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The Droit De Suite or Resale Royalty Right Under the Brazilian Framework

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Abstract

The resale royalty right – also referred to by its French designation droit de suite – was first implemented about a hundred years ago in France, with the intention of protecting so-called struggling artists and their families. The idea was to remedy the situation where these people lived in total poverty while their works of art were acquired for stunning sums of money at auction houses and art galleries. However, there is considerable controversy on whether such provisions still have a place in the current art market or whether they should be abolished entirely. The art market has indeed changed a lot since the beginning of the 20th century (when the first provision on droit de suite was enacted). Nowadays, there are a number of artists who have benefited from the vicissitudes of the art market, such as the artist entrepreneur. In April 2017, the World Intellectual Property Organization held a conference for the purpose of discussing the current position of these rights in the world. The present paper intends to first discuss the current status of such rights worldwide, including in terms of international treaties. The paper will then focus specifically on the Brazilian legal framework, which has maintained the resale royalty right in force for many decades. Throughout the text, the author will advance arguments in favor of and against the resale royalty right in order to showcase different perspectives and opinions on this still controversial subject.

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Notes

  1. Van Gogh (2003), passim.

  2. At the time of the transaction, the resale royalty right was in any event not applicable, since it usually lasts for the same term as the right to the economic exploitation of a copyrightable work, which is the artist’s lifetime plus around 50 years after his death.

  3. According to the British newspaper The Independent (Harding, May 3, 2012).

  4. The official title of the treaty is the Berne Convention for the Protection of Literary and Artistic Works (herein referred as to the Berne Convention).

  5. The TEFAF (The European Fine Art Foundation) Art Market Report 2017 estimates that the global market of art sales amounted to $45 billion in 2016, including transactions made by dealers and auction houses.

  6. A leading artist of the Young British Artists group (YBAs), also referred to as the Brit artists and Britart, comprising visual artists who organized exhibitions together in 1988. Many of them graduated during the 1980s from the BA Fine Art major at Goldsmiths, University of London.

  7. The title of which is For the Love of God. The work of art was originally displayed at the White Cube Gallery in 2007 bearing a price tag of 50 million pounds sterling.

  8. Entitled The Physical Impossibility of Death in the Mind of Someone Living, it was first displayed at the Saatchi Gallery in London in 1992 and is thought to have had a price tag of $12 million, according to Don Thompson, in his book The $12 Million Stuffed Shark: The Curious Economics of Contemporary Art, published by St. Martin's Griffin.

  9. As reported by the British newspaper The Guardian, which in a March 11, 2012 article wrote that “Damien Hirst has gone from mouthy YBA to global brand over the past 25 years – and become the world's richest living artist on the way” (O’Hagan March 11, 2012).

  10. The Portuguese lawyer José de Oliveira Ascensão, should be mentioned among the critics of the resale royalty right. According to Ascensão, whose arguments will be mentioned later in this paper, the right makes no sense in the present time (his arguments are set out in Ascensão 2009). Another scholar who raises criticism against this right is Berger (2001).

  11. In 2016, Senegal and Congo suggested that this conference be held before the 34th session (May 2017) of the WIPO’s Standing Committee on Copyright and Related Rights (SCCR). The entire conference can be viewed at http://www.wipo.int/webcasting/en/#demand. Accessed on May 16, 2017.

  12. As will be seen, the current resale right provisions were introduced on February 14, 2006.

  13. In English-speaking jurisdictions droit de suite is usually referred as the resale royalty right, which is used for instance by Ricketson (2015). From now on, this paper will use this expression to refer to the right in question.

  14. In Brazil and Portugal, the resale right is referred to as direito de sequência, which is a literal translation of the French expression droit de suite.

  15. This understanding is shared by a large majority of lawyers. For instance, see Rocha (2000), p. 4.

  16. Tepper (2007), p. 13.

  17. The painting portrays a farming couple pausing in their work to pray the Angelus. It is currently in the Musée d’Orsay collection in Paris.

  18. Katzenberger (1973), p. 365.

  19. Ibid, supra note 18.

  20. Ibid, supra note 18.

  21. Ricketson and Ginsburg (2006, p. 672.

  22. This imbalance is noted for instance by Catherine Saez in an article for Intellectual Property Watch entitled Resale Royalty Right: A Way To Redress Imbalance In Copyright Revenue, WIPO Told (Saez, November 22, 2016).

  23. See supra note 4.

  24. Since the signing of the original text of the Berne Convention, the treaty has undergone seven amendments: The Berne Paris Additional Act (1896), the Berlin Act (1908), the Berne Additional Protocol (1914), the Rome Act (1928), the Brussels Act (1948), the Stockholm Act (1967) and the Paris Act (1971).

