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Copyright Laws Are a-Changin’ (Maybe) in the US and EU

by Mostafa Heddaya on December 13, 2013

Joseph Gordon-Levitt's attempt to copyright the copyright sign has just been appropriated and copyrighted by the "author."

Joseph Gordon-Levitt‘s attempt to copyright the copyright sign has just been appropriated and copyrighted by the “author.”

The arena of copyright is a global morass of collaboration, appropriation, and theft. Rights management is a nightmare for artists and a cash machine for the legal profession, but two recent developments, one in the United States and the other in the European Union, aim, respectively, to expand the scope of royalties and streamline the process by which rights and permissions are transacted.

Stateside, the US Copyright Office released today a report on resale royalties for visual artists, a response to a request made by Congressman Jerrold Nadler, a Democrat representing New York’s 10th district. The report, titled “Resale Royalties: An Updated Analysis,” follows a 1992 report from the Copyright Office on the same subject, and suggests that resale royalties, i.e. royalties paid to a visual artist (defined as “painters, illustrators, sculptors, and photographers”) upon secondary sale of their work, be implemented — with certain constraints. Nadler’s office, in a statement released today, notes that “Many of the Copyright Office’s recommendations will be reflected in the new version of [his] Equity for Visual Artists Act, which he plans to introduce early in 2014.”

The Copyright Office’s report states:

In general, visual artists do not share in the long-term financial success of their works. Instead, the financial gains from the resale of their works inure primarily to third parties such as auction houses, collectors, and art galleries. […] The Copyright Office agrees that these factors place many visual artists at a material disadvantage vis-à-vis other authors, and therefore the Office supports congressional consideration of a resale royalty right, or droit de suite, which would give artists a percentage of the amount paid for a work each time it is resold by another party …

In recommending a resale royalty right, also known as droit de suite, the Copyright Office offers a number of criteria that might guide any potential legislation. They suggest that such rights apply to “auction houses, galleries, and private dealers,” have a “relatively low threshold value to ensure that the royalty benefits as many artists as possible,” and be limited to “a royalty rate of 3 percent to 5 percent of the work’s gross resale price
(i.e., a range generally in line with royalty rates in several other countries) for
those works that have increased in value,” among other considerations.

A federal opinion on this matter is significant, as a 2012 legal ruling from a California federal court in Estate of Graham, et al, v. Sotheby’s Inc. threatened the constitutionality of the law in the one state that has such a resale provision on the books, California’s Resale Royalty Act. That ruling, which is currently pending appeal, held that the law violated the Commerce Clause by improperly placing restrictions on transactions that occur outside of the state of California. The original lawsuit was brought by a class of California-based artists and their estates against a number of auction houses for failing to pay royalties under the act. Congressional legislation on this topic could affect the outcome of this case, and would seriously impact the auction and art dealing industry nationally.

Meanwhile, on the procedural side of things, the European Commission is pursuing a project called the Rights Data Integration (RDI), a clearinghouse of sorts for “efficiently manag[ing] and trad[ing] intellectual property rights online for any and all types of usage, across any and all types of content, in any and all media … ” This effort is still in its infancy, but it could significantly alter the process by which authors of online content — audio, visual, and text — are able to manage permissions to their work. (With the caveat that “RDI does not directly affect the content of rights laws and agreements — it only makes it possible to process the results of those agreements in more highly-automatable ways.”) The project started in October 2013 and is scheduled to last 27 months. As with most European Commission endeavors, a healthy skepticism regarding the robustness of the outcome is probably in order.

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