When a work of art is resold, should the person who created it receive some of the profit?
Theodore Feder, president of the New York-based Artists’ Rights Society, says yes, as do many of the artists he represents. “Visual artists are among the only artists not to get a residual for their work,” says Feder, whose organization is the main copyright and licensing oversight agency in the United States. (The society manages over 50,000 artists’ interest in the images of the works, rather than the works themselves.)
To rectify this perceived inequality, Feder and Bruce Lehman, a former U.S. Patent and Trademark Office commissioner, are lobbying Congress to adopt a federal bill that would grant resale rights to artists whose work is sold at major auction houses in this country. The proposal — the latest in three decades’ worth of attempts to institute such a law, first initiated by Ted Kennedy in 1993 — comes on the heels of a court ruling that invalidates the only resale royalty statute on the books in the United States, a California state law that is almost never heeded or enforced.
That ruling was made in response to a class-action suit filed in October 2011 by a group of artists including Chuck Close and Laddie John Dill against the New York branches of Christie’s and Sotheby’s, accusing them of skirting the California law, which entitles a living artist, or the estate of an artist who has been dead fewer than 20 years, to 5 percent of the proceeds of a secondary-market sale over $1,000.
In May, Judge Jacqueline Nguyen of the Ninth Circuit, who was a district court judge in Los Angeles at the time the case was heard, struck down the law on constitutional grounds, quoting the commerce clause in finding that it “has the ‘practical effect’ of controlling commerce ‘occurring wholly outside the boundaries’ of California even though it may have some ‘effects within the state.’” (The case is currently awaiting appeal in a higher court.) By creating the new federal law, backers hope both to broaden the area of coverage and to circumvent the commerce clause issues raised by the California law.
As currently written, the federal bill would require that a royalty be paid on any works sold at auction houses by a living artist or an artist who has been deceased fewer than 70 years, in line with copyright expiration. For any work sold above $5,000 at a major American auction house, the royalty would be 7 percent (a rate not yet set in stone, according to Feder), with half going to the artist or his or her estate and the other half going into an escrow account to fund acquisitions of emerging American artists at nonprofit museums in the U.S.
But the bill may face an uphill battle given its spotty support in Congress. “You would expect, in theory, the Democrats to be in favor of the bill,” says Feder, “but there is a strong wing of the Democratic Party that is against any expansion of copyright.” On the other hand, the bill has received some support from within Republican ranks.
As Art+Auction went to press, the bill was stalled in committee and not likely to reappear until after the election. However, in late September, the U.S. Copyright Office opened its own inquirey into a possible federal resale royality law. The inquiry is set to last 45 days, nearly half the typical duration; it ends on November 5. Observers suggest the bill’s co-sponsor, Senator Herb Kohl of Wisconsin, would like to see it through before his imminent retirement.
“I think the Copyright Office put off the inquiry for some time,” said Los Angeles art law attorney Christine Steiner told ARTINFO’s Rachel Corbett in an email. And while it is in its early stages, “I would note that this issue may have some legs.” Still, the office will only produce a report on the feasibility and importance of the bill — the power to push it through remains squarely with Congress.
When the Copyright Office last raised the question of a resale royalty law 20 years ago, it found that there was “insufficient economic and copyright policy justification” to enact federal regulations. Since then, however, more than 60 countries, including the U.K., have adopted such laws. Still, one New York attorney who has argued artists’ intellectual property cases cautions that it is much easier to protect artist’s rights in Europe, “where art is considered an extension of the artist’s personality” rather than a piece of personal property that can be bought and sold.
This article appears in the October issue of Art + Auction. It has been updated to reflect recent developments.