  25. The ALAI was founded by the French writer Victor Hugo in 1878 with the aim of creating international protection for artistic works. The ALAI played an important role in the adoption of the Berne Convention, which resulted from a conference held in Rome in 1882.

  26. Ricketson and Ginsburg (2006), p. 673, report that at that time, in addition to France, only Belgium and Czechoslovakia included such a provision in their national law.

  27. Ibid, see supra note 26.

  28. Actes 1928, 283 as quoted in ibid, see supra note 26.

  29. The International Office referred to here is the Bureaux Internationaux Réunis pour la Protection de la Propriété Intellectuelle (BIRPI), which was originally established to administer the Berne Convention as well as the Paris Convention for the Protection of Industrial Property (1883). Today, this role is played by the World Intellectual Property Organization (WIPO).

  30. Duchemin (1948), p. 301 ff, as quoted in Ginsburg and Ricketson, see supra note 26, p. 674.

  31. Ibid, see supra note 30.

  32. Nevertheless, the 1961 treaty on neighboring rights (i.e., the Rome Convention for the Protection of Performers, Producers of Phonograms and Broadcasting Organizations) used some elements of the Samaden project.

  33. Ibid, p. 676.

  34. Ibid, see supra note 33.

  35. Since then, Art. 14bis has become 14ter. The term “transfer” was replaced by “disposal”, and “extent” was substituted for “degree”.

  36. California is the only state in the USA that affords resale rights. The California Resale Royalty Right Act became law in 1976, amending the California Civil Code (Section 986). The main criteria for the application of the resale royalty right in California are: the royalty is calculated on the basis of the resale price (and not the profit), the gross transaction price must be more than US$ 1,000.00, the resale royalty right lasts for the artists' lifetime plus 20 years after their death, the seller must reside in California or the sale must take place in California, and the artist must be an American citizen or must have lived in California for at least two years.

  37. The United Kingdom Intellectual Property Office (2014).

  38. Adolfo (1998), p. 22.

  39. Ibid, p. 21.

  40. Recital (4).

  41. Recital (7).

  42. Ibid, see supra note 40.

  43. Joyce et al. (2016), p. 513.

  44. Actually, Sec. 608 (b) of the Visual Artists Rights Act of 1990 (which introduced the author's moral rights into the American jurisdiction) requested that the Copyright Office “should conduct a study on the feasibility of implementing:

    (A) a requirement that, after the first sale of a work of art, a royalty on any resale of the work, consisting of a percentage of the price, be paid to the author of the work; and (B) other possible requirements that would achieve the objective of allowing an author of a work of art to share monetarily in the enhanced value of that work”.

  45. The United States Copyright Office (1992), p. 43.

  46. Ibid, p. 145.

  47. According to the Copyright Office's suggestion, every time a work of art went on public display, a royalty should be paid by the entity responsible for organizing the exhibition, such as museums and art galleries.

  48. Ibid, p. 150.

  49. Ibid, see supra note 48.

  50. Ibid, p. 151.

  51. H.R. 3688 – 112th Congress (2011–2012).

  52. H.R.1881 – 114th Congress (2015–2016).

  53. Letter from the US Copyright Office forwarding the updated report to the US Congress (The United States Copyright Office 2013, p. 3).

  54. Anna Dempster, in an article for The Art Newspaper entitled Trust, but verify, as they say, states “[a]symmetry of information naturally suits the person who knows more. This might suggest a need for regulation to ensure market transparency. But regulation should not be confused with transparency and is difficult to achieve in a global marketplace of many different cultures. Functional market transparency is based on accepted norms of behavior that are willingly subscribed to by all participants, not imposed from above” (Dempster July 11, 2013).

  55. Ibid, see supra note 52, p. 28.

  56. Ibid, see supra note 52, p. 42.

  57. Ibid, p. 44.

  58. Ibid, pp. 48–61.

  59. Initially, the resale royalty right was only applicable for living artists. From January 1, 2012 onwards such a right was extended to cover transactions involving works of deceased artists within the remaining copyright period.

  60. Such as the “aggressiveness and expertise of art market personnel in attracting consignments, concentration and turnover in the fortunes of art buyers, visibility of national artists, and local tax and other regulatory burdens” (Ibid, see supra note 52, p. 53).

  61. This statement by the US Copyright Office is based on a report – the Consultation Preparatoire au Rapport de la Commission Europeenne sur la Mise en Oeuvre et les Effets de la Directive 2001/84/Ce Du Parlement Europeen et du Conseil du 27 Septembre 2001 Relative au Droit de Suite au Profit de l ’Auteur d ’une Oeuvre d ’Art Originale – prepared by the French government (French Republic 2011).

  62. The United States Copyright Office, see supra note 52, p. 53.

  63. Idem, p. 57.

  64. The first-sale doctrine is an Anglo-American rule that has special importance for copyright and trademark law. According to this doctrine, the rightful owner of an original copyright work is free to transfer the title to the tangible good to third parties without the copyright holder’s permission.

