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WILL THE ART MARKET REALLY SOAR? REVISITING RESALE RIGHTS AFTER BREXIT.

As the United Kingdom prepares to leave the European Union, copyright law may strike readers as of little concern. One element of copyright law, however, has garnered attention since the referendum: the Artist's Resale Right which entitles artists or their estates to a royalty each time one of their works is resold through an auction house or art market professional. The United Kingdom has opposed resale royalties since their inception, but was obligated to implement the Directive of the European Parliament and Council 'on the resale right for the benefit of the author of an original work of art'. Some art market professionals expressed concern that the Directive would disadvantage the United Kingdom by driving sales to its primary competitors, the United States and China, which do not impose resale royalties. Consequently, despite the perceived liberalness of the art world, Brexit is viewed positively by those who want to reduce transaction costs. This article describes the origins of ARR; argues that the opacity of the art world leads to inaccurate predictions about the economic implications of repeal; and concludes that quantitative analysis ultimately should not be the driving force behind these discussions. Rather, the debate about ARR embodies a qualitative tension between internationalism and nationalism characterising the current political moment more broadly.

INTRODUCTION

As the United Kingdom prepares to leave the European Union, copyright law may strike some readers as of relatively little concern. Indeed, even at a recent discussion hosted by the IPKat Blog and British Literary and Artistic Copyright Association, an expert panel characterised copyright as unlikely to be greatly affected by 'Brexit.' (1) Sir Richard Arnold, a High Court Judge of the Chancery Division, noted that many recent international agreements including that on Trade-Related Aspects of Intellectual Property Rights ('TRIPS'), and the more recent Beijing and Marrakesh Treaties--encompass developments towards which the nation was independently headed. (2) One element of copyright law, however, has garnered attention since the referendum: the Artist's Resale Right ('ARR'). ARR entitles artists or their estates "to a royalty each time one of their works is resold through an auction house or art market professional". (3) The United Kingdom has opposed resale royalties since they were first proposed in the early twentieth century, but was obligated to implement the Directive of the European Parliament and Council 'on the resale right for the benefit of the author of an original work of art' ('the Directive'). (4) Some art market professionals worried that the Directive would disadvantage the UK by driving art sales to its primary competitors, the United States and China, which do not impose resale royalties. (5) Consequently, despite the perceived liberalness of the art world, Brexit is viewed positively by those who want to reduce art market transaction costs. Anthony Browne, Chairman of the British Art Market Federation ('BAMF'), wrote for the right-leaning Telegraph: "The art market has been a British success story. Brexit presents new opportunities to build on this." (6) Because current EU legislation initially will be maintained after Brexit before becoming subject to individual reconsideration, ARR will stay in place for now--but if any provision of copyright were to be repealed, it is a likely target. (7) Browne has already announced he will lobby to dismantle resale royalties in the UK. (8)

Part I of this Article describes the origins of resale royalties for artists and implementation of ARR. Part II argues that, given the lack of transparency in the art world, it is difficult to make accurate economic predictions about the effect that a repeal of ARR might have on the art market. Part III concludes that quantitative analysis ultimately should not be the driving force behind these discussions; rather, the debate about ARR embodies a qualitative tension between internationalism and nationalism that characterises the current political moment more broadly.

I. HISTORY OF THE ARTIST'S RESALE RIGHT IN THE UNITED KINGDOM

'Copyright assumes abundance, but the art market depends on scarcity." (9)

A. ORIGINS

Copyright has never sat comfortably with visual art, perhaps because it was initially conceived to protect books. In 1710, England passed the first known copyright act, the Statute of Anne, to provide authors with limited terms of exclusive rights (and the ability to license those rights) in the publication of their writings. (10) Scholars such as Guy A. Rub, Professor of Law at the Ohio State University Michael M. Moritz College of Law in the US, argue that copyright law was actually intended to "correct market failures for non-visual artists". (11) Paintings are unique and difficult to replicate. When a painting is sold, the artist (ostensibly) receives upfront payment for her efforts. Conversely, printed books are substitutes for an original manuscript. Without protection over those copies, an author might not recoup any proceeds from her efforts. (12) Thus, prior to copyright, it was actually visual artists that were believed to be better compensated for their creative endeavors. Overtime, though, the tables turned. Technically, artists can make money from reproductions. Albrecht Durer revolutionised printmaking in the sixteenth century and sold copies of his work throughout Europe. (13) Commercial artists today might design mass-produced greeting cards. Some fine artists and their estates--such as Pablo Picasso--could even benefit from postcard reproductions of their famous works in museums. But the majority of painters and sculptors do not traditionally make money from reproductions and therefore cannot necessarily benefit from 'appreciation in value'. (14) Authors of runaway bestsellers profit from their popularity. In the absence of resale royalties, artists who gain recognition might watch a work they originally sold for a few thousand pounds resold for millions without receiving additional compensation. (15)

The aforementioned tension between copyright and the visual arts may help explain why Paris was full of 'starving artists' in the early twentieth century, even though the city was the centre of the art world. Networks of dealers and collectors had replaced a patronage system from which artists received a living stipend to create works for their benefactors. Visual artists were now required to survive on proceeds from individual works, often sold at a very low price through necessity. (16) Public attention was drawn to the plight of several significant French painters, including Jean-Francois Millet, Paul Gauguin and Paul Cezanne, who died in poverty, but whose work sold well (especially posthumously) on the secondary or resale market. Neither they nor their families benefited from later recognition. France passed the first droit de suite (literally, 'right to follow', but translated as 'resale royalty right') in 1920 to counter this perceived disparity in earning potential among artists working in different mediums. (17) Today, many argue the 'starving artist' myth is just that--a myth. Professor Rub, for example, has asserted that these oft-cited stories are "anecdotal", "taken out of context" and "a weak justification for a legislative reform". (18) Regardless of the status of artists in 1920s' France, there is evidence that today, at least in the United States, artists' earnings are "typically quite similar to those of the general population", when side jobs such as teaching are included. (19) Yet the popular notion persists that artists deserve more economic participation in the monetary appreciation of their work.

