E sccr/34/7 prov. Original: english date: august 4, 2017 Standing Committee on Copyright and Related Rights Thirty-Fourth Session Geneva, May to 5, 2017

AGENDA ITEM 9: OTHER MATTERS
Proposal from Senegal and Congo to include the Resale Right (droit de suite) in the Agenda of Future work by the Standing Committee on Copyright and Related Rights of the World Intellectual Property Organization

6. 
   The Chair gave the floor to Professor Kathryn Graddy for her presentation via video conference.
   

6. 
   Professor Graddy summarized the International Conference on Artist's Resale Right, held at WIPO on April 28, 2017. The video of that summary can be found at (Thursday, May 4, 2017 Afternoon Session): http://www.wipo.int/webcasting/en/?event=SCCR/34#demand
   

6. 
   The Chair thanked Professor Graddy and opened the floor to questions.
   

6. 
   The Delegation of Mexico stated that it was very clear that resale rights were fair, just, and in favor of artists. The Delegation asked Professor Graddy to state what percentage she thought she was fair to pay to the authors through this resale right.
   

6. 
   Professor Graddy responded that in the European Union, the percentage was a sliding scale from 0.25 per cent up to 2.5 per cent, with a maximum of 12,500 euros. Australia had instituted a rate of 5 per cent and the maximum that had so far been paid out was $55,000. The Professor stated that the correct percentage probably depended on the price of the painting as that made a big difference. For example, in the case of Picasso's painting that was recently sold for $170 million, if you were to collect 5 per cent on the $170 million that would be about $10 million that would go to Picasso's heirs, which $10 million was a lot for a resale of a painting. The Professor stated that in the case of Australia, she was not sure if the $55,000 went to an indigenous artist or not, but that $55,000 seemed much more reasonable. The Professor stated that maybe a higher rate of 2.5 per cent was important but that $500 did not seem very reasonable or that one may have a cap on the amount, but perhaps the higher rate. That could be a reasonable compromise between the two ways that different countries could actually implement resale.
   

6. 
   Professor Graddy made a presentation on the results of the preliminary study on the artist's resale rights. The presentation of that preliminary study can be found at (Thursday, May 4, 2017 Afternoon Session): http://www.wipo.int/webcasting/en/?event=SCCR/34#demand
   

6. 
   The Chair stated that the presentation was a very comprehensive overview of an empirical study based on the economic data and analysis of the implementation of artist's resale rights. He opened the floor for questions.
   

6. 
   The Delegation of France stated that it was very pleased with the results of the study which confirmed a study that had been carried out in the European Union when it had evaluated the directive on resale right. One of the things that the European Union had studied when it assessed its directive was the economic impact. The study did not find any proven economic impact, which that finding was in line with one of the conclusions presented by Professor Graddy. The Delegation thanked the Professor for having stressed the inalienable nature of resale right, which made it possible for artists to receive a complimentary income, enabling them to carry on their artistic and creative activities as a result of that extremely important inalienable characteristic. The Delegation stated that at the beginning of the presentation, Professor Graddy had given the example of a resale experiment in California that was in her view, unsuccessful. The Delegation stated that as far as it understood, perhaps the success or the lack thereof, was a result of the background of the resale right in California. The Delegation stated that in France that would have been income or turnover, whereas in California, that was profit. The Delegation stated that its idea of resale right, which was linked to its proportional remuneration system for the artist, was in proportion to the sales and not to the profit. It seemed to be complicated to set up remuneration based on profits, as one needed to know the profit margin, and that was too intrusive when compared to the market and the profit made by the collections. The Delegation asked whether the lack of success of the California initiative was due to the complexity of their system.
   

6. 
   Professor Graddy responded that once there was a tracking of artist's resale rights, she was not sure that there was any more complex than that. She did not think that people in California really tried to make it work and she did not think that there was a followup on artists. There was no good record keeping, so it was in effect not implemented well. The big issue was that it was just too easy for one to take his or her painting from California to Arizona and sell it. Within the European Union, it was not that easy, as one had to take it out and face export duties. Christie's could not just say it was going to close its auction house in France and move it somewhere else as there was too much to be lost. As more countries were implementing that, the competitive effects were evening out because everybody had an even playing field. The Professor stated that she was not sure she had a strong opinion on the complexity of the profit versus the resale, other than that they did a very bad job in California and that it was simply too easy to move from California and sell one’s paintings somewhere else.
   

