REPORT on the proposal for a European Parliament and Council Directive on the resale right for the benefit of the author of an original work of art (COM(96)0097 - C4-0251/96 - 96/0085(COD))
3 February 1997
Committee on Legal Affairs and Citizens' Rights
Rapporteur: Mrs Ana Palacio Vallelersundi
- By letter of 25 April 1996 the European Commission, pursuant to Article 189b(2) and Article 100a of the EC Treaty, submitted to Parliament the proposal for a European Parliament and Council Directive on the resale right for the benefit of the author of an original work of art.
- A LEGISLATIVE PROPOSAL - DRAFT LEGISLATIVE RESOLUTION
- B EXPLANATORY STATEMENT
- O P I N I O N
By letter of 25 April 1996 the European Commission, pursuant to Article 189b(2) and Article 100a of the EC Treaty, submitted to Parliament the proposal for a European Parliament and Council Directive on the resale right for the benefit of the author of an original work of art.
At the sitting of 8 May 1996 the President of Parliament announced that he had forwarded this proposal to the Committee on Legal Affairs and Citizens' Rights as the committee responsible, and to the Committee on Culture, Youth, Education and the Media for its opinion.
At its meeting of 24 April 1996 the Committee on Legal Affairs and Citizens' Rights had appointed Mrs Palacio Vallelersundi as rapporteur.
At its meetings of 22 July 1996, 3 September 1996, 3 October 1996, 18 November 1996, 18 December 1996 and 22 January 1997 it considered the Commission proposal and the draft report.
At the last meeting it approved the draft legislative resolution by 20 to 3 with no abstentions.
The following were present for the vote: De Clercq, chairman; Palacio Vallelersundi, vice-chairman and rapporteur; Rothley, vice-chairman; Mosiek-Urbahn, vice-chairman; Alber, Añoveros Trias de Bes (for Ferri), Barzanti, Berger, Cot, Cox, Gebhardt, Habsburg-Lothringen (for C. Casini), Janssen van Raay, Kerr (for D. Martin), Krarup, Malangré, Medina Ortega, Nassauer (for Cassidy), Newman, Oddy, Schaffner (for Florio), Thors and Ullmann.
The report was tabled on 3 February 1997.
The deadline for tabling amendments to this report will appear on the draft agenda for the partsession at which it is to be considered.
A LEGISLATIVE PROPOSAL - DRAFT LEGISLATIVE RESOLUTION
Proposal for a European Parliament and Council Directive on the resale right for the benefit of the author of an original work of art (COM(96)0097 - C4-0251/96) - 86/0085(COD))
The proposal is approved with the following amendments:
Commission text[1] |
Amendments |
(Amendment 1)
Recital -1 (new)
whereas the raison d'etre of the artist's resale right is essentially to provide authors with financial support linked to the value of their works on the market; |
(Amendment 2)
Recital 1
whereas in the field of copyright, the artist's resale right is an inalienable right, enjoyed by the author of an original work of art or original manuscript to an interest in any sale of the work subsequent to the first transfer by the author, | whereas the artist's resale right is an inalienable right, which can never be given up, enjoyed by the author of an original work of art and the rightful claimants thereto, to an economic interest in any successive transfers of his work, |
[The deletion of the words 'or original manuscript' affects the entire text in all its language versions.[ |
(Amendment 3)
Recital 2
whereas the artist"s resale right is intended to ensure that authors share in the economic success of their works; whereas it helps to redress the balance between the economic situation of authors and that of other creators who benefit from successive exploitations of their works; | whereas the artist"s resale right is intended to ensure that authors share in the economic success of their original works of art intended to be viewed; whereas it helps to redress the balance between the economic situation of authors of original works of art and that of other creators who benefit from successive exploitations of their works; |
(Amendment 4)
Recital 5a (new)
Whereas it results from the foregoing that the conclusion of an international Convention laying down obligatory resale rights would be desirable; |
(Amendment 5)
Recital 6
Whereas the artist's resale right is currently provided for by the domestic legislation of a majority of Member States; whereas such laws, where they exist, display certain differences, notably as regards the works covered, those entitled to receive royalties, the rate applied, the sales subject to payment of a royalty, and the basis of assessment thereof; whereas the application or non-application of such a right has a significant impact on the competitive environment within the internal market; whereas as with any other parafiscal chargeit is an element which must be taken in to account by each individual wishing to sell a work of art; whereas this right is therefore a factor which contributes to the creation of distortions of competition as well as displacements of sales within the Community; | Whereas the artist's resale right is currently provided for by the domestic legislation of a majority of Member States; whereas such laws, where they exist, display differences, notably as regards the works covered, the holders of the right, the rate applied, the transactions subject to payment of a royalty, and the basis on which these are calculated; whereas the application or non-application of such a right has a significant impact on the competitive environment within the internal market, since, as with parafiscal charges, the existence or absence of an obligation to pay on the basis of the artist's resale right is an element which must be taken in to account by each individual wishing to sell a work of art; whereas this right is therefore a factor which contributes to the creation of distortions of competition as well as displacements of sales within the Community; |
(Amendment 6)
Recital 7
Whereas such disparities in the application of the artist's resale right by the Member States have a direct negative impact on the proper functioning of the internal market in works of art as provided for by Article 7a of the Treaty; whereas in such a situation Article 100a of the Treaty constitutes the appropriate legal basis; | Whereas such disparities with regard to the existence and application of the artist's resale right by the Member States have a direct negative impact on the proper functioning of the internal market in works of art as provided for by Article 7a of the Treaty; whereas in such a situation Article 100a of the Treaty constitutes the appropriate legal basis; |
(Amendment 7)
Recital 13
Whereas the scope of the artist's resale right should be extended to any resale, with the exception of transactions between private individuals, of the work subsequent to the first sale by the author; whereas the artist's resale right therefore applies to transactions effected by all professional sellers, such as sales rooms, art galleries and, in general, any dealer in works of art; | Whereas the scope of the artist's resale right should be extended to any resale of the work subsequent to the first sale by the author, with the exception of the first transfer of ownership between sellers or between a seller and a final purchaser, within a period of three years from the acquisition of the work by the seller, as well as those corresponding to transactions between private persons, and the artist's resale right therefore applies to all transactions which involve the participation of an artmarket professional, particularly those effected at public sales, in commercial premises or involving a seller or dealer; |
(Amendment 8)
Recital 14
whereas effective rules should be laid down based on experience already gained at national level with the artist's resale rights; whereas it is appropriate to calculate the royalty as a percentage of the sale price and not of the increase in value of works whose original value has increased; | whereas effective rules should be laid down based on experience already gained at national level with the artist's resale rights; whereas it is advisable to calculate the royalty as a percentage of the sale price and not of the increase in value of works whose original value has increased; |