Thomas F. Cotter, Associate Professor of Law at the University of Florida College of Law in the US, has described authors' rights in their intellectual property as grounded in two philosophical traditions: personality theory and utilitarianism. (20) The common law tradition of copyright focuses on economics; artists are incentivised to produce more when they are compensated for their efforts, thus creating a cycle of production. (21) The pervading myth of the starving artist is more enmeshed with traditional Continental theories of authorship rather than the utilitarian Anglo-American ones. (22) French authorial rights (droits d'auteur) are traditionally divided into economic (patrimoniaux) and moral (moraux) rights. Economic rights include those such as the creator's ability to profit from reproduction of an original work. Moral rights encompass "non-economic rights linked to the personality of the author, which permit the author to maintain a certain dominion over his or her work, even after having ceded economic rights" (for example, attribution and integrity). (23) Despite the undeniably commercial aspect of resale rights, France plainly considered the droit de suite a moral right, owed to the artist because of a continued personal connection to her art. Under this personhood theory of intellectual property, derived from the philosophies of Immanuel Kant and Georg Wilhelm Friedrich Hegel, artists would be entitled to resale royalties by virtue of a natural, inherent connection to their creations, which is not severed when a physical work is sold. Consequently, droit de suite is not per se financially motivated, but rather a means to legally recognise the continuing relationship of the visual artist and her artwork. (24)

Beneath the concept of artistic personhood of is an assumption about what 'authorship' really means. (25) Peter Jaszi, Professor Emeritus at the American University Washington College of Law, presents a post-structural history of Anglo-American copyright law in his influential 1991 article, 'Toward a Theory of Copyright: The Metamorphoses of 'Authorship" by demonstrating the instability of 'authorship' as a modern legal concept. (26) He argues that copyright developed alongside the eighteenth-century Romantic conception of the author as a 'genius', whose work represents an individual expression of the self. (27) Resale royalty rights fit well within this philosophic system, which considers art an expression of authorial personality. But Jaszi also argues that mythologising authorship prevents an understanding of the artist as a "socially constructed category rather than a real or natural one". (28) More recently, conceptual and post-modern art explicitly flout traditional notions of authorship embedded in copyright law. Difficulties result from an attempt to reconcile tradition notions of authorship and personhood theory with the contemporary art market. However, this justification for resale royalties has remained strong since France introduced the droit de suite, which quickly spread throughout parts of Europe, but not to the United Kingdom. (29)

B. IMPLEMENTATION

Perhaps unsurprisingly, France was a primary supporter of the first major multinational agreement on the protection of intellectual property: The Berne Convention for the Protection of Literary and Artistic Works ('Berne' or 'the Convention'). (30) The United Kingdom was among the initial countries to sign the Convention at its creation in 1886. Berne has since been revised several times and, in 1948, introduced an optional droit de suite provision to its 37 members, allowing "the artist to follow the fortunes of his work and to profit from the increase in its value each time it changes hands". (31) For a time, the national economic decision of whether or not to introduce resale royalties remained with individual countries. In its most recent iteration from 1971, Article 14ter of Berne reads:

(1) The author, or after his death the persons or institutions authorized by national legislation, shall, with respect to original works of art and original manuscripts of writers and composers, enjoy the inalienable right to an interest in any sale of the work subsequent to the first transfer by the author of the work.

(2) The protection provided by the preceding paragraph may be claimed in a country of the Union only if legislation in the country to which the author belongs so permits, and to the extent permitted by the country where this protection is claimed.

(3) The procedure for collection and the amounts shall be matters for determination by national legislation. (32)

Embedded within this text is the concept of reciprocity, but not non-discriminatory national treatment, as is required elsewhere in the Convention. In other words, an artist is entitled to a resale royalty outside her home country if both nations have such a right (reciprocity), but that royalty will be at the foreign rate, even if it is lower than that of her home country (discrimination). Art-market professionals could thus forum shop, dealing in jurisdictions with lower or non-existent resale royalty requirements. (33) Most prominent among the countries favourable to dealers were the United States, which did not even join Berne until 1989 (and still lacks a resale royalty right), and the United Kingdom, which staunchly opposed the right.

The establishment of the European Economic Community ('EEC' or 'the Community') in 1957 and the European Union in 1993, in addition to the development of new digital technologies beginning in the 1980s, necessitated a reconsideration of international intellectual property laws. (34) The 1980s also witnessed a boom in the art market, making cross-border transaction costs such as import and export tariffs more significant. (35) In a global art world, the free movement of goods and persons across Europe actually minimises transaction costs associated with international trade and travel. (36) Evidently, however, shopping the European Union for favourable royalty laws was creating:
   distortions of competition and displacement of sales within the
   Community and lead[ing] to unequal treatment between artists
   depending on where their works [were] sold. (37)


In 1993, the European Court of Justice ruled that Member States had to reach a middle ground between independent legislation of moral rights and adherence to ECC principles. (38)

Believing that the lack of harmonisation of resale rights contributed to a 'distorted' European art market and citing the expansion of the modern and contemporary art trade, the European Parliament and Council issued Directive 2001/84/EC 'on the resale right for the benefit of the author of an original work of art'. (39) Even under the Directive, there remained national discretion as to royalty rates and timeframe of implementation in an effort to show the 'proportionality and subsidiarity' required by the Treaty of Rome. (40) In his 2013 Note, 'The Incompatibility of Droit de Suite with Common Law Theories of Copyright,' Alexander Bussey argues that the decision to implement the resale right across the European Union (as opposed to eliminating it) also indicates wide acceptance of the original French moral justification for resale royalties as a method for correcting economic inequity amongst artists. (41) Other commentators argue that this was a first step towards 'synchronising' moral rights, which were traditionally limited in common law countries. (42) Brian L. Frye, Associate Professor of Law at the University of Kentucky College of Law in the United States, posits that the shifting of the art world from Paris to London over the course of the twentieth century led to this harmonising Directive. (43) Indeed, a World Intellectual Property Organization ('WIPO') report characterised the "decline of France on the world art scene in the second half of the twentieth century' as 'undeniable". (44)

