The art world celebrated this week.  First, a painting of Jesus Christ was identified as the work of Leonardo da Vinci.  The painting, called “Salvator Mundi,” is the first Leonardo to be discovered in over 100 years and is one of only fifteen surviving Leonardo paintings in the world.  Second, perhaps because stocks plummeted and Europe’s debt crisis unfolded, collectors invested heavily in art.  This past Wednesday, Sotheby’s achieved its third highest total for a contemporary art sale ever, bringing in almost $200 million in one evening.

Sotheby’s makes a commission from each sale at its auctions.  It retains 25% of the first $50,000, 20% of the next $50,000-$1million and 12% of the rest.  By contrast, the artists whose works are resold at the auction do not receive a penny.  In the United States, there is no federal law that provides artists with resale rights.  However, this may change in the near future, for the Artists’ Rights Society and Bruce Lehman, the former commissioner of the U.S. Patent and Trademark Office, are lobbying Congress for a droit de suite law.

Droit de Suite refers to an artist’s resale right.   Each time an artist’s work is resold, he (or his heirs) is entitled to a royalty payment.  The right is based on fairness and rooted in the belief that if art appreciates in value, the artist should be able to share in the proceeds.

Although droit de suite laws, at first blush, appear rather benign, they are quite controversial, particularly in the United States.  When Senator Edward Kennedy proposed that resale rights be included in VARA (Visual Artists Rights Act), the idea was so contentious that it had to be excluded from the bill.  California compensated for this lost provision by enacting the California Resale Royalty Act, which requires sellers to pay artists 5% of the resale price of a work if the price exceeds $1,000.  But California is the only state to adopt such a law.

Why have other states not followed suit?  After all, it seems patently unfair that a seller could turn a substantial profit off of a living artist’s work while the artist receives nothing.  Indeed, the European laws were fueled by stories such as that of Jean-Francois Millet, whose heirs sold flowers to earn a living in Paris while his works sold for millions in auction houses.  Why is this country resistant to droit de suite?

First and foremost, a resale rights law could be detrimental to unknown artists, as buyers will likely demand lower prices for art in order to pay the resale fee.  The work of unknown artists is not often resold; thus, these artists will likely not earn royalties and would be significantly harmed.

Second, in addition to harming unknown artists, resale rights laws could potentially harm small art dealers and galleries who cannot afford to raise prices on works simply to pay the royalty.

Third, large auction houses such as Christie’s and Sotheby’s fear that it will cause collectors to resell their works in other countries, where droit de suite does not exist, causing a market flight.

Fourth, it could be a logistical nightmare.  If sellers or collection agencies have trouble tracking down the artist, the state would have to hold the royalty in escrow until the artist is found.  This issue was documented in a recent Wall Street Journal article that featured Patty Milich, California’s art sleuth.  The article chronicles Ms. Milich’s months-long attempts to deliver often smalls sums of money to artists who have either “faded into obscurity, moved abroad, or simply don’t want to be bothered.”

Fifth, there could be international conflict, as exemplified by the battle between Salvador Dali’s heirs and Spain for the royalties from recent sales of Dali’s artwork.  Dali had named Spain as the only heir to his intellectual property rights; however, French law gave priority to droit de suite and gave the resale proceeds to Dali’s living heirs.  Spain sued and the European Court of Justice ruled in its favor, deciding that the royalties should be distributed in accordance to Dali’s will.

Finally, the artists who will benefit most from this law are those whose work is famous enough to sell repeatedly.  Indeed, a study shows that in France, “approximately 70 percent of the royalty payments went to the estates of a handful of famous 20th-century artists, like Picasso.” Picasso was a millionaire.  Do artists like Picasso really need more money?

Despite the controversy, the Artists’ Rights Society and Bruce Lehman are campaigning for droit de suite in the United States.  They believe that artists should be rewarded for their work.  Yet will Congress adopt this legislation?  Perhaps the better question is, during this time of economic uncertainty when Congress is attempting to cut government spending, should it adopt this legislation?

– Frances Kammeraad

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4 Responses to Droit de Suite: Lobbying for Resale Rights in the United States

  1. john walker says:

    Speaking as a Australian professional artist I agree that resale royalties are a bad idea for just about all living artists .
    I would ask you to read our piece on the 1709

  2. Talor Bearman says:

    I think it is interesting how this right would intersect with the current rights of copyright owners. For instance, after the “Copyright Term Extension Act of 1998″ the rights of the author last for 70 years after his or her death. I wonder which law would trump in this situation?
    As you pointed out, the artists who would benefit the most from this would be artists whose work is famous enough to sell repeatedly. While Picasso and Dalhi would be protected by the current copyright act, someone like da Vinci would no longer have protection under the “life plus 70″ rule. If this law passed in the U.S. would da Vinci’s estate receive payment under the droit de suite law, or would copyright law preempt it?

  3. Shane Valenzi says:

    That’s an interesting point, Erin, but isn’t visual art already treated differently than other forms of copyright? Visual art has just as many features of real property as it does intellectual property, most notably that each piece of visual art is the only one of its kind, while there are tens of thousands of CDs, books, copies of sheet music, etc.

    With that said, the practical problems of Droit de Suite Francie elucidates are all real, legitimate concerns; a further issue might be that robust droit de suite laws might actually incentivize established artists to create less art, as fewer pieces from a renown artist should theoretically drive up the resale value of the pieces that already exist.

    One alternative that might help alleviate these concerns is to allow (and encourage) artists to bargain for enforceable droit de suite rights during the initial sale of their works; this would prevent unknown artists from being harmed, as they could simply elect not to bargain for these future rights, while giving established artists a bargaining chip that would allow them to gamble on less money up front in exchange for the potential that their work might be worth much more over time. This exception to the first sale doctrine might be the sort of compromise that would alleviate artists’ rights advocates while giving proponents of the status quo enough bargaining power to maintain business as usual.

  4. Erin Reimer says:

    Great article, Francie.

    In addition to your list of reasons why states may be resistant to droit de suite, I also must add the obvious: I’m not sure why the United States would be willing to adopt droit de suite when it would result in treating copyright in visual artwork so differently than other forms of copyright. Copyright in the US, generally, is subject to the first sale doctrine; for example, once a cd is sold to a consumer, that consumer can sell the same copyrighted cd without owing a royalty to the original artist. I imagine that if the US adopted droit de suite, it would have to be rooted in a very concrete policy choice in order to ward off complaints from other copyright-owners. I’m not sure a concrete enough policy even exists. Would Congress merely be saying that artists like painters need more incentive to produce in today’s time than they once did in the era of Picasso and Monet?