• basis
• history
• arguments for
• and against
• Berne, TRIPS and UNESCO
• administration
• a shaggy story

     basis

The droit de suite aims to provide visual artists with a share of revenue from sales of their work after initial sale of that work to a dealer or other buyer. It has been criticised as an inappropriate or ineffective tax. It has also been characterised as a measure of justice for creators and as an extension of intellectual property.

It is independent of droit moral - moral rights schemes - that are based on respect for the artist's creativity. Moral rights legislation is discussed here.

The resale right provides that visual artists or their estates receive a royalty on the resale of artworks. That royalty is usually between 3% to 5% of the price of the work, with individual payments being made to copyright collecting societies on behalf of the artists. (Some regimes involve galleries and dealers paying 1% of their turnover into a special fund. Some nations base the royalty on the seller's profit rather than the price of the work).

It relates to public rather than private sales - eg by dealers and auction houses rather than directly between private individuals - and covers work above a specific value.

An artist who originally sold a painting for a few hundred francs might thus receive considerable royalties many years later when the work is resold several times for several million francs, sharing in the increased value of the work and enjoying an ongoing incentive for creation.

The droit is concerned with the resale of physical entities - for example canvas, a sculpture, a work on paper - and is independent of reproduction rights (ie the artist's licensing of intellectual property for use in posters, books etc).

Typically, artists sell the canvas, pigment or paper - the embodiment of their creativity - but retain the intellectual property. The droit allows artists or their estates to snaffle between 5% and 0.25% of the price of the artwork when the embodiment is resold, sharing in the increase in value of the work over time. An Australian report, for example, notes that Indigenous artist Johnny Warangkula Tjupurrula sold one of his paintings for $150; at an auction some years later that canvas went for $206,000. (As at July 2004 the record for auction of work by an Indigenous artist is $778,000 for Rover Thomas' All That Big Rain Coming From Top Side in 2001.)

The droit lasts while a work is in copyright (so there is no need to pay money to the estate of Rembrandt, Raphael or Da Vinci on the increasingly rare occasions when their works change hands).

It has been strongly opposed on economic grounds by some dealers (eg UK galleries and auction houses argued vehemently that it would disadvantage artists by discouraging sales), on philosophical grounds as a social welfare measure unrelated to copyright and on operational grounds as difficult to administer.

     history

First proposed in the 1860s, the droit was established in France in the 1920s to assist the widows of artists killed in the 1914-18 War. It supplemented a special tax on the overall turnover of art dealers that has been used for a special arts social welfare fund.

Droit de suite provisions were subsequently incorporated into the copyright legislation of most nations in what is now the European Union and reflected in the Berne Convention for the Protection of Literary & Artistic Works, discussed in our Intellectual Property guide.

The EU Resale Royalty Directive (discussed in the following page of this profile) harmonises legislation in the various EU states.

The droit is a peculiarity that has not found much favour in Australia, the US (although a form of the droit is in place in California), Canada, New Zealand or Asia.

Application is discussed in the following page of this profile.

     arguments for

Much of the debate about the droit has been polemical. In practice the most serious argument against introduction of the droit is uncertainty about whether it works.

Supporters acknowledge that although a resale royalty regime has been operating in France and other nations since at least the 1930s, the impact of those regimes on the overall resale market, on the viability of dealers and on the bottom end of the first sale market is unclear. Agreed statistical information about which artists benefit, how frequently, on what scale and with what effect is also unavailable.

Discussion has been vexed by disagreement about economic models, motivation and philosophies. Particular issues are highlighted in Creative Industries: Contracts Between Art & Commerce (Cambridge: Harvard Uni Press 2000) by Richard Caves, The State and the Arts (Cheltenham: Elgar 1998) by John O'Hagan, The Economic Structure of Intellectual Property Law (Cambridge: Harvard Uni Press 2003) by William Landes & Richard Posner, Muses and Markets: Explorations in the Economics of the Arts (Oxford: Blackwell 1989) by Bruno Frey & Werner Pommerehne and Playing Darts with a Rembrandt: Public & Private Rights in Cultural Treasures (Ann Arbor: Uni of Michigan Press 1999) by Joseph Sax.