EU Member States were given five years to implement domestic resale royalty rights for visual artists based on a sliding scale of rates, with some discretion as to minimum sales price enforcement, with the goal of harmonisation by 2012. (45) The United Kingdom had no choice but to develop a resale royalty right, but it did so in the longest time frame permitted. ARR was enacted in 2006 for living artists and not extended to the heirs of deceased artists until 2012. (46)

C. ARTIST'S RESALE RIGHT

The Intellectual Property Office of the United Kingdom ('IPO') defines ARR as the entitlement of artists or their estates "to a royalty each time one of their works is resold through an auction house or art market professional". (47) ARR is restricted by four primary factors: (1) term length; (2) type of sale; (3) type of art; and (4) sale price.

i. Term length. ARR follows copyright term lengths, expiring 70 years after the death of an artist. (48) For example, the British painter Howard Hodgkin died in 2017, and so his estate will receive royalties from the resale of his works until 2087. (49)

ii. Type of sale. ARR applies only to professional resales. The art market is divided into primary and secondary markets. The primary market is generally composed of galleries that exhibit and sell new artwork and divide the proceeds with the artists. (50) When the Gagosian Gallery exhibited new Hodgkin paintings while the artist was alive, he probably received a set percentage of proceeds from any sales. (51) With these 'first sales,' there is no royalty. When art market professionals (such as auction houses) resell works that have already had their 'first sale' elsewhere, they are participating in the secondary market. (52) If a collector who purchased a Hodgkin painting from Gagosian Gallery later auctioned that work at Christie's, Hodgkin (today, his estate) would receive a royalty based on that sales price. Christie's uses the symbol [lambda] in its catalogue entries to flag are subject to a resale royalty. (53)

Although it may seem an obvious point, even if a work appreciates significantly in value after the first sale, the artist will not be entitled to a resale royalty if the art is not resold. This would seem to financially favour artists whose work is frequently resold, even though being considered a 'flip artist' (one whose work is bought to be quickly resold) is not a positive characterisation. (54) In practice, however, it appears that most collectors retain their art rather than quickly resell it. For instance, a study concluded that modern and contemporary art sold at major auction houses in 2013 had been held by collectors, on average, for over a decade before being resold. (55)

iii. Type of art. ARR applies only to creators of original works of art, which include:
   any work of graphic or plastic art such as a picture, a collage, a
   painting, a drawing, an engraving, a print, a lithograph, a
   sculpture, a tapestry, a ceramic, an item of glassware or a
   photograph. (56)


This restriction presents some ambiguity: copyright in the United Kingdom applies to a closed set of original creative works, while the ARR list is open-ended. (57) Because it seems likely ARR applies only to copyrighted works, contemporary artists working in non traditional mediums might not be eligible for to receive resale royalties. (58)

iv. Price. Works must be resold for 1,000 [euro] or more in order to qualify for ARR. Royalties are calculated on a 'sliding scale' and capped at 12,500 [euro] per artwork. The royalty rate for the first 50,000 [euro] of proceeds (0 [euro]-50,000 [euro] for works above 1,000 [euro]) is 4 per cent; the rate for the next 150,000 [euro] (50,000.01 [euro]-200,000 [euro]) is 3 per cent; the rate for the next 150,000 [euro] (200,000.01 [euro]-350,000 [euro])is 1 per cent; the rate for the next 150,000 [euro] (350,000.01 [euro]-500,000 [euro]) is 0.5 per cent; and the rate for any amount in excess of 500,000 [euro] is 0.25 per cent. All works that sell for more than 2 million [euro] are subject to the same maximum royalty amount, 12,500 [euro]. (59) For example, the purchaser of the Hodgkin painting Goodbye to the Bay of Naples (1980-82), which recently sold at Christie's London for 1,688,750 [pounds sterling] (approximately 1,886,164.88 [euro] based on the exchange rate at time of sale), would be responsible for a royalty payment of 10,936.89 [pounds sterling] (approximately 12,215.41 [euro] based on the exchange rate at time of sale). (60)

Even though the United Kingdom is a worldwide leader in 'value transactions' (sales of art over 1 million [euro]), only an extremely small percentage of the total market is comprised of royalty payments. (61) According to a 2015 EC J decision, auction houses are legally permitted to shift the cost of resale royalties to buyers as long as artists or their estates are not adversely affected. (62) In addition to the 'hammer price', auction houses generally collect a 'Buyer's Premium,' value-added tax ('VAT'), and possible additional expenses for transport and storage from buyers; royalty payment is merely one of many components of the total purchase price. (63) As of 2014, royalties in the UK are mandatorily paid by secondary market sellers to two artists' rights societies: the Design and Artists Copyright Society ('DACS') and the Artists Collecting Society ('ACS'). (64) In 2016, DACS distributed 14 million [pounds sterling] to artists and their estates, but this was a mere 0.15 per cent of total UK art sales that year. (65) ACS (on a different fiscal year) distributed less than two million pounds for 2017-2018. (66)

Although in reality royalty fees are a small percentage of the overall market, Bussey and Professor Rub argue that the perceived future transaction cost of resale royalties will lower the amount artists receive from their first sale. Consequently, royalties would redistribute money towards those well-established artists and estates already in a sound financial position (the Picasso estate, for example) to the detriment of the vast majority of artists whose work is never resold. (67) Moreover, because artists may not be in a position to monitor or enforce royalty rights, management is generally undertaken by agencies (such as DACS and ACS), which leaves room for "mismanagement and corruption". (68) Despite these potential negatives, artists in the United Kingdom generally support ARR. DACS reports that most artists use the royalty money for living expenses, art materials and studio space. (69) For the individual artists and estates receiving royalties, these funds can be anything but insignificant.