(Amendment 9)
Recital 15
whereas the categories of works of art subject to the artist's resale right should be harmonized; whereas works of applied art should be excluded; | whereas the categories of works of art subject to the artist's resale right should be harmonized; whereas original manuscripts and works of applied art should be excluded; |
(Amendment 10)
Recital 17
Whereas the non-application of the artist's resale right below the minimum threshold makes it possible to avoid disproportionately high collection and administration costs; | Whereas the establishing of a threshold below which transfers are not subject to artist's resale right corresponds, as a general principle, to the disproportionate difference between the amount to be received by the artist as against the expense of exercising his rights. Nonetheless, by virtue of the principle of subsidiarity, it is up to the Member States to regulate the exercise of artist's right of resale, and within that framework to fix, where appropriate, national thresholds which are lower than the Community threshold and which could unquestionably therefore prove to be an efficient means of protecting the interests of artists just starting their careers; |
(Amendment 11)
Recital 19
Whereas a system consisting of a tapering scale of rates for several price bands may help to prevent the Community rules on the artist's resale right from being circumvented; whereas the rates must reflect the interests both of artistic circles and of the art market; | Whereas the due weighting of the various interests involved in the market in original works of art makes it advisable to establish a system consisting of a tapering scale of rights for several price bands, which, while maintaining the principle of protecting creative artists as a social value underpinning European intellectual property law, would at the same time take into consideration the detrimental effect on both artists and professionals working in the art market of the relocation which could result from establishing excessively burdensome artist's resale rights; |
(Amendment 12)
Recital 19a (new)
whereas it would broadly speaking be inappropriate to introduce a 0 (zero) rating because it would run entirely counter to the very reasons for which it had been introduced; |
(Amendment 13)
Recital 21
Whereas provision should be made for the possibility of periodic adjustment of the threshold and rates; whereas, to this end, it is appropriate to entrust to the Commission the task of drawing up periodic reports on the practical effect of the application of the artist's resale right and, where appropriate, of making proposals for amendment of the threshold and rates; | Whereas provision should be made for the possibility of periodic adjustment of the threshold and rates; whereas, to this end, it is appropriate to entrust to the Commission the task of drawing up periodic reports on the effective application of the artist's resale right in the Member States and on the impact on the European art market and, where appropriate, of making proposals for amendment of the threshold and rates; |
(Amendment 14)
Recital 22
Whereas the persons entitled to receive royalties must be specified, due regard being had to the principle of subsidiarity; whereas it is not appropriate to take action through this Directive in relation to Member States' laws of succession; whereas, however, those entitled under the author must be able to benefit fully from the resale right after his death; | Whereas the persons holding the author's resale right must be specified, due regard being had to the principle of subsidiarity; whereas it is not appropriate to take action through this Directive in relation to Member States' laws of succession; whereas, however, those entitled under the author must be able to benefit fully from the resale right after his death; |
(Amendment 15)
Recital 23
Whereas Member States should be free to determine the procedures for collecting and managing the amounts paid over by virtue of the artist's resale right; whereas in this respect management by a collecting society is one possibility; whereas, however, Member States must ensure that amounts intended for authors who are nationals of other member States are in fact collected and distributed; | Whereas the Member States are responsible for regulating the exercise of the artist's resale right, particularly with regard to the way this is managed; whereas in this respect management by a collecting society is one possibility; whereas, however, Member States must ensure that amounts intended for authors who are nationals of other member States are in fact collected and distributed; |
(Amendment 16)
Recital 25
(applies to Spanish version only) |
(Amendment 17)
Article 1
Member States shall provide, for the benefit of the author of an original work of art, an artist's resale right, to be defined as an inalienable right to receive a percentage of the sale price obtained from any resale of the work , with the exception of transactions effected by individuals acting in their private capacity, subsequent to the first transfer of the work by the author; | Member States shall provide, for the benefit of the author of an original work of art, an artist's resale right, to be defined as an inalienable right which cannot be given up prematurely or otherwise, to receive a percentage of the price obtained from any resale of the work by public sale, in a commercial establishment or with the involvement of a trader or dealer, with the exception of the first transfer of ownership between traders or between a trader and a final purchaser, provided such a transaction takes place within three years of the trader having acquired the work. |
(Amendment 18)
Article 2
For the purposes of this Directive, 'original work' means manuscripts and works of plastic art such as pictures, collages, drawings, engravings, prints, lithographs, sculptures, tapestries, ceramics and photographs, provided they are made by the artist himself or are copies considered to be original works of art according to professional usage in the Community; | For the purposes of this Directive, 'original work' means works of art intended to be viewed such as pictures, collages, paintings, drawings, engravings, prints, lithographs, sculptures, tapestries, ceramics and photographs, provided they are made by the artist himself or are copies considered to be original works of art according to the relevant legal provisions in each Member State, but which may under no circumstances be more than twelve in number. |
(Amendment 19)
Article 3
1. Royalties collected pursuant to Article 1 shall be payable when the sale price is equal to or higher than ECU 1000. | 1. The Member States shall establish the minimum threshold above which transfers are subject to the author's resale rights. |
2. Member States may fix a national threshold which is lower than the threshold laid down in paragraph 1. | 2. In no case shall this threshold exceed ECU 1000. |
(Amendment 20)
Article 3a (new)
Calculation basis | |
The amount of the author's resale right shall be determined by taking as a basis the sum invoiced, or the sum at which the transfer is valued, excluding tax, but without any prior deductions whatever for any other reason. |
(Amendment 21)
Article 4
The royalty collected pursuant to Article 1 shall be set at the following rates: | The artist's resale right calculated on the basis laid down in the foregoing article shall be set at the following rates: |
(a) 4% of the sale price between ECU 1000 and ECU 50 000; | (a) 4% of the sale price between ECU 1000 and ECU 50 000; |
(b) 3% of the sale price between ECU 50 000 and ECU 250 000; | (b) 3% of the sale price between ECU 50 000 and ECU 100 000; |
(c) 2% of the sale price above ECU 250 000. | (c) 1.5% of the sale price above ECU 100 000. |
(Amendment 22)
Article 5
Article 5 | Delete |
Calculation basis | |
The sale prices referred to in Articles 3 and 4 are net of tax. |
(Amendment 23)
Article 6.1.
