale royalty right, which would grant visual artists a percentage of the proceeds each time their work is resold.  Unlike other artists – including, for example, songwriters and performing artists who may receive some royalties whenever their works are reproduced or performed – our visual artists currently benefit only from the original sale of their artwork.  This means that the artist receives no part of the long-term financial success of a work.  For example, if a young artist sells a work of art for $500 at the beginning of his or her career, and the same work is later sold for $50,000, the original artist gets nothing.  It is the purchaser, not the artist, who benefits whenever the value of the artist’s work increases.

“The Berne Convention, to which the United States is a signatory, makes adoption of the resale royalty right optional, but does not allow artists in any country that fails to adopt this right to benefit from resale royalties in any other country.  Because we do not provide this right, U.S. artists are prevented from recovering any royalties generated from the resale of their works in countries that have resale rights.

“Seventy other countries now provide this right, including the entire European Union.

“Concerned about this lack of fairness for American artists, I have introduced a bill – H.R. 4103, the American Royalties Too (or ART) Act – to correct this deficiency, and injustice, in the law.  The ART Act provides for a resale royalty of 5 percent to be paid to the artist for every work of visual art sold for more than $5,000 at public auction.  The royalty would be capped at $35,000 for works of art that sell for more than $700,000.  The royalty right is limited to works of fine art that are not created for the purpose of mass reproduction.  Covered artworks include paintings, drawings, prints, sculpture, and photographs in the original embodiment or in a limited edition.  Small auction houses with annual sales of less than $1 million are exempt.

“I firmly believe that the time has come for us to establish a resale royalty right here in the United States.  I am not alone in this belief.  The national arts advocacy organization Americans for the Arts supports this legislation.  So does the Visual Artists’ Rights Coalition (VARC), which includes the Artists Rights Society, the Visual Artists and Galleries Association, the American Society of Illustrators Partnership, the National Cartoonists Society, the Association of American Editorial Cartoonists, and the Association of Medical Illustrators, among others.

“The United States Copyright Office, which once opposed adopting a resale royalty right, also now supports “Congressional consideration of a resale royalty right, or droit de suite, which would give artists a percentage of the amount paid for a work each time it is resold by another party.”  In its report in December of last year – Resale Royalties:  An Updated Analysis – the Copyright Office observed that visual artists operate at a disadvantage relative to other artists.  It also noted that many more countries had adopted resale royalty laws since its 1992 report recommending against adoption of this right, and that the adverse market effects it feared might result from resale royalty laws have not materialized.

“I welcome and look forward to hearing more from Karyn Claggett, Associate Register of Copyrights and Director of Policy and International Affairs, who is testifying on resale royalty on behalf of the Copyright Office at the hearing today.

“By adopting a resale royalty, the United States would join the rest of the world in recognizing this important right.  And because these other countries have reciprocal agreements, they would then pay U.S. artists for works resold in their countries.  This would ensure that, in addition to resale royalties for works resold in this country, American artists would also benefit whenever and wherever their works are sold, whether in New York, London, or Paris.

“Serious consideration of a resale royalty right is long overdue, and I thank Chairman Coble and Chairman Goodlatte for including this issue as part of the Subcommittee’s review of the Copyright Act.

“With that, I look forward to hearing from our witnesses and yield back the balance of my time.”

US Senators Tammy Baldwin (D-WI) and Ed Markey (D-MA) and Congressman Jerrold Nadler (D-NY) have introduced legislation to level the playing field for visual artists in the United States by establishing copyright protections for their intellectual property.

“Artists and arts organizations make valuable contributions to our communities and strengthen our quality of life. Just as our copyright laws extend to musicians and authors to encourage their artistic creativity, they should also apply to our visual artists,” said Senator Baldwin, who serves on the National Council on the Arts. “The ART Act is a commonsense measure that helps protect the intellectual property of our artists.”

“Our visual artists are critical cultural contributors, and the ART Act ensures they are fairly compensated for their work,” said Senator Markey. “Their creativity is a currency that should be properly valued. The ART Act also brings the United States in line with over seventy other countries, so that American artists can receive royalties when their works are sold overseas.”

“American artists are being treated unfairly,” said Congressman Nadler, who first introduced a version of the ART Act in 2011 and serves as the Ranking Democrat on the Courts, Intellectual Property, and Internet Subcommittee of the House Judiciary Committee. “At a time when more than seventy other countries properly compensate visual artists for their work, it is time for the United States to do the same. The ART Act will ensure that visual artists get the compensation they deserve and will no longer be at a disadvantage on the international art market. It is the only fair thing to do.”