II. ECONOMIC IMPLICATIONS OF THE ARTIST'S RESALE RIGHT IN THE UNITED KINGDOM

"Thus, after all the studies conducted on the UK situation, no impact on the tracking of transactions related to the two resale right reforms can be found." (70)

A. OVERVIEW

In their assessment of droit de suite, economists Maryam Dilmanghi and Jim Engle-Warnick bluntly state:
   [E]conomic efficiency was not among the legislators' motivations
   for the conception of this right. Increasing artists' revenues and
   fairness have been the main culprits behind its conception. (71)


Perhaps it is this perception that has led some economists and commentators to incorrectly conclude that resale royalty rights are inefficient or harmful to the market. (72) However, according to a report commissioned by WIPO, which identified and analysed a number of significant economic studies conducted on the global art market since 2001, there is no evidence that the introduction of resale royalties had any chilling effect on the UK art market. Importantly, these studies do not suggest that resale royalties have either inhibited sales or driven collectors to the US and China. (73) Additionally, there is no evidence that the repeal of ARR would have a positive impact on the UK art market by attracting collectors who would otherwise be put off by the added cost of the royalty. (74) There are also no comparable examples of a nation with such a large global market share introducing and repealing a resale royalty right from which to draw conclusions. In sum, there is no evidence to suggest, or method to predict, that the UK art market 'will soar' if ARR is repealed because of Brexit. (75) In fact, many assertions by art market professionals, economists, arts advocates, and others appear to be mere speculation, while attempts to reach reliable, empirical conclusions face what Stephanie B. Turner dubbed 'the information problem' in her Note on resale royalties. (76) This Section addresses the limitations of the data used to assess the state of the UK art market and ARR's effect upon it.

B. MARKET REPORTS AND METHODOLOGICAL PROBLEMS

There are few public sources of data from which to conduct economic analyses of art markets at all, let alone to isolate a specific variable which may have a significant impact. This discussion will include data from only three organisations widely considered to be reliable: the European Fine Art Foundation ('TEFAF'), Art Basel and the British Art Market Federation ('BAMF'). (77) TEFAF is an organisation known primarily for its three international fairs that cover historic, modern, fine and decorative arts. TEFAF also has the longest-running comprehensive market report. (78) TEFAF also partners with Artnet, the widely used Price Database of which has records dating back to 1985. (79) Art Basel is known for its modern and contemporary art fairs, but also issues its own Art Market Report. BAMF is a lobbying collective of dealers and auction houses whose Chairman, Anthony Browne, has publicly expressed support for Brexit. (80) As of the time of writing, only the Art Basel Art Market Report has released a general market overview for 2018. (81)

There are methodological challenges to collecting data on the art market, which is often referred to as "the last major unregulated market". (82) Most information must be culled from publicised results (such as auction 'hammer prices') or voluntary surveys. John Zarobell, Associate Professor at the University of San Francisco in the United States, characterises the art market as an 'informal economy', one in which transactions are "unrecorded, untaxed, and unregulated but not explicitly illegal". (83) Concerns about 'informality' have become increasingly significant as private sales, brokered directly between a seller and buyer (most likely by their agents) without public disclosure, have come to dominate the market. (84) There is an oft-repeated wisdom that most art sales are triggered by one of the three 'Ds'--debt, divorce or death--none of which are happy events eagerly shared with the world. (85) Therefore, many collectors seeking discretion and privacy have gravitated towards the private sale model. As Turner describes, it is:
   practically impossible to collect any information about private
   sales from empirical observation ... [T]hird parties--including the
   artist herself--may never know a sale occurred in the first place.
   The details of a particular sale--such as the parties
   involved ... and the ultimate purchase price--are cloaked in
   confidentiality. (86)


Moreover, although dealers and auction houses--that is to say, art market professionals implicated by ARR--arrange private sales, it is unclear how these agreements are documented. Could the role of the middleman go unrecorded in order to avoid expenses such as the resale royalty? This seems more likely in the case of private actors and less likely in the case of auction houses brokering private sales; Christie's, for example, conducts private sales around the world, but its website directs buyers to its general payment page, which explicitly mentions potential resale royalty payments. (87) Nevertheless, the secrecy involved in private sales may obfuscate data about resales and potential royalty obligations. (88) The inability to properly collect data on private sales has been cited by the US Copyright Office as a justification for not implementing a resale royalty right. (89)

Even in ostensibly public sales, there are competing behind-the-scenes interests and costs which may not find their way into official reports. A primary example of opacity in the artworld is the use of third-party guarantees by auction houses. Artnet, in fact, has published 'Art Demystified' articles for this very reason. (90) Often a consignor will refuse to auction a high-value work unless she is guaranteed a minimum price. Generally, although the practice varies amongst companies, either the house or a third party agrees in advance to pay the difference between the minimum amount required by a consignor and 'hammer price' if her work fails to sell for at least the minimum. Third-party guarantors may then receive a percentage of proceeds above the minimum sale price; different 'financing fees' are earned by guarantors at different houses. The guarantor remains anonymous and the guarantee price is undisclosed, but sometimes small symbols appears in catalogues next to a lot to signal outside interests. (91) Consequently, the 'hammer price' publicised by auction houses and used for analyses does not capture all economic activity generated by a sale.

C. IDENTIFIABLE TRENDS

Despite the lack of industry transparency and the inconsistency of economic reports, there are some broadly identifiable trends that may be attributed to the UK art market. Based on data from the past decade, the United Kingdom has consistently been one of the top three nations in terms of market share, with the United States and China. In 2018, the United Kingdom pushed up to second place, with 21 per cent of he $67.4 billion in worldwide sales of art. (92) These numbers counter the pessimistic view taken by BAMF in 2016, when it stated Moreover, economic models that have been applied to the resale royalty do not seem to have played out in reality (at least in the UK). In her 2016 Note on the topic, Michelle Janevicius (writing in the US) proposed applying an elasticity model to conclude:
   [B]asic economic analysis shows that a droit de suite renders the
   demand curve for the art market more elastic and a resale royalty
   could likely harm both the secondary and primary art markets.
   Additionally, in an economic application the resale royalty acts as
   a discriminatory tax, and could result in the market viewing
   artwork subject to a resale royalty as a poor investment.' (93)


The numbers referenced above indicate the elasticity of art market demand does not seem to have been affected by resale royalties--or Brexit. Furthermore, the Art Basel Art Market Report states that more than 80 per cent of import and export of art in the UK is conducted with non-EU nations--predominantly the US, whose buyers must pay the resale royalty that they would not pay if purchasing at home. (94) In short, ARR does not appear to have affected the UK art market positively or negatively.

