California Western School of Law

Brown, Richard Nicholas

NONUSE CANCELLATION OF USED
TRADEMARKS IN VENEZUELA
RICHARD NICHOLAS BROWN*
In Venezuela, it is possible for registered trademarks in large
scale commercial use to be cancelled for nonuse. Conversely, a
Venezuelan trademark registration that has never been used can
survive an attack for nonuse by adhering to the letter of Venezue-
lan law.
Venezuelan courts aim for compliance with existing law and do
not alter the law to provide for commercial realities. In Mobil
Tankers Co., S.A. v. Mene Grande Oil Co.,' the U.S. Court of Ap-
peals for the Third Circuit examined the procedures applied in
Venezuelan Civil Courts while considering whether or not to retain
jurisdiction over an admiralty suit. The Court concluded that
the more important question is whether the relinquishment of ju-
risdiction would best serve the ends of justice .... However, the
relinquishment of jurisdiction could result in serious detriment to
Mobil's and Socony's causes of action. It would relegate the libel-
lants to a foreign forum in which the procedural remedies are far
less conducive to the fair administration of justice than those
available under our admiralty rules. The mode of trial, the lack of
adequate pre-trial procedures, and the limitation on the manner
in which expert testimony may be offered do not comport with
our concepts of fairness.'
Venezuelan attorneys believe that the Court of Appeals was wrong
in its analysis, but the case illustrates the differences between U.S.
and Venezuelan court procedures. Additionally, it emphasizes the
point that it is better to try to comply with Venezuelan law to avoid
litigation.
The current Venezuelan Industrial Property Law of September
2, 1955, contains its nonuse provision in Article 36(d): "The regis-
tration of a trademark shall be without effect . . .(d) when it ex-
* Of counsel to the law firm of Baker & McKenzie in Caracas, Venezuela; formerly
Pharmaceutical Trademark Counsel to Bristol Myers Company; chairman International Ad-
visory Committee of the USTA; former chairman Foreign Trademark Committee of the
USTA; J.D., Columbia University School of Law.
1. 363 F.2d 611 (3d Cir. 1966).
2. Id. at 614.
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Brown: Nonuse Cancellation of Used Trademarks in Venezuela
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CALIFORNIA WESTERN INTERNATIONAL LAW JOURNAL
pires for lack of use for two consecutive years." Article 36(d) is
unusual because of the accepted interpretation that a two year pe-
riod of nonuse is not curable by subsequent use. This interpretation
stems from the meaning of the word "caduque" (expire) in Article
36(d) and from cases such as Carlo Erba S.A. v. Farina S.A.'
The Carlo Erba case dealt with a petition filed on August 12,
1981, to cancel the March 5, 1974, registration of the IBUSPRIN
trademark covering pharmaceuticals on the grounds of nonuse. The
Registrar stated that the burden of proving lack of use of the trade-
mark was on the petitioner. The petitioner placed in evidence a let-
ter from the Ministry of Health dated February 10, 1981, stating
that a health license had only recently been requested for "IBUS-
PRIN". The Registrar ruled that because no health license had
been granted during the eight years that had elapsed since 1974
when the IBUSPRIN registration was issued, and since the IBUS-
PRIN registration covered pharmaceutical products which needed
health licenses before they could lawfully be distributed, the IBUS-
PRIN trademark could not have been legally used in Venezuela.
The IBUSPRIN trademark was accordingly declared to have ex-
pired for lack of use under the terms of Article 36(d) and was or-
dered cancelled.
In Aida Prato Romero v. The Seven-Up Company," the Regis-
trar issued a decision (later reversed on other grounds) cancelling
the SEVEN-UP trademark for lack of use. The SEVEN-UP trade-
mark was registered under trademark number 13082 on July 23,
1941, by the Seven-Up Company to cover beverages. The Seven-Up
Company licensed the trademark to Industrial Embotelladora de
Bebidas C.A. in 1956, but failed to register the license at the
Trademark Office. When Aida Prato Romero petitioned to cancel
the Seven-Up trademark, Embotelladora Green Sport de Orient
C.A. was bottling Seven-Up and was also the owner of the health
license for the beverage. In the decision cancelling the SEVEN-UP
trademark for nonuse, the Registrar held that since there was no
record of any license of use from the Seven-up Company to Green
Sport, the use by Green Sport did not inure to the benefit of the
Seven-Up Company, even though Green Sport owned the health
license. Since there was no health license in the name of the regis-
tered owner, there was no legal use of the trademark in Venezuela.
The cases clearly demonstrate that a) the petitioner in a nonuse
3. Boletin No. 280, p. 105.
4. Boletin No. 209, p. 284.
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NONUSE CANCELLATION-VENEZUELA
cancellation action in Venezuela has the burden of proof; and b)
the absence of a health license required to distribute a particular
product is considered prima facie evidence of nonuse.
In order for the use of a trademark to benefit the registered
owner and protect the trademark registration from a cancellation
petition under Article 36(d), the use must be made directly by the
registered owner. If the registered owner is a foreigner, legal use
would mean exportation to Venezuela of products bearing the
trademark in question. Proof of such legal use would include origi-
nal, signed "accepted" invoices or original customs receipts. If a
health license or other permit is needed, the health license must be
in the same name as the owner of the Venezuelan trademark. If use
is made by a licensee, the license must be recorded both at the
Office of the Superintendent of Foreign Investments ("SIEX")
(when the registered owner is not a Venezuelan company) and at
the Trademark Office. It is important to note that only public or
private documents as defined by Article 124 of the Civil Code are
admissible as evidence and that steps must be taken to obtain and
preserve such documents.
Where government authorization is necessary to distribute a
product, such as pharmaceuticals, pesticides, beverages, foods and
most cosmetics and perfumes, the trademark owner must be certain
that the authorization is either in its name or in the name of the
