E sccr/30/2 original: english date: april 30, 2015 Standing Committee on Copyright and Related Rights Thirtieth Session Geneva, June 29 to July 3, 2015
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- Beneficiaries of resale royalty
- Works of art to which the resale right applies
- Sales eligible for resale royalty
- Liability to pay resale royalty
- Duration of resale royalty right
- Collecting resale royalty
- Special case of museums
- Implementation
- Resale right
Resale rightsThe resale right is the royalty received by authors - and their heirs - of original graphic and plastic artworks when their works are resold by an art market professional. This way, the author and his heirs can receive consideration for successive transfers of the work. Thus, authors and their heirs are associated to the success of their work. The specificity of visual artists is that their primary source of income is the material selling of their original works. While auction houses and galleries make their business by taking commissions, it would be paradoxical that artists do not benefit from the profit generated by their works on the art market. This is why the resale right, which is not applicable to first transfers, was created. It also helps to restore the balance with the authors of other creative sectors (composers, screen-writers and film directors, writers...) whose rights of reproduction and communication to the public cannot be compared with those of visual artists. Born in France in 1920, the resale right was created in response to the report that Jean-François Millet’s family was living in poverty while his painting The Angelus (1858), purchased from the artist for FRF 1,200, was re-sold for FRF 580,000 in 1889 at the Secretan sale. The owner of the painting made a huge profit from this sale, whereas the family of the artist lived in poverty. Then, a drawing by Forain prior to the First World War is known to have ignited a major campaign in the popular press in favour of the resale right. The campaign depicted two children in rags outside an auction room. While the auctioneer says: “Gone for 100,000 francs!” one child says to the other: “Look! They're selling one of Dad's paintings!” For the next half-century after France adopted a resale royalty law, other European countries recognized this right: Belgium in 1921, Poland in 1935 and Italy in 1941. In 1948, it was established internationally by Article 14ter of the Berne Convention at the International Intellectual Property Organization (WIPO), but non-binding. Harmonized in Europe by the Directive of 27 September 2001, that right is now recognized by 65 states (members of the European Union of course, but also Australia, Brazil, Russia, Mexico, Tunisia, Senegal...). Currently, the top two countries in terms of the art market are considering introducing this right. Indeed, the United States draft bills were tabled in both houses of Congress so that the resale right, which already exists in the State of California97, shall become a federal law. China has included this right in the revision of the law on intellectual property. Bills were also filed in Canada and Switzerland. And at WIPO, more and more voices are calling for the right to become mandatory within the Berne Convention.
Authors and, after their death, their heirs, are usually eligible for resale royalty right. However, laws sometimes restrict the beneficiaries. Under Chilean law, only the author is entitled to the resale right. Under French law, the resale right is transferred to the artist’s legal heirs (namely descendants, ascendants, collateral relations, excluding legatees, even universal) subject to the beneficial ownership awarded to the surviving spouse. And under most laws, an author and all his heirs are entitled to the resale royalty right (EU, Congo, Venezuela…). Under all laws, it is an inalienable and unrenounceable right. This means that the artist cannot assign it, donate it or bequeath it.
The resale right concerns original work of visual art. According to different laws, it refers to “original works of fine arts” (Russian law), “original graphic and three-dimensional works and manuscripts” (Senegal law), “works of three-dimensional art” (Venezuelan law). The European directive defines the scope very precisely: “1. ‘original work of art’ means works of graphic or plastic art such as pictures, collages, paintings, drawings, engravings, prints, lithographs, sculptures, tapestries, ceramics, glassware and photographs, provided they are made by the artist himself or are copies considered to be original works of art. 2. Copies of works of art covered by this Directive, which have been made in limited numbers by the artist himself or under his authority, shall be considered to be original works of art for the purposes of this Directive. Such copies will normally have been numbered, signed or otherwise duly authorized by the artist.” The resale right may only apply to works of art made by the artist himself. It can also apply to works of art made with his permission. Serbian law only admits works of art made by the artist’s own hand: “As the originals of the works of fine art, from paragraph 1 of this article, are considered to be pictures, drawings, collages, graphics, photographs, tapestries, sculptures, works of art made in ceramics, glass or other material and similar works made by the artist’s own hand.” Whereas Norwegian law allows a resale right for works of art made with the artist’s permission: “Original works of art are defined for this purpose as artworks produced in a limited number of copies by the artist him/herself or with his/her permission.” Usually, the author of an architectural work or a work of applied art may not object to its owner renting out the work or construction. Under Australian law, manuscripts are not eligible to resale right, whereas they are eligible in many countries.