This Section has sought to demonstrate the evidentiary weakness of economic arguments for and against a resale royalty right in the UK. The decision to maintain or repeal ARR cannot solely rely on such analyses because there simply are not enough accurate data available to make an economics-based conclusion about the art world.

III. CONCLUSION

"Culture is the latest casualty of the Brexit vote" (95)

There are certainly tangible outcomes of Brexit on the art world so far. (96) But given the opacity of the art world, there simply are not enough reliable data or historical precedent from which to conclude that the repeal of the Artist's Resale Royalty would hurt or help the United Kingdom's art market economically; any conclusions drawn will be short on data and long on agenda-based conjecture. Interestingly, as of this writing, the Author has found no evidence that lawmakers are even considering repealing ARR. So why have lobbyists like Browne and many artworld journalists and commentators focused on the fate of resale royalties as a crucible of Brexit? Maybe for the same reason that the 'starving' artist gained the attention of the French public in the early 1920s: there is still something romantic and sublime about art and the individuals who create it. This is true even in today's overheated, competitive and commercialised art world. Artists capture the public imagination and often represent through their work the anxieties of their country and their era. Furthermore, a nation's political divisions are often revealed through attitudes toward culture in general and art in particular. However, ARR, its purpose, and impact have seemingly befuddled people from both sides of the political divide. How does, for example, a pro-Brexit nationalist view the art market? Is it an elitist milieu that should redistribute a small portion of resale proceeds from wealthy collectors back to starving artists? Or is it merely another industry that should be deregulated to promote a 'UK first' agenda? How do players in the art market balance the costs of ARR against the 'cultural isolation' and the diminishment of influence that may accompany its repeal? (97) Regardless of whether they personally financially benefit from ARR, will artists see its repeal as an indication that the United Kingdom no longer supports a dynamic, global art world? There is no obligation to repeal the Artist's Resale Right after Brexit, and the United Kingdom would do better to maintain the law. Rather than having a demonstrable economic effect on the art market of the United Kingdom, repealing the Artist's Resale Royalty would, it is submitted, go further to show a qualitative and quantitative lack of understanding of global nature of the art world.

Sinclaire Devereux Marber, Litigation Law Clerk, White & Case LLP, New York. LLM in Intellectual Property from the London School of Economics, JD from Columbia Law School, ALM in Museum Studies from Harvard, and BA in the History of Art from Yale. Sinclaire has written and published on numerous art law and copyright issues. The author would like to thank Professor Anne Barron for her supervision of the paper on which this article is based. Any views expressed in this article are strictly those of the author and should not be attributed in any way to White & Case LLP. White & Case means the international legal practice comprising White & Case LLP, a New York State registered limited liability partnership, White & Case LLP, a limited liability partnership incorporated under English law and all other affiliated partnerships, companies and entities. This article is prepared for the general information of interested persons. It is not, and does not attempt to be, comprehensive in nature. Due to the general nature of its content, it should not be regarded as legal advice.

(1) Attended by Author 19 Oct. 2017. For conference summary, see Eleonora Rosati, 'What Future for UK Copyright after Brexit? Report on IPKat-BLACA panel discussion' (IPKat, 20 Oct. 2017) <http://ipkitten.blogspot.co.uk/2017/10/what-future-for-uk-copyright-after_30.html> accessed 26 June 2019

(2) Ibid.; Agreement on Trade-Related Aspects of Intellectual Property Rights (adopted 15 April 1994, entered into force 1 Jan. 1995), 1869 UNTS 299; Beijing Treaty on Audiovisual Performances (adopted 26 June 2012), 51 ILM 1214; Marrakesh Treaty to Facilitate Access to Published Works for Persons Who Are Blind, Visually Impaired or Otherwise Print Disabled (adopted 27 June 2013, entered into force 30 Sept. 2016), 1869 UNTS 299.

(3) Intellectual Property Office [hereinafter 'IPO'], 'Guidance: Artist's Resale Right' (16 May 2014) <www.gov.uk/guidance/artists-resale-right> accessed 26 June 2019.

(4) Council Directive 2001/84/EC of 27 Sept. 2001 on the resale right for the benefit of the author of an original work of art [2001] OJ L272 [hereinafter 'Directive']; Alexander Bussey, Note, 'The Incompatibility of Droit de Suite with Common Law Theories of Copyright' (2013) 23 Fordham Intell. Prop. Media & Entertainment L.J. 1063, 1075.

(5) The United States has no resale royalty laws and has been reluctant to officially incorporate moral rights into the Copyright Act. See the Visual Artists Rights Act 1990 (affording limited moral rights to visual artists, but not a resale royalty). The United States announced in 1992 that it would consider resale royalties if the European Union were to harmonise its royalties, but all subsequently-introduced legislation has failed or been effectively pre-empted. See, e.g., California Resale Royalty Right for Visual Artists Act 2009; Equity for Visual Artists Act 2011; American Royalties Too Act 2015. In 2013, there appear to have been proposed resale royalty rights legislation in China, but to the Author's current knowledge, none has yet been passed. See, e.g., Michael Barris, 'Art Market's Growing Pains' China Daily USA (8 March 2013) <http://usa. chinadaily.com.cn/epaper/2013-03/08/content_16291681.htm> accessed 26 June 2019.

(6) Anthony Browne, 'The UK Art Market can Soar after Brexit' Telegraph (20 Sept. 2016) <www. telegraph.co.uk/news/2016/09/20/the-uk-art-market-can-soar-after-brexit/> accessed 26 June 2019.

(7) See also Clare McAndrew,' Why Brexit is a Golden Opportunity for the U.K. Art Market' Artsy (30 Aug. 2018) <https://www.artsy.net/article/artsy-editorial-brexit-golden-opportunity-uk-artmarket> accessed 26 June 2019.

(8) Scott Reyburn, 'U.K. Art World Weighs 'Brexit' as 'Depressing Moment' or Golden Opportunity' New York Times (31 March 2017) <https://nyti.ms/2nHac3J> accessed 26 June 2019.

(9) Brian L. Frye, 'Equitable Resale Royalties' (2017) 24:2 J. Intell. Prop. L. 1, 25.