recorded licensee. The owner must also ensure that the license was
obtained within two years of the trademark's initial registration.
Lack of the license or existence of a license which is not attributa-
ble to the registered owner (either directly or through a recorded
license) "constitutes proof of nonuse as a matter of law".
In those instances where no government approval is required, the
burden of proving nonuse is extremely difficult to sustain because of
its negative nature. This burden may be impossible to overcome
since discovery of the registrant's records is extremely limited. Con-
sequently, if the trademark is for a class of goods that does not
require a government permit, an unused trademark may be impos-
sible to cancel for nonuse even where there is no legal use. When
filing trademark applications in Venezuela, it is advisable to keep
this fact in mind and attempt to obtain coverage for specific goods
which do not require government approval.
The fact that Venezuela is a member of the Andean Common
5. See Trademark User Requirements in Latin America, 74 TMR 142.
19871
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Market carries additional consequences for foreign trademark own-
ers. It creates the possibility of another dangerous nonuse situation
if the plaintiff succeeds in shifting the burden of proof to the regis-
trant. Decision 24 of the Andean PactO which became effective in
Venezuela on January 1, 1974, established a common "regime" for
foreign investment, trademarks, patents and licenses and the pay-
ments of royalties. Trademark and patent licenses are directly af-
fected by Decision 24 which also has an impact on the question of
use.
Article 18 of Decision 24 provides that any trademark license
must be examined, approved by and recorded with the "competent
authority." In Venezuela, the competent authority is SIEX which
was established in 1974 to regulate and administer Decision 24.
The regulations of Decision 24 provide that to have effect in Ven-
ezuela, any agreement must be authorized by and registered with
SIEX if it has as its objective "to use or otherwise exploit the
trademarks and the distribution of products identified by trade-
marks owned by foreigners." As a consequence of Article 62, the
use of a trademark in Venezuela by a licensee will not inure to the
benefit of the trademark owner unless SIEX has approved and re-
corded a license. This conclusion is a matter of Venezuelan law,
such that actual use by a person under an executed but unrecorded
license will not overcome that result. Furthermore, as indicated
above, subsequent use does not revive a registration that has ex-
pired for lack of legal use under Article 36(d). Consequently, re-
cording a license at SIEX after the nonuse will not revive a void
registration. For example, the REVENESCENCE registration of
September 29, 1956, was ordered cancelled by Decision No. 2917
of July 13, 1984, despite the fact that a license had been recorded
at SIEX on March 12, 1982.
The records of SIEX are not officially open to public inspection,
but it is relatively easy and inexpensive to determine whether a
trademark license was recorded. If a hostile third party discovers
that a foreign registrant has not recorded a license with SIEX, the
trademark can be attacked for nonuse because subsequent use does
not cure previous nonuse.
In addition to the Andean Pact and SIEX rules, Article 4 of the
Industrial Property Law states that licenses must be recorded at
the Trademark Office in order for use by the licensee to inure to
6. The text of the Adean Pact can be found at 8 I.L.M. 910 (1969).
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NONUSE CANCELLATION-VENEZUELA
the benefit of the trademark owner. To record a license at the
Trademark Office, it is necessary to first record that license at
SIEX. Therefore, if licenses are not recorded at both SIEX and the
Trademark Office, the trademark can be attacked for nonuse after
two years. Since subsequent legal use does not cure the defect
caused by nonuse, it may be ineffectual to register a license if the
registrations are over two years old. Several cases of cancellation
alleging failure to record license agreements and consequent nonuse
are presently being litigated in Venezuela, although no decisions
have been issued. Some of these cases may eventually be decided
against foreign trademark owners who did not record their licenses
with SIEX as required.
Under present law, the following options are available to foreign
trademark owners to resist attempts to cancel their registered
trademarks for nonuse:
1) Produce evidence of use by the foreign trademark owner by
showing that the product was imported into Venezuela. This ap-
proach is risky because it can be very difficult to find proper evi-
dence of use where existing registrations are concerned. This ap-
proach is only advisable if the foreign trademark owner could
obtain the necessary "accepted" invoices showing the trademark in
question and if he could establish that the health licenses in the
name of the trademark owner had been in existence during the en-
tire registration period. The registrant in the REVENESCENCE
case followed this approach but failed in his efforts because no
health licenses had been obtained.
2) Rely on use by a licensee and reregister any void trademarks,
making certain that the proper licenses are recorded and health li-
censes are in the name of the trademark owner or recorded licen-
see. Failure to take all of these steps could lead to cancellation as
occurred in the SEVEN-UP case where the trademark was regis-
tered, health licenses had been obtained, but there was no license
between the trademark owner and the owner of the health license.
3) Refile whenever the registration approaches vulnerability, that
is, every two years, if only a few trademarks are involved. This is
less expensive than preparing and filing license agreements.
4) Adopt a wait and see attitude and accept the risks of potential
cancellation actions until it is determined if the draft acts will be
approved.
In conclusion, trademark owners need to be aware that Venezue-
lan law creates situations where a trademark which is being used
19871
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can be cancelled for nonuse, while a trademark not being used may
not be cancelled.
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English