1. The royalty collected under Article 1 shall be payable to the author of the work and, after his death, to those entitled under him. | 1. Those who hold the artist's resale right are the author of the work and after his death those entitled under him. |
(Amendment 24)
Article 7
Member States shall provide that authors who are nationals of third countries shall enjoy the artist's resale right in accordance with this Directive and their internal legislation, provided that authors from the Member States enjoy reciprocal treatment in the third countries concerned.. | Member States shall provide that authors who are nationals of third countries shall enjoy the artist's resale right in accordance with this Directive and their internal legislation, provided that authors from the Member States enjoy reciprocal treatment in the third countries concerned. |
(Amendment 25)
Article 8
Duration of the artist's resale right. | Natural lapse of the artist's resale right by the process of time. |
The artist's resale right shall last for the period laid down in Article 1 of Directive 93/98/EEC. | The artist's resale right shall lapse when the deadline laid down in Article 1 above of Directive 93/98/EEC is reached. |
(Amendment 26)
Article 9
Right to obtain information | Right to obtain information |
The author or his authorized representative may enquire any dealer, sales director or organizer of public sales to furnish any information that may be necessary in order to secure payment of sums payable under the artist's resale right during the previous year of original works of art.. | For three years from the date of transfer, the management of commercial establishments or of public sales and traders, commercial dealers and public administrations shall be obliged to supply authors or their authorized representatives on request with any information that may be necessary to secure payment of the sum payable under the artist's resale right. |
(Amendment 27)
Article 10
The Commission shall present to the European Parliament, the Council and the Economic and Social Committee not later than 1 January 2004 and every five years thereafter a report on the implementation of this Directive and shall, where appropriate, put forward proposals for adjusting the minimum threshold and the rates of the royalties to take account of changes in the sector. | The Commission shall present to the European Parliament, the Council and the Economic and Social Committee not later than 1 January 2002 and every three years thereafter a report on the implementation and impact of this Directive, paying particular attention to its impact on the European market in modern and contemporary art, especially as regards the fostering of artistic creativity and the management procedures in the Member States, and shall, where appropriate, put forward proposals for adjusting the minimum threshold and the rates of the royalties to take account of changes in the sector, and any other proposal it may deem necessary in order to enhance the effectiveness of this Directive. |
Legislative resolution embodying the opinion of the European Parliament of the proposal for an European Parliament and Council Directive on the resale right for the benefit of the author of an original work of art (COM(96)0097 - C4-0251/96 - 96/0085(COD))
(Codecision procedure : 1st reading)
The European Parliament
- having regard to the Commission proposal to the European Parliament and the Council COM(96)0097 - 96/0085(COD)[2],
- having regard to Article 189b (2) and Article 100a of the EC Treaty, pursuant to which the Commission has submitted its proposal (C4-0251/96),
- having regard to Rule 58 of its Rules of Procedure,
- having regard to the report by the Committee on Legal Affairs and Citizens' Rights and the opinion of the Committee on Culture, Youth, Education and the Media (A4-0030/97),
1. Approves the Commission proposal subject to the amendments made by Parliament;
2. Calls on the Commission to amend its proposal accordingly pursuant to Article 189a (2) of the EC Treaty;
3. Calls on the Council to incorporate Parliament's amendments in the common position that it adopts in accordance with Article 189b (2) of the EC Treaty;
4. Should the Council intend to depart from the text approved by Parliament, calls on the Council to notify Parliament and request that the conciliation procedure be initiated;
5. Points out that the Commission is required to submit to Parliament any modification it may intend to make to its proposal as amended by Parliament;
6. Instructs its President to forward this opinion to the Council and Commission.
B EXPLANATORY STATEMENT
I. THE CONCEPT OF RESALE RIGHT
Resale right may be defined as the non-renounceable right of all plastic artists to receive, in advance and inalienably, a percentage on the resale price of their works. It was introduced in France in 1920, for reasons of equity.
Today, all the legal systems which recognize this right, as well as the Berne Convention, classify it among authors' rights.
In the case of literary, musical or audiovisual works, authors' remuneration is traditionally guaranteed from the first moment. Reproduction and distribution rights govern the incorporation of the work in a medium permitting its communication and the making of copies, as well as the making of the original or copies of the work available to the public by means of sale, hire, etc. With creative works of this type, the 'originality' of the work is not diminished or affected by the fact that its incorporation in a material or tangible support implies the possibility of producing an infinite number of copies of reproductions of that support. The specific nature of literary, musical or audiovisual works is that the original modification of the external world carried out by their authors through the creative act appears and reappears in all its purity and integrity on each single occasion of public access to a support, representation, projection or interpretation of the work. This means that social appreciation of the work is not tied to its being incorporated in a support of greater or lesser value: any support uniting the necessary technical conditions can offer the spectator the unaltered essence of the author's original creation.
The economic profit gained by the author in the case of such works results from the fortunate conjuncture of his production and reproduction, on a large-scale and original basis. Both factors create the possibility of continued exploitation by the author from the moment when his work has achieved collective recognition.
This combination of circumstances does not apply to the plastic Articles Reproductions of a plastic artwork, whatever their degree of perfection, do not enjoy the same appreciation as that extended by the public to the original. The collective evaluation is, beyond all doubt, indissociably bound up with the first physical manifestation of the work. Reproductions tend to arouse minimal interest, if not social disapproval. This exclusive uniqueness of the plastic work can become a financially prejudicial factor for its author, since his main source of income is none other than the first manifestation of his creative effort.
