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Munch's 'The Scream' at auction

Munch’s ‘The Scream’ at auction

Is a painting real property or intellectual property?

This is just one of the hotly debated issues over the “American Royalties Too Act of 2014,” cleverly shortened to “ART.” No misspelling, just a bit of a pun. “Too” refers to the revised version of the unpassed Royalties Act of 2011 and a demand for the same type of continuing returns for visual art that lyricists and writers now receive.

Artists generally are thrilled with the idea, which requires auction houses to give them money any time their art work is resold. Specifically sales of more than $5,000 will require 5 percent of the resale price with a cap set at $35,000.

Congressman Jerrold Nadler, D-N.Y.. introduced the bill last February, claiming that only purchasers benefited “whenever the value of the artist’s work increases” and not the artist. It hasn’t seen much action yet, as well as little solid support. Prognosis on Govtrack.us, the official bill-tracking site, gives it 3-percent chance of being enacted, or thumbs down. There are reasons for that.

California attempted this with their “California Resale Royalties Act,” or CRRA, from 1976. It’s currently in limbo after Chuck Close and other artists aggressively chased their share of royalties from auction houses in other states (but sellers were from California).

Efforts backfired when Judge Jacqueline H. Nguyen ruled for defendants Sotheby’s, Christie’s and eBay. Finding the CRRA “entirely unconstitutional,” she ruled it violated the Commerce Clause of the U.S. Constitution attempting to regulate interstate commerce. Her decision is currently appealed at the Ninth Circuit Court.

Christopher Rauschenberg related a sad tale about his father in Huffington Post. Robert Rauschenberg originally sold a piece for only $900 in the 1970s when he was not such a big name and bemoaned that he received no part of its later resale at $85,000.

Supporters of the Act claim this is as an injustice, citing film or digital image royalties by comparison. But the high auction prices investors made possible by taking a chance is the means by which Rauchenberg became wealthy. They established him as a high-command artist who can continue to ask those prices while also becoming more attractive to investors and collectors.

Rauschenberg's "Thaw"

Rauschenberg’s “Thaw”

Detractors of the ART Act compare this to coin, car or jewelry collecting, which may also increase in value while original makers don’t receive a penny. If you teased out the argument, the same could be said of houses or race horses. Should the original owner or trainer of a race horse receive continued earnings after it is sold and wins the Kentucky Derby? What about a dress at a resale shop if it is haute couture and a highly artistic creation?

The fact that a painting or sculpture is a piece of physical property complicates legal tangles, especially with so many new mediums in contemporary art. Law must define exactly what qualifies as discrete pieces of “art,” which may not be as easy as it seems.

So far legal advice for the Act hails from the U.S. Copyright Office, which originally didn’t think this was a particularly good idea. Their own 1992 study advised that art royalties would cause more problems than they would solve. The Office suggested it may reconsider the issue if all European Community Member States adopted royalty rights – and they did.

About 60 nations currently have some sort of droite de suite, or royalty laws, but few actually enforce them much. They do stand more often in Europe, and that is the template supportive artists and sponsors turn to for an example. And this is one of reasons officially given for reintroducing the concept here – so many other nations have recently enacted similar laws.

Droite de Suite laws hark back to at least 1920, supporting artists’ “inalienable right to be associated with their work.” Republican President George H.W. Bush was the first to seriously push for artists’ royalties when he signed the “Visual Artists’ Rights Act,” or VARA, in 1990. VARA only covered a few minimal issues though: such as the right for an artist’s name to be associated with his work and to protect it from defamation, distortion and at times destruction of the work, even if it belonged at that point to another.

Tellingly, the ART Act is almost entirely partisan, supported so far by Democrats with the lone exception of Howard Coble, R-N.C., who is “not uncomfortable with the concept of a resale royalty.” I won’t try to explain the deep party divide, but could hazard a few guesses: either Democrats truly support the arts more, or Democrats expect to be the recipients of support from (generally) well-known, left-wing artists. Quid pro quo.

Christie’s and Sotheby’s have actively lobbied against the ART Act, which is generally opposed by auction houses. Among other things, it requires them to keep extensive financial records (beyond current requirements) on sales records of living artists and heirs of some dead ones. Essentially who owns what, when and where – forcing auction houses to be vast data-bases and hire more employees. Sotheby’s asserted that “a resale royalty right would give artists a perpetual ownership interest in the object as well, contrary to traditional notions of property rights under U.S. law.”

The biggest problem with art royalty rights is yet another bureaucracy created to enforce it. Think arty arm of the IRS, which we all know and love so well. ART Act requires creation of a “collecting society,” which oversees all these transactions to be supervised by the Register of Copyrights. They will be tasked to “distribute the appropriate royalties (minus administrative expenses) to authors or successor copyright owners” at least four times a year.

Not only American artists alone will profit by the Act. The law stipulates that recipients of royalties be either a citizen, or domiciled in the U.S., or a country that provides similar resale rights, or created the work here at some earlier time. All these must be tracked down and notified each time their work sells past a minimum amount.

Another hurdle for the ART Act 2014 hasn’t been discussed much but could seriously affect all types of art dealers, not only the monster auction houses of New York and London. A directive to the Register of Copyrights requests they consider if the Act “should be expanded to cover dealers, galleries, or other professionals engaged in the sale of works of visual art.”

This would extend the budding art bureaucracy much further. That’s rather alarming when you consider thousands of tiny, independent galleries that now exist blissfully beyond federal manipulation. And that’s likely why intelligent Republicans aren’t doing somersaults of joy over the ART Act yet, nor are they opposed to artists getting a fair share.

Sources: theartnewspaper.com / artlawreport.com / Nicholas O’Donnell / lexology.com / Huffington Post

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