©2020. Published in Landslide, Vol. 12, No. 3, January/February 2020, by the American Bar Association. Reproduced with permission. All rights reserved. This information or any portion thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association or the copyright holder.
February 05, 2020 Feature
Droit de suite: A U.K. Perspective on the Artist’s Resale Right
Simon T.L. Marshall
Over the last decade, the global art market has grown by 9 percent, rising to $67.4 billion in 2018.1 Despite the art market thriving, most artists find themselves struggling financially. A report published by the Arts Council in 2018 on the income and livelihoods of artists in the U.K. found that 90 percent of artists do not earn enough from their art practice to support themselves, with two-thirds of the artists surveyed earning less than £5,000 ($6,155).2 Although a few artists may find fame and fortune, the reality for most is an increasing difficulty to meet their living expenses while trying to sustain their practice, provide for their families, and make provisions for the management of their affairs after death. This is why droit de suite, or the artist’s resale right (ARR), is so important. It provides artists with vital income, enabling them to continue creating works. It also supports artists’ estates by helping them to preserve the artist’s legacy long after the artist’s death.
A Short History of Droit de suite
Droit de suite (“the right of following on”) was made law in France in 1920 and was introduced at a time when relatives of many artists killed during World War I were left struggling financially, despite sellers of those artists’ works being enriched considerably through the increasing value of the works. This situation was played out in the case of Jean-François Millet, whose painting L’Angelus was originally sold by him for 1,000 francs but was resold 14 years after his death for 553,000 francs. This sale came at a time when Millet’s family were in dire need of money. It is said that the contrast between the financial circumstances of Millet’s family and the seller of L’Angelus was a primary driver for the introduction of droit de suite in France, which would ensure that artists, or their heirs, receive a royalty payment on subsequent sales of their works.3
After the introduction of droit de suite in France, the right was included as an optional provision within the Berne Convention in 1948.4 In 2001, a Resale Right Directive5 was implemented in Europe as a means of harmonizing ARR across the European Union (EU). The directive declared: “In the field of copyright, the resale right is an unassailable and inalienable right, enjoyed by the author of an original work of graphic or plastic art, to an economic interest in successive sales of the work concerned.” The directive provided for a transitional period for implementation by EU member states, allowing member states until 2005 to fully implement it in their domestic laws. However, the U.K. was allowed a further extension, which meant that the directive was not fully implemented in the U.K. until 2012.
Since the implementation of the directive across the EU, ARR has continued to spread across the world, with 81 countries adopting ARR into their laws.6 There has also been support for making ARR a compulsory provision of the Berne Convention.7
In the U.S., the Copyright Office has expressed support for ARR,8 and the current proposal for its implementation is in the form of the American Royalties Too Act of 2018, which was introduced in the Senate and House of Representatives in September 2018. This act would see the introduction of a 5 percent royalty on works resold at auction for $5,000 or more, with the royalty capped at $35,000.9
ARR in the U.K.
ARR was first introduced into U.K. law on February 14, 2006, in the form of the Artist’s Resale Right Regulations10 following the Resale Right Directive. The U.K. was one of five countries in the EU benefiting from a derogation under the directive11 to delay the full implementation of ARR, covering works by deceased artists, until 2010. At the end of 2008, the U.K. government opted to delay full implementation until 2012, due to the adverse economic climate at the time. From January 1, 2012, the directive was implemented fully in the U.K. and ARR was extended to deceased artists’ heirs and beneficiaries.
In the U.K., ARR applies to all copyright-protected works of graphic or plastic art,12 enabling a qualifying rights holder13 to claim a resale royalty when a work is sold on the secondary art market at a minimum sale price of €1,000 ($1,105) with the involvement of an art market professional, such as a gallery, art dealer, or auction house. The royalty is calculated as a percentage of the sale price less any value added tax or buyer’s premium and is charged on a sliding scale from 4 percent to 0.25 percent.
Portion of the Sale Price: Royalties
Less than €50,000: 4%
€50,000.01–€200,000: 3%
€200,000.01–€350,000: 1%
€350,000.01–€500,000: 0.5%
More than €500,000: 0.25%
This sliding scale is cumulative, which means that where the sale price is higher than the first threshold, the royalty on each portion of the price must be calculated accordingly and added together to arrive at the final sum. The maximum royalty payment an artist or artist’s heir can recoup from a sale is €12,500 ($13,813), which is reached by works sold for €2 million ($2,209,760) or more.