(10) Paul Goldstein and P. Bernt Hugenholtz, International Copyright: Principles, Law, and Practice (3rd edn, Oxford 2013) 16-19.

(11) Michelle Janevicius, Note, 'Droit de Suite and Conflicting Priorities: The Unlikely Case for Visual Artists' Resale Royalty Rights in the United States' (2015) 25 DePaul J. Art & Intell. Prop. L. 383, 389, citing Guy A. Rub, 'The Unconvincing Case for Resale Royalties' (25 April 2014) 124 Yale LJF 1, 5 ("Copyright law deals with a certain failure in the market for non-visual works.").

(12) Ibid. See also Maryam Dilmaghani and Jim Engle-Warnick, 'The Efficiency of Droit de Suite: An Experimental Assessment' (2012) 9:1 Rev Econ Res on Copyright Issues 93, 94.

(13) The Economist 'Portrait of the Artist as an Entrepreneur' (17 Dec. 2011) <www.economist.com/ node/21541710> accessed 26 June 2019.

(14) Allison Schten, Note, 'No More Starving Artists: Why the Art Market Needs a Universal Artist Resale Royalty Right' (2017) 7 Notre Dame J. Intl. Comp. I. 115, 117.

(15) Ibid. There are contemporary findings to support this proposition. The US Copyright Office, which has concerns about the accuracy of art market data given the lack of industry transparency, still officially stated that, based on available information, visual 'artists' ability to exploit those rights [copyright] is limited.' Maria A. Pallante (Former Register of Copyrights), 'Resale Royalties: An Updated Analysis' (Dec. 2013) <www.copyright.gov/docs/resaleroyalty/uscoresaleroyalty.pdf> accessed 26 June 2019. This report is cited in Janevicius, above, note 11 at 408 and Nithin Kumar, Note, 'Constitutional Hazard: The California Resale Royalty Act and the Futility of State-Level Implementation of Droit de Suite Legislation,' (2014) 37 Colum J. L. & Arts 443, 445.

(16) Bussey, above, note 4 at 1067-69.

(17) See, e.g., Liliane de Pierredon-Fawcett, 'The Droit de Suite in Literary and Artistic Property,' in John Henry Merryman and others (eds), Law Ethics and the Visual Arts (5th edn, Kluwer 2007) 600. See also Bussey, above, note 4 at 1068; Frye, above note 9, at 5-6; Dilmaghani and Warnick, above, note 12 at 94-95; Schten, above, note 14 at 116; M. Elizabeth Petty, Note, 'Rauschenberg, Royalties, and Artists' Rights: Potential Droit de Suite Legislation in the United States'(2014) 22 Wm & Mary Bill Rts J. 977, 983; Stephanie B. Turner, Note, 'The Artist's Resale Right: Overcoming the Information Problem' (2012) 19 UCLA Ent L. Rev. 329, 335.

(18) Rub, 'Unconvincing Case', above, note 11 at 2.

(19) Rub, 'Stronger than Kryptonite? Inalienable Profit Sharing Schemes in Copyright Law' (2013) 27:1 Harv. J. L. Tech. 49, 83 (citing a study from 2000). Merryman, above note 17, Rub, above note 11, and Janevicius, above note 11, cite the work of Randall K. Filer, who came to similar conclusions in the 1980s and so is perhaps now outdated. See, e.g., Filer, 'The Starving Artist--Myth or Reality? Earnings of Artists in the United States' (1986) 57 J. Pol. Econ. 94; Filer, 'A Theoretical Analysis of the Economic Impact of Artists' Resale Royalties Legislation' (1984) 8:1 J. Cultural Econ. (1984) 1.

(20) Thomas F. Cotter, 'Pragmatism, Economics, and the Droit Moral' (1997) 76 N.C. L.Rev. 1, 7-8. See also Goldstein and Hugenholtz, above note 10 at 19-21; Lionel Bently and Brad Sherman, Intellectual Property Law (4th edn, Oxford, 2014) 32; William Fisher, 'Geistiges Eigentum--ein ausufernder Rechtsbereich: Die Geschichte des Ideenschutzes in den Vereinigten Staaten,' in Eigentum im internationalen Vergleich (Vandenhoeck & Ruprecht, 1999). The English translation ('Theories of Intellectual Property') is available at <https://cyber.harvard.edu/people/tfisher/ iptheorv.pdf> accessed 26 June 2019. Scholars such as Anne Barron, Associate Professor of Law at the London School of Economics, have challenged that strict dichotomy. See, e.g., Barron, 'Copyright Law and the Claims of Art' (2002) 4 I.PQ. 368, 400-401.

(21) This philosophy has also been routinely challenged as surveys of creators indicate they do not exclusively produce art for profit. See, e.g., Janevicius, above note 11 at 410-11; Fisher, above, note 20 at 12; Jessica Silbey, The Eureka Myth: Creators, Innovators, and Everyday Intellectual Property (Stanford UP, 2015) 6-9.

(22) Bussey, above note 4 at 1092.

(23) Pierre Sirinelli, 'Intellectual Property Law' in George A. Bermann and Etienne Picard (eds), Introduction to French Law (Kluwer, 2012) 180-82.

(24) See, e.g., Bussey, above note 4 at 1093; Goldstein and Hugenholtz, above note 10 at 10.

(25) By 'authorship,' the Author means the general category of creators as labelled in traditional copyright, including writers, musicians and visual artists.

(26) Peter Jaszi, 'Toward a Theory of Copyright: The Metamorphoses of'Authorship',' (1991) 40:2 Duke L.J. 455, 455-57.

(27) Ibid., at 459.

(28) Ibid.

(29) Bussey, above note 4 at 1068; Goldstein and Hugenholtz, above note 10 at 320.

(30) Berne Convention for the Protection of Literary and Artistic Works (adopted 9 Sept. 1886, revised on 24 July 1971, amended 28 Sept. 1979) 102 Stat. 2853, 1161 UNTS 3 [hereinafter 'Berne'].

