Firstly an article on "Droit de Suite" from the Guardian 3rd January 2006

Guidance for business on Artist's Resale Right "Droit de suite"

Introduction

Artist’s resale right will be introduced into the UK in 2006 as required by EC Directive 2001/84. The introduction of resale right will be important to any business which sells or deals in works of art including auctioneers or galleries, or other art market professionals such as agents or dealers. Artist’s resale right is a new intellectual property right in UK law, and will entitle authors of original works of art, and their successors in title, to a percentage of the sale price whenever one of their works is resold on the commercial art market. This note explains how the right will be applied and which sales will be affected. The issues covered are:

1. Which sales will be covered by the new right?
    
2. Which works of art are subject to resale right?
    
3. What about employee created works?
    
4. How will royalties be calculated?
    
5. What is meant by the 'sale price'?
    
6. How will royalties be collected?
    
7. Do royalties attract VAT payments?

Which sales will be covered by the new right?

Resale right will only be payable on sales of works which are still covered by copyright; in general, these are works of art which were created by an author who is still alive or has been dead for less than 70 years.

Certain sales are exempt from resale right. These are those with a sale price of less than €1,000 or those where the work was purchased less than three years previously directly from the author and is being resold for €10,000 or less. Sales between private individuals, without the participation of an art market professional, or by a private individual to a public, non-profit making museum (again without an art market professional) are also exempt.

Until 2010 (or possibly 2012, as this date may be extended) sales of works by authors who are deceased will be exempt. After this date the right will apply to all works still in copyright.

Which works of art are subject to resale right?

All the usual works of art are covered, such as paintings, drawings, engravings, prints, lithographs and sculptures, amongst others. Ceramics, glassware and tapestries are also covered, and other works to the extent that they can be considered to be “works of graphic or plastic art” within the meaning of the Directive.

What about employee created works?

Resale right applies only to sales following an initial transfer of ownership by the author. If a work is never owned by the author, it is considered that there cannot have been such an initial transfer of ownership and so such a work will never qualify for resale royalties. It is normally the case that works created in the course of employment are not owned initially by the creator but rather by the employer, and would therefore not be eligible for resale right.

How will royalties be calculated?

Royalties will be calculated using a sliding scale of percentages of the sale price, net of tax. The scale is as follows:

There will be an upper limit of €12,500 payable on any one work for any sale.

What is meant by the 'sale price'?

It is considered that this means the price the work is advertised for. Therefore, it will be the ticket price in a gallery or the hammer price at an auction.

How will royalties be collected?

Resale right will be managed by collecting societies; individual artists will not be able to request payments directly. This means that the seller will be required to pay all royalties to a collecting society who will then distribute them to the artists. Collecting societies will run systems whereby royalties can be paid at regular intervals and will require only limited details about the sale, for example who the author is and the sale price achieved. Currently in the UK the main collecting society dealing with the administration of artists' rights is the Design and Artists Copyright Society.

Do resale royalties attract VAT payment?

No. Resale royalties are outside the scope of VAT.

Status of this guidance

This guidance provides information about some of the effects of the statutory instrument implementing the Artist’s Resale Right Directive that will be important to many large and small businesses, but does not in any way replace the legislation. This guidance has no legal force, but is intended to help businesses understand the significant changes for them that are covered by this guidance.

As resale right is an entirely new right to the UK the manner in which it works will be carefully monitored and, if necessary further guidance will be issued.

Further information

Implementation of the Resale Right Directive will involve an entirely new right being introduced in the UK. It will be possible to find the final text of the statutory instrument, when it is made, at Her Majesty's Stationery Office  in due course and information about its progress, including a copy of the consultation document on implementation issued in February 2005, can be found on this website.

Information in general about copyright law can be found on this website. Enquiries about copyright in general can also be directed towards the Patent Office's Central Enquiry Unit.

Central Enquires Unit
The Patent Office
Concept House
Cardiff Road
Newport
South Wales
NP10 8QQ

Tel: +44(0) 1633 816566
Fax: +44(0) 1633 816526
E-mail: centralenquiries@patent.gov.uk