1. Introduction
The artist’s resale right (droit de suite) is a statutory right entitling the author of a work of fine art to participate financially in subsequent resales of that work. It reflects the fact that visual artists—unlike composers or writers, for example—typically participate in the economic value of their works only once, namely upon the first sale. Any increase in value that occurs over time, often as the artist’s reputation grows, would, in the absence of the resale right, benefit exclusively the respective owner and the art trade.
The purpose of the resale right is therefore to achieve a fair balance between the interests of authors and those of the art market. At European Union level, this objective is embodied in Directive 2001/84/EC on the resale right for the benefit of the author of an original work of art. In Austria, the Directive was implemented by section 16b of the Austrian Copyright Act (Urheberrechtsgesetz – UrhG), which has been in force since 2006. Since 1 January 2012, the right to a resale royalty has also been available without restriction to the author’s successors in title.
2. Subject Matter of the Resale Right
2.1 Works of Fine Art
The resale right applies exclusively to originals of works of fine art. This includes traditional categories such as paintings, drawings, sculptures, prints and photographs, as well as contemporary forms of artistic expression, including installations, kinetic art and performance or action art. The lists contained in the Directive and the Austrian legislation are not exhaustive. The decisive question is whether, according to prevailing market perception and the practice of the art market, the work is regarded as a work of fine art.
Particular difficulties arise in relation to works of applied art. Such works are not generally excluded from the resale right. The relevant issue is whether the utilitarian purpose of the object is secondary to its artistic expression and whether the object is primarily traded as a work of art. Here too, the perception and established practice of the art market are of central importance.
2.2 Meaning of “Original”
A resale royalty arises only if the work concerned qualifies as an original. Section 16b(3) UrhG distinguishes between three categories:
– works created by the author personally;
– works produced in a limited edition under the author’s supervision and authorised by the author;
– other copies or objects regarded as originals.
Unique works generally present no particular difficulty. In the case of editioned works, however, the artist must have actively participated in the creative or production process. Posthumously produced casts or prints do not generally qualify as originals under the second category, although they may, in certain circumstances, fall within the residual third category. Signatures, numbering and certificates of authenticity are merely indicative and do not replace a substantive assessment of whether the work qualifies as an original.
3. Requirements for the Claim
3.1 Resale
The royalty becomes payable upon any sale for consideration following the first transfer of the work by the author. The first sale itself is not subject to the resale right, as the author is able to determine the sale price directly. The right applies to all transactions for consideration, in particular sales, exchanges and auctions, irrespective of whether they take place offline or online.
3.2 Involvement of an Art-Market Professional
A mandatory requirement is the involvement of an art-market professional as seller, buyer or intermediary. Purely private sales do not fall within the scope of the resale right. Art-market professionals include, in particular, galleries, auction houses and art dealers.
Collectors, investors and other market participants may also fall within this category where their activities display a sufficient degree of regularity and are economically directed towards the trading of works of art.
The distinction is difficult in individual cases and has not yet been clarified comprehensively by the Austrian Supreme Court. A comprehensive assessment is required, taking into account the person’s position in the market, the frequency of the transactions and the existence of an independent economic interest in the sale.
3.3 Minimum Sale Price
A resale royalty is payable only where the sale price amounts to at least EUR 2,500. Compared with the thresholds applicable in a number of other European jurisdictions, this threshold is relatively high and significantly limits the practical scope of the resale right in Austria.
4. Amount and Calculation of the Resale Royalty
The royalty is calculated on a progressive basis as follows:
– 4% of the first EUR 50,000;
– 3% of the next EUR 150,000;
– 1% of the following EUR 150,000;
– 0.5% of the next EUR 150,000;
– 0.25% of any amount exceeding those thresholds.
The total royalty is capped at EUR 12,500.
The basis of assessment is the net sale price, excluding value added tax. The resale royalty itself is not subject to value added tax, since there is no direct exchange of services between the author and the seller.
In practice, particular attention must be paid to whether the price stated in an auction or sale agreement includes ancillary charges, commissions, buyer’s premiums or taxes, as these items may have to be distinguished from the net sale price relevant for the calculation of the royalty.
5. Debtor and Liability
The primary debtor of the resale royalty is the seller of the work. In addition, any art-market professional involved in the transaction is jointly and severally liable by operation of law as guarantor and principal debtor. The person entitled to the royalty may therefore choose freely against whom to bring the claim.
This liability regime effectively shifts the economic risk of ensuring the correct payment of the royalty to the art trade. Galleries, auction houses and dealers must therefore establish appropriate internal procedures for identifying transactions subject to the resale right, calculating the royalty and documenting payment.
6. Inheritance, Waiver, Assignment and Limitation
The right to a resale royalty cannot be waived and cannot be assigned in advance. It is, however, fully inheritable and subsists for 70 years after the end of the calendar year in which the author died.
The ordinary limitation period is three years from the date on which the person entitled to the royalty becomes aware of both the resale and the identity of the debtor. In any event, the claim becomes time-barred 30 years after it arose.
The practical enforceability of the claim may depend heavily on access to information concerning the sale. For this reason, duties of disclosure and the preservation of transaction records are of considerable importance, particularly where a sale has been conducted through an intermediary or across national borders.
7. Practical Issues
In practice, disputes frequently concern the classification of the object as a work of fine art, the question whether it qualifies as an original, the professional status of a party to the transaction and the correct determination of the net sale price.
Further difficulties may arise in cross-border transactions. Relevant connecting factors may include the place of sale, the habitual residence or establishment of the parties, the location of the work and the law governing the transaction. Since the resale right is harmonised only to a limited extent within the European Union, differences between national legal systems may remain relevant.
Digital sales channels and online auctions also create evidentiary and enforcement issues. Although an online transaction is not excluded from the resale right, it may be more difficult to determine the parties involved, the role of the platform, the place of sale and the applicable law.
8. Conclusion
The artist’s resale right is an important instrument for the protection of visual artists. Its practical application nevertheless raises numerous questions of classification, interpretation and enforcement. In the absence of comprehensive guidance from the Austrian Supreme Court, a careful legal assessment of the individual transaction is of particular importance.
The decisive issues are typically whether the object qualifies as an original work of fine art, whether the transaction constitutes a resale for consideration, whether an art-market professional was involved and how the relevant net sale price is to be calculated. Proper contractual documentation and reliable transaction records are therefore essential for artists, heirs, collectors and art-market professionals alike.