(31) World Intellectual Property Organization [hereinafter 'WIPO'], Guide to the Berne Convention for the Protection of Literary and Artistic Works (Paris Act, 1971) 90, available at <www.wipo. int/edocs/pubdocs/en/copyright/615/wipo_pub_615.pdf> accessed 26 June 2019.

(32) See also Elisa D. Doll, 'The Equity for Visual Artists Act of 2011 (EVAA): Crafting an Effective Resale Royalty Scheme for the United States through Comparative Meditation' (2014) 24 Ind. Int'l & Comp. L. Rev. 462, 465-66.

(33) Goldstein and Hugenoltz, above note 10 at 31-32, 101-102, 319-21; Doll, above note 27 at 466.

(34) Irma Sirvinskaite, 'Toward Copyright Europeanification: European Union Moral Rights' (2010) 3 J. Int 7 Media & Ent L (2010) 226, 266. For a recent analysis of the development and goals of the European Union in light of Brexit, see George Alogoskoufis, 'The European Union Economy, Brexit, and the Resurgence of Economic Nationalism' (2017) 41 Fletcher F World Ajf27, 29.

(35) See, e.g., Jeremy R. Howard, 'Art Market: The 20th Century' Encyclopedia Britannica <www. britannica.com/topic/art-market/The-20th-century> accessed 26 June 2019.

(36) See, e.g., Scott Reyburn, 'As a 'No Deal' Brexit Looms, the Art World Prepares for the Fallout' New York Times, 20 Feb. 2019 <https://nyti.ms/2VapyeV> accessed 26 June 2019.

(37) Directive, Recital 14.

(38) Sirvinskaite, above note 34 at 270, referring to Joined Cases C-92/92 and C-326/92 Phil Collins v. Imtrat Handelsgesellschaft mbH and Patricia Im- und Export Verwaltungsgesellschaft mbH and Leif Emanuel Kraul v. EMElectrola GmbH [1993] 1-5171 para. 17.

(39) See also Bussey, above note 4 at 1074.

(40) EC Treaty (Treaty of Rome, as amended) Art. 5.

(41) Bussey, above note 4 at 1077. See also Janevicius, above note 11 at 384: "[It] is a matter of fundamental fairness that visual artists receive the continual benefit of their work, as do other types of artists.".

(42) Sirvinskaite, above note 38 at 284.

(43) Bussey, above note 4 at 1076.

(44) Standing Committee on Copyright and Related Rights, Economic Implications of the Artist's Resale Right (WIPO 35, 2017) 11 [hereinafter 'WIPO Report'].

(45) Directive, Art. 12(1); Frye, above note 9 at 9.

(46) Bussey, above note 4 at 1075; Design and Artists Copyright Society [hereinafter 'DACS'], 'How do the 2012 Changes Affect Me' (18 July 2012) <www.dacs.org.uk/for-beneficiariesheirs/artists-resale-right/frequently -asked-questions#FAQ192> accessed 26 June 2019. Although this Article focuses on the United Kingdom, resale royalty systems are in place in many parts of South America and Africa. Australia has also implemented a national resale royalty scheme, characterised by a desire to create equity for indigenous artists (as is the concern of Canada, although the country has yet to implement a state-sponsored royalty scheme). Schten, above, note 14 at 120-23.

(47) IPO, above note 3.

(48) Ibid.

(49) Michael McNay, 'Sir Howard Hodgkin Obituary' Guardian, 9 March 2017 available at <www. theguardian.com/artanddesign/2017/mar/09/sir-howard-hodgkin-obituary> accessed 26 June 2019.

(50) IPO, above note 3.

(51) Gagosian, 'Howard Hodgkin' <www.gagosian.com/artists/howard-hodgkin> accessed 26 June 2019.

(52) IPO, above note 3; see also Bussey, above note 4 at 1072-73 (describing the difference between primary and secondary art markets).

(53) Christie's, 'Howard Hodgkin, Goodbye to the Bay of Naples' (6 Oct. 2017) <www.christies.com/ LotFinder/lot_details.aspx?intObjectID=6100691> accessed 26 June 2019; see also Christie's 'FAQ: Droit de Suite' <https://www.christies.com/features/guides/buying-services/financialinformation/> accessed 26 June 2019.

(54) Janevicius, above note 11 at 415; Eileen Kinsella, 'Flipping Is Not a New Phenomenon' Artnet (18 Aug. 2014) <https://news.artnet.com/market/flipping-art-is-not-a-new-phenomenon-80251> accessed 26 June 2019. Charles Saatchi is an example of a collector infamous for flipping in the UK.

(55) Kinsella, above note 54.

(56) Artist's Resale Right Regulations 2006, s. 4(1).

(57) An 'artistic work' is defined as 'a graphic work, photograph, sculpture or collage ... a building or a model for a building, or ... a work of artistic craftsmanship.' Copyright, Designs and Patents Act 1988, s. 4(1).

(58) Goldstein and Hugenholtz, above note 10 at 320. See also DACS, 'Artist's Resale Right: in detail' <https://www.dacs.org.uk/for-artists/artists-resale-right/in-detail> accessed 26 June 2019.

(59) IPO, above note 3.

(60) This particular work was originally sold by Knoedler & Co. in New York to a private collector from Chicago in 1982 (first sale) and inherited by the Barron Family before being auctioned (resale) in 2017. Christie's 'Howard Hodgkin, Goodbye to the Bay of Naples', above note 53. Both the Design and Artists Copyright Society ('DACS') and the Artists Collecting Society ('ACS') have online 'ARR' calculators. DACS, 'ARR royalty calculator' <www.dacs.org.uk/forart-market-professionals/ arr-royalty-calculator> accessed 26 June 2019; ACS, 'ARR Calculator' <http://artistscollectingsociety.org/arr-calculator/> accessed 26 June 2019.

(61) WIPO Report, above, note 44 at 13; The British Art Market (BAMF2017) 10.

(62) Directive 2001/84/EC does not preclude "the person by whom the resale royalty is payable, designated as such by national law, whether that is the seller or an art market professional involved in the transaction, from agreeing with any other person, including the buyer, that that other person will definitively bear, in whole or in part, the cost of the royalty, provided that a contractual arrangement of that kind does not affect the obligations and liability which the person by whom the royalty is payable has towards the author." Case C41/14 Christie's France SNC v. Syndicat national des antiquaires [2015] ECLI, para. 34.

