Resale Royalties and Why the United States Has None
An artist whose early work resells for a hundred times its first price receives a share of that increase in much of the world and nothing in the United States. The reasons are treaty reciprocity, federal preemption and the first sale doctrine.
The rule in short
Droit de suite entitles the author of an original work of art to a percentage of the price on later resales handled by art market professionals. The Berne Convention treats the right as optional and conditions it on reciprocity, so an American artist gains nothing abroad while no federal right exists at home. A California statute creating a resale royalty was held preempted by the federal Copyright Act for sales after that Act took effect, leaving private contract as the only mechanism.
The economic argument for a resale royalty is easy to state. A painter sells early work cheaply, the market later values it at a multiple of that price, and the increase is realized entirely by owners and intermediaries. Most of Europe and a substantial number of other jurisdictions answer this with a statutory share. The United States does not, and the reason is not indifference so much as a specific set of legal obstacles.
The entitlement being described
Droit de suite gives the author of an original work of art a percentage of the price on later resales in which an art market professional participates as seller, buyer or intermediary. It is an economic right, inalienable in most systems that grant it, and it runs for the copyright term rather than for the author's life. It has nothing to do with attribution or integrity, which are the subject of the moral rights provisions of the copyright statute, though the two are frequently discussed together as artist protections.
The right is administered collectively almost everywhere it exists. A collecting society receives notice of qualifying sales from auction houses and dealers, calculates the amount, and distributes it. That infrastructure is a large part of why the right functions at all, and its absence is one reason proposals in jurisdictions without collecting societies stall.
What the treaty actually requires
The Berne Convention addresses the resale right, but permissively. Member states may grant it, and an author may claim it in another member state only if the law of the country to which the author belongs grants it, and only to the extent permitted by the country where protection is claimed. The right is therefore optional and conditioned on reciprocity, which is the opposite of the treatment given to the core economic rights.
The practical effect for American artists is direct. Because the United States grants no resale right, its nationals ordinarily cannot claim one abroad, even on a sale that takes place in a country where the right exists and is enforced against every domestic artist. The absence at home produces the absence abroad.
How the right works where it exists
The harmonized European approach applies a sliding scale, with the percentage falling as the sale price rises, so that modest resales carry a higher rate than very large ones. A minimum sale price triggers the obligation and a ceiling caps the amount payable on any single sale, which keeps the burden on the top of the market bounded. Liability is placed on the seller or on the professional involved, and the obligation is enforced through the collecting society rather than by the individual artist.
Criticism concentrates on two points: that the money flows disproportionately to the estates of already successful artists rather than to living artists in need of it, and that the burden encourages sales to migrate to jurisdictions without the right. Both claims are contested, and the evidence on market migration in particular has not produced agreement.
Three distinct things are often conflated: the dealer's commission on a sale, the artist's moral rights in the physical work, and a statutory share of resale proceeds. The first is contractual, the second is federal and personal to the artist, and the third does not exist in American law at all. Contract terms drafted as though the third existed create enforcement problems from the outset.
The state statute and its preemption
One state enacted a resale royalty, entitling qualifying artists to a fixed percentage of the resale price where the seller resided in the state or the sale occurred there and the price exceeded a threshold. The statute operated for years before a federal court of appeals, sitting en banc, held it preempted by the federal Copyright Act as to sales occurring after that Act took effect. The reasoning was that the state right was equivalent to a right within the general scope of copyright and conflicted with the first sale doctrine, which frees the owner of a lawfully made copy to dispose of it.
What survives is a narrow window of sales predating the federal Act's effective date. Federal bills creating a resale right have been introduced repeatedly and none has been enacted. The Copyright Office has examined the question more than once, and its later analysis presented a resale royalty as one option Congress might adopt alongside other measures for visual artists rather than as a recommendation standing alone.