This initial disadvantage is compounded by the fact that the distribution of an original plastic artwork is inherently more difficult: it is only possible via the exhibition and display of the work - and not of copies of it - to the general public. This means that the works cannot be distributed on a multiple or mass basis, at least not in the period when the author has not yet acquired universal fame, even if his work already shows a high level of artistic merit. This creates further obstacles to the authors of plastic works being able to have a concrete impact on change or evolution in societies' aesthetic tastes.
For the above reasons, long periods may go by before a society acquires a high degree of appreciation for the plastic arts, and it typically happens that a substantial time-lapse is required for this social appreciation to acquire its correlative in a high economic valuation of the work.
One has further to add the fact that over the last few decades the plastic arts have become a kind of 'safe haven' for investment. In a world of growing economic uncertainty, in which fixed reference points are few and unstable, the finished uniqueness of original plastic artworks represents a solid reality, often leading to huge increases in their prices not always unconnected to speculative interests.
All the above circumstances lead to the existence of a discriminatory effect as regards the opportunities available to plastic artists for exploiting their own work. They encounter difficulties in the way of profiting from their creations, which do not comparably apply to the creators of other types of artwork. In this context, resale right may be conceived as a form of 'return of rights' to the authors of plastic works, in relation to a value which, while it indubitably existed previously in the work, but which has encountered particular obstacles to its being fully recognized by the community.
II. IS HARMONIZATION JUSTIFIED, AND ON WHAT CRITERIA?
From the discussions of the subject on the Committee on Legal Affairs and Citizens' Rights, it has emerged that, while solutions of the most contrary nature are proposed, there is, at least, universal agreement on the diagnosis: the absence of harmonization of resale right in the EU Member States is a source of discrimination with regard to the protection of plastic artists, and leads to distortions of competition which are inimical to the proper functioning of the internal market.
On the basis of this diagnosis, a whole range of disparate proposals have been put forward. In particular, some take the view that it would be preferable, not to harmonize resale right in the Member States, but, on the contrary, to abolish it in those Member States where it exists and is applied in practice. They believe that any other solution would lead to the collapse of markets which today handle a substantial proportion of European plastic works, with sales being displaced to countries like the US and Switzerland where resale right does not exist. Any harmonization other than 'zero harmonization' would, on this view, lead to a situation far worse than that which now exists, and would therefore be in flagrant breach of the principle of proportionality.
The committee rejected the great majority of the amendments tabled from this extreme viewpoint, taking the view that to do away with resale right in the Member States would be not only an unrealistic proposition but would undermine certain basic principles of European culture, such as the recognition of artistic creation. The rapporteur considers the criticisms of resale right to relate to the ways in which it is organized, rather than to its existence as such.
It must be stressed, even at the risk of appearing repetitive, that resale right, as an integral part of the established rights of authors, is an essential prerogative of plastic artists. The objective of Community action in the field of intellectual property is to harmonize Member State law so as to ensure a high level of protection for writers. It would not be consistent with the Treaties for the Community to discriminate against plastic artists, as opposed to other types of artist, concerning the principle of protection. The challenge of this directive is the challenge of creating a European cultural area; in practice, this means reconciling the requirements of the internal market and the need to protect the living and working conditions of artists.
III. THE LEGAL BASIS
The rapporteur has considered it desirable to insist on the legal basis, in the light of the debates which have taken place on the matter. She believes that Article 128 of the Treaty should under no circumstances be considered suitable - far from it, given that its fourth paragraph states that 'cultural aspects' are to be compatible with actions 'under other provisions of this Treaty'.
The Committee on Legal affairs and Citizens' Rights has taken the view that the right legal basis is Article 100a. The Court of Justice has established that this article is the correct basis for measures aimed at harmonizing intellectual property in the context of the realization of the objectives set out in Article 7a of the treaty - that is, of the operation of the internal market (see judgment of 13 July 1995 - Case 350/92, Spain v Council).
IV. COMMENTS ON THE TEXT OF THE PROPOSAL FOR A DIRECTIVE
A. THE COMMISSION'S TEXT: SHARED POINTS OF VIEW
1. Duration of resale right (Article 8)
The proposal for a directive aligns the duration of resale right with that of other authors' rights, pursuant to Directive 93/98/EEC of 29 October 1993. Resale right is thus to apply up to seventy year's after the author's death.
The debates and hearings of the Committee on Legal Affairs and Citizens' Rights have shown that there is considerable support for a shorter duration; those favouring this argue (not unreasonably) that the period specified in the proposal would, taken together with the broad criteria for the determination of right holders (see next section), create practical difficulties in implementing the law. One cannot altogether dismiss the position of those who argue that to maintain the right up to seventy years after the author's death would defeat the very end of the right itself, in other words to secure him collective recognition for his work.
Nonetheless, the committee has come down in favour of retaining the period proposed by the Commission, largely for reasons of legal coherence. As has already been stressed several times, resale right is defined as an integral part of authors' rights in general. Community law has established the harmonization of the duration of authors' rights in the directive cited above; it follows that there is no reason to exclude resale right from this uniform duration.
2. Determination of resale right holders (Article 6.1.)
The committee supports the provision proposed by the Commission in Article 6.1, subject to one technical modification: the reference to the persons to whom the right is payable should be replaced by 'those who hold the artist's resale right', for reasons of legal rigour.
The proposal for a directive, for reasons of compliance with the principle of subsidiarity, refers to 'those entitled', thus making the determination of the persons concerned a matter for national law.
Inheritance law is, indeed, a matter for the Member States, and this aspect of it is regulated very differently by the various national legal systems.
It has to be concluded that the practical objections raised in the debates on the committee, reasonable though they are, do not constitute legal arguments of a nature to justify the Community institutions using this directive to limit - as has been called for repeatedly - the right concerned to the author of the work, his spouse and his direct descendants up to the second degree.
