Visual artists in Australia may soon gain the right to a percentage of the commercial resale price each time their work is sold. The proposed legislative framework for this right, the Resale Royalty Right for Visual Artists Bill (the Bill), was introduced into the House of Representatives on 27 November 2008. The Bill has now been referred to the Standing Committee on Climate Change, Water, Environment and the Arts for preparation of an advisory report to the House by 20 February 2009. If the Bill is passed a resale right for visual artists is expected to be in place by 1 July 2009.
Under the proposed scheme, artists will receive a royalty payment of 5 percent of the sale price each time their artwork is resold through, for example, an auction house, a commercial gallery or an art dealer for $1,000 or more.
The Bill defines the resale royalty right as:
"the right to receive resale royalty on the commercial resale of an artwork".
What is "an artwork"?
Artwork that will qualify for the royalty scheme proposed by the Bill is original work of graphic or plastic art that is either:
- created by the artist or artists; or
- produced under the authority of the artist or artists.
Graphic or plastic art includes pictures, collages, paintings, drawings, engravings, prints, lithographs, sculptures, tapestries, ceramics, glassware and photographs.
The Bill expressly excludes the following works from qualifying for the royalty scheme:
- a building, a drawing, plan or model for a building;
- a circuit layout; and
- a manuscript of a literary, dramatic or musical work.
When is a sale a "commercial resale"?
It is proposed that the royalty right be limited to sales of artwork in circumstances where:
- the ownership of the artwork is transferred from one person to another for monetary consideration;
- the transfer is not the first transfer of ownership of the artwork; and
- the transfer of ownership of an artwork involves an art market professional acting in that capacity (eg an auctioneer, the owner or operator of an art gallery, the owner or operator of a museum, an art dealer or a person otherwise involved in the business of dealing in artworks).
Private sales not involving an art market professional will not attract royalty rights.
Who holds the resale royalty rights?
The Bill contemplates situations where there are multiple artists and artists who have passed away.
Where an artwork is created by:
- A single living artist
The resale royalty right is held by the artist, provided that he or she satisfies a residency test at the time of the commercial resale.
- A single artist who has passed away (but who satisfied the
residency test immediately before his or her death)
The resale royalty right is held by the successor(s) in title to the right so long as they satisfy the residency test.
- Multiple artists
The resale royalty right is held by each artist who is living at the time of the commercial resale (provided that they satisfy the residency test at the time of the commercial resale).
Or, alternatively, the right is held by the successors in title to the right so long as they satisfy the residency test.
As with other copyright law, the proposed resale royalty right continues to subsist in artwork until 70 years after the end of the calendar year in which the artist dies. If there is more than one artist then, in relation to the proportion of the resale royalty right held by the particular artist, the resale right continues 70 years after the end of the calendar year in which that artist dies.
Liability, enforcement and penalties
If the Bill is passed unamended, the resale royalty rights will
apply to resales that occur after 1 July 2009. Liability to pay the
resale royalty will arise at the time of a commercial resale of
artwork. The seller(s) of the artwork and person(s) acting as an
agent/market professional for the seller (or if there are no such
agents, the buyer) will then be jointly and severally liable to pay
the resale royalty.
The Bill provides for the appointment of a collecting agency. Artists may give the collecting agency notice of any royalty rights they may have and the collecting agency has obligations to use its best endeavours (whether or not notice has been provided) to locate each holder of the resale royalty right and pay the holder its share of the royalty.
Sellers are required to notify the collecting agency of commercial resales of artwork within 90 days commencing from the date of sale of the artwork. There is a proposed civil penalty of up to 200 penalty units (ie approximately $22,000) for an individual and up to 1,000 penalty units (ie approximately $113,000) for corporations that fail to comply with this requirement.
Because their works are not disseminated in ways that generate copyright royalties, visual artists in Australia tend to benefit less from copyright law than other creators of works (such as writers and songwriters). The introduction of a resale royalty right is directed at resolving this inequity and providing incentive to visual artists to pursue their art. Ultimately, the incentive lies in the benefit from the increase in the value of their work between the first and subsequent sales. Visual artists will, no doubt, keenly follow the progress of the Bill through Parliament.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.