Oregon Volunteer Lawyers for the Arts

In Defense of Art

In Defense of Art is the official blog of Oregon Volunteer Lawyers for the Arts

After the Sale

Should Visual Artists get a cut of subsequent sales of a work?

by Lydia Loren

New legislation has been introduced in Congress that would amend the federal Copyright Act to grant some artists the right to receive up to 5% of the sale price on resales of their artwork. Based on the French legal concept called “droit de suite”, these types of resale royalty rights are common throughout Europe. They are not, however, part of federal copyright law in the United States.   If passed by Congress, the American Royalties Too Act of 2014 (H.R. 4103; S. 2045) would change that. An artist who sells his painting today for $1,000 and sees it sold at auction 10 years from now for $100,000, would be entitled to a $5,000 payment from the seller.

Introduced by Rep. Jerrold Nadler (D-N.Y.) and Sens. Tammy Baldwin (D-Wis.) and Ed Markey (D-Mass.), the ART Act would create a new exclusive right under Section 106 of the Copyright Act to collect a resale royalty on works of visual art that are sold at auction for more than $5,000. Only auction houses that sold at least $1 million of visual art in the previous year would be required to pay these royalties, and the amount of royalties paid for any one sale would be capped at $35,000.

While federal coypright Law does not contain a resale royalty right, California does grant artists such a right. However, in 2012, a federal judge struck down California’s state droit de suite statute, finding the state law to be unconstitutional. Estate of Robert Graham v. Sotheby’s Inc., 860 F. Supp. 2d 1117 (C.D. Cal. 2012). The basis of that ruling was that a state cannot imposed undue burdens on commerce that is interstate. In legal circles, that theory is known as the “dormant commerce clause.” The U.S. Constitution grants authority to regulate interstate commerce to Congress, not the states. So the “dormant” part of the commerce clause is the negative implication that arises from the grant of power to Congress: states cannot regulate interstate commerce.

The ART Act, because it would be passed by Congress, does not face the same constitutional challenge. It does, however, face opposition from auction houses. Earlier attempts to pass federal resale royalty provisions have all failed. Whether this one will get traction is yet to be seen, but frankly, is probably not that likely.