Resale royalty

(a)

Collection of resale royalty for visual art

Chapter 1 of title 17, United States Code, is amended by inserting after section 106A the following:

106B.

Collection of resale royalty for visual art

(a)

Definitions

In this section: (1)

Art market professional

The term art market professional means a person engaged in the business of buying and selling works of visual art to the public. (2)

Author’s successor

The term author’s successor means an individual who holds the right of the author of a work of visual art to the resale royalty after the death of the author as defined under subsection (e)(3). (3)

Commercial Resale

The term commercial resale means a sale of a resale copy of a work of visual art by, or with the intervention of, an art market professional, subsequent to the first sale of that copy. (4)

Price

The term price means the aggregate of all payments in cash, credit, or in-kind by or on behalf of a purchaser, excluding any fees for services rendered by the art market professional in connection with such sale. (5)

Resale Copy

The term resale copy, for the purposes of this section, means the material object in which the work of visual art is fixed by or under the authority of the author, in a single or limited edition. (6)

Visual Artists’ Collecting Societies

The term visual artists’ collecting societies means entities that have been designated to administer the resale royalty under this section. (b)

Collection generally

Independent of the exclusive rights provided in section 106, the author of a work of visual art shall be entitled to a royalty for the commercial resale of a resale copy of the work by a person other than the author or the author’s successor for a price of $5,000 or more. (c)

Duration

The entitlement to a resale royalty shall subsist simultaneously with and for the duration of the term of copyright protection afforded to the work of visual art pursuant to chapter 3 of this title. (d)

Calculation and payment of royalty

(1)

In general

The royalty for the sale of a resale copy of a work of visual art under this section shall be an amount equal to the lesser of— (A)5 percent of the price paid for the resale copy of the work of visual art in that sale; or (B)$50,000. (2)

Adjustment of amount

In 2022 and each year thereafter, the dollar amount described in paragraph (1)(B) shall be increased by an amount equal to the product of— (A)that dollar amount; and (B)the cost-of-living adjustment determined under section 1(f)(3)(A) of the Internal Revenue Code of 1986 for the year, determined by substituting the C–CPI–U for calendar year 2024 for the CPI for calendar year 2024 and all that follows in clause (ii) of that section. (e)

Collection and payment of royalty

(1)

Collection

Not later than 90 days after the date of the final payment for the purchase of the resale copy of the work of visual art, the art market professional shall pay the resale royalty calculated under subsection (d) to such visual artists’ collecting societies as are designated by the Register of Copyrights under subsection (i). (2)

Distribution

Not fewer than four times each year at quarterly intervals, any visual artists’ collecting society to which payments are made under paragraph (1) shall distribute to the author or the author’s successor as copyright owner in an amount equal to the difference between— (A)all royalties attributable to the sales of resale copies of works of visual art by the author; and (B)the reasonable administrative expenses of the collecting society as determined by regulations issued under subsection (i). (3)

Successors

In a case in which an author is dead, the right of that author to the resale royalty shall transfer as bequeathed by will. In the absence of a will, the right shall be apportioned as follows: (A)The widow or widower is entitled to the entire royalty of the author unless there are any surviving children or grandchildren of the author, in which case the widow or widower is entitled to one-half of the author’s royalty. (B)Any surviving child of the author, and any surviving child of any dead child of the author, is entitled to the royalty of the author in accordance with this section as follows: (i)A single surviving child of the author or single surviving grandchild that is the child of a deceased child of the author is entitled to the entire royalty of the author if there is no surviving spouse. (ii)If there is no surviving spouse and more than one child of the author, alive or dead, each child is entitled to an equal share of the royalty, and the share of any deceased child shall be split equally among all surviving grandchildren that descend from the deceased child. (iii)If there is a surviving spouse, each child of the author is entitled to an equal share of one-half of the royalty, and the share of any deceased child shall be split equally among all surviving grandchildren that descend from the deceased child. (C)In the event that the author’s widow or widower, children, and grandchildren are not living, the entitlement to collect a resale royalty is extinguished. (D)Where a work of visual art is a joint work, each joint author is entitled to an equal share of any resale royalty. Where an author who is a joint author is dead, his or her share of any resale royalty shall be apportioned among his or her successors in accordance with this paragraph (3). (4)

Unclaimed royalties

(A)

Escrow

Subject to subparagraph (B), if, after a good faith effort, a visual artists’ collecting society is not able to make a timely distribution under paragraph (2) because the collecting society is unable to locate the author or the author’s successor, the collecting society shall— (i)deposit the amount that would have been distributed to the author or authors’ successor into an interest-bearing escrow account until the author or the author’s successor has been identified and located, and continue to make reasonable good faith efforts to identify and locate the author or author’s successor, including by administering and publicizing, including on the visual artists’ collecting society’s website, a process by which authors or the author’s successor can claim any royalty due under this subsection; and (ii)upon locating the author or author’s successor, distribute the amount described in clause (i), including interest, to the author or author’s successor. (B)

