The Artist's Resale Right: A Latecomer to Bill C-32?
Joel Secter

 For the third time in five years, Parliament is considering copyright reform. Ironically, one proposal getting much attention in the mainstream media is not among the amendments in Bill C-32, An Act to amend the Copyright Act, which passed second reading and is now before legislative committee. The Artist Resale Right (ARR), part of a campaign to incorporate a resale royalty into Canadian copyright law, is being spearheaded by the Canadian Artists' Representation/Le Front des artistes canadiens (CARFAC), the national voice of Canada's visual artists. The initiative got a boost from Michael Ignatieff when he stated that he would like to "introduce a new resale right on art, similar to European laws."[1] According to Michael Geist, the announcement was welcome news because "it helps clarify where the party stands and specifically where compromise is needed if the bill is to be passed."[2] With issues such as digital locks, fair dealing, and the private copying levy dominating the policy discussion, many Canadians are just learning about a law which already exists in 59 other countries and would lead to artists (and potentially their estates) receiving a portion of the resale value of their visual art.

The proposed ARR would entitle visual artists to receive five percent of the proceeds from the resale of their art in the public secondary market. The rationale for this royalty is that artists and their families should benefit from the appreciation of the value of their works. The doctrine originated in France where the droit de suite, meaning right to follow, was introduced after World War I to assist the widows of artists who saw their husband's work resold for tidy sums while they continued to live in poverty. It can be contrasted with the first-sale doctrine predominant in North America, whereby visual artists' rights are limited to the initial sale of their work. With the notable exception of California, the purchaser of a piece of art in Canada or the U.S. is entitled to the full increase in the value of that work.

The ARR concept was officially incorporated into the Berne Convention for the Protection of Literary and Artistic Works, the world's foremost international copyright treaty, in 1971 and is now prevalent throughout Europe. Article 14ter of that Convention states:

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.[3]

The application of the Convention is reciprocal among parties to the treaty such that artists and their heirs receive the benefits of droit de suite when their work is sold in any participating country. The doctrine also received resounding support from the United Nations Educational, Scientific and Cultural Organization in 2001 when it stated "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."[4] The European Union issued a Directive requiring all its Member States to incorporate droit de suite schemes into their copyright and intellectual property laws by 2006.

Other countries from Latin America to Africa have adopted ARR legislation and a recent campaign in Australia led to the implementation of the Resale Royalty Right for Visual Artists Act in 2010. Visual artists there are eligible to receive five percent of the sale price when their works are resold publicly for $1000 or more. It applies to paintings, drawings, photography, ceramics and glassware by artists during their lives and for a period of 70 years following the artist's death. The Australian Government is investing $1.5 million to support the establishment of the Copyright Agency Ltd., a private organization designated to implement the legislation.

In Australia, advocates argued that Aboriginal artists would benefit from the ARR, a strategy that has been adopted by CARFAC in Canada. According to CARFAC, "Canada's Aboriginal artists in particular are losing out on the tremendous profits being made on their work in the secondary market." Not only do many Aboriginal artists living in isolated northern communities live in impoverished conditions, according to CARFAC the average Canadian visual artist earns $13,976 per year, an eleven percent decrease since 1990. To correct this injustice, the not-for-profit organization is trying to convince Members of Parliament that ARR should be a priority.

According to CARFAC, incorporating an ARR into Bill C-32 is the preferred route for this legislation because:

• The proposed term of the resale right is the same as copyright protection.
• The works to be covered by the resale right are identical to those works listed in the visual arts works identified by the Act.
• The artist and their heirs are determined in the same manner as set out in the Copyright Act.

CARFAC is proposing that the ARR be available to every Canadian artist whose work is protected under the Copyright Act. In addition, it would be available to the estates of artists whose works are sold within the usual copyright limitation period, which in Canada is 50 years after the death of the artist. Works sold publicly for $1000 or more would be eligible and the fee to be paid to the artist is five percent of the gross sale before taxation. CARFAC submits that the Canadian Artists Representation Copyright Collective Inc. (CARCC) is well situated to serve as the collection agency.

It is understandable why many groups, artists and MPs have signed on to CARFAC's proposal. Most notably, it would ensure that visual artists and their families continue to enjoy the fruits of their labour if their works are resold on the secondary market for higher prices. The financial incentive will undoubtedly foster artistic creation in Canada by rewarding those who succeed commercially. Proponents of the ARR argue that visual artists are at a great disadvantage because the whole value of an artwork is not made on the original sale. Thus, it would only be fair for visual artists to receive a "royalty" comparable to copyright protected writers and musicians. While such a comparison is compelling, it is not entirely apt because writers and musicians, while retaining rights to control and profit from their works, do not receive royalties when their books or albums are resold in used book and record stores.

Though ostensibly justified in principle, the ARR scheme raises several challenges. The experience in other countries shows that most artists' work does not make it into the secondary market. Frequently those artists whose work does sell on the secondary market are deceased and it is therefore their heirs who enjoy any benefit. For these reasons, only a fraction of visual artists will ever benefit directly from such a law and it will likely only make a marginal difference for most. Second, opponents have argued convincingly that ARR laws are not only difficult and expensive to administer, they are even more problematic to enforce. Third, the ARR may have the unintended consequence of driving sellers to other, more friendly, jurisdictions. Why would one sell art in Toronto if they could avoid paying an additional cost by selling it in New York? Even if the ARR does not adversely affect Canada's art market, it may divert scarce funds that dealers and collectors might otherwise use to support emerging artists.

Views from dealers have been mixed. Jeff Walker of Walker's Fine Art and Estate Auctioneers in Ottawa has stated "I don't think they should be paid compensation once one of their existing artworks is resold.I don't see how that's fair from any point of view."[5] In contrast, David Heffel, president of the national auction house Heffel, is quoted as saying "from a philosophical standpoint, I don't have a problem.but from a business standpoint I have doubts the government can create something that doesn't put the onus on the small-business owner."[6] As it happens, the CARFAC proposal leaves determining how to manage this additional fee up to the discretion of the seller of the work.

If the Harper government can stave off an election in the coming months, Members of Parliament will likely be asked to vote on Bill C-32 later this year. While the ARR is a latecomer to the discussion, it very well may be the concession needed to win support for the bill. Notwithstanding that it may be of little immediate financial benefit to most of Canada's visual artists, it will undoubtedly be viewed as a significant victory for them.

Joel Secter, a student-at-law with Drache Aptowitzer LLP in Ottawa, is a recent graduate of the University of Ottawa and has previous experience in dealing with tax and charity matters. He can be reached at jsecter@drache.ca.