Nonuse Cancellation of Used Trademarks in Venezuela

Friedman, Richard E.

Moore, John Norton

CALIFORNIA WESTERN
INTERNATIONAL LAW JOURNAL
VOLUME 18 WINTER 1987 NUMBER I
MEXICO AND THE UNITED STATES:
STRENGTHENING THE RELATIONSHIP
PREFACE
Richard E. Friedman* and John Norton Moore**
Mexico and the United States share the world's longest border
between a developed and developing nation. There is increasing re-
alization in the United States that the economic well-being and po-
litical stability of Mexico are important issues relating to the eco-
nomic well-being and national security of the United States.
Although a comprehensive negative political realignment of Mexico
is unlikely, were such a shift to occur it could alter the global stra-
tegic balance. Short of such a catastrophic political realignment,
Mexico and the United States also share a range of increasingly
important interdependencies. These include growing resource, trade
and financial relations, drug and weapons trafficking problems, im-
migration and refugee concerns, and hemispheric security. The se-
vere economic dislocations in the aftermath of the two oil crises of
the seventies, Mexico's still unresolved debt crisis, heightened
* Chairman, Standing Committee on Law and National Security of the American Bar
Association
** Walter L. Brown, Professor of Law, University of Virginia and formerly Chairman
of the Standing Committee on Law and National Security of the American Bar Association.
Although the committee is gratified by the diversity of views presented, it must note that
the views expressed are those of the authors, and do not reflect those of the Standing Com-
mittee on Law and National Security of the American Bar Association.
1
Friedman and Moore: Preface
Published by CWSL Scholarly Commons, 2015
CALIFORNIA WESTERN INTERNATIONAL LAW JOURNAL
American awareness of the drug problem, and the war in Central
America increasingly have drawn attention to the importance of
U.S.-Mexico relations.
In recognition of the expanding importance of U.S.-Mexico rela-
tions for U.S. national security, and with the hope of stimulating
broad discussion of the issues in both countries, the Standing Com-
mittee on Law and National Security of the American Bar Associ-
ation, in cooperation with California Western School of Law, spon-
sored a workshop entitled "Mexico and the United States:
Strengthening the Relationship." This workshop was held at Cali-
fornia Western in San Diego on February 6 and 7, 1987. The con-
ference included a blue-ribbon roster of participants from both
Mexico and the United States. It was one of the most important
national conferences on strengthening United States-Mexico rela-
tions held in recent years. The proceedings of the conference are
being published in this issue of the California Western Interna-
tional Law Journal in the interest of sharing the deliberations with
a broader audience.
This Conference is one in a series of National Security Work-
shops sponsored by the Standing Committee on Law and National
Security of the American Bar Association. The Standing Commit-
tee traces its lineage to the leadership of Justice Louis Powell of the
United States Supreme Court who recognized the importance of
the American Bar Association taking the lead in education on na-
tional security affairs. The Committee currently focuses on schol-
arly research and broad national education on the interrelationship
between law and national security. It is non-partisan and does not
take positions on issues independent of the American Bar
Association.
It is impossible to do justice to the important papers in these
proceedings in a short preface. However, a number of themes stand
out and deserve particular attention.
First, with respect to the general relationship between Mexico
and the United States, it was pointed out that both nations should
transcend the exaggerated sensitivities that discourage open and
candid discussion of the relationship. We should discuss Mexican
policy as fully and candidly as Americans debate European and
NATO policy. Friendship, above all, invokes a duty of candor and
concern as well as a genuine motivation to strengthen the relation-
ship. Less than complete candor and concern is a form of patroniz-
ing that is out of place in the relationship. Similarly, one of the
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PREFACE
senior statesmen at the conference, Professor Guillermo Floris