3. Third countries and the principle of reciprocity (Article 7)
The committee has endorsed, without disagreement, the principle of reciprocity established in Article 7 of the proposal for a directive. It should be recalled that this is in line with the Commission communication to the Council on the working programme on copyright and related rights, submitted in the wake of the Green Paper.
4. The regressive percentage system
Without prejudice to what will be said in the following section, it is important here to stress that the Commission is quite correct in establishing a regressive system of royalty rate bands, as a weapon for encouraging the preservation of the market in contemporary art.
This principle should be considered an authentic blessing, since it combines economic imperatives with the preservation of the basic principles that underlie resale right. There is no doubt that the incentive to sell works of art elsewhere depends on the level of prices practised (which in its turn determines the amount received by the artist under resale right). The regressive arrangements proposed will make it possible, in the case of works fetching a high price, for artists to earn, under resale right, sums which may be considered to 'compensate' for the expense and inconvenience of the works being sold elsewhere.
5. The application threshold (Article 3)
The committee has supported the Commission's position on the application threshold, subject to a purely technical amendment to the wording.
It should first be recognized here that a minimum threshold for royalties must be set; this should not, however, be excessively high, to ensure that new and lesser-known artists are not excluded from resale right. The threshold must nonetheless be realistic - i.e. it must be set at a level at which exercise of the right is viable, since otherwise, in extreme cases, the fixed costs of administering the right could exceed the sum payable.
It has ben concluded from the debates and hearings of the committee that the administrative costs vary markedly from one Member State to another, and that they are closely related to the forms of management employed. Given this, and since the directive does not seek to harmonize the administrative aspect, the committee felt it would be prudent to retain the threshold proposed by the Commission, as well as the possibility of Member States setting lower thresholds.
This margin of manoeuvre left to the Member States is certainly not a factor of unity; however, it remains the case that it will concern works of lower market value. It follows that the legislative divergences arising will not be sufficiently important to affect the single market or create genuine obstacles to crossborder competition.
The rapporteur tabled an amendment which appears to have gone astray in the complex voting on committee. Nonetheless, she considers it to be necessary for reasons of coherence. The text as it stands does not state what percentage should apply to the first price band, i.e. that between the threshold set by the Member State and ECU 1000. Correctness of legislative technique dictates that a provision should be added to the effect that, where a Member State sets a threshold which is lower than ECU 1000, it shall also set the percentage applicable, and that this percentage shall not be lower than 4% (the rate established in the text for the first price band, i.e. that starting at ECU 1000).
6. Revision of the directive (Article 10)
The committee has endorsed, and stressed the importance of, the principle of periodic revision established in Article 10; this is essential for the correction of such aspects as may appear in need of improvement following the implementation of the provisions.
B) JUSTIFICATION OF THE MAIN AMENDMENTS
1. Manuscripts
The Commission text includes manuscripts among the types of work from which resale right may be derived.
It is true that Article 14c of the Berne Convention includes manuscripts (albeit on a non-mandatory basis) among the types of work producing resale right. It should also be pointed out that the case-law of a number of Member States (especially France) has determined that, in certain concrete de facto circumstances, particular works which may be classified as manuscripts should be considered as generating resale right.
Against these arguments, it may be pointed out that in the majority of cases Member State law does not explicitly include manuscripts. They are not included in the national legislation by Spain, Germany, France, Greece, Denmark, Finland or Belgium.
Above all, however, it should be recalled that manuscripts are intended for subsequent use via reproduction; they are, in reality, simply the original support for a work which, by its very nature, is to be published or performed, unlike those works of art which are intended to be contemplated, and which therefore embody the essence of uniqueness. If one takes this line of argument to its logical conclusion, one may say that the sale of a manuscript (or score) on the market, in some cases at a considerable price, is merely the consequence of its large-scale dissemination (via multiple editions or performances) - a factor which is protected by specific authors' rights.
The exclusion of manuscripts from resale right also follows from the concept of this right itself. The justification for resale right is not the possibility of speculation in an artist's works, but, rather, the need to compensate the author of works intended for contemplation which, by the way in which they are created, do not qualify for protection under the better-known forms of author's rights (reproduction and performance rights).
All the above does not mean that, in exceptional circumstances, resale right may not apply to a particular manuscript whose character as an object intended for contemplation predominates over the general characteristic of being the material support for an author's work intended to be disseminated and appreciated via reproduction. The rapporteur considers that the case-law mentioned above takes due account of precisely such cases.
2. The originality criterion
The proposal for a directive does not define originality, referring instead to 'professional usage in the Community'. This creates a problem, as in reality no such 'usage' exists at Community level.
First of all, it should be recalled that while German, Belgian, Greek, Luxembourg, Italian and French law specify originality as a prerequisite if a work is to generate resale right, this is far from being the case in Portuguese, Spanish, Danish and Finnish law. In addition, 'originality' is conceived in different ways by different artistic cultures, from the moment when what are technically called 'simple arts' (essentially, where there is only one copy of a work) are abandoned in favour of 'complex arts' producing 'multiple' originals (metal casting, engraving, photography, lithography, etc). In these circumstances, the criterion of 'authenticity' no longer applies, or at least no longer obtains so clearly; a limited number of copies may be considered 'originals'.
In the case of metal casting, some countries limit the number of copies which can be considered originals to eight, others to twelve. As far as photography is concerned, in view of the difficulty of determining 'originality', Spain, for instance, has decided to exclude this art from resale right.
In view of this visible non-existence of any 'professional usage in the Community', the rapporteur has proposed a mixed solution (while fully aware of its drawbacks). Under this approach, no attempt is made to define originality as such, but, in the interests of harmonization, a maximum number of copies is fixed for 'multiple' works. The committee has endorsed this position, although it has become clear from the debate that the Community institutions will have to tackle the matter head-on as soon as possible.
3. The problem of promotional sales
The committee adopted Amendment 49, by Mrs Berger, by 14 votes to 0 with 11 abstentions, which would exclude 'promotional sales' from resale right.
Anyone familiar with the world of art galleries will be aware that, except in a very few cases, in the last analysis gallery owners buy the works of artists, especially new artists, in order to finance the artist and enable him to survive on a day-to-day basis.