The Resale Right Directive, which was implemented into U.K. law by the Artist’s Resale Right Regulations, provides for payment of the resale royalty to be made by the seller, for EU member states to select another person, or for liability to be shared by two people out of the seller, the buyer, and an art market professional acting as intermediary.14 When the directive was transcribed into U.K. law by the regulations, the U.K. opted for there to be joint liability between the seller and the first of either the agent of the seller, the agent of the buyer, or the buyer.15
It is the artist who first owns ARR and, unlike copyright in the U.K., it is not possible for the artist to assign the right.16 The right is inalienable to ensure that the artist retains a share in the financial success of works he or she created, although on the artist’s death ARR may pass to an heir or an assigned charity.17 It is not possible for the artist to waive the right, and any agreement to share or repay resale royalties is void.18
In the U.K., collective management of the resale royalty has been made compulsory,19 which means the owner of ARR must choose a collecting society to manage the right on his or her behalf, such as the Design and Artists Copyright Society (DACS).
The Artist’s Resale Right Regulations provide the owner of ARR, or someone acting on his or her behalf, with the right to request any information necessary to secure payment of the resale royalty from any buyer, seller, or art market professional involved in a relevant sale.20 These requests must be made within three years of the relevant sale, and the person receiving the request must do everything within his or her power to supply the requested information within 90 days of receipt of the request. If that person fails to respond within the prescribed time, then the requestor may make an application to the court for an order compelling the supply of the information.21 Common practice in the U.K. is for collecting societies acting on behalf of the ARR owner to request the information from art market professionals. DACS sends requests for information on a quarterly basis to all art market professionals it holds on record requiring them to disclose all qualifying sales made by them in the preceding 90 days.
The Impact of ARR on the Art Market and Artists
The introduction of ARR in the U.K. was strongly resisted by the U.K. art market, as many art market professionals believed that the introduction of ARR would threaten the future competitiveness of the U.K. art market with sales diverted to countries without ARR. However, there is little evidence that these concerns have played out.
In 2017, an independent economic research project conducted by Kathryn Graddy of Brandeis University, Boston, investigated the economic implications of ARR, including whether art sales were relocated to jurisdictions without ARR.22 The report concluded that no evidence could be found that ARR harmed the art market, or that it forced relocation of art sales to other jurisdictions. This position is also reflected in DACS’s distribution data, showing an increase in the distribution of resale royalties each year,23 and in the growth of the U.K. art market, which has overtaken China to become the second largest in the world with a 21 percent share of the market in 2018.24
The U.K. government conducted a survey in 2014 in order to obtain evidence on the scale and cost of administering ARR.25 The results of this survey showed that the cost and time art market professionals spent dealing with administration in relation to ARR were low. The average time for responding to a request for information was 15 minutes per quarter; the average time to calculate ARR liability was 30 minutes per quarter; and the average time for all administration tasks, including querying errors, came to 95 minutes per quarter. Based on the hourly wage for the industry at the time, this time was calculated to cost art market professionals approximately £20 ($24.62) per quarter.
In 2016, DACS released a white paper to celebrate the 10th anniversary of ARR in the U.K.,26 in which DACS analyzed its distribution data and spoke to artists to paint a picture of the impact of ARR on the artists and estates receiving resale royalties through DACS. This white paper highlighted that ARR positively impacted a range of artists including low earners. The median monthly resale royalty distributed by DACS in 2015 was £272 ($334),27 and some recent analysis by DACS on its distribution data for 2015 to 2018 has shown that more than 50 percent of the works sold were for less than £5,000 ($6,143), highlighting that the royalties from these sales are typically supporting emerging and less well known artists.
Given that most artists do not earn enough from their practice to support themselves, ARR royalties provide vital income, helping artists to continue producing works and also providing support for their estates after death. When DACS surveyed its members on how ARR royalties benefited them, 81 percent of artists who received ARR royalties used the income to pay for living expenses, 73 percent spent it on art materials, and 63 percent used it on studio space. Whereas for estates, 32 percent used the royalties for cataloging work, 25 percent used them for promoting the artist, and 22 percent used them for general administration of the estate.28
Brexit
With Brexit looming on the horizon, some artists and art market professionals have questioned how the U.K.’s departure from the EU will impact ARR. At the time of writing, it is unclear how or when the U.K. will leave the EU. However, the U.K. government has set out commitments to preserve ARR in the Withdrawal Agreement and Political Declaration.29 The U.K. government has prepared for a no-deal scenario through the introduction of a statutory instrument that removes redundant references from the Artist’s Resale Right Regulations, reflecting the U.K. position outside of the EU. This ensures that ARR will continue to function should the U.K. leave the EU without a deal; and the U.K. will continue to provide ARR on a reciprocal basis to foreign nationals of countries that also recognize ARR.30 The U.K. Intellectual Property Office released guidance on these changes stating: “Nationals of the UK and other countries that provide reciprocal treatment for UK nationals (including EU member states) will continue to receive resale rights in the UK after Brexit. This is in accordance with the Berne Convention.”31 As ARR in the U.K. was implemented into national law to harmonize ARR across Europe, critics of ARR will view the U.K.’s departure from the EU as an opportunity to lobby for its repeal; however, it seems that ARR will remain post-Brexit with or without a deal with the EU.
