Lobbyists Hired to Fight American Artist Royalty Act

The NY Times has an interesting article on the American Royalties Too Act and Sotheby's and Christie's who have already spent nearly $1 million on lobbyists to oppose the bill.  The article states many do not believe the bill will pass, but the big auction houses are taking no chances.  In addition, the article points out that beyond the auction house opposition, museums as well as sellers too oppose the legislation.

The NY Times reports (follow the source link for the complete article)
Lawyers for Sotheby’s auction house paid an unusual visit to a few lawmakers on Capitol Hill this month and brought along some high-powered lobbying muscle. They had come to complain about a new bill that even some supporters acknowledge faces a difficult road in this divided Congress: a proposal to give visual artists — or their estates — a cut of the profits when their work is resold at public auction.

Despite the long odds, Sotheby’s and Christie’s have spent about $1 million in the last couple of years to hire well-known legal and lobbying talent in Washington such as Paul D. Clement, a solicitor general under President George W. Bush, and the Podesta Group, run by the Democratic super-lobbyist Tony Podesta, whose brother, John D. Podesta, recently joined the Obama administration as a top aide.

“We’re taking it seriously, even though we don’t think it’s going to pass,” said Jane A. Levine, Sotheby’s director of worldwide compliance.

Art world deal making typically doesn’t involve Congress, so elite auction houses have not had much cause to spend time — or money — lobbying Capitol Hill. And in this case, the effort might seem outsize — a drone firing on a beetle — given that a version of the bill introduced in December 2011 by Representative Jerrold Nadler, Democrat of New York, and former Senator Herbert Kohl, Democrat of Wisconsin, failed to attract a single co-sponsor. But a few things have changed since then. One is that Mr. Nadler is now the ranking Democrat on the courts, intellectual property and Internet subcommittee of the House Judiciary Committee, which has jurisdiction. A second is that the United States Copyright Office issued a report in December that backed off its longtime opposition to the idea of resale royalties. The report noted that in the past 20 years, dozens of countries around the world have introduced some version of resale royalties, known by the French phrase droit de suite.

Lobbying for resale royalties by organizations that license and monitor artist copyrights is what helped resuscitate the long-dormant issue a few years ago. Federal lobbying reports show that in the two years leading up to the introduction of the 2011 bill, the Visual Artists Rights Coalition and the Artists Rights Society spent $280,000 on lobbyists like Bruce Lehman, former commissioner of the United States Patent and Trademark Office, and John Weinfurter, a former congressional staff member.

“In the past, visual artists have not been able to get their nose under the tent,” Mr. Lehman said of the political process. The two lobbyists are continuing to push for the latest version of the bill, introduced last month in the House by Mr. Nadler and in the Senate by two Democrats, Edward J. Markey of Massachusetts, and Tammy Baldwin of Wisconsin, who took over Mr. Kohl’s seat. (The coalition spent $176,000 on lobbyists in 2012 and 2013.)

Mr. Weinfurter said he is optimistic about the bill. Representative Louise M. Slaughter, a New York Democrat and a chairwoman of the Congressional Arts Caucus, has signed on as a sponsor and he is meeting Monday, Mr. Weinfurter said, with a Senate Republican who he hopes will join her. “We intend to do a full-court press,” he said.

As the art market has become a high-priced playground for billionaires and hedge-fund moguls, interest in resale royalties has grown. A few celebrity artists have shared in the tremendous growth in wealth, but most — even those whose work may now command millions of dollars — don’t benefit if prices increase after the initial sale.

To alter that, Mr. Nadler introduced what he has called the American Royalties Too Act. “To me, the bill is a question of fundamental fairness,” Mr. Nadler said.

Sellers, museums and auction houses have generally opposed resale royalties, which they view as an added tax that raises the cost of doing business and, in the long run, would dampen prices. California was the only state that had a resale royalty law, but a state court struck it down as unconstitutional in 2012, ruling that the statute was interfering in an issue under federal jurisdiction. The case is now being reviewed by the United States Court of Appeals for the Ninth Circuit.

Despite the jaw-dropping prices for some works of art, Christie’s and Sotheby’s have had trouble widening their profit margins in recent years, partly because of incentives they’ve given to big-ticket sellers to win their business. The auction houses worry that the proposed royalty bill would encourage more sellers to abandon public auctions for private deals.
Source: The NY Times

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