“Visual artists are the only members of the creative community in the United States who do not receive residual payments for their works. Composers, lyricists, actors, playwrights, screenwriters all deservedly receive royalties for the later productions, performances, or sales of their works,” said Frank Stella, one of the most renowned artists in the world and recipient of the National Medal of Arts by President Obama in 2009. “Unfortunately, visual artists in the US do not earn a penny in residual or resale payments. The benefits derived from the appreciation in the later sale of their works accrue entirely to the collectors, auction houses, and galleries. The adoption of the droit de suite in my country is therefore long overdue.”

Under current copyright law, visual artists—painters, sculptors, and photographers—are denied the ability to fully benefit from the success of their work over time. Unlike recording artists or publishers who, if successful, sell thousands of copies of their work and recoup a royalty from each purchase, artists sell their work only once.  If they are successful, the price of their work increases but they recoup nothing if their original work is resold at a much higher price. The benefits derived from the appreciation in the price of a visual artists’ work typically accrues to collectors, auction houses, and galleries, not to the artist.  In addition, United States artists are at a disadvantage in the global art market where more than seventy other countries have provided resale royalty rights for visual artists.  The American Royalties, Too (ART) Act of 2014 remedies this inequity by providing a modest resale royalty right for visual artists.

The ART Act would:

  • Provide a competitive resale royalty of five percent of the sales price (up to $35,000) for any work of visual art sold at auction for $5,000 or more
  • The resale royalty applies to any auction where the entity conducting the auction has sold at least $1 million of visual art during the previous year
  • Royalties are collected by visual artists’ copyright collecting societies who must distribute the royalties to the artists or their heirs at least four times per year
  • Allows US artists to collect resale royalties when their works are sold at auction in the European Union and more than seventy other countries
  • The ART Act requires further study by the Copyright Office after five years to determine the effects of the resale royalty on the art market and whether it should be expanded to cover works sold by dealers and other art market professionals

The ART Act includes many recommendations from the US Copyright Office’s December 2013 report, entitled Resale Royalties: An Updated Analysis.

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.

The International Foundation for Art Research will host its next IFAR Evenings event, “Artists Resale Rights in the US: Overdue or Shouldn’t Do?” in New York on Monday, November 25, 2013, from 6:00 to 8:30 PM. A Q&A session and a reception will follow the presentations.

Unlike many countries, the United States does not provide for resale royalties for visual artists (also known as droit de suite) by statute. A California royalty right, enacted in 1976, was recently ruled unconstitutional, a decision currently on appeal. In December 2011, Congressman Jerrold Nadler sponsored H.R. 3688, the Equity for Visual Artists Act, recommending a federal resale royalty. While the Judiciary Committee failed to act on the bill in the 112th Congress, a new version of the bill is expected to be reintroduced in this Congress. On Nadler’s request, the US Copyright Office has been reviewing the implications of enacting a federal resale royalty law. Its report is expected soon.

Please join the following distinguished speakers as they discuss this important and often divisive issue:

  • Karyn Temple Claggett, Associate Register of Copyrights and Director of Policy and International Affairs, US Copyright Office
  • Sandra L. Cobden, General Counsel, Dispute Resolution and Legal Public Affairs, Christie’s
  • Theodore H. Feder, Founder and President, Artists Rights Society
  • Philippa S. Loengard, Assistant Director and Lecturer in Law, Kernochan Center, Columbia Law School
  • Jerrold L. Nadler, Congressman, Tenth Congressional District, New York

Space is limited; advance reservations with payment are essential. The program is free to IFAR members and supporters, with a reduced rate for IFAR Journal subscribers and full-time students with ID. Tickets are $25 each for the general public.

About IFAR

Established in 1969, the International Foundation for Art Research (IFAR) is a nonprofit educational and research organization dedicated to integrity in the visual arts. It works at the intersection of art scholarship, art law, and the public interest. IFAR has hosted IFAR Evenings since 1981. These are informal lectures and panels on topics related to IFAR’s core areas, including art attribution and authenticity, ownership, theft, looting, and other legal, ethical and scholarly issues concerning art objects. Several IFAR Evenings are usually scheduled each year. IFAR also organizes conferences and symposia; publishes the award-winning IFAR Journal, offers an Art Authentication Research Service and provenance research services; serves as an information resource; and has recently launched an expanded website with several new research tools, including the Art Law & Cultural Property Database and the Catalogue Raisonné Database.

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