(63) See, e.g., Bonhams, 'How to Buy: United Kingdom' <https://www.bonhams.com/how_to_ buy/16362/> accessed 26 June 2019; Jacqueline Pasharikov, Note, 'Edvard Munch's Scream Screams for Droit de Suite: Why Congress Should Enact a Federal Droit de Suite Statute Governing Artists' Resale Rights in the United States' (2015) 26 U. Florida J. L. and Pub. Pol. 383,414.

(64) Collective Rights Management Directive 2014. See IPO, above note 3; Bently and Sherman, above note 20 at 55.

(65) DACS, 'About Us' <www.dacs.org.uk/about-us/what-is-dacs> accessed 26 June 2019.

(66) ACS, 2017-2018 Transparency Report (4 Dec. 2018) 8 <http://artistscollectingsociety.org/annualreports/> accessed 26 June 2019.

(67) Rub, 'Unconvincing Case', above note 11,6-7; Bussey, above note 4 at 1073, 1081 (noting that the Picasso, Matisse, Leger and Braque estates account for 70 per cent of droit de suite payouts in France).

(68) Bussey, above note 4 at 1078.

(69) Ibid. DACS, 'The Power of the Artist's Resale Right' <https://www.dacs.org.uk/for-artists/artistsresale-right/ the-power-of-artist-s-resale-right > accessed 26 June 2019.

(70) WIPO Report, above note 44 at 25.

(71) Dilmaghani and Engle-Warnick, above note 12 at 97.

(72) Ibid.

(73) Bussey, above note 4 at 1082; Janevicius, above note 11 at 394; Pasharikov, above note 63 at 413.

(74) See Janevicius, above note 11 at 415.

(75) As predicted by Browne, above note 6.

(76) Turner, above note 17. The US Copyright Office has referred to 'an information problem' in its 2013 report, which Turner uses to signify the art world's information problem. Pallante, above note 15 at 26.

(77) The WIPO Report cites TEFAF, the Art Market Report, and Artprice, but the Author has excluded the Artprice report from this article because it covers only auction sales and thus excludes a large part of the secondary market. WIPO Report (n 37) 7.

(78) Rachel A.J. Pownall, Art Market Report (TEFAF 2017). Since 2017, the TEFAF has issued 79 thematic reports: Art Dealer Finance (2018) and The Chinese Art Market (2019).

(79) Artnet 'About' <www.artnet.com/about/aboutindex.asp> accessed 26 June 2019.

(80) BAMF <http://tbamf.org.uk/> accessed 26 June 2019; Browne, above note 6.

(81) Clare McAndrew, The Art Market (2019), available at <https://www.artbasel.com/about/ initiatives/the-art-market> accessed 26 June 2019.

(82) Marc Spiegler, 'The Art Trade is the Last Unregulated Market' Art Newspaper (June 2005) <www.marcspiegler.com/Articles/Artnewspaper/ArtNewspaper-2005-06-MarketReform.htm> accessed 19 May 2018; see also Isaac Kaplan, 'Should the Art Market Be More Heavily Regulated?' Artsy (23 May 2016) <www.artsy.net/article/artsy-editorial-should-the-art-market-bemore-heavily-regulated> accessed 26 June 2019.

(83) John Zarobell, 'What Actually Happens in the Art Market's Informal Economy' Artsy (2 Aug. 2017) <www.artsy.net/article/artsy-editorial-art-markets-informal-economy> accessed 26 June 2019.

(84) Turner, above note 17 at 352; Henri Neuendorf, 'Behind Closed Doors: Why the Auction House Giants Are Doubling Down on Private Sales'Urinei (25 Jan. 2018) <https://news.artnet.com/market/private-sales-auction -houses-1201454> accessed 26 June 2019.

(85) See, e.g., Anna Louie Sussman, 'The New Collector's Guide to Reselling Art, Artsy (8 June 2017) <www.artsy.net/article/artsy-editorial-resell-art-hurting-anyones-feelings> accessed 26 June 2019.

(86) Turner, above note 17 at 353.

(87) Christie's, 'Buying Privately' <www.christies.com/privatesales/index/buying-privately> accessed 26 June 2019; Christie's, 'Buying at Christie's: Arrange for Payment' < www.christies.com/ buying-services/buying-guide/arrange-for-payment/> accessed 26 June 2019.

(88) Janevicius, above note 11 at 423.

(89) Ibid.; Pasharikov, above note 63 at 407.

(90) Neuendorf, 'Art Demystified: Art Auctions and Minimum Price Guarantees' Artnet (6 May 2016) <https://news.artnet.com/market/art-demystified-minimum-price-guarentee-490211> accessed 26 June 2019.

(91) Christie's, for example, o uses to signify a minimum price guarantee and * to signify a third-party guarantee (or both symbols together). Christie's 'Financial Arrangements Explained' <www. christies.com/buying-services/buying-guide/financial-information/> accessed 19 May 2018.

(92) McAndrew, above, note 81 at 16.

(93) Janevicius, above note 11 at 409. Elasticity measures 'the responsiveness of a dependent economic variable to changes in influencing factors.' 'Elasticity' Merriam-Webster (19 May 2018) <https://www.merriam-webster.com/dictionary/elasticity> accessed 19 May 2018.

(94) This number may be overstated because "many EU sales under the VAT margin scheme are not necessarily recorded". McAndrew, above note 81 at 38.

(95) In Nov. 2017, the European Commission announced that UK cities would no longer be eligible to compete to host European Capital of Culture in 2023, leaving many to worry about being 'culturally isolated'. Gareth Harris, 'EU Parliament pulls plug on UK's bid for European Capital of Culture 2023' Art Newspaper (24 Nov. 2017) <http://theartnewspaper.com/news/ euparliament-pulls-the-plug-on-uk-s-bid-for-european-capital-of-culture-2023> accessed 19 May 2018.

(96) Ibid. See also Reyburn, above note 8.

(97) Harris, above note 97.
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