Margadant S., (the former Associate Dean of the Faculty of Law,
UNAM, Mexico City), urged that traumas from the past should be
set aside in relations between the two countries. Both nations are
inextricably bound together and must work together to actively
strengthen their relationship. Traumas from the past are no more
an appropriate basis for current policy than the American Revolu-
tionary War or Pearl Harbor would be bases for current American
policy in relations with England and Japan.
Second, the Conference reflected concern from both American
and Mexican participants about the current economic crises in
Mexico. There was general support for debt-equity swaps and Ma-
quiladora operations, as well as an important new proposal by Am-
bassador Abelardo L. Valdez for a free-trade and co-production
zone. Many participants, however, supported the view that lasting
economic improvement requires a revitalized private sector to pro-
mote more rapid economic growth. As one participant pointed out,
the underground Mexican economy may already account for as
much as 40% of the Gross National Product (GNP). The sugges-
tion that official figures may understate economic performance, is
good news. But the suggestion that governmental policies in the
past may have severely hampered the private sector is bad news. A
lasting solution to the debt crises, the provision of employment for
the expected large increase in the work force, enhanced foreign in-
vestment, and possibly even political stability itself may depend on
revitalizing the private sector.
Third, it was pointed out that the United States' and Mexico's
shared interests, as reflected in our common participation in the
Organization of American States (OAS), were addressed. This or-
ganization protects democratic freedom in this hemisphere from ag-
gressive political and military strategies directed at forcibly over-
throwing governments and denying self-determination. The Cuban-
Nicaraguan secret war against Central and Latin American states
is a severe security threat for both countries. While both Mexico
and the United States have had substantially different foreign poli-
cies dealing with this threat, it is imperative we both work more
effectively to meet the common danger. Being two of the most im-
portant states within the OAS system, enhanced coordination could
have a major effect within the region. Ultimately, Mexico's and the
United States' most important shared national interests include,
common security interests in hemispheric stability, self-determina-
1987]
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Friedman and Moore: Preface
Published by CWSL Scholarly Commons, 2015
CALIFORNIA WESTERN INTERNATIONAL LAW JOURNAL
tion, and democratic freedom as guaranteed by the OAS Charter.
In order to accomplish these goals, both nations must exert sub-
stantially greater efforts at coordinating security and foreign
policies.
Fourth, with respect to problems of the unauthorized flow of im-
migration, drugs, and weapons there was substantial consensus that
effective solutions need to be joint solutions. It was also stressed
that a strengthened Mexican economy would help to decrease the
problems of illegal immigration and drug trafficking. Both Ameri-
can and Mexican participants stressed that both sides had moved
beyond past rhetoric and now understand that the illegal drug
problem is a joint problem.
Finally, under the leadership of Professor Jorge A. Vargas of the
Mexico-U.S. Law Institute, there was an extremely sensitive and
important discussion of "political change and stability in Mexico."
There was candid discussion about serious issues of corruption and
the need for the PRI to bring back the disaffected middle class and
private sector. Additionally, conference members recognized the
unique institutions of the Mexican political system and historic
strengths of the PRI. Serious political instability cannot be ruled
out in Mexico, particularly if economic conditions worsen. But it
seems far more likely that these unique Mexican institutions can
adapt, through gradual change, as they have successfully adapted
in the past.
We hope that these proceedings will receive national attention in
both Mexico and the United States. Most important, we hope that
they will serve as a catalyst for major new efforts by both nations to
strengthen their relationship.
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Preface

