Government introduces Copyright (Artists' Resale Right) Amendment Bill

The Government has tabled a Bill that will amend the Copyright Act 1994 to establish a mandatory resale right for artists when their works are resold in New Zealand. The right will apply to artists who are residents or citizens of New Zealand or who are nationals of countries that offer a similar right to nationals of New Zealand.

The proposed resale right will entitle an artist to receive a royalty payment each time his or her original artistic work is resold on the secondary art market.

An "artistic work" for the purposes of the relevant right will include a graphic work, photograph, sculpture, collage or model and works of artistic craftsmanship. Artistic works forming part of a limited edition of artistic works created by an artist or under the artist's authority will also be subject to the resale right. Works of architecture are, however, excluded. The resale right will apply only where ownership in an artistic work is transferred by sale after the first transfer of ownership of that work by the artist. It will not apply to the first sale or transfer of an artistic work and, importantly, it will not apply to sales between private individuals.

The right is inalienable and cannot be waived, assigned or charged.

The artist who created the artistic work will hold the right regardless of whether the artist owns the copyright in the work. The right can only be transmitted on the death of the holder of the resale right. Upon that occurrence, the right will pass in accordance with the artist's will or, if there is no will, by operation of law.

The proposed resale royalty rate will be a fixed percentage of the resale price (i.e. of the hammer or sale price) and will only be payable in relation to sales that are above a specified minimum threshold. At present it is understood that the royalty rate will be a flat 5% and the specified minimum threshold will be $500.

The resale right will continue for only so long as the copyright in a work subsists. That will generally be for 50 years after the death of the artist.

The obligation to pay the resale royalty arises at the time when an artistic work is sold on the secondary art market through any auction house, gallery, dealer or other intermediary professional involved in the business of dealing in works of art. The seller, together with the art-market intermediary or professional involved in the sale will be jointly and severally liable to pay the resale royalty. If there is no agent involved in the sale, the seller and the buyer will be liable, so long as they are acting in the course of a business of dealing in artistic works.

The collection of resale royalties will be managed through a compulsory collection system by the sole collecting agency on behalf of artists. This is so whether or not the artist is a member of that agency. Only this agency will be entitled to request information on any resale in order to secure payments of royalties and it must treat such information as confidential. In return for managing the resale right, the collecting agency will be entitled to charge a fixed fee or percentage of the royalty as determined under regulations to be enacted.

Non-payment of resale royalties and failure to provide information as required under the Act will be subject to civil proceedings. Such proceedings will only be able to be pursued by the collecting agency, on behalf of a resale right holder (ie. the artist or his or her successor).

The Bill has been introduced in the face of criticism that the establishment of such a resale right will depress the art market in New Zealand and/or move it offshore. However, the Government has pointed to the success of the introduction of similar legislation in the United Kingdom to demonstrate that this is unlikely to happen. It has also been argued that the New Zealand art market is unlikely to move offshore because the majority of New Zealand works of art purchased in the last ten years in Australasia were purchased by buyers within New Zealand and that trend is unlikely to change.

Need more information?

For more information on copyright law issues please call Garry Williams on 64 9 916 8661.