The resale right applies to all sales subsequent to the first transfer of ownership by the author him/herself. The resale right applies when an art market professional acts as seller, buyer or agent. Under some laws, it only applies to public auctions. Under Ecuadorian law, the resale right applies “at a public auction, or where a dealer in such works is directly or indirectly involved in such resale as buyer, seller or agent”.
The person by whom the royalty is payable is, according to most laws, the seller. However, some countries provide that it can be borne by the seller and the buyer.
The levy of the royalty sometimes applies to the pre-tax price, sometimes on the gross price. Sometimes, the law does not provide anything on that subject. The European directive provides that the resale royalty should be calculated based on the selling price net of tax. Most countries do not provide any application threshold (Belarus, Burkina Faso, Chile, Ecuador…). However, Western countries generally provide an application threshold. In the European Union, Member States have to provide a minimum price that is lower than EUR 3,000. In Australia and in California, the tax threshold is USD 1,000. In most countries, 5% of the selling price is payable in resale royalty on the commercial resale of an artwork. This rate varies between 2% and 10% across countries. Some countries, European countries in particular, apply a decreasing rate. It is possible to set a ceiling on the resale royalty. European Union fixed it at EUR 12,500. Serbia, Montenegro, Georgia, Iceland and Norway also set a maximum price. In India, it cannot be up to 10% of the resale price. In Turkey, it cannot exceed 10% of the price difference. All other countries have not set a ceiling.
When it is transferred to the heirs, the duration of the resale royalty right ranges from 20 years (California) to 100 years (Mexico) after the artist’s death. It usually ceases to apply upon expiration of the term of work’s copyright. In the European Union and Australia, the resale right expires 70 years after the artist’s death.
Each country adopting the resale right has to create a collecting society. The collecting society then receives and handles declarations of sales covered by the resale right and collects and distributes royalties to the artists and beneficiaries it represents.
In some cases, museums are not concerned by the resale right when they buy works of art from private persons. Under the European directive, the resale right should not extend to acts of resale by persons acting in their private capacity to museums which are not for profit and which are open to the public. In the same way, Norwegian law provides: “The right stated in the first paragraph does not apply to resale by private persons to museums that are open to the public and that are not operated as commercial enterprises, unless an agent as described in the first paragraph is involved in the sale.” Under most laws, museum collections are inalienable; this way, they cannot sell their works of art and they are not concerned by the resale right. But in some instances, in the USA in particular, museums are allowed to sell their collections; therefore, they could pay resale royalties. However, there is no such resale right as yet in the US. A Bill had been introduced to this effect known as the 2014 American Royalties Too Act (ART) which did not survive the 113th Congress. Had it passed, ART would have provided a resale royalty of five percent (up to $35,000) to be paid to visual artists for every work sold for more than $5,000 at public auction 99
For an efficient application of the resale right, it is essential to focus on three major points. Needless to say that in order to be effective the resale right has to be triggered by an authentic and well-organized art market in order to be applicable. For instance, a substantial art market not only needs a vivid artistic creation but also numerous and various auction houses and galleries, and secured transactions. Secondly, States have to set up a collecting and redistributing system. Then, the art market professional could collect the resale right and redistribute it either directly to the artist or his heirs, or to a collecting society. And in that last case, artists appoint collecting societies to collect their royalties, and then it is up to them to redistribute royalties to the artists or their heirs. Lastly, a monitoring system is essential to oversee the distribution of royalties. Then, it should ensure that art market professionals redistribute royalties to the artists or the collecting societies. And at a second level, it controls the payment of the royalties by the collecting societies to the artists or their heirs. Resale right 
Overall most of the 71 museums were not aware of a legislation in their country implementing a resale right, which is not a very surprising, all the more as the a vast majority of public museums (as opposed to private museums) may not sell works of art in their collections, pursuant to national law (principle of inalienability of public collections). However the resale right may become a growing concern for museums in the event that their national law becomes more flexible regarding the sale of artwork in public collections. There is already in place in many countries mechanisms of deaccessioning/decommissioning the works to dispose of them subsequently. In the USA for instance, museums follow the recommendations of the American Association of Museums (AAM), author of the Code of Ethics for Museums in 1993. This text considers that the sale of an object of a collection must be used exclusively for the purchase of a new property (superior) or maintenance of collections100”. In Europe, many States have a principle of inalienability but transfers can be made in various circumstances as in Germany, Denmark, Spain, Italy, the Netherlands and the United Kingdom. Denmark and the Netherlands are the two countries that have the most formalized alienation of public museums policy: the first, through the guidelines of the Heritage Agency which is responsible for enforcing the law on museums and the second through the code of the Institute for Protection of Cultural Heritage. In both countries, museum managers are encouraged to streamline their collections. These sales transactions may take place only after a thorough documentation of work.101 With the general trend of cuts of public funding, the temptation for museum to sell their artwork becomes more acute, notably in the UK.
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