Geraci, Alan L.

Nabozny-Younger, Sandra

Damages for a Temporary Regulatory Taking: First English Evangelical Lutheran Church v. County of Los Angeles

Vukson, Todd M.

Inmate Abortion Funding in California: A Constitutional Analysis

Library, California Western

BOOKS RECEIVED
INTERVENTION ON TRIAL: THE NEW YORK WAR CRIMES TRIBU-
NAL ON CENTRAL AMERICA AND THE CARIBBEAN. Edited by
Paul Ramshaw and Tom Steers. Praeger Publishers: New
York, New York. 1987. Pp. 215. $32.95
TERRORISM, U.S. STRATEGY, AND REAGAN POLICIES. Marc A.
Celmer. Greenwood Press Inc.: Westport, Connecticut. 1987. Pp.
132. $29.95.
THIRD WORLD ATTITUDES TOWARD INTERNATIONAL LAW. Edited
by Frederick E. Snyder and Surakiarat Sathirathai. Martinus
Nijoff Publishers: Dordrecht, The Netherlands. 1987. Pp. 851.
No price given.
THE CLOISTERED VIRTUE: FREEDOM OF SPEECH AND THE ADMINIS-
TRATION OF JUSTICE IN THE WESTERN WORLD. Barend van
Niekerk. Praeger Publishers: New York, New York. 1987. Pp.
352. $49.95.
THE EXCLUSIVE ECONOMIC ZONE IN INTERNATIONAL LAW. David
Joseph Attard. Clarendon Press, Oxford University Press: New
York, New York. 1987. Pp. 350. No price given.
THE DICTIONARY LAW DICTIONARY. Robert L. Bledsoe and Boles-
law A. Boczek. ABC-CLIO: Santa Barbara, California. 1987.
Pp. 344. $37.50.
THE PREVENTION OF TERRORISM IN BRITISH LAW. Clive Walker.
Manchester University Press: Wolfeboro, New Hampshire. 1986.
Pp. 288. $47.50.
1
Library: Books Received
Published by CWSL Scholarly Commons, 2015
208 CALIFORNIA WESTERN INTERNATIONAL LAW JOURNAL [Vol. 18
THE STRUCTURE OF CRIMINAL PROCEDURE: LAWS AND PRACTICE
OF FRANCE, THE SOVIET UNION, CHINA, AND THE UNITED
STATES. Barton L. Ingraham. Greenwood Press, Inc.: Westport
Connecticut. 1987. Pp. 196. $35.00.
2
California Western International Law Journal, Vol. 18, No. 1 [2015], Art. 24
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Books Received