Proponents have argued for the droit on several grounds. One - sometimes characterised as the 'genius in the garret' theory - is that great works are rarely recognised at first sale, with the artist consequently being inadequately rewarded. Each generation - resellers and buyers - should accordingly "make some reparation for the insensitivity of its ancestors".

Another is that resale of artworks involves exploitation of the artist, who creates a commodity that is profitable for sellers and intermediaries but does not share that profit. A royalty on resale enables the artist to share the benefits enjoyed by the vendor, dealer or auctioneer, insurer and other intermediaries in the distribution chain in a way that is broadly analogous to licensing by literary creators, composers and performers.

Advocates of 'intrinsic value' argue that the latent value of an artwork at the time of first sale is realised through resale. The royalty provides a mechanism through which the artist (or estate) can share in realisation of that latent value and thus have an incentive for creativity.

     arguments against

The absence of hard data has strengthened criticisms that include claims that any scheme will be administratively cumbersome (with disproportionate overheads that benefit government agencies or a collective rights administration body), that existing arts support and social welfare schemes make adequate provision for struggling creators or - less plausibly - that artists can use contract law to secure a share in future resales.

Others have charged that

• the droit necessarily benefits the wrong artists at the wrong time of their career (eg 'stars' rather than those who really need assistance)
• the financial needs of artists are adequately met through first sale and subsequent reproduction rights
• sales between private persons "tend to be conducted discreetly", making information and remuneration rights difficult to enforce
• overall demand for and spending on art is fixed, so benefits for celebrity artists will be at the expense of emerging creators
• demand for contemporary works will be reduced by a "tax on the profits of philanthropy"
• major works are sold or donated to cultural institutions and thus aren't resold
• the legislation will be evaded, either by sales going to 'friendlier' jurisdictions (eg from London and Paris to the US) or resellers ignoring the law and relying on the inability or disinterest of artists in taking them to court

Some Australian agents have featured droit de suite provisions in contracts when selling works on behalf of artists, reportedly not encountering major resistance by private or commercial purchasers. The Australian Copyright Council, however, notes that contract

is no substitute for a right under legislation, as rights under a contract are generally not enforceable against people other than the people who are party to the agreement, and cannot be imposed retrospectively (for example, where as a younger or less aware person, an artist sold a work without such a contractual clause).

Consistent with overseas studies, the ACC notes that in practice only established artists may be in a position to impose such conditions on sale and resale of their work.

     Berne, TRIPS and UNESCO

Article 14 of the Berne Convention (as revised in 1971) identifies droit de suite as one of the 'author's rights' comprised in copyright, with the expectation that it can be claimed by creators and their heirs during the duration of copyright protection.

Berne essentially treats the droit as aspirational: it is not a 'minimum right' that must be reflected in the national legislation of all signatories to the international agreement but instead is one that can be linked to reciprocity in national regimes.

Proponents of the droit have often argued that it is an inalienable right, ie one that the creator cannot waive in advance. That argument, reflected in the EU Directive, reflects perceptions that the art market is weighted strongly towards dealers. Those dealers holds a stronger bargaining position than emerging artists and are able to set price and sale conditions. In practice inalienability merely specifies that an artist/heir can - in principle - exercise the right following first sale and does not obligate the artist (or another entity such as copyright collecting society or government agency) to exercise that right.

UNESCO asserted in 2001 that

All original works of fine art in its widest sense, including works of graphic art and photographs of a creative nature, which are resold on the art market in the world, must be subject to droit de suite legislation.

It noted that

The persons entitled to droit de suite remuneration are the artists and their heirs. In order to prevent the art dealers from forcing the artists to give up this right on the occasion of the first sale it must be recognised as inalienable and non-waivable.

The droit de suite claim must be addressed not only to the vendors themselves, but also to any art market professional involved in resale either on the vendor's or on the buyer's side. This right should not apply to sales between private persons.

Droit de suite legal provisions should provide for uniform royalty rates; rate splitting for certain portions of sale prices only complicates its management.

The precondition to making droit de suite claims is a right to information granted to the right owners and enforceable against vendors and traders; it is more appropriate that this right be exercised by a collecting society.

The remuneration claim can be enforced independently of the information claim and be asserted either individually or by a collecting society; practice will prove that this claim is usually made by a collecting society jointly with the information claim which makes the management of this right less costly and minimises the interference in the market proceedings.

