Does the secondary sales royalty apply in addition to statutory law secondary sales royalties for commercial art sales?
Select jurisdiction
Germany
Yes, it does. In some occasions of commercial transactions, the sale of creative works
will trigger a financial share payable to the creator (up to 4% of the sales price). This is
based on statutory law: German Copyright Code, Sec. 26.
Secondary sales royalties in NFT projects are a contractual commitment payable by the
NFT seller in case provided in the contractual NFT terms and conditions. It may come
on top of statutory law requirements and cannot be off-set.
France
Yes, secondary sales royalty applies in addition to statutory law secondary sales royalties for
commercial art sales.
In France, secondary sales for commercial art sales are subject to a legal royalty regime (known as
“droit de suite”). According to the French Intellectual Property Code, the collection of this legal resale right is subject to a certain number of cumulative conditions:
• a professional of the art market must be involved in the resale of the work (as seller, buyer or
intermediary),
• the work – unique or in a limited number of copies – must be original and have been created
by the artist himself or under his responsibility (for the plastic creations on audiovisual or
digital support the maximum number of copies is fixed at twelve);
• the sale must be carried on French territory or be subject to the value added tax;
• the sale price of the work must be higher than 750 euros, and when the sale price is less than
10 000 euros, the resale right does not apply if the seller has acquired the work directly from
the artist less than three years before the sale.
The French Superior Council of Literary and Artistic Property (“CSPLA”)10 considers that the legal
resale right can apply to NFTs if the legal conditions mentioned above are met, and in particular if
the digital files associated with the NFTs are created in a number limited to twelve copies or less
(although the CSPLA points out the difficulty of assessing the number of digital files).
Nevertheless, the legal resale right and the conventional royalties on secondary sales are not
equivalent, since:
• The legal resale right can only benefit to the author of the artwork, and it is an inalienable
right (it cannot be transferred to any third party); whereas the NFT royalty can benefit to the
creator of the NFT (which is not necessarily the same person as the author of the artwork) and
can be assigned;
• The conventional royalties have a much wider scope than the legal resale right, since they
apply to all resales of the NFTs, regardless of whether the legal conditions are met (number
of copies, originality of the work, quality of the participants, sale price);
• From a practical standpoint, legal resale right is set to be paid by the seller; whereas
conventional royalties are usually paid by the buyer.
Thus, the conventional royalties cannot replace the legal resale right: the resale right shall apply so
far as the legal conditions are met. Consequently, the legal resale right and the conventional
royalties can coexist and therefore be cumulated. This is the point of view of the CSPLA.
Although we did not come across such situation yet, a smart contract may be coded to integrate the
automatic payment of the legal resale right instead of a conventional royalty. The smart contract
would have to take into account all legal conditions and consequently become a tool for implementing
the legal resale right. Nevertheless, such code maybe delicate given the complexity of the legal
conditions, and the fact that they vary from a country to another.