Reisman, W. Michael

The Cult of Custom in the Late 20th Century

Merryman, John Henry

REMARKS
KEYNOTE ADDRESS: VISUAL ARTS LAW
JOHN HENRY MERRYMAN*
Visual Arts Law is a glamorous and seductive field. But behind
the glamour and the seductiveness is a concrete reality which we
can call the Art World. It is made up of people and institutions
that closely and intricately relate to each other in ways in which
they do not relate with other institutions and people. The principal
components of the Visual Arts World are artists, of whom we have
roughly 400,000 in the United States; art collectors-we do not
know how many tens or hundreds of thousands of those there are,
but there are lots of them; museums-there are close to a thousand
art museums; dealers; auction houses; art historians and university
art departments; art critics; the relevant staff at the National En-
dowments for the Arts and the Humanities; the art press; and so
on. What you have here is a kind of ecological system. What affects
one part of it affects every other part. You push at one point and
everybody feels it.
It follows that in order to make art law intelligently, in order to
practice it well and productively, in order to mold policy usefully
for the visual arts, you have to consider the systemic effects of what
you propose and what you do. And in order to consider those ef-
fects, you have to know something about the reality with which you
are dealing; you have to be familiar with the art world and how it
operates. In other words, you have to pay some dues. These are
generalizations. Let me give some specific examples which I will
draw from the field of artists' rights. The examples are timely be-
cause of a bill that has been recently introduced by Senator Ken-
nedy of Massachusetts.' The bill has three parts. One part would
eliminate the requirement of a copyright notice on a work of art in
* Sweitzer Professor of Law, Cooperating Professor in the Department of Art, Emeri-
tus, at Stanford University and Chariman of the Visual Arts Committee on the Entertain-
ment and Sports Industry.
1. S. 2796, 99th Cong., 2d Sess. (1986).
1
Merryman: Keynote Address: Visual Arts Law
Published by CWSL Scholarly Commons,
VISUAL ARTS LAW
order to protect the artist's copyright in it. That is a thoughtful and
realistic provision. The United States is one of only two nations in
the world that require a copyright notice in order to protect copy-
right in a work of art. (The other is the Philippines.) In the rest of
the world, copyright vests and is protected without the copyright
notice. It is true that the small c in a circle, or the word "copy-
right," or the abbreviation "copr" is all that is needed. It seems a
small thing, an easy thing, and yet many artists refuse to use it
because they think the copyright notice disfigures the work of art.
Others say they do not like it because it makes the artist look com-
mercial, as though he thinks of his work as a piece of property
rather than as a pure work of art. One can laugh at that or not, but
the fact is that a number of artists do not add the copyright notice
to their work and thus lose their copyright. The Kennedy bill would
correct that.
A second part of the Kennedy bill would federalize something
that now exists only in California (the first state in the United
States to adopt it), Massachusetts (in roughly the same form) and
New York and Louisiana (in a much weaker and paler form). It is
called the "moral right" of the artist and it exists everywhere else
in the world outside the Common Law nations: throughout Europe,
Latin America, most Asian countries and many Middle Eastern
and African countries. Its crucial part is the right of the artist to
prevent others, inlcuding the owner of the work of art from altering
it, disfiguring it or destroying it. Again, this would be a very good
idea. The preservation of the work of art, as it emerges from the
artist's hand in its true, authentic form is important to art history,
to preservation of the culture. Adoption of this provision would put
the U.S. in the company of most of the world and would enable us
to join the Bern International Copyright Convention, which in-
cludes a moral right provision in Article 6bis.
The third part of the Kennedy bill would establish on a federal
level something else that California has already enacted: the resale
proceeds right-the right of the artist to a percentage of the pro-
ceeds on a profitable resale (not the original sale) of a work of art.
At first glance, to the outsider, the resale proceeds right looks like a
wonderful idea, something that is fair and desirable. Here are these
artists who create the work of art and sell it for a certain price and
some years later the work may be resold at a much higher price
without the artist's participation in any way in that increase in
value. Once paid on the original sale, that is all the artist gets.