6. 
   The Chair wished to follow up on the point that was being made by the Delegation of France, which was whether it would be practical to implement profitbased remuneration, rather than incomebased remuneration. One of the points the Delegation tried to make was that perhaps one the additional reasons why the law did not work in California was that it was based on profit rather than income, whereas in France, it was based on income.
   

6. 
   Professor Graddy stated that it was true that collection agencies often cited compliance as being huge, meaning they did not know what it was purchased for. That perhaps could have been one reason why it failed, but, there were also other major reasons why the California law did not work.
   

6. 
   The Delegation of Canada stated that Professor Graddy had mentioned various elements: models based on profit, based on resale price, models with caps, sliding scales, minimum sale prices. The Delegation wondered if in Professor Graddy’s research, she had been able to get a sense of whether different approaches or models were emerging, for instance, different approaches for countries with large art markets, versus different approaches for countries with maybe smaller art markets.
   

6. 
   Professor Graddy stated that countries with smaller art markets, which were countries where paintings were sold for less, tended to go for a higher commission rate, 5 per cent, than countries with huge art markets. The Professor stated that a difference she had missed had to do with the price of the painting. There should be a cap on super valuable paintings and extremely high priced paintings, but maybe, countries with smaller art markets may want to increase, as Australia had done.
   

6. 
   The Chair thanked Professor Grady and stated that the Committee looked forward to the completion of the study and the final presentation at the following meeting. The Chair encouraged additional questions to be emailed to the Secretariat who could forward them to the Professor. The Chair opened the floor to general comments on the resale right.
   

6. 
   The Delegation of Benin regretted the fact that the resale right’s conference did not actually enable Member States to have a proper discussion in the presence of the artists themselves. The Delegation thanked Professor Graddy for her intervention, which it stated helped the Committee understand the issue a bit more. The issue of resale rights was very important, particularly for African countries, and especially for the French speaking countries, as they were the ones who had introduced the resale right. With the support of WIPO and UNESCO, the government of Tunisia brought together, earlier that year, a committee which proposed provisions on the rights of the resale right under copyright. That was the Tunis Model Law for Developing Countries, which had, in a clear framework, specific provisions on the resale right. The Tunis Model Law called for 5 per cent which it saw as a reasonable amount to require. The French legislation, which was based on the 1957 French law on copyright, and the French speaking African countries legislation, which was based on the Tunis Model Law of 1977, reflected that 5 per cent. There was a well-structured art market throughout the African continent, which would be unimaginable without the resale right. Benin had been restructuring its art market, and had recently created various structures. The Delegation favored the inclusion of resale right on the official agenda of the SCCR, whose discussions could lead to a Diplomatic Conference on the resale right to bring it into international law. The Delegation believed that the collective organizations for management and artist rights would be able to guarantee effective remuneration to artists in all jurisdictions around the world.
   

6. 
   The Delegation of Malawi stated that the topic of artist's resale rights was important to Malawi, as in the previous year, it had just passed a law that had provisions on the artist resale right. The Delegation stated that it had learned a lot from the conference and from the experiences of other countries, that would help Malawi smoothly implement the artist's resale rights. The Delegation wished to maintain the topic of the artist's resale right on the agenda of the SCCR, and have it included as an official item.
   

6. 
   The Delegation of the European Union and its Member States thanked the Delegations of Senegal and the Republic of Congo for their proposal to put resale rights in the agenda, going back to SCCR 27 and tabled at SCCR 31, and as for the initiative to hold a conference on the topic prior to that session. As it had reiterated in previous meetings of that Committee, the European Union attached great importance to the resale right. The resale right had formed part of the European Union's legal framework for more than a decade, and there was dedicated legislation applicable in all its 28 Member States. The Delegation welcomed the presentation by Professor Ricketson on the resale right at the previous session, and thanked Professor Graddy for her presentation. The artist's resale right was a topic of high importance for creators of all countries and regions in the world, and that was underlined in the artist’s resale right conference, which was a good example of a substantive debate based on economic evidence. The Delegation wished to see such discussions on that topic within the Committee and gave its support for discussions on the resale during the SCCR. The European Union and its Member States furthermore believed that if the SCCR agenda was expanded to cover additional items in the future, priory should be given to that issue. The Delegation looked forward to sharing its experiences and information on the implementation of the European Union resale right directive, and the merits of that right and urged all delegations to support the proposal from Senegal and the Republic of Congo and to accept the resale right as a selfstanding item in the agenda of the SCCR.
   

