Intellectual Property: Resale Royalty for Visual Artists Act

Background

    * In its 2007 arts policy, New Directions for the Arts, the Federal Government committed to a resale royalty scheme for visual artists, based on the recommendation in the Report of the Contemporary Visual Arts and Craft Inquiry of 2002.
    * In the May 2008 budget, the Government allocated A$1.5 million over three years to support the establishment of the scheme.
    * The Bill was passed in the Senate on 26 November 2009 and received royal assent on 9 December 2009.

How the royalty right works

A resale royalty right is a new copyright right under Australian law, entitling artists to a percentage of the sale price each time their work is resold. This right lasts for the life of the artist and 70 years after the artist's death.

The artist receives the royalty even if the copyright in the work has been transferred to someone else. The entitlement to the royalty cannot be transferred but passes to the artist's estate when the artist dies.

The philosophy behind the introduction of the royalty right is to provide a stream of "royalty" to remunerate an artist if the value of a work is not recognised at the time of the original sale but increases over subsequent resales.
Main features of the Bill

    * The right will cover original works "of graphic or plastic art", including pictures, collages, paintings, drawings, engravings, prints, lithographs, sculptures, tapestries, ceramics, glassware and photographs. This definition reflects similar arrangements in the European Union.
    * The right will last for the artist's lifetime plus 70 years.
    * The scheme will extend to works that were created before the legislation takes effect, but will only apply to commercial resales of works that are first acquired after the legislation comes into force. In other words, the royalty will be payable on resales of works sold through the secondary art market, where the seller acquired the work after the commencement of the scheme, regardless of whether this first transfer was made by sale, gift or any other means.
    * The scheme will include all resales involving art market professionals, public institutions or organisations. It will not apply to private sales between individuals, where there is no art market intermediary.
    * The right will apply to subsequent transfers of works for more than A$1,000.
    * The royalty will be 5% of the resale price, with no cap on the maximum royalty payable.
    * The seller will be liable to pay the royalty, but the scheme allows for the seller's agent, or the buyer's agent, or the buyer to also be jointly liable.
    * The Minister will appoint a sole collecting society to collect and distribute the royalties following an open tender selection process. This society will need to meet the criteria set out in the Bill: for example, it will have to be a company limited by guarantee and allow all people entitled to royalties to become its members.
    * Works by Australian artists sold overseas may also be eligible for royalty payments under the multilateral copyright treaty, the Berne Convention for the Protection of Literary and Artistic Works.

Implications

The introduction of the royalty right has implications for both artists and art market professionals. Artists will need to become familiar with the mechanics of the collecting society arrangements (once the collecting society is appointed). In negotiating transactions involving the resale of works, sellers and buyers in the secondary art market will need to clearly record agreements as to the apportionment of liability for the payment of the royalty.

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