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CALIFORNIA WESTERN INTERNATIONAL LAW JOURNAL
The argument in favor of the resale proceeds right is that the
artist should participate in the "unearned profit" of the speculating
collector who resells the artist's work. This attitude has made the
resale proceeds right a sentimental favorite. This sentiment was
given sympathetic publicity in 1973 at a famous auction held at
Sotheby's New York of part of the collection of Robert and Ethel
Scull. At that sale, a work by Robert Rauschenberg, for which he
was paid originally $1,000 or so in the early 1960's, sold at auction
for $90,000 or so. Mr. Rauschenberg was present at the sale, which
was a big social event, and accosted Mr. Scull with (and I apolo-
gize for the coarseness of language): "I have been working my ass
off for you and you're getting all the profit." The encounter was
captured for posterity on a widely distributed documentary film
that helped lead to California's enactment of the resale proceeds
right law, with a lot of help from Mr. Rauschenberg, other artists
and enthusiatic art supporters
Now, who could oppose such a law? I will try to persuade you
that anyone who a) knows anything about how the art world works
and b) is able to think clearly should oppose it. Let me explain. The
first thing to consider is the impact of such a law on the art market.
You may say that you don't care about the art market, but that is
very foolish. The art market is important to everybody in the art
world. It is as important to artists as it is to dealers and auction
houses and collectors. The art market is where information about
the work of art is focussed. It is where the utility and value and
importance of a work of art can be measured. It is also the channel
for distributing art, and the more efficient the market is, the more
efficiently will works of art get distributed and the more likely they
are to go to the places they should go. In short, the market is as
important in the art world as it is in any area of productive activity.
So what is the market effect of the resale proceeds right law? In
California, the first thing that happened immediately after enact-
ment of the resale proceeds right law was that Sotheby's, which at
that time had an auction house in Los Angeles, immediatly sus-
pended all sales of the work of living artists. It did not want the
hassle, it did not want the trouble. It could sell the work of living
artists in New York which did not have such a law. There was no
reason for it to bother with continuing to do so in California. It
continued to operate in California, selling other kinds of things:
jewelry, oriental rugs, the work of dead artists, old masters, etc.
But the work of contemporary artists, living artists, the artists who
[Vol. 17
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VISUAL ARTS LAW
would benefit, according to the nice, sentimental people who fa-
vored the resale proceeds right, would no longer be sold. That
meant that a very important part of the art market left California.
Now let us suppose that the Kennedy bill were enacted in Con-
gress. That would hurt the resale market for contemporary art in
the United States, including New York, which is currently the larg-
est and strongest contemporary art market in the world. That mar-
ket would leave New York and go to London, where it formerly
was. Art is easily transportable, and money is easily transportable.
Driving the resale market abroad would affect all parts of the art
world in the United States.
A second problem with the resale proceeds right law is this: Art,
particularly contemporary art, is a discretionary good. Unlike food,
shelter or clothing, no one has to have contemporary art; people can
live without it. It is something they may freely decide to acquire or
not to acquire. Anything that makes the purchase of contemporary
art less attractive will reduce the flow of money into the contempo-
rary art market. An excise tax on resales-and that is what the
resale proceeds right looks like to museums, collectors, dealers and
auction houses-discourages first sales. Less money becomes availa-
ble to buy the works of living artists.
Third, the resale proceeds right regressively redistributes wealth
from the unrecognized, unsuccessful, even if worthy, artist to the
recognized, successful, wealthy artist. It is a Robin Hood in reverse:
It takes from the poor and gives to the rich.
Consider some cruel realities about the resale of art. Of all the
400,000 artists in the United States, perhaps two hundred have any
resale market whatsoever. Over 99% of the art sold on the primary
market cannot be resold. No auction house will take it, no dealer
(including the dealer you bought it from) wants it. The best you
can do is donate it to a charity. The artists whose works have a
profitable resale market are the artists who are recognized, whose
work is in major museums, whose work is collected by major collec-
