THE ARTIST'S RESALE RIGHT IN CANADA

The Artist's Resale Right (ARR), or droit de suite, entitles an artist to receive a percentage royalty payment when work is resold after the artist first sells the work.

For example, Canadian artist Tony Urquhart sold a painting, The Earth Returns to Life, in 1958 for $250. It was later resold by Heffel Fine Art auction house in 2009 for approximately $10,000.  Had ARR been in place at a rate of 5%, the artist would have received a royalty of $400, assuming collective management administrative costs of 20%.  Without ARR, the artist did not benefit from the increased value of his work.

Canadian Artists’ Representation / Le Front des artistes canadiens (CARFAC) is the professional association of Canada's visual artists. The Regroupement des Artistes en arts visuels du Québec (RAAV) is the professional association that represents the interests of the visual artists of Québec.  CARFAC and RAAV are partners in defending artists’ economic and legal rights. The Artist's Resale Right - ARR is a source of income which is not yet available to Canadian artists because it is yet to be enacted in law.  In May 2013 Scott Simms, Member of Parliament, introduced a private member’s bill, C-516, that proposes the addition of ARR to the Canadian Copyright Act.   ARR is established in many countries and Canadian artists must have the right in Canada in order to benefit from reciprocity should a sale of their work take place outside Canada.

Artists are encouraged to follow the progress of the adoption of ARR and to add their voice to those of CARFAC and RAAV.

While all Canadian artists may potentially benefit from ARR, three main demographic groups have the most to gain. Canadian Aboriginal artists have established themselves in the international art market as a unique identity and brand, yet are losing out on the tremendous profits being made on their work in the secondary market. Many artists, particularly those living in isolated communities, sell their work to middlemen at low prices.  Values dramatically increase once work reaches an international market.  ARR, paid through collecting societies with reciprocal agreements with societies in countries where the works are sold, would benefit many Aboriginal artists.

Established artists, many of them senior, could benefit from the Artists' Resale Right. It is often taken for granted that artists thrive once they become established, but CARFAC has found that even Governor General Award winning artists find it difficult, if not impossible, to make a living from their art. The implementation of ARR in Canada would provide greater financial independence for our senior artists, allowing them to benefit from reputations built over a lifetime.

Artists’ estates may benefit, as works are resold after an artist’s death.  Estates are often in need of income, given the expenses related to administering an estate.  Works must be stored and managed, inventories developed and kept, documentation is required, and so on.

The Copyright Act is the preferred legislation for several reasons:

• The proposed term of the ARR is the same as copyright protection, life plus 50 years.
• The works that are to be covered by the ARR are the same types of works identified by the Act for most other visual artists’ copyrights.
• The artist  and  their  heirs  are  determined  in  the  same  manner  as  set  out in  the Copyright Act.

Copyright legislation outlines artists’ moral rights, based on a legal recognition of an artist’s continuing relationship with his or her work. The right to receive ARR is similarly derived from the right of attribution of authorship, as it connects the creator with the work after the physical work is sold.

By adding ARR to our Copyright Act, Canada would be consistent with most other international copyright laws. While some countries chose to create a new stand-alone Act, at least 22 members   of   the   European   Union   have   included ARR in their   copyright   and intellectual property laws.   Copyright is subject to international laws, such as the Berne Convention, and in order to benefit from reciprocity when works are sold outside of Canada, Canada must adopt ARR.

Legislators depend on recommendation from interested groups in order to formulate effective laws.  Bill C-516 conforms to CARFAC/RAAV’s recommendations for ARR.

Bill C-516 recommends that artists whose works are resold for $1 000 or more be eligible for compensation. The royalty recommended is 5% of the gross sale not including buyer’s premium or taxes.   Collective management of the right would be mandatory – the right can only be paid through a collective society.  In order to finance the management of the right, the societies may withhold an administrative fee from the amounts paid by the sellers.  The amount withheld is usually 20% of the royalty, but it can vary depending on the societies’ costs.

As is done in most countries, ARR royalties would be paid by art market professionals, such as dealers and auction houses, those in the business of buying and selling art.  Private sales between individuals would be excluded.  While the seller of the work is liable for paying the royalty, mandatory collective management would assure that the artists receive their royalties, relieving the art market professional of the burden of locating and keeping track of artists.

In countries where the right is successfully administered, the Artists' Resale Right is managed by collecting societies serving visual artists.  Sellers report their sales to the societies, which collect the royalties for those artists who are registered with them. 

The royalties are paid to the artists by their societies.  For artists who are not registered with a society, there is usually one society charged with locating unregistered artists and paying them.  The collecting societies are affiliated with societies in other countries, thus representing artists in those countries, and having their own members represented abroad. 