The act of engraving a first copy for the gallery owner, which is in many cases aimed at promoting the artist and is far more likely to be risky than profitable for the owner, may, paradoxically, be ultimately against the artist's interest, where the owner operates on the basis of contracts of the 'deposit-for-sale' type to which resale right obviously does not apply.
4. Price bands and percentages (Article 4)
This aspect is the true Gordian knot of the proposal for a directive. What has to be said at once is that none of the proponents of the various positions defended at the committee's meetings was able to furnish convincing arguments in favour of their views. Radically opposed arguments were even advanced on one and the same point (e.g. sale elsewhere).
It is obvious that for the rigorous determination of the rates and bands a study should have been carried out of sales over a relatively long period, based on unassailable data. The members of the committee were not able to benefit from any such study; indeed, the rapporteur's impression is that no reliable harmonized data exist to support such a project.
It is particularly difficult to predict market behaviour as regards sale elsewhere (what is the cut-off point over which the sum payable in resale right is likely to displace sales on to other markets?). The rapporteur, after a careful analysis of the arguments marshalled in favour of one or other position, feels able to conclude only that caution is vital on this matter.
This having been said, it appears from the debates and hearings that the implementation of the directive would increase the net number of sales generating resale right. It would seem a matter of common sense that, in the case of famous artists whose works are regularly sold in London, the gain from resale right on resales on that market could compensate for the effects of a lower percentage, without affecting the total sum received at the end of the process. Similarly, a low percentage in the case of the higher price bands should lead to an increase in resale price which would be lower than the costs entailed by transferring the sale to New York or Zürich.
To conclude on this aspect, the rapporteur wishes to state that, to the best of her knowledge and understanding and on the basis of detailed study of the matter and hours of conversation with various agents on this complex market, she considers:
- that resale right is one of a number of factors taken into account by the purchaser. Under no circumstances should one suppose that the introduction of a moderately fixed resale right will put an end to flourishing markets which have been created and continue to exist on the basis of probity, tradition and expertise and of certain aspects of taxation practice;
- the bands fixed by the Commission do not correspond to market realities. One may reasonably speak of an international market from ECU 50 000 upwards (i.e. a market frequented by major collectors and institutional investors);
- if the three-band structure is to be kept and problems avoided when moving from one band to another, the percentage for the highest band should not exceed 1.5%.
5. Administrative arrangements (Article 6.2)
The question of the administrative arrangements for resale right was repeatedly raised in the committee's debates. In particular, attention focused on the desirability or otherwise (and, by extension, the competence in this respect of the Community institutions) of compulsory collective administration of the sums relating to resale right. The view of both the rapporteur and the committee is that the directive should be confined to the legal field proper (definition, persons entitled, prerequisites, duration, etc), and should not encroach on the administrative aspects, which are a matter for the Member States.
V. THE RAPPORTEUR'S CONCLUSION
In conclusion, the rapporteur wishes to make it clear that she is convinced of the need for this directive, which will make it possible to level out the existing inequalities of rights affecting plastic artists, as well as the distortions of competition among professionals in the sector, without adversely affecting the European art market.
The directive thus arises from economic imperatives: in particular, the need to eliminate the distortions existing in the internal market in art and to protect that market against external competition. No less important, however, than those economic imperatives are the principles of European cultural identity and the protection and promotion of artistic creation.
It is not acceptable to fail to act on the obligation of harmonization, as laid down in the Treaties and as demanded by the Commission since as long ago as 1977.
The rapporteur is confident that this proposal for a directive will be adopted. A dose of moderation will no doubt have to be injected, to overcome the more reasonable of the arguments of those who oppose the notion of a directive on the matter. Such moderation, apart from being desirable from the viewpoint of the final aim of harmonizing resale right, is also advisable given the provision for regular revision included in Article 10.
The example of the seventh directive on VAT, which was adopted after eighteen years of negotiations and establishes a number of exemption regimes, is a precedent which we should certainly not forget.
O P I N I O N
(Rule 147 of the Rules of Procedure)
of the Committee on Culture, Youth, Education and the Media
for the Committee on Legal Affairs and Citizens' Rights
Draftsman: Mr Hugh Kerr
At its meeting of 10 June 1996 the Committee on Culture, Youth, Education and the Media appointed Mr Kerr draftsman.
At its meetings of 10 June 1996, 1 July 1996, 19 November 1996 and 10 December 1996 it considered the draft opinion.
At the last meeting it adopted the conclusions as a whole unanimously.
The following took part in the vote: Castellina, chairman; Sanz Fernández and Tamino, vicechairmen; Kerr, draftsman; Ahlqvist, Aparicio Sánchez, Arroni, Augias, Azzolini (for Marín), Baldi (for Guinebertière), Boniperti, Darras (for de Coene), Gröner, Günther (for Heinisch), Hawlicek, Kuhne, Leperre-Verrier, Mohamed Ali, Pack, Ripa di Meana, Ryynänen, Todini, Tongue and Vaz da Silva.
1. Introduction
The aim of this Directive, based on Article 100a, is to harmonize national regimes concerning the artists' resale right throughout the European Union. The artists' resale right is an inalienable right which entitles the author of a work of art (or heirs after the death of the author) to receive a percentage of the price of the work when it is resold. It is important to be clear that this is a form of copyright, and not a tax, since the proceeds go to the author, or his/her beneficiaries, and not to the exchequer.
Presently, eleven Member States have domestic legislation concerning artists' resale rights, although it is only actively enforced in eight of those. The four countries where no such legislation exists are the Netherlands, Austria, Ireland and the United Kingdom. In those countries where the artists' resale right does exist, there are considerable variations in the legislative regime. Thus, the proposed Directive aims to eliminate the differences between existing domestic laws, as well as to extend the concept of the artists' resale right to those countries where it does not presently exist in law.