tors, whose work, is the subject of critical articles in the art press,
whose work is discussed in art history courses. It is artists like Jas-
per Johns, one of whose paintings resold for $3,630,000 in Novem-
ber, 1986, who would get some money from the resale proceeds
right. Robert Rauschenberg, for whom the value of every work in
his studio was vastly multiplied as a result of the Scull auction,
would make a lot of money out of the resale proceeds right. But the
overwhelming majority of living artists, producing artists, would
19871
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CAUFORNIA WESTERN INTERNATIONAL LAW JOURNAL
never get a nickel out of it.
Well, you might say, that is all right, we don't care if a few
successful artists get a little more, particularly since it is always
possible that one of us may make it, lightning may strike and we
may be successful, and then we will get this additional benefit. But
there is no free lunch. The additional money that goes to the suc-
cessful artist has to come from somewhere in the art world.
We have already seen that the amount of money available to buy
art is reduced by this law. But the additional point here is that the
law regressively redistributes that reduced amount of money. Let
me give you a concrete example. Suppose there is an art dealer who
is interested in promoting the work of unrecognized but worthy art-
ists. He puts on ten shows a year for his ten artists. He rents gal-
lery space, pays a receptionist, pays for packing and shipping, in-
surance, utilities, the cost of opening parties, entertaining critics,
collectors and curators and so on. Suppose he is a very good dealer,
and the work of the artist he is currently showing-ten canvases in
the gallery-sells out for $2,000 a canvas. That is, by any measure,
a tremendous success. The dealer takes 50%, or $10,000, and it
turns out that he has lost money after he deducts expenses in con-
nection with keeping the gallery open and putting on the show.
How does he stay in business? Some dealers subsidize their gal-
leries out of their own private wealth. But most dealers have to
make a living at it, lacking private wealth. They have to support
the "front room" of the art gallery, where the shows are hung, in
some way. The way they do that is by being active in the secondary
market. They pick up a Sam Francis gouache or a nice Frank
Stella painting or a Noguchi sculpture and resell it. The profit they
make from those resales subsidizes the front room, paying the ex-
penses of showing the work of less recognized artists. What the re-
sale proceeds right does is take from the dealer a substantial part
(5% of the gross retail price in California, which usually means
more than 25% of the profit) of his income from the secondary
market activity. That reduces his ability to keep the front room
open. Instead of ten well mounted and publicized shows a year, he
will have to do fewer shows, and do them less well. Sam Francis,
Frank Stella and Isamu Noguchi, all successful and affluent artists,
will be a little more affluent, but the unrecognized artists that the
dealer represents will be much worse off.
That is a simple, practical illustration of how the resale proceeds
right law takes from the unrecognized, unsuccessful artist and gives
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Merryman: Keynote Address: Visual Arts Law
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1987] VISUAL ARTS LAW 271
to the already recognized, successful and affluent artist. It should
convince you that the world of art law is not simple. It is glamorous
and attracts dilettantes who can do a lot of harm. The Art World is
a wonderful place, but it is also complex and interdependent, and if
you only look at one little part of it, you will make serious mistakes.
Think of the Art World as populated by a variety of people doing
honorable work; not just artists, but also dealers, collectors, mu-
seum personnel and many others. They are all part of the ecology.
It is unprofessional to lose sight of that fact. The bottom line is that
professionalism in art law is just as important as it is in any other
field in the law.
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Keynote Address: Visual Arts Law

Obach, Sebastian

Recent Development of Industrial Property Rights in Chile

Law Review, California Western

California Western Law Review 
Volume 23 Number 2 Article 8 
1987 
Books in Brief 
California Western Law Review 
Follow this and additional works at: https://scholarlycommons.law.cwsl.edu/cwlr 
Recommended Citation 
Law Review, California Western (1987) "Books in Brief," California Western Law Review: Vol. 23 : No. 2 , 
Article 8. 
Available at: https://scholarlycommons.law.cwsl.edu/cwlr/vol23/iss2/8 
This Article is brought to you for free and open access by CWSL Scholarly Commons. It has been accepted for 
inclusion in California Western Law Review by an authorized editor of CWSL Scholarly Commons. For more 