Given the continuing wider acceptance of ARR around the world, perhaps it is time for the U.S. to follow suit, allowing U.S. artists to benefit from resales of their works at home, as well as in the U.K., via reciprocity in accordance with the Berne Convention.
Endnotes
1. See Clare McAndrew, The Art Market 2019 (2019), https://www.artbasel.com/about/initiatives/the-art-market.
2. See TBR, Livelihoods of Visual Artists: 2016 Data Report (2018), https://www.artscouncil.org.uk/sites/default/files/download-file/Livelihoods%20of%20Visual%20Artists%202016%20Data%20Report.pdf.
3. Case C-518/08, Fundación Gala-Salvador Dalí v. Société des auteurs dans les arts graphiques et plastiques (ADAGP), 2009 E.C.R. I-3093.
4. Berne Convention for the Protection of Literary and Artistic Works art. 14ter, Sept. 9, 1886, 828 U.N.T.S. 221 [hereinafter Berne Convention].
5. Directive 2001/84/EC of the European Parliament and of the Council of 27 September 2001 on the Resale Right for the Benefit of the Author of an Original Work of Art [hereinafter Resale Right Directive].
6. Sam Ricketson, Proposed International Treaty on Droit de suite/Resale Royalty Right for Visual Artists 1 (Melbourne Law Sch., Academic Study No. SG15-0565, 2015).
7. Id.; see also Resale Right Directive, supra note 5, recital 7.
8. U.S. Copyright Office, Resale Royalties: An Updated Analysis 2 (2013) (“[T]he Office 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.” (footnote omitted)).
9. H.R. 6868, 115th Cong. (2018); S. 3488, 115th Cong. (2018).
10. The Artist’s Resale Right Regulations 2006, SI 2006/346, as amended by the Artist’s Resale Right (Amendment) Regulations 2009, SI 2009/2792, and the Artist’s Resale Right (Amendment) Regulations 2011, SI 2011/2873 [hereinafter Artist’s Resale Right Regulations].
11. Resale Right Directive, supra note 5, recital 17.
12. Artist’s Resale Right Regulations, supra note 10, arts. 3–4. Article 4 states that “‘work’ means any work of graphic or plastic art such as a picture, a collage, a painting, a drawing, an engraving, a print, a lithograph, a sculpture, a tapestry, a ceramic, an item of glassware or a photograph.”
13. Id. art. 10. The right may be exercised by a living artist who is a European Economic Area (EEA) national, or in the case of heirs, where the artist was an EEA national at the time of death. There is no restriction on the nationality of subsequent owners of ARR after the artist’s death.
14. Resale Right Directive, supra note 5, recital 25 & art. 1(4).
15. Artist’s Resale Right Regulations, supra note 10, arts. 13(1)–(2), 12(3)(a).
16. Id. art. 7(1).
17. Id. art. 9.
18. Id. art. 8.
19. Id. art. 14(1).
20. Id. art. 15.
21. Id. art. 15(5).
22. Joëlle Farchy & Kathryn Graddy, The Economic Implications of the Artist’s Resale Right, WIPO Doc. SCCR/35/7 (Nov. 6, 2017).
23. See Annual Reports, Design & Artists Copyright Soc’y, https://www.dacs.org.uk/about-us/corporate-resources/annual-reports (last visited Dec. 10, 2019).
24. See McAndrew, supra note 1.
25. Intellectual Prop. Office, Artist’s Resale Right—Summary of IPO Survey Findings (2014), https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/375378/artists-resale-rights-ipo-survey.pdf.
26. Design & Artists Copyright Soc’y, Ten Years of the Artist’s Resale Right: Giving Artists Their Fair Share (2016), https://www.dacs.org.uk/DACSO/media/DACSDocs/reports-and-submissions/Ten-Years-of-the-Artist-s-Resale-Right-Giving-artists-their-fair-share-DACS-Feb-16.pdf.
27. Id. at 7.
28. Id. at 11.
29. See Withdrawal Agreement and Political Declaration, GOV.UK (Nov. 25, 2018), https://www.gov.uk/government/publications/withdrawal-agreement-and-political-declaration.
30. See The Intellectual Property (Copyright and Related Rights) (Amendment) (EU Exit) Regulations 2019, SI 2019/605.
31. Changes to Copyright Law after Brexit, GOV.UK (Oct. 18, 2019), https://www.gov.uk/guidance/changes-to-copyright-law-after-brexit.