The Difference between US and European Intellectual Property Rights for the Visual Arts Widens, as the US Appeal Court Rules
Originating as an extension of French copyright law in the 1920s, an artist’s resale rights, or droit de suite, is now a common feature of an artist’s moral right across Europe. Such right affords artists royalty payments upon subsequent sales of original works of art. In stark contrast, however, the US codified what is known as the First Sale Doctrine, whereby the copyright holder’s right to control reproductions and displays of an artwork does not extend to the original work itself, thus limiting absolute ownership and pre-empting the artist from having an interest in the resale of such work. This doctrine was codified in the federal Copyright Act 1976 (FCA).
Only one year later, in 1977, California attempted to challenge the First Sale Doctrine by enacting the California Resale Royalties Act (CRRA) which granted artists an unwaivable right to 5% of the proceeds of any resale of their artwork in specified circumstances, such right being akin to that afforded to artists across Europe.
In 2011, several artists and their successors sought recovery of these royalties from Sotheby’s, Christie’s and eBay. After a seven-year legal battle, with the Ninth Circuit Court of Appeals (“Ninth Circuit”) having already limited the resale right to sales only within California in 2015, the case came to the Ninth Circuit once more. In its recent ruling, the Ninth Circuit has limited such rights even further by holding that the FCA pre-empts them in their entirety. However, the predecessor to the FCA (the Copyright Act 1909) did not pre-empt such rights. The court found that the artists did have a right, but it was limited to a one-year period: from 1 January 1977 when the CRRA came into force until 1 January 1978 when the FCA became effective.
This decision highlights the distinctions between the US and the European attitudes towards royalties, despite the US becoming a signatory to the Berne Convention, which recognises an artist’s right to an interest in subsequent sales of artworks, back in 1989.
It is thought that the royalty right provided by the CRRA has been neglected by many of California’s galleries and auction houses. However, this decision will affect those artists who have been actively collecting their royalties, and throws into question any past or future attempts by either the federal government or other states to enact legislation granting royalty rights across the US.
The Kittel Principle - Sweet Sixteen
The following is an article written by David Bedenham about HMRC’s wide-ranging application of the ‘Kittel principle’. The current focus appears to very much be on the labour supply industry and the allegation of ‘Mini Umbrella Company Fraud’ (or ‘MUC Fraud’). This article highlights the need for taxpayers to get specialist advice at an early stage when faced with a Kittel decision. If you have any queries about Kittel-related issues or similar denials of input VAT or assessments to VAT, please contact Iain MacWhannell (email@example.com).
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Tax note: Financial Institution Notices (FIN)
Understanding paragraph 4A of Schedule 36 to the Finance Act (“FA”)
SHORT CASE REPORT FTT DECISION – EXCISE DUTY - Cantina Levorato SRL v. HMRC  UKFTT 461 (TC)
Short Case Report on FTT Decision Excise Duty
Fast Track for Register of Overseas Entities Owning UK Property
The invasion of Ukraine has prompted the UK government to speedily publish the draft legislation for the Economic Crime (Transparency and Enforcement) Bill 2022 which requires foreign entities that acquire UK property (freehold interests or leases granted for more than 7 years) to register with Companies House and declare details of their beneficial ownership.