Author' societies mandated to exercise droit de suite are in a position to maintain social institutions or institutions which support young artistic talents with a view to encouraging the growth of the artistic potential of the nation, as well as persons excluded from the art market who benefit, at least partially, if this lies in the national legislature's intentions.

To encourage all States to introduce this right, it should be bound to the principal of material reciprocity

     administration

Administration of the droit is based on national legislation - a discrete enactment or provisions in the Copyright Act - with royalties being collected and distributed by a government agency or by a collective intellectual property rights (IPR) administration body, often known as a copyright collecting society.

We have profiled Australian and overseas collecting societies here. They are owned by copyright owners, operate on a not-for-profit basis and provide efficiencies in rights administration that are not available to most individual copyright owners.

The costs of collecting the droit in Europe appear to vary between 10% and 40% of the royalties collected. Australian rights administration body Viscopy foreshadowed that its costs might be 25% of the royalty. France reportedly deducts administration costs of 20%.

The Californian regime requires the vendor to withhold 5% of any sale over US$1,000, paying the royalty directly to the artist within 90 days of the sale.

     a shaggy story

James Fenton's 6 February 1997 NYRB review of Richardson's monumental life of Picasso provides an anecdotal view of the early history of droit de suite and the then current UK furore about the EU Directive.

A 1914 Picasso still life - Bottle of Glass, Wineglass, Packet of Tobacco & Visiting Card - features the visiting card of financier Andre Level, responsible for the La Peau de l'Ours (skin of the bear) art investment fund. The 'bear' involved a group of art lovers contributing 250 francs each year for speculative investment in modern paintings. The investments would be displayed in the shareholders' homes (an example is the Picasso here) before being sold after ten years, when the fund was wound up through sale of the collection. Matisse, who had unsuccessfully sought a group of backers to support him in a similar way, may have originated the idea.

Level assembled twelve partners and began investing in 1904. Ten years later, as if to prove that the fund had matured on schedule, it became almost impossible for him to buy the kind of works he'd originally set out to acquire. A catalogue was printed - now a collector's item fetching prices greater than the Bear group's original investment in works by Picasso or Braque - and the sale duly took place, just in time to beat the German cultural export drive planned by von Schlieffen. As we noted several years ago in an article for the Commonwealth arts and communications department, there is more than one way to skin a bear.

The investors, whether out of nobility or concern to secure future works, agreed that 20% of the proceeds should go to the artists, divided between them in proportion to price increases.

That principle entered French law six years later - in search of a good anecdote, Fenton glides over agitation for droit since the 1860's and postwar lobbying by veteran's groups - and was known as droit de suite, with artists or their estates receiving a small proportion (2 to 5%) of works resold in France or other European countries with similar legislation.

Writing at the height of agitation by UK art dealers, the NYRB quoted coverage in the London Daily Telegraph of 16 December 1996 of a speech by auction house supremo, Lord Hindlip, who warned that the extension of droit de suite to the UK would send all 'bears' swimming to the US.

In the House of Lords, Hindlip claimed that the EU Directive would be the end of London as the center of the modern art market, if not the end of the world (the two are synonymous to all right-thinking people) as no Japanese collector would wish to pay the extra 2%.

'Imagine a conversation with the Japanese seller of the £2m Picasso, the bread and butter of our business. I tell him that our charges are 2% and that we will charge him expenses of a further 0.5%. 'So I will have to pay 2.5% to sell my picture in London?' asks our Japanese. 'Not quite,' I have to reply, 'there is the question of droit de suite.' His face clouds and he says 'So it is 2.5% to you and 2% to the artists heirs?' 'Yes, that is so,' I add, 'but if it bought by a European there will be another 5%.'

Fenton speculated, with little justification, that La Peau de l'Ours might one day be responsible for closing down Christie's London operations - a bear market for art in London. Critics subsequently commented that "although roughly a third of the fine art sold around the world is French in origin, only 7 percent of all French art sales take place in France", supposedly because of the droit.

In reality its impact on the UK or on Australia is unlikely to be that drastic. Separate reports about the German regime, for example, indicate that in 1998 the resale rights of around 7,454 artists were administered by a nonprofit copyright collecting society. Only 274 received any payment: an average of DM 1,681 (about £550). Some of the more spirited memoirs of the art trade suggest that some dealers spend more than that each year on nose candy.

   next page  (application in Australia, the EU and US)