2. Why Harmonization?
Your rapporteur is generally supportive of this proposed Directive and the principle of harmonization which it puts forward, since the present situation is one of competitive distortions in the modern and contemporary art market in the European Union, along with discriminatory treatment of artists depending on the legal situation in the country in which their work is sold. Therefore the arguments in favour of harmonization are twofold. Firstly, it will eliminate existing distortions within the Community as concerns the contemporary and modern art market. Secondly, there are moral/cultural arguments linked to the necessity of proper remuneration for artists and the recognition and encouragement of creative activity.
However, your draftsman does have a number of concerns about the Commission's proposals:
(a) It is important that harmonization does not lead to the decline of the art market within the European Union and its displacement to the United States or elsewhere. Therefore harmonization must be implemented in a way which achieves a balance between the interests of the artist and the interests of the market.
(b) Implementation of the Directive and the administration of 'droit de suite' must be as simple as possible. Overly complex systems will result in non-collection of royalties and excessively high administration costs, which clearly is not to the benefit of the artist.
(c) It is vital that emerging artists whose works are selling within the lower price range of the market, and not simply better-established artists, should benefit from the proposed harmonization.
Your draftsman has sought to address these concerns in the proposed amendments to the Directive.
3. Distortions in the market
The current situation in the European Community is one of distortion of competition between art dealers/auction houses in those countries where the artists' resale right exists, and those where it does not. Thus, art dealers in Germany, for example, must pay a percentage of the sale of a contemporary work of art to the artist or his or her estate, whereas a British dealer does not. Thus, those dealers/auction houses based in a country where this right exists are at a competitive disadvantage, facing an extra cost.
There is opposition to the proposed harmonization, in particular, from sections of the art trade in those countries where the right does not presently exist, who argue that its introduction throughout the European Community will lead to the removal of the contemporary art market to the USA and Switzerland where the right does not exist. In considering the validity of this point of view, there are a number of factors which should be borne in mind. The artists' resale right is only one influence among many affecting the cost of a transaction. Other influences include legislative and fiscal provisions, which differ between countries. Moreover, there are costs involved in moving a painting from one country to another for the purposes of selling it, such as insurance and transportation costs. This means that depending on the price of the individual work of art and the rate of 'droit de suite' applicable, that moving the sale to a country where the right does not exist is not necessarily financially beneficial to the seller.
Two additional factors to consider with regard to the effect of harmonization on the market are that the right only applies to contemporary and modern art and thus the potential impact of its introduction must be judged in this light; and that it only applies to the resale of a work of art, not the original sale. That the success of any particular art market is not solely due to the existence or otherwise of droit de suite can be demonstrated by pointing to the importance of the contemporary art market in Cologne, where this right applies and is implemented.
Others who oppose harmonization or introduction of the artists' resale right argue that it is unworkable, and that the necessary administration will be excessively expensive and burdensome. Clearly, it is vital that harmonization is implemented in such a way that national regimes are as simple and efficient as possible, while achieving their objectives.
4. Fair and equal treatment for artists
The Phil Collins judgement established the principle of non-discrimination on the grounds of nationality within the European Community. Previously, the principle applied was that of reciprocity for the application of the artists' resale right. This meant that a British artist whose painting was sold in France (where the resale right exists) would not receive a resale payment since a French artist selling in Britain (where the right does not exist) would not receive a resale payment. This situation of reciprocity was ended by the Collins judgement. Now, that same British artist whose work is sold in Paris receives a resale payment, while the French artist still does not. Thus, harmonization is necessary to ensure equal treatment of artists regardless of where their works are sold within the Community.
There is another type of parity which this harmonization would help to achieve - that is, parity for visual artists vis-à-vis other sorts of creative artists. Currently, those working in the musical and literary fields are able to benefit from copyright payments from successive exploitations of their work. Visual artists do not generally enjoy the same opportunity to receive copyright payments, since income is through sale, rather than reproduction. Thus there is a need to ensure that they receive remuneration from subsequent sales of their work, in order to be treated on a par with other sorts of creative artists.
While your draftsman is supportive of the proposed harmonization in order to benefit artists, it would be unrealistic to over-emphasise the benefits to emerging artists. Moreover, if one's main aim was to devise an instrument to support and benefit artists, it is unlikely that a system of 'droit de suite' would be the best solution. Fiscal measures or other provisions might be more effective in this respect.
5. The Directive
The Directive seeks to harmonize the following:
(i) the types of works covered by the right - Article 2 provides a description of 'original work' for the purpose of this Directive;
(ii) the types of transactions giving rise to payment - all sales with the exception of the first sale of the work by the artist and those by private individuals (Article 1);
(iii) the minimum threshold for the right to be applied, which the Commission sets at a level of ECU 1000 (Article 3);
(iv) the rate of the resale right - the Commission suggest between 2% and 4% on a sliding scale depending upon the price of the work (Article 4).
6. Amendments to the proposed Directive
(a) Amendments proposed by your draftsman seek to change the structure of the schedule for royalty payments proposed by the Commission. The amendment to Article 3 has two objectives. Firstly, it reduces the threshold at which royalty payments commence from ECU 1000 to ECU 500. This is in order to ensure that a greater number of artists, including those whose works sell for less money, benefit from 'droit de suite' payments. Your draftsman, however, is aware that reducing the threshold to too low a figure would result in implementation problems and disproportionately high administration costs. The threshold proposed by the draftsman is a reasonable compromise between the needs of artists and administrative reality. It will help to ensure that it is not merely the already successful artists who benefit from this Directive.
In addition, this amendment removes the facility for Member States to fix lower national thresholds. The ability of Member States to act in this way would appear to run counter to the very objective of the Directive i.e. harmonization. It would reintroduce the possibility of competitive distortions, and unequal treatment of artists depending on the Member State in which their work is sold. Moreover, the inclusion of this provision, seems to your draftsman, to weaken the Commission's arguments in favour of harmonization.
(b) The suggested amendment to Article 4 alters the payment schedule in order to reflect the modification already referred to as regards the lower threshold. In addition, the rate of royalty for sales in the first bracket has been increased from 4% to 5%, in order to produce a redistributive effect in favour of lower-priced works and their creators. Sales of works in this price range are unlikely to move outside the European Union, even at this increased rate of 'droit de suite', since transportation and other associated costs would be more costly to the seller than payment of this royalty.