  65. The Fifth Amendment basically covers five different constitutional rights: “(1) right to indictment by the grand jury before any criminal charges for felonious crimes, (2) a prohibition on double jeopardy, (3) a right against forced self-incrimination, (4) a guarantee that all criminal defendants have a fair trial, and (5) a guarantee that government cannot seize private property without making a due compensation at the market value of the property.” (Kim 2017).

  66. The United States Copyright Office 2013, p. 69 and Penn Central Transp. Co. v. City of New York, 438 U.S. 104, 124 (1978).

  67. Idem, p. 70 and Eastern Enters., 524 U.S. at 528.

  68. Idem and Andrus v. Allard, 444 U.S. 51, 66 (1979).

  69. Selective Serv. Sys. v. Minnesota Pub. Interest Research Grp., 468 U.S. 841, 851 (1984).

  70. Ibid, p. 65.

  71. Ibid, p. 65.

  72. For more information about the history of Brazilian copyright law, the author recommends the articles written by Cavalheiro (2001) and Zanini (2014), both in Portuguese.

  73. The Act referred to actually established the first two law schools in the country, in the cities of Sao Paulo and Olinda. Additionally, it granted the law school academics copyright over their works for a limited ten-year term.

  74. Except for the Federal Constitution of 1937, enacted during the Getulio Vargas dictatorship, which did not mention authors’ rights as a constitutional right.

  75. Portinari (2015), p. 87.

  76. Among others, Brazil is member of the following copyright treaties: the Universal Copyright Convention (1971) Paris Act, the Inter-American Convention on the Rights of the Author in Literary, Scientific and Artistic Works (Washington DC, 1946), the International Convention for the Protection of Performers, Producers of Phonograms and Broadcasting Organizations (Rome, 1961), the Convention for the Protection of Producers of Phonograms Against Unauthorized Duplication of their Phonograms (Geneva, 1971), the Treaty on the International Registration of Audiovisual Works (Geneva, 1989), etc.

  77. The peace treaty signed in the aftermath of World War I.

  78. The current term is three years, as laid down by the Brazilian Civil Code (since the Copyright Act does not include a specific rule).

  79. The 1967 draft bill for the first Brazilian Copyright Act originally established a 2% royalty fee on the total amount of the sale price. This provision, however, would only be applicable if the figure was at least 5 times higher than the Brazilian capital’s minimum wage. Nevertheless, the draft bill was amended during the legislature approval procedure, resulting in the provisions of Sec. 39 of the 1973 Copyright Act.

  80. See infra note 95.

  81. Ascensão (1997), p. 238.

  82. The wording of Sec. 38 actually uses the expression surplus value. This is to indicate that the resale royalty should be exclusively applied to the profit from the subsequent transaction, but not on the full price of the sale.

  83. During the 1990s Brazil reviewed every act related to intellectual property in order to comply with the TRIPs Agreement. In 1998, Brazil also enacted Law No. 9,609/1998, which granted the protection of software through author’s rights.

  84. It should be noted that Brazil is a member of the American Convention on Human Rights, which establishes in Art. 7(7) the following: “[n]o one shall be detained for debt. This principle shall not limit the orders of a competent judicial authority issued for nonfulfillment of duties of support.” On the basis of this provision, the Federal Supreme Court rendered the following binding statement (in Portuguese súmula vinculante): “the civil imprisonment of the bailee in debt is illegal, regardless of the type of bailment.”

  85. The Brazilian Copyright Act is more generous than the TRIPs Agreement, which lays down that the member states must grant at least a 50-year term of protection for copyrighted work (Art. 12).

  86. During the discussion of the draft several people held the post of Minister of Culture. One of them, Ana Buarque de Hollanda, encouraging a wider debate, stated the following: “[t]here are deep differences within society concerning this subject [i.e. the amendment of the 1998 Copyright Act]. This transparency contributes to the search for the widest possible consensus on the complex subject of copyright, and inaugurates a new stage in the debate” (O GLOBO 2011).

  87. The bill was drafted by Senator Antonio Carlos Junior (Brazil, Senate 2008).

  88. The National Library is responsible for registering any piece of literary work for the purpose of proving the anteriority of a copyrightable work (as a country that follows the French tradition of the author’s right, registration is not a mandatory requirement for enforcement). As a matter of fact, it does not make sense to use the National Library as an entity responsible for registering private agreements, as intended by this bill. The service of registering literature is a different situation, as it relates to the very nature of the National Library, which is to hold any literary work produced in the country.

