The Swiss Copyright Act (SCA) is currently under revision. On 11^th December 2015, the Swiss Federal Council published the draft legislation and the explanatory notes. The proposed introduction of a lending right for art works in art. 13 para. 1 SCA caused a stir throughout the art market.

The applicable law:

Up until now, anyone who rents or otherwise makes available for a fee copies of literary or artistic works generally owes a remuneration to the author (art. 13 para. 1 SCA). The author’s right for remuneration expires 70 years after his or her death (art. 29 para. 3 SCA). For artworks, the assertion and collection of remuneration claims are exclusively performed by ProLitteris, an institution subject to federal supervision (art. 40 para. 1 SCA).

The proposed amendment:

The Swiss Federal Council proposes to extend the lending right payments to non-commercial lending activities. According to the new art. 13 para. 1 SCA “anyone who rents, lends or otherwise makes available free of charge copies of literary or artistic works as a principal or ancillary activity, owes a remuneration to the author.“

The SCA does not define the term ‘principal and ancillary activity’. According to the explanatory notes, the ‘occasional lending to family members and friends’ is specifically excluded. Conversely, all other forms of lending are subject to remuneration. The provision would therefore apply to the various foundations, art associations, private collectors and art dealers which today lend artworks to Swiss museums free of charge.

Since the proposed art. 13 para. 1 SCA does not specify a duration threshold, this would mean that both loans for temporary exhibitions as well as permanent loans would be subject to remuneration.

Reactions from the art market:

On 31^st March 2016, the consultation period, during which interested parties had the opportunity to comment on the proposed SCA revision, came to an end. The Association of Swiss Museums, ICOM Switzerland, the Swiss Art Market Association as well as Cultura, the umbrella association for various Swiss cultural institutions, strongly rejected the introduction of a lending right. They fear negative consequences for the lending of artworks in Switzerland as well as the international activities of Swiss lenders.

They rightly criticise the Swiss Federal Council for justifying its proposal by reference to the proposed lending scheme for literary works without taking into account the particularities of the art market. It is argued that the lending of a book is a direct substitute of a purchase and therefore, the author ought to be compensated. While there is validity to this argument, it does not apply to artworks. Unlike books, artworks on loan to museums are unique and therefore the loan of an artwork does not exclude the sale of the same or any other artwork. On the contrary, the exhibition of artworks in a museum or other forms of exhibition is a great marketing opportunity for artists. Opponents fear that the introduction of a lending right will lead to fewer exhibitions of living artists and artists who’s oeuvre falls under the 70-year copyright protection.

Furthermore, critics point out that the introduction of a lending right would lead to significant costs and an increased administrative burden. Swiss museums heavily depend on loans in order to create differentiated and exciting exhibitions. A recent example includes the temporary exhibition ‘Chinese Whispers’ at the Kunstmuseum Bern, which showcases works from Uli Sigg, one of the world’s leading collectors of contemporary Chinese art. Another example includes the artworks of the E.G. Bührle Foundation, which will be on permanent loan to the Kunsthaus Zürich from the year 2020 onwards. They will be displayed in the museum’s newly built exhibition rooms. According to new art. 13 para. 1 SCA, the lending payments would fall upon the lender. However, in practice it is likely that such payment will be borne by the borrowing institution as is common practice for shipping and insurance costs. Many museums already have a difficult time finding the financial resources to cover the costs associated with loans. In an environment of stretched public finances, many museums are unlikely to get a budget increase. Hence, the additional costs of lending rights would negatively impact the quality and quantity of exhibitions.

Finally, the opponents point out that many Swiss museums not only act as borrowers but also lend works from their own collections to other museums world-wide. They fear that the increased lending costs would reduce the international lending activity into Switzerland. Even ProLitteris suggests that loans between ‘museums and similar institutions’ should be exempted from such payments.

As criticism of the new proposal mounts, we will see if it will have the effect that the museum sector desires: to do away with the proposal once and for all.

It’s worth noting that there is a very unique ‘exhibition right’ in Canada which benefits artists and applies specifically to museums and galleries who want to publicly exhibit, other than for sale or hire, artworks created after 1988 (see subsection 3(1)(g) of the Canadian Copyright Act (CCA)). The CCA has placed the burden squarely on the museum sector, who have had to cover the costs since the law changed in 1988. As a ‘public exhibition right’ it is in some ways quite different from a ‘lending right’, but part of the effect, at least for museums, can be similar – especially as both rights cover non-commercial lending/displaying of artworks.