II 115th CONGRESS 2d Session S. 3488 IN THE SENATE OF THE UNITED STATES September 25, 2018 Mr. Hatch (for himself and Mr. Leahy ) introduced the following bill; which was read twice and referred to the Committee on the Judiciary A BILL To amend title 17, United States Code, to secure the rights of visual artists to copyright, to provide for resale royalties, and for other purposes.

1. Short title This Act may be cited as the American Royalties Too Act of 2018 . 2. Definition Section 101 of title 17, United States Code, is amended by inserting after the definition of architectural work the following: An auction is a public sale at which a copy of a work of visual art is sold to the highest bidder and which is run by a person that sold not less than $1,000,000 of copies of works of visual art during the previous year. A person that conducts all sales exclusively online does not conduct an ‘auction’ for purposes of this title. . 3. Exclusive rights (a) Exclusive rights in copyrighted works Section 106 of title 17, United States Code, is amended— (1) in paragraph (5), by striking and at the end; (2) in paragraph (6), by striking the period at the end and inserting ; and ; and (3) by adding at the end the following: (7) in the case of a work of visual art, to collect a royalty for the sale of a copy of the work if the copy is sold by a person other than the author of the work or, if applicable, the author's successor as copyright owner for a price of not less than $5,000 as the result of an auction. . (b) Collection of resale royalty for visual art (1) In general 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) the term price means the aggregate of all installments paid in cash or in-kind by or on behalf of a purchaser for a copy of a work of visual art sold as the result of the auction of that copy; and (2) the term sale means a transfer of ownership of a copy of a work of visual art as the result of the auction of that copy. (b) Collection generally The collection of a royalty under section 106(7) shall be conducted in accordance with this section. (c) Calculation of royalty (1) In general The royalty shall be an amount equal to the lesser of— (A) 5 percent of the price of the copy of the work of visual art as sold at auction; or (B) $35,000. (2) Adjustment of amount In 2019 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 2017 for the CPI for calendar year 2016 and all that follows in clause (ii) of that section. (3) Joint works In the case of a work of visual art that is a joint work, each author of the work or, if applicable, author's successor as copyright owner shall be entitled to an equal share of any royalty for the sale of a copy of the work. (d) Collection and payment of royalty (1) Collection Not later than 90 days after the date on which the final payment of the price of the copy of the work is made, the person that conducts the auction shall pay the resale royalty calculated under subsection (c) to a visual artists’ copyright collecting society designated by the Register of Copyrights under subsection (h). (2) Distribution Not fewer than 4 times each year, a visual artists’ copyright collecting society to which payments are made under paragraph (1) shall distribute to the author or the author's successor as copyright owner an amount equal to the difference between— (A) all royalties attributable to the sales of copies of works by the author; and (B) the reasonable administrative expenses of the collecting society as determined by regulations issued under subsection (h). (3) Unclaimed royalties (A) Escrow Subject to subparagraph (B), if, after a good faith effort, a visual artists’ copyright collecting society is not able to make a timely distribution under paragraph (2) because the copyright collecting society is unable to locate the author or author’s successor as copyright owner, the copyright collecting society shall— (i) deposit the amount that would have been distributed to the author or author's successor as copyright owner into an interest-bearing escrow account until the author or author’s successor as copyright owner has been identified and located; and (ii) upon locating the author or author's successor as copyright owner, distribute the amount described in clause (i), including interest, to the author or author’s successor as copyright owner. (B) Transfer If the author or author’s successor as copyright owner of a work of visual art is not identified and located during the 3-year period beginning on the date on which the sale of the copy of the work of visual art occurs, the amount that would have been distributed to the author or author's successor as copyright owner under paragraph (2) shall be transferred to the Copyright Office for the purposes of developing and conducting programs, symposia, and education initiatives in support of artists in the United States. (4) Administration A visual artists’ copyright collecting society shall administer all amounts collected under this subsection in accordance with generally accepted accounting principles. (e) Failure To pay royalty (1) Right of action Except as provided in paragraph (2), if a person fails to pay or distribute a royalty in accordance with subsection (d), the person to which the royalty is due may bring an action in an appropriate district court of the United States to recover either— (A) the amount of the royalty; or (B) statutory damages in an amount available under section 504(c). (2) Exception (A) In general Except as provided in subparagraph (B), a person shall not be liable in an action brought against the person under paragraph (1) if, not later than 60 days after the date on which the royalty was due, the person pays or distributes an amount equal to the sum of— (i) the royalty due; and (ii) a late fee determined in accordance with appropriate regulations as may be promulgated by the Register of Copyrights. (B) Willful or repeated failure to pay Subparagraph (A) shall not apply if the failure of the person to pay or distribute a royalty in accordance with subsection (d) was willful or repeated. (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 (d). (f) Transfer of right The right to collect a royalty under this section may not be sold, assigned, or otherwise transferred or waived except as provided in section 201. (g) Eligibility To receive royalty payment A visual artists' copyright collecting society that collects a royalty under this section for the sale of a copy of a work of visual art shall distribute the royalty to— (1) any author of a 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 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 as copyright owner of an author described in paragraph (1). (h) Regulations The Register of Copyrights shall issue regulations governing visual artists’ copyright collecting societies described in this section, including regulations that— (1) establish a process by which a person is determined to be and designated as a visual artists’ copyright collecting society, which process shall— (A) require a visual artists’ copyright collecting society authorized to administer royalty collections and distributions under this title to— (i) have prior experience in licensing the copyrights of authors of works of visual art in the United States; or (ii) have been authorized by not fewer than 500 authors of works of visual art, either directly or through reciprocal agreements with foreign collecting societies, to license the rights granted under section 106; and (B) provide that a person shall no longer be designated as a visual artists’ copyright collecting society if, during a period of not less than 5 years that begins after the date on which the person is designated as a visual artists’ copyright collecting society, the person does not distribute directly to each author, or to the successor as copyright owner of each author, the amount of the royalties required to be distributed under subsection (d); (2) determine a reasonable amount of administrative expenses that a visual artists’ copyright collecting society may deduct from the royalties payable to an author of a work of visual art under subsection (d)(2); and (3) establish a process by which— (A) not less frequently than annually, a visual artists’ copyright collecting society may obtain from any person that conducts auctions a list of each copy of a work of visual art sold in those auctions that is by an author represented by the collecting society; and (B) an author of a work of visual art or, if applicable, an author's successor as copyright owner may obtain from a visual artists’ copyright collecting society any information in the possession of the collecting society that relates to a sale of a copy of a work of visual art by the author, including the amount of any royalty paid to the collecting society on behalf of the author or the author's successor as copyright owner. . (2) 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. . 4. Notice of copyright Section 401 of title 17, United States Code, is amended by adding at the end the following: (e) Non-Applicability to works of visual art The provisions of this section shall not apply to a work of visual art. . 5. Study required Not later than 5 years after the date of enactment of this Act, the Register of Copyrights shall— (1) conduct a study on— (A) the effects, if any, of the implementation of this Act, and the amendments made by this Act, on the art market in the United States; and (B) whether the provisions of this Act, and the amendments made by this Act, should be expanded to cover dealers, galleries, or other professionals engaged in the sale of copies of works of visual art; and (2) submit to the Committee on the Judiciary of the Senate and the Committee on the Judiciary of the House of Representatives a report on the study conducted under paragraph (1), including any recommendations for legislation. 6. Effective date This Act and the amendments made by this Act shall take effect on the date that is 1 year after the date of enactment of this Act.