  89. Special Appeal No. 594.526/RJ, Reporting Justice Luis Felipe Salomão, 4th Board of Appeals, judged on April 2, 2009.

  90. The Superior Court of Justice is the Brazilian highest court for determining the interpretation of federal laws and harmonizing conflicting interpretations (in relation to federal laws) from lower appellate courts. The Federal Supreme Court decides on constitutional matters.

  91. A modern Brazilian painter whose most notable works include War and Peace (original Portuguese title Guerra e Paz, 1952–1956), which is on display at the United Nations Headquarter in New York City as gift from the Brazilian government.

  92. This interpretation is also supported by the Portuguese scholar Ascensão (1997, pp. 298–299).

  93. While there are scholars who assert that this right is important to remedy unfair situations suffered by artists and their families, there are others who argue that the right is, in general, ineffective and its application nowadays makes no sense at all. A comparison between these two points of view will be presented again in the Conclusion.

  94. For instance, an article was published on January 07, 2012 in the Brazilian newspaper O Globo (Furlaneto 2012) discussing resale royalty right. Auctioneers, collectors, lawyers and resale royalty right-holders gave their opinions on the topic. An auctioneer asserted that the resale royalty right was “inoperative, anachronistic and paternalistic.”

  95. Leite (2004), pp. 145–147.

  96. Ascensão (2009), p. 47.

  97. Sec. 97 of the Copyright Act states that “[a]uthors and the owners of the neighboring rights may form non-profit-making associations for the exercise and defense of their rights,” while Sec. 99 reads “[t]he[se] associations shall jointly maintain a single central office for the collection and distribution of the royalties generated by the public performance of musical works (…), including performance by broadcasting and transmission by any means…” The ECAD is the office referred to in Sec. 99 Act, and it is the only one of its kind. Broadcasters might negotiate the performance rights directly with the right-holders, but the ECAD is the only organization that is allowed to collectively levy and receive the royalties on behalf of its members.

  98. For instance, the Brazilian Association for the Rights of the Visual Authors (known by the Portuguese acronym AUTVIS): https://www.autvis.org.br/.

  99. See, for instance, Egea (1999).

  100. In 2015, Artsy, the website dedicated to the art market, published an article listing the most influential cities for the art segment (ARTSY 2015).

  101. Apart from New York, which is home to many affluent art institutions and galleries, the United States held two high-profile art fairs (both in Miami): Art Miami and Art Basel Miami Beach.

  102. Hong Kong is an important art hub in Asia, boasting branches of a number of prestigious institutions such as Sotheby’s, Christie’s, Gagosian Gallery, etc.

  103. Switzerland held Art Basel.

  104. Gombrich (1995), pp. 610–612.

  105. See, for instance, Ricketson and Ginsburg (2006), p. 10.

  106. Ascensão (2009), p. 44.

  107. Ibid, p. 47.

  108. Ibid, p. 46.

  109. Rys 2017, January 20.

  110. Leeds and Sorkin (2006), April 13.

  111. Banternghansa and Gradd (2009), p. 28.

  112. This fact also received attention from the international press. For instance, on November 14, 2012 the Huffington Post (Grant November 14, 2012) published the article entitled UK’s Artist Resale Royalty Law Didn’t Damage the Art Market (Despite All the Claims).

  113. Dilmaghani and Engle-Warnick have a different understanding. According to their experimental assessment, “the number of transactions in the market for visual arts could decline as result of droit de suite, provided art dealers are more prone to decide in accordance with the rational choice framework and are risk neutral”; Dilmaghani and Engle-Warnick (2012), p. 24

  114. In Brazil, Section 90, item, II, of the 1998 Copyright Act sets out the right of musicians to allow (whether free of charge or on payment of royalties) the public performance of their songs.

  115. Ricketson (2015) wrote an article that presents a possible draft international treaty on droit de suite/resale royalty right for visual artists.

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Acknowledgements

The author would like to extend special thanks to Gabriel Leonardos for his mentoring since the early years of his career as an intellectual property attorney and for being a role model for the entire Kasznar Leonardos litigation team. The author would also like to acknowledge Mr. Leonardos’ generosity and availability for carefully proofreading the present paper and sharing his thoughts and opinions. This paper was also reviewed by Julian Cornelius. The author warmly thanks him for his valuable help.

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Correspondence to Paulo Bianco.

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Paulo Bianco has postgraduate degrees in Art and Architecture History from the Pontifical Catholic University of Rio de Janeiro (Rio de Janeiro, Brazil), in Intellectual Property Law from the Pontifical Catholic University of Rio de Janeiro (Rio de Janeiro, Brazil), and in Entertainment Law from the Rio de Janeiro State University (Rio de Janeiro, Brazil).

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Bianco, P. The Droit De Suite or Resale Royalty Right Under the Brazilian Framework. IIC 50, 196–222 (2019). https://doi.org/10.1007/s40319-019-00784-2

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