The available regimes side by side
| Regime | What triggers payment | Enforceable against later buyers |
|---|---|---|
| Harmonized European resale right | Resale involving an art market professional above a threshold | Yes, by statute, through a collecting society |
| Berne baseline | Only where the author's own country grants the right | Yes, subject to reciprocity |
| United States federal law | No trigger; no right exists | No |
| State resale royalty statute | Historic sales predating federal preemption | Only within the surviving window |
| Contractual resale provision | Resale by a party who signed the agreement | Only against signatories, absent an effective covenant |
What contract can and cannot replace
Artists and their advisers have long used sale agreements that reserve a percentage of any increase on resale, require notice of transfer, and obligate the buyer to bind the next purchaser to the same terms. Against the original buyer these are ordinary contracts and are enforceable as such. Against a subsequent purchaser they run into the reluctance of American law to enforce covenants attached to movable property, into questions about restraints on alienation, and into the simple problem that a later buyer who never saw the agreement is not bound by it.
The realistic uses are narrower and still worth having: a right of first refusal, a notification obligation, a share of profit on an early flip, and a requirement that the work be offered back at a stated price. These sit alongside the other terms an artist negotiates with a gallery, addressed in consignment agreements and what happens if the dealer fails. Where a resale depends on the work being accepted as genuine, the separate problem described in authentication disputes can matter more to the artist's estate than any royalty would, and institutions selling from their own holdings answer to the different constraints set out in the rules on deaccessioning.
Points to carry away
- The resale right is an economic entitlement to a share of later sale prices, distinct from the moral rights of attribution and integrity.
- The Berne Convention makes the right optional and subject to reciprocity, so it is unavailable to authors from countries that do not grant it.
- European member states apply a sliding scale of rates on sales involving an art market professional, subject to a threshold and a ceiling per sale.
- There is no federal resale royalty in the United States, and no statute has been enacted despite repeated proposals.
- The California statute was held preempted by the federal Copyright Act for sales occurring after that Act took effect.
- Contractual resale provisions bind the original buyer but bind later purchasers only with difficulty.
Questions readers ask
Would an American artist collect a royalty on a sale in a country that has the right?
Generally not. The treaty conditions the entitlement on reciprocity: an author may claim the right only where the country of which the author is a national grants it, and only to the extent the country where protection is sought allows. Because the United States has no resale right, its nationals fall outside the reciprocity condition in most jurisdictions. Artists who hold dual nationality, or who are nationals of a state that does grant the right, may be treated differently, which makes nationality a practical question rather than a formality.
Why does the first sale doctrine matter to the argument?
The first sale doctrine says that the owner of a lawfully made copy may sell or otherwise dispose of that copy without the copyright owner's permission. A resale royalty conditions that disposition on a payment, which is why courts analyzing the California statute treated it as equivalent to a right within the general scope of copyright and therefore preempted. Proposals for a federal right avoid the problem by legislating within the copyright statute itself rather than around it, which is a matter for Congress rather than the courts.
Do royalties written into blockchain sales work?
They work where the transaction happens on a platform that enforces them, and they stop working where it does not. A royalty encoded in a token contract depends on the marketplace honoring the instruction; a transfer executed outside that marketplace, or on one that treats the royalty as optional, produces no payment. The arrangement is best understood as a platform policy rather than a property right, and it has the same weakness as any contractual resale term: it binds only those who agreed to it.
Sources
- World Intellectual Property Organization — Berne Convention for the Protection of Literary and Artistic WorksArticle 14ter states the optional resale right and its reciprocity condition.
- U.S. Copyright Office — Resale Royalties: An Updated AnalysisThe Office's study of the resale right, foreign practice and the options open to Congress.
- Cornell Legal Information Institute — 17 U.S.C. 301, Preemption With Respect to Other LawsThe provision under which state rights equivalent to copyright are displaced.
- Cornell Legal Information Institute — 17 U.S.C. 109, Limitations on Exclusive Rights: Effect of Transfer of Particular CopyThe first sale doctrine that a resale royalty is said to burden.
- California Legislative Information — Civil Code 986, Resale RoyaltyThe text of the state resale royalty statute, its rate, threshold and conditions.
- Cornell Legal Information Institute — 17 U.S.C. 106A, Rights of Certain Authors to Attribution and IntegrityThe moral rights provision often confused with an economic resale entitlement.
Justice Partners Journal is a publication, not a law firm. This article states general rules and cites its sources; it is not advice about any particular case, and the law differs by state and changes over time.
