Indian artists are entitled to royalties from resale of their works. Why don’t they get them?

Since 1994, Indian artists and their heirs have had a right to benefit from resales of the artists’ works. Very few artists are aware of this provision in the Indian law, which has lain dormant in the books for 24 years. That might be about to change.

Last week, Scroll.in published an article about royalties from resale, but the piece failed to mention Section 53A of the Copyright Act, which deals with the matter. The article led with the example of Tyeb Mehta, whose canvases sold for millions in his last years, but who did not profit directly from those auctions because the paintings were sourced from collectors rather than the artist himself. As it happens, not only did Mehta have a right to a share of those record-setting prices before his death in 2009, his heirs stand to benefit from current sales like the Saffronart auction of June 15, 2018 in which Mehta’s Kali was purchased by an anonymous buyer for over Rs 26 crore.

Section 53A

I first learned about Section 53A in 2006 through Achal Prabhala, a friend and former colleague who was working with Lawrence Liang of the Alternative Law Forum on proposed amendments to India’s copyright law. Many of the changes they suggested were subsequently accepted. The art market was then in a crazed phase and, for the first time in India’s history, secondary sales (further sales after the initial transaction involving the artist) promised to secure a substantial income for artists in high echelons. Achal, having come across the resale rights clause in the course of his work, asked me to alert members of the art community to it, which I did through an email to a group of leading artists, dealers, and auction house heads. To my surprise, the artists marked on the mail responded tepidly to the revelation when they responded at all, and I dropped the matter.

Achal contacted me again last week following the Scroll.in article, noting despondently that the Indian art world appeared as ignorant about the issue in 2018 as it had been in 2006. Wanting to get up to speed on the current status of Section 53A, I turned to Shreyas Narla, a legal researcher I met two years ago when he enrolled in an art history course for which I was on the faculty. Conceived by Tasneem Mehta of the Bhau Daji Lad Museum, the year-long diploma course attracts graduates from diverse fields who bring their own expertise to bear on the history of art. In his end-of-term research paper, Shreyas produced an analysis of Nandalal Bose’s illustrations of the original copies of the Indian Constitution which ranks among the best such assignments I have encountered.

When I emailed him about the resale rights matter, he agreed to read up on it and give me a legal perspective. What follows is a summary of his detailed responses to my questions.

1. The lowest sale price at which resale rights begin to apply has been fixed by Section 53A at Rs 10,000, and the amount due to artists and heirs is capped at 10%, but no decision has been made on how much that percentage will be.
2. If the government decides to codify precisely what is due to artists and heirs for particular transactions, the law will have to be amended and the amendment passed by Parliament.
3. In the absence of such an amendment, the Intellectual Property Appellate Board has the power to set the rate of royalties.
4. Given the ambiguity of the language in Section 53A, the Appellate Board could either evolve a set of rules applicable to all secondary sales, or deal with them case by case. The latter would be chaotic but is possible thanks to the lack of clarity in the law.
5. The Appellate Board is the only competent authority, and no recourse is available through the courts for any parties to a dispute.
6. Copyright is defined as lasting 60 years from the death of the artist, but also, in the case of a photograph, as 60 years from when it is first published.  
7. The limitation law allows complaints to be lodged for a maximum of three years after a violation. Artists or their heirs applying for royalties in July 2018 can do so for sales that took place in or after July 2015.
8. Section 63 of the Copyright Act, which deals with penalties for infringements, carves out an exception for Section 53A – that no dealer or auction house is liable to be punished for withholding royalties. As a consequence, dealers have an incentive to wait for the Appellate Board to rule on complaints rather than disbursing royalties promptly.  

Presumably, the Appellate Board can create a form of punishment by prescribing the highest allowable cut of the sale price where it sees deliberate delays, and lower rates for standard sales. Before any of that happens, however, the law needs to be tested by an artist or heir knocking on the Appellate Board’s door demanding restitution. The time is now propitious. It took decades from the framing of the Copyright Act in 1957 to the mooting of a permanent Copyright Board in 2012. The constitution of that panel was enmeshed in controversies, and before things were sorted out, the Copyright Board was merged with the Appellate Board. After months in limbo, the Appellate Board finally appears to be functional.

Global experience

In judging what a fair rate for royalties would be, it is helpful to look at the global experience of resale rights, also known as droit de suite. The practice originated in France and has been enshrined in the Berne Convention for the Protection of Literary and Artistic Works. Around 180 countries have signed the Berne Convention, and are obliged to ensure at some point that artists are paid resale royalties, but few have already done so. The European Union has evolved a uniform rate for royalties, which is degressive, or arranged on a sliding scale. It starts at 4% for the first €50,000, falls to 3% between €50,000 and €200,000, 1% between €200,000 and €350,000, 0.5% between €350,000 and €500,000, and finally 0.25% above €500,000, with a cap of €12,500. Australia adopted a flat 5% resale royalty in 2010, and China has been toying with a law for years but has not codified it yet. The United States, the world’s largest market, has taken no steps towards implementing droit de suite.

I believe India’s Appellate Board should mimic the European Union’s degressive rates, because charging a flat 10% on high-value transactions will be a market killer. It will cause sales to be offshored to places such as the United States and Hong Kong which make no provision for droit de suite. With low-value transactions, a different problem comes into play, that of administration costs. In order for resale royalties to work smoothly nationwide, a body needs to be established to collect from sellers and distribute to claimants. The government is unlikely to build a transparent, corruption-free agency, while a private organisation could charge steep commissions for its services, rendering them worthless for artists who sell at relatively low prices.

On the positive side, if the Appellate Board works in earnest, it can provide succour to artists far more quickly than the labyrinth of the Indian court system ever could.