Transfer

If the author or the author’s successor is not located during the 3-year period beginning on the date on which the sale of the resale copy of the work of visual art covered under this section occurs, the amount that would have been distributed to the author or the author’s successor under paragraph (2) shall be transferred to the Copyright Office for the purposes of developing and conducting programs and educational initiatives in support of artists in the United States. Distribution of funds under this subparagraph satisfies the obligations of the visual artists’ collecting society under this subsection with respect to those funds. (5)

Administration

Visual artists’ collecting societies shall administer all amounts collected under this subsection in accordance with generally accepted accounting principles. (f)

Failure To pay or distribute royalty

(1)

Right of action

(A) If an art market professional fails to pay a royalty in accordance with subsection (e) to a visual artists’ collecting society designated by the Register of Copyrights, such a society, either by itself or jointly with any other such society, may bring an action in a district court of the United States to recover an amount equal to the amount of the royalty and attorney’s fees but if no such society exercises this right within one year from the date payment is due, the author or author’s successors may within three years from the date payment is due bring an action in a district court of the United States to recover an amount equal to three times the amount of the royalty and attorney’s fees. (B) If a visual artists’ collecting society to which a royalty payment is made under section (e)(1) fails to distribute the royalty in accordance with subsection (e)(2) or (3), the author or author’s successors may within three years from the date the society received the royalty payment bring an action in a district court of the United States to recover an amount equal to three times the amount of the royalty and attorney’s fees. (2)

Collecting Societies

With the permission of the person to whom the resale royalty is due under paragraph (1), visual artists’ collecting societies may bring a suit on that person’s behalf under this subsection. (3)

Exclusive remedies

The remedies provided under this subsection shall be the exclusive remedies for a failure to pay or distribute a royalty in accordance with subsection (e). (g)

No transfers

The entitlement to a royalty under this section may not be sold, assigned, or otherwise transferred or waived. (h)

Eligibility To receive royalty payment

Any visual artists’ collecting society that collects a royalty under this section for the sale of a resale copy of a work of visual art shall distribute the royalty to— (1) any author of the work of visual art— (A) who is a citizen of or domiciled in the United States; (B) who is a citizen of or domiciled in a country that provides a royalty for the resale of a resale copy of a work of visual art; or (C) whose work of visual art is first created in the United States or in a country that provides a royalty for the resale of a copy of a work of visual art; or (2) the successor of an author described in paragraph (1). (i)

Regulations

The Register of Copyrights may conduct such proceedings and adopt such regulations as necessary or appropriate to effectuate the provisions of this section, including to— (1)establish a process by which entities are designated as a visual artists’ collecting societies authorized to administer royalty collections and distributions under this section, which process shall require such entities to— (A)have experience in licensing the copyrights of authors of works of visual art in the United States; or (B)have experience in collecting, maintaining, and distributing monies on behalf of artists in accordance with generally accepted accounting principles; (2)determine the reasonable administrative expenses that the visual artists’ collecting societies may deduct from the royalties payable under subsection (e)(2)(B); (3)establish a process by which— (A)visual artists’ collecting societies may obtain from any art market professional the sale price, date of sale, and other such information as the Register of Copyrights deems appropriate, for each sale of a resale copy of a work of visual art covered by this section; and (B)an author of a work of visual art or, if the author is dead, the author’s successor may obtain from visual artists’ collecting societies any information in the possession of the collecting societies, including the information obtained under clause (A) and the amount of any royalty paid to the collecting societies, that relates to a sale of any resale copies of such author’s work; and (4)establish a process by which the visual artists’ collecting societies may lose their designation as such if, in the judgment of the Register, the entity fails to substantially carry out the duties of a visual artist’s collecting society or fails to comply with the appropriate standards of conduct under this section or any applicable regulations adopted by the Register. (j)

Closest alternative designation

If the Register is unable to identify an entity that fulfills each of the qualifications set forth in clauses (A) through (B) in section (i)(1), or if an entity is identified and the Register finds cause not to designate such entity, the Register may designate any entity that most nearly fulfills such qualifications for purposes of carrying out the responsibilities of the visual artists’ collecting societies and for which the Register does not find cause not to designate. If the Register judges that no entity nearly fulfills the qualifications for the purposes of carrying out the responsibilities of the visual artists’ collecting societies, then the Register may promulgate regulations for an alternative method for collecting and distributing resale royalties.

(b)

Technical and conforming amendment

The table of sections for chapter 1 of title 17, United States Code, is amended by inserting after the item relating to section 106A the following:

106B. Collection of resale royalty for visual art.