9 Section 708 of title 17 specifically designates the fees for most services of the Copyright Office. Services not specifically designated, however, may fall within catch-all subsection (a)(11) providing fees "for any other special services requiring a substantial amount of time or expense, such fees as the Register of Copyrights may fix on the basis of the cost of providing the service." The Copyright Office believes this provision could be invoked to allow the Copyright Office to charge for the cost of providing the registration services proposed in H.R. 3221. Budgetary considerations would preclude the Office from offering the services for free. The applicability of section 708(a)(11) authorizing the charging of a reasonable fee should be made clear in the legislative history. An artist registering for resale royalty royalty eligibility may designate a collecting society as his or her representative. Conceivably, this provision could foster the establishment of organizations similar to the existing music performing rights societies. The registration system for transactions requiring a resale royalty is distinguishable from other registration systems maintained by the Copyright Office in that the party registering the transaction receives no benefit from making a registration. The existing registration systems generally create public records of copyright ownership rights, or the right to a compulsory license. Registration of visual artwork transactions, on the other hand, documents the obligation of the seller to pay the artist a resale royalty. The high degree of voluntary compliance applicable to existing registration systems maintained by the Copyright Office may not be achieved with respect to registrations of fine art transactions. · 10 The penalty for nonregistration of visual artwork transactions is the possibility of a suit by the artist or collecting society, which would subject the seller "to a penalty equal to treble the amount of the royalty owed." Clearly, enforcement falls almost entirely on the artist or his or her representative. Commentators on the California Resale Royalties Act report that the primary weakness of that Act is the inability or unwillingness of artists to sue to enforce their rights. 1/ That Act does not have a central registration system like H.R. 3221; the central registry should facilitate suits by artists. The seller is responsible for making the resale royalty payment directly to the artist, presumably by locating the address of the registered artist, or the designated representative, in the records of the Copyright Office. The Copyright Office has no direct role in the payment scheme. H.R. 3221 is unclear as to what happens if there is a break down in the system. What happens if the address of the registered artist is not current? What standards of diligence are imposed on the seller to locate the artist? May the seller deduct expenses incurred in locating an artist whose address is not current in the Copyright Office? Noncompliance with the royalty resale provisions allows the artist to seek two distinct remedies. Nonpayment of royalties is designated as a "copyright infringement" and presumably all the remedies specified in Chapter 5 of title 17 would be available to the artist. Most significant of these remedies would be actual damages (likely the amount of the royalties owed), statutory damages, and attorneys' fees. Nonregistra 1. J. McInerney, "California Resale Royalties Act, Private Sector 11 tion of transactions is also designated as a "copyright infringement," but H.R. 3221 specifies a penalty of "treble the amount of the royalty owed." The nature and relationship between these two remedies is unclear. For nonregistration of transactions, is "treble the amount of the royalty owed" intended as the sole remedy, or is it additional to other Chapter 5 remedies? Are the penalties for nonpayment and nonregistration cumulative, allowing an artist to receive treble royalties for nonregistration, plus statutory damages and attorneys' fees for nonpayment? G. State Laws Protecting the Personal Rights of Artists Three states have laws protecting the personal rights of artists in a fashion similar to H.R. 3221: California, New York, and Massachusetts. Of these three, only California provides for a resale royalty. H.R. 3221 is silent as to whether enactment would preempt these state laws. Unless it is amended, section 301 of title 17 would seemingly preempt these laws. A brief discussion of the three state statutes follows: 1. California California was the first state to enact legislation granting rights similar to those in H.R. 3221. The California Resale Royalties Act compensates visual artists for the appreciated value of their work upon sale. 2/ The California Art Preservation Act protects the integrity of an artist's work, and establishes a right of attribution. 3/ 2. Cal. Civ. Code $986 (West Supp. 1984). 3. Cal. Civ. Code $987 (West Supp. 1984). - 12 The Resale Royalty Act was passed in 1977 after publicity cast attention upon a few lucrative resales of works by contemporary artists. 4/ The Act was controversial, and was quickly challenged by an art dealer as being preempted by the 1909 federal Copyright Act. The Ninth Circuit rejected this contention in Morseburg v. Balyon. 5/ In 1982, the Act was amended to deal with the perceived enforceability shortcomings of the original legislation. Under the California law, resale royalties apply only to transactions occurring in California, or to transactions where the seller is a resident of California. All transactions must be for more than $1,000 and the gross sales price must be greater than the original purchase price. For transactions subject to the royalty, the royalty is 5 percent of the gross selling price. 6/ The greatest shortcoming of the California law has been enforceability. The lack of a central registration system has been attributed as a major source of the problem. One commentator summed up the situation in the following words: 1/ 4. 6. 7. In the mid-1970's, Robert Rauchenberg's painting Thaw was auctioned for $85,000. Reportedly it had been purchased about fifteen years earlier for $960. The Whitney Museum reportedly paid $1,000,000 for Jasper John's Three Flags, while the artist earned only $900 from its original sale. The 621 F.2d 972 (9th Cir.), cert. denied, 449 U.S. 983 (1980). McInerney, "California Resale Royalties Act: Private Sector Despite the (1982) amendments, the Act is perhaps the State's most neglected and underused law. Many of those who could benefit are ignorant of the Act; others who are aware of the Act feel impotent to enforce it. Those whom the Act seeks to regulate do not comply with its provisions. The monitoring necessary for individual enforcement is an impossible bureaucratic nightmare attempted by no one. Apparent lack of effective means to collectively enforce the Act has made it virtually irrelevant. As a result, visual artists continue to be exploited and remain uncompensated for their residual interests in resold artwork. The California Art Preservation Act seeks to preserve works of fine art and protect the personality of the artist. The Act prohibits the intentional "defacement, mutilation, alteration, or destruction of a work of fine art." Where the alleged mutilation was associated with an effort to conserve a work of fine art, evidence of gross negligence is required. Additionally, the artist has a right of attribution, and "for just and valid reason," the right to "disclaim authorship of his or her work of fine art." The rights of attribution and integrity may be waived by written contract. Owners of buildings who wish to remove a work of fine art capable of removal without mutilation, are subject to liability under the Act unless they attempt to notify the artist of their intention, and provide the artist with an opportunity to remove the work. 90-655 O 89 2 |