6. 
   The Delegation of Georgia, speaking on behalf of CEBS stated that it attached great importance to the proposal put forward by the Delegations of the Republic of Congo and Senegal to include the resale right in the agenda of the future work of the Committee. The Delegation stated that the conference was an excellent opportunity to share different practices. The Delegation was in favor of advancing the work which would fuel deliberations on the resale rights and are looked forward to engaging constructively in the discussions on the issue.
   

6. 
   The Delegation of Botswana thanked the Secretariat for organizing the informative international conference on resale and expressed its appreciation of the findings of the study by Professor Graddy, which confirmed that there was need for resale rights. The Delegation thanked the Delegations of Senegal and the Republic of Congo for their proposal to consider resale rights in the work of the SCCR. The Delegation supported the proposal for the resale rights to be included in the future work of the SCCR.
   

6. 
   The Delegation of the United States America stated that as it had noted in previous sessions of the SCCR, the resale royalty right was subject to discussion in the United States. That discussion was informed by a recent revision of the 1992 U.S. Copyright Office report droit de suite, the artist's resale royalty right. The Delegation had reason to believe that the discussion would continue and intensify. The United States was not among the WIPO Member States that had implemented droit de suite regime at the domestic level at that time. The Delegation stated that it was nonetheless willing to participate in an informed discussion of the topic, and welcomed the Secretariat's commissioning of a resale royalty right study that focused on the actual operation of the right at the national level, a useful resource for the Committee. On the basis of Professor Graddy’s presentation, the Delegation had reason to believe it would be an excellent addition to its work. The Delegation stated that it was not in a position, at that time, to support the making of the resale royalty right a standing item of the agenda of that Committee, nor did it think norm setting in that area was yet mature.
   

6. 
   The Delegation of Italy supported the introduction of that subject to the agenda of the following meeting of the SCCR. The study undertaken by Professor Graddy showed that the creation of a resale royalty right created no problems for the market, and particularly, not for the auction houses market. The Berne Convention foresaw the resale right, and therefore was nothing new.
   

6. 
   The Delegation of Japan stated that as it was one of the countries that did not have the resale right in national legislation, such of information on the resale right was beneficial to its understanding on how it would benefit artists and the art market. The Delegation expressed concern that introducing the topic as a standing item may reduce the time for discussion on the broadcasting treaty, the topic that it considered as a top priority. After many years of discussion, the Delegation would like to conclude the broadcasting treaty topic as early as possible. In that regard, the Committee should focus on the agenda on the table. The Delegation supported conducting the study proposed by the Delegation of the United States of America as it may be useful to objectively analyze the pros and cons of resale rights.
   

6. 
   The Delegation of the Czech Republic stated that many of the experiences it had with the implementation of the resale rights corresponded to what had been presented by several speakers during the resale rights conference. For the Delegation, the topic of resale right was very important and it supported the inclusion of that topic on the agenda of the SCCR.
   