In addition, a reduced rate of royalty - 1% for sales above ECU 250 000 - has been introduced in order to prevent the diversion of sales of works of art in this category to countries where 'droit de suite' does not exist. This is the most mobile section of the art market and, consequently, it is sales in this price range which would be most likely to move outside the European Union if the royalty were to be set at too high a rate.
(c) The amendment to Article 9 seeks to emphasise the obligation which is imposed on dealers and auction houses to provide relevant information. The text of the Commission is rather weak on this point. Clearly, the right to relevant information is essential for effective implementation and collection of royalties.
(d) Finally, the amendment to Article 10 seeks to acknowledge concerns about the impact of the Directive by calling for a detailed report to be produced every three years, rather than the five years proposed by the Commission, paying particular attention to certain issues, including the impact on the state of the market for modern and contemporary art in the European Union and the financial situation of artists. Moreover, this amendment seeks to increase the possibilities for review and revision from that which is proposed by the Commission, which is limited to the adjustment of thresholds and rates.
Conclusions
The Committee on Culture, Youth, Education and the Media calls on the Committee on Legal Affairs and Citizens' Rights to incorporate the following amendments in its report:
Commission Text | Amendment |
(Amendment 1)
Recital 2
2. Whereas the artist's resale right is intended to ensure that authors share in the economic success of their works; whereas it helps to redress the balance between the economic situation of authors and that of other creators who benefit from successive exploitations of their works; | 2. Whereas the artist's resale right is intended to ensure that authors continue to receive payment by enabling them to benefit from the success of their works; whereas it helps to redress the balance between the economic situation of authors and that of other creators who benefit from successive exploitations of their works; |
(Amendment 2)
Recital 5a (new)
5a. Whereas it results from the foregoing that the conclusion of an international Convention laying down obligatory resale rights would be desirable; |
(Amendment 3)
Recital 17
17. Whereas the non-application of the artist's resale right below the minimum threshold makes it possible to avoid disproportionately high collection and administration costs; | 17. Whereas the non-application of the artist's resale right below the minimum threshold makes it possible to avoid collection and administration costs which are disproportionately high when compared with the amount received by the author; |
(Amendment 4)
Recital 21
21. Whereas provision should be made for the possibility of periodic adjustment of the threshold and rates; whereas, to this end, it is appropriate to entrust to the Commission the task of drawing up periodic reports on the practical effect of the application of the artist's resale right and, where appropriate, of making proposals for amendment of the threshold and rates; | 21. Whereas provision should be made for the possibility of periodic adjustment of the threshold and rates; whereas, to this end, it is appropriate to entrust to the Commission the task of drawing up periodic reports on the effective application of the artist's resale right in the Member States and on the impact on the European art market and, where appropriate, of making proposals for amendment of the threshold and rates; |
(Amendment 5)
Article 3
1. Royalties collected pursuant to Article 1 shall be payable when the sale price is equal to or higher than ECU 1 000. 2. Member States may fix a national threshold which is lower than the threshold laid down in paragraph 1. | 1. Royalties collected pursuant to Article 1 shall be payable when the sale price is equal to or higher than ECU 500. |
(Amendment 6)
Article 4
The royalty collected pursuant to Article 1 shall be set at the following rates: (a) 4% of the sale price between ECU 1000 and ECU 50 000, (b) 3% of the sale price between ECU 50 000 and ECU 250 000 (c) 2% of the sale price above ECU 250 000 The Royalty shall be payable by the seller. | The royalty collected pursuant to Article 1 shall be set at the following rates: (a) 5% of the sale price between ECU 500 and ECU 50 000, (b) 3% of the sale price between ECU 50 000 and ECU 250 000 (c) 1% of the sale price above 250 000 ECU The Royalty shall be payable by the seller. |
(Amendment 7)
Article 6
Persons entitled to receive royalties
1. The royalty collected under Article 1 shall be payable to the author of the work and, after his death, to those entitled under him. 2. Member States may provide for the collective management of sums paid over by virtue of the artist's resale right. They shall determine the arrangements for collecting and distributing royalties where the author is a national of another Member State. | 1. The royalty collected under Article 1 shall be payable to the author of the work and, after his death, to those entitled under him or to his collecting society. 2. Member States may provide for the collective management of sums paid over by virtue of the artist's resale right. They shall determine the arrangements for collecting and distributing royalties where the author is a national of another Member State. 3. With a view to promoting living visual artists, collecting societies may use a commensurate percentage of the profits from the receipt of the artist's resale right for social and cultural purposes. |
(Amendment 8)
Article 8
Duration of the artist's resale rights
The artist's resale right shall last for the period laid down in Article 1 of Directive 93/98/EEC. | The artist's resale right shall apply throughout the life of the author and for 70 years after his death, in accordance with Article 1 of Directive 93/98/EEC. |
(Amendment 9)
Article 9
The author or his authorized representative may requireany dealer, sales director or organizer of public sales to furnish any information that may be necessary in order to secure payment of sums payable under the artist's resale right during the previous year or original works of art. | Any dealer, sales director or organizer of public sales is required to furnish any information that may be necessary in order to secure payment of sums payable under the artist's resale right during the previous year or original works of art, at the request of the author or his authorized representative. |
(Amendment 10)
Article 10
The Commission shall present to the European Parliament, the Council and the Economic and Social Committee not later than 1 January 2004 and every five years thereafter a report on the implementation of this Directive and shall, where appropriate, put forward proposals for adjusting the minimum threshold and the rates of the royalties to take account of changes in the sector | The Commission shall present to the European Parliament, the Council and the Economic and Social Committee not later than 1 January 2002 and every three years thereafter a detailed report on the implementation and impact of this Directive paying particular attention to its impact on the European market in modern and contemporary art; the mechanisms by which the Member States enforce the provisions of the Directive and the administration costs involved; the impact on the financial situation of artists working in the European Union; the working methods of galleries and auction houses.Where appropriate, the Commission shall put forward proposals for adjusting the minimum threshold and the rates of the royalties to take account of changes in the sector, along with any other proposals deemed necessary to improve the effectiveness of the Directive. |