Art resale royalty options

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A federal resale royalty law that would require payments from the reseller of art to an artist when her work is resold is under consideration. This article analyzes provisions that might be contained in such a law with comparisons to Australia, England, France and California. It begins by pointing out that these payments can be conceptualized as either a substitute for copyright royalties or for the profits of a joint venture between the artist and the collector. It analyzes the kinds of artwork on which a resale royalty should be payable, with specific attention to multiples, crafts, antiques and wine. Sales might be subject to the royalty based on the place of sale, the nationality or residence of the seller, buyer, intermediary or artist. Minimum proceeds or a profit might be required. Such a law should define what constitutes a sale in light of auction practices like reserve prices, and whether leases, exchanges, gifts, bequests, charitable donations, loans or casualty losses should trigger a royalty payment. The base on which the royalty is paid must be determined. If the base is to be gross sales price, is that the amount the seller receives, the amount the buyer pays, or some other amount? If the base is to be net profit, one must determine what expenses of holding the art and effectuating the sale may be deducted from the sales price. The royalty could be imposed at a flat rate, a variable increasing rate, or a variable decreasing rate. Its amount could be capped. All such laws benefit the artist who created the work, but many laws also benefit surviving spouses or heirs. The benefit might be limited to citizens or residents of the country, or of a country that provides reciprocal rights to our citizens or residents. The right could last for a short time after the first sale, for the duration of the copyright, or forever. Whether the right should be waivable or transferable has been hotly contested. A system needs to be worked out when the law of more than one country would compel a payment for the same resale. One needs to consider the income, gift and estate tax consequences of the payment or receipt of the royalty and the transfer of the underlying right. The most important aspect of any such law would be its enforcement provisions. With the facts largely within the knowledge of the seller and his agents and unavailable to the artist, most laws simply impose an obligation on the seller to pay and his agent to withhold. That has proven insufficient to effectuate the royalty. The law needs to specify a time for payment, an obligation to make information available without specific request, effective remedies for failure to comply, the role of collecting societies and statutes of limitations, and the interface between private collection and the role of government agencies such as the Register of Copyrights and the Internal Revenue Service.

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Journal, Copyright Society of the U.S.A.