6. 
   The Delegation Senegal thanked all the Member States who had accepted the holding of the conference, and thanked the Secretariat who had organized everything. The Delegation thanked all of the experts and artists who had contributed to the success of the conference. The Delegation expressed that it seemed that for WIPO, intellectual property was not an end in itself, as it understood it. The mission of WIPO was to encourage creativity and innovation through the use of intellectual property, and the resale right was a very simple thing and not at all complicated to understand. The artist should have an ongoing interest in the commercial success of their art and it was very difficult to find anybody who would actually say no to that. Everybody, even if they were politically correct, would still say yes, the artist had to have that interest; and if the answer was yes, then we must not be accused of passivity. That was a right which artists were demanding very passionately. One could see how passionate they were when they talked about this, and when one saw what was happening in music or in the audio visual spheres, there were difficulties because of downloading and streaming, and the market for those was exploding, and the art market was huge at the moment. There was a need to look very carefully at that and find a solution because the solution was already within grasp. The Delegation wished to discuss the resale right that currently existed in Africa and the African art market. It was understood that the African art market, although it was still relatively small, was emerging and growing. That meant that the works created by the artist were not just remaining in Africa but were traveling around the world. For instance, Cellise was a talented Senegalese artist who had just received 7,000 Euros, which was huge in Senegal. Although not hugely rich, he now had the money to buy materials, to work better, to produce better things, to produce quality works of art in better conditions, works which may well also leave the country. So even in Africa, there was a need to see that principle of reciprocity. Now, even if the artists themselves did not travel, their works were already traveling around the world. And under the principle of reciprocity, that was why there was a demand the universality of the resale right because it had huge consequences for the lives of those artists and the lives of their families. The Delegation stated that it heard again and again of people who had reticence with regard to the resale right, but did not hear any real arguments and that was not very productive. On subjects that were being discussed for example, broadcasting and exceptions, and people gave clear reasons why they held the positions that they did, but the Delegation had not heard any clear reasons why people held the positions they did with regard to the resale right. The Delegation restated its proposal that it stated should be given greater attention, and stated that the vast majority of the Member States had agreed to continue discussing it. The Delegation stated that together with the Republic of Congo and other Member States, they were going beyond that and suggesting that the resale right now be included as a standing agenda item for the work of that Committee. The Delegation stated that it may be seen that international organizations were unproductive in the way that so much time was spent talking, without making progress. That was a subject that had a very simple solution, which would really improve the lives of the artists, and would certainly help WIPO to promote creativity.
   

6. 
   The Representative of the International Confederation of Societies of Authors and Composers (CISAC) expressed gratitude for the growing support that the resale right initiative was receiving from members of the Committee. The international conference on the economic impact of the resale right was a unique opportunity to gather, in one location, various players in the art market from around the world. Present at the conference were dealers, academics, economists and journalists who engaged in discussions about the resale right, its economic impact, and the importance in supporting the livelihood of artists. The Representative thanked the Secretariat for its excellent work in organizing the conference, which contributed to enriching the debate and promoting a better understanding of the right. Visual artists had the opportunity to make their voice heard in an authoritative forum and passionately expressed the importance of the resale right for their lives and creative careers. While the right represented insignificant sums for sellers and auction houses, for many visual artists, that remuneration was a vital part of their income. The Representative stated that it was emotional to listen how the resale right had changed the lives of many creators and had enabled them to live off their works, and in many cases, helped them to become renowned artists. Visual artists indicated that the resale right was the only legal instrument that allowed them to maintain a connection with the unique art works they created. It forced the art market to be more transparent, which helped visual artists know where their works were and who owned them. That was a crucial point because when a work of art increased in value, it did because of the artist's growing reputation. And it was only fair that the artist himself or herself would be able to share in that. Some other important elements had emerged from the discussions. The economic impact of the resale right on the art market was analyzed by Professor Graddy who, together with Professor Farchy, was in charge on the economic study of the resale right commissioned by WIPO. According to the findings of the study in the targeted countries, there was no evidence that the resale right had a relevant impact on market prices or volumes of art works. Instead, the resale right had proven to be a tool to foster creativity in visual art. The Representative was confident that the early findings of that authoritative study would dispel the concern with regards to the effects of the resale right to the art market. Today, with the increasing implementation of the resale right across the world, it had proven to be a fundamental instrument to foster creativity in visual arts but there was important progress to be made in order to achieve effective harmonization and security availability around the world. As it was pointed out during the Conference, the right was recognized under international copyright law, but more so in a manner that was basic and insufficient. It was included in Article 14 of the Berne Convention which remained the principle grouping for global artist rights, however, it was not compulsory and it was subject to the requirement of reciprocity. That particular nature of the right in the Berne Convention opened a measurable obstacle for visual artists worldwide. Practically it meant that artists did not get the right, even in countries that recognized it, if the right did not exist in the artist's own country. The situation was, therefore, that the availability of the right and the level of protection varied from one country to another, and depended upon the nationality of the author and his or her place of residence. Some countries representing major art markets had not incorporated the right, impeding in that way its application to a considerable number of artworks. For that reason, it was important to insure its effective monitorization and secure its availability around the world. As the Committee had expressed its interest in discussing the resale right the Representative invite it to formally introduce the resale right as a future item of the SCCR. The Committee should not miss the opportunity to commence an indepth analysis of the shortfalls of the existing international framework on the right, and address any needed updates to ensure that all creators benefitted from the same protection, and received a share when their works were sold by auction houses or galleries. That Committee could change the situation of visual artists worldwide and could give them the protection they truly needed and deserved. The Representative strongly encouraged Member States to introduce the resale right as a future agenda item, to discuss the issue, and to identify the problems and determine the solutions that needed to be found at an international level for the sake of visual artists.
   