Artists receive reporting of their works sold, their royalties, and tax receipts reflecting their annual payments.  All an artist has to do is to keep current contact information with his/her society.  Sellers must report and pay the amounts due, but they are relieved by the collecting societies of the responsibility for locating artists and paying them directly.

Bill C-516 recommends that works of art covered by copyright be eligible, with the following provisos:

Works with a sale price of $1 000. or more, exclusive of buyer’s premium and tax are included.

Works sold on the secondary market by an art market professional are included.

In other words, the Artist's Resale Right does NOT apply to first sales or other first transfers of ownership like donation.  It does NOT apply to private sales between individuals.  It does NOT apply if the work is not covered by copyright, if it is resold for less than $1 000, or if it is resold in a country that either does not have ARR or an effective system for reciprocating ARR.

Generally, it is artists who would pay for the administration of ARR, through a deduction from the royalties collected for them by their collecting societies.  Collecting societies aim to cover their costs, which are normally kept to 20% or less of the amounts collected.  The societies generally deduct administrative fees from the royalties they collect.  So, if a work is sold on the secondary market for $5000 (exclusive of commissions and taxes), the ARR royalty of 5% payable by the seller to the collecting society would be $250.  The society might retain 20% of this amount as administrative fee ($50). The artist’s net royalty, the amount of his or her cheque, would be $200.  If the artist is an eligible foreign national, his or her collecting society would also deduct an administrative fee.

Administrative fees are their main source of income for collecting societies. They do not receive government grants to help them operate.    Their costs include salaries, office expenses, accounting, communications, audit, legal costs, information technology, membership in the society’s international associations, and so on.  Their aim is to serve their artist affiliates, to defend and monetize their rights, and to benefit them financially.   Societies are encouraged by their peers and their affiliates to be transparent in their activities.  The international associations set standards for the operations of collecting societies and membership in those associations is contingent on meeting those standards.

On the sellers’ side, sellers may simply pay the royalty out of the proceeds of a sale, or they may pass the cost back to the buyer, charging the royalty on top of the sale price, as they might with a buyer’s premium, or as they would with a sales tax.

In Canada, CARFAC and RAAV recommend that CARCC – Copyright Visual Arts be the collective management society charged with the administration of the ARR for all Canadian living artists and estates, except those registered with SODRAC.

Signing up for ARR royalties does not affect your copyright.  Since the Artist's Resale Right would not be transferable, you cannot sign it over to anyone, including a collective.  Nevertheless, the law will require collective management of ARR because it is efficient and effective.  You will be asked to choose a collecting society and register with it in order to collect any royalties that may be due to you.  If you do not register, royalties will be collected by a collecting society and held for you for a reasonable length of time while the society tries to locate you. 

You can register for the ARR right now when you log in and register as an Associate on the Copyright Visual Arts site or contact Copyright Visual Arts. Registration for ARR will not make you a full member of Copyright Visual Arts and you will still manage all your other copyrights yourself. 

If you want to become a full member of CARCC - Copyright Visual Arts and take advantage of all its licensing services, please log in on this site and register as a Member or contact Copyright Visual Arts.

No. While the Artist's Resale Right was initially set up to assist destitute families of deceased artists in France in the 1920s, most countries have updated their legislation since 2001, in order to have a greater impact for living artists, especially those with lower incomes. It is for this reason that CARFAC/RAAV recommends a minimum threshold of $1 000, so that many artists can benefit from the right – not just those who command high sales prices.

No. The right would only apply to secondary sales of original works of art protected by copyright. It would neither apply to first sales, nor to sales between private individuals. It would not apply to sales of works outside copyright. It would not apply to works that sell for less than the qualifying threshold of $1 000. It would not apply when a work is sold in a country without the Artist's Resale Right, or if an artist is from a country without the right or its effective management.

If, as recommended in Bill C-516, ARR is a copyright, it will last for fifty years after your death.  It will continue to benefit your heirs, and help them with the management of your estate.  You would be able to will your ARR, like your other copyrights, so you should include it in your Will.

Market flight has never materialized in countries that have adopted the Artist's Resale Right, including the UK, which has the largest art market in Europe. The royalties are too modest to provide an incentive to sellers to relocate in order to avoid paying it. Other associated costs will be more influential when deciding where to buy or sell an art work. The cost of exporting an artwork is invariably higher than the royalty. As well, commissions commonly charged by art market professionals are considerably higher.

Art will always be sold where it’s likely to get the best price. CARFAC / RAAV see no real threat of the art market moving abroad because of ARR, as buyers are more likely to purchase Canadian work in Canada.