6. 
   The Representative of the International Federation of Journalists (IFJ) fully supported the proposals that the artist's resale rights be included on the standing agenda. That was an important principle that authors' rights and copyright should provide a means of support for independent, dedicated and professional creators. The Representative adopted the argument of CISAC and Delegation of Senegal. The Representative echoed the point made by Senegal that the resale right not only vitally supported artists, but was a demonstration to the world that WIPO was fulfilling its mission to promote and encourage creativity.
   

6. 
   The Representative of the European Visual Artists (EVA) highlighted its participation in the discussion at the resale right’s conference and thought the conference was balanced and that all stakeholders were able to their views to that question. A lot of issues around the resale right were clarified, as Committee members witnessed the importance of the resale right for the visual creators and visual artists. That was an economic right that had great importance for the artist, but was also gave them the right to transparency, the right to follow their works, to get information, a point which was too important for visual artists. The Representative recommended that the SCCR take that question as a standing agenda item.
   

6. 
   The Representative of the International Authors Forum (IAF) stated that the artist resale right entitled creators and the authors of original works of art to a royalty each time their work was resold through an auction house or art market professional. An artist's resale right recognized the ongoing stake an artist had in the increasing value of their work, and it helped to establish parity to artists. Authors benefitted from resale markets where resale rights were collected, but as Professor Graddy had noted, they missed out in other markets where the resale right did not exist. There was a growing trend toward selling artworks online, and that had contributed to art sales being increasingly international. An international resale right would resolve disparities between countries who had the right and those who did not, and would ensure that artists received remuneration from sales of their work, especially when their work was sold abroad. The AIF welcomed the introduction of the resale right on the SCCR agenda.
   

6. 
   The Representative of the Library Copyright Alliance (LCA) stated that the resale right went against a fundamental principle of copyright law, the exhaustion doctrine. Under the exhaustion doctrine, a copyright owner's distribution right on a particular copy was exhausted after the first authorized sale of that copy. The resale right run contrary to that principle and diminished the rights of an owner of a copy of a work. The Representative stated that any discussion of the resale right had to recognize that basic conflict.
   

6. 
   The Representative of Knowledge Ecology International, Inc. (KEI) supported the proposal to continue discussions on the artist's resale right. The Representative thought that the Ricketson draft treaty was a good starting point for an international instrument.
   

6. 
   The Representative of Corporación Latinoamericana de Investigación de la Propiedad Intelectual para el Desarrollo (Corporación Innovarte) believed that all countries had the freedom to provide for the resale right as was indicated in the Berne Convention. The Representative had heard the preliminary report of the study and they showed that in the case of the United Kingdom, there was no negative impact. Rather than the fact that the United States of America, for example, did not have the resale right, the Representative did not see any crossborder issue. Until a better case was made, the Representative did not think that that issue should on the agenda.
   

6. 
   The Representative of the Canadian Artists’ Representation (CARFAC) stressed the importance of the centrality of the original work of art. The artist resale right was not new, almost 100 years, and was neither a charity nor a tax, but was rather a fair and just recognition that as the artistic creation builds in value over time that should be recognized through modest compensation to the originating artist. In the spirit of the notion that justice delayed was justice denied, the Representative urged the Committee to pursue vigorously the artist resale right so that Canadian artists, and those that did not presently have the artist resale right, may soon benefit from what would become the world standard.
   

6. 
   The Chair stated that he wished to update Committee members on the discussions that he had with regional coordinators. What was discussed was for Committee members to look at Agenda Items 6, 7 and 8, and to ask themselves what could be the subject of a Chair’s summary and what could be possible recommendation to the General Assembly in relation to those items. As a result of the discussions, the Chair would work with the Secretariat to update or to revise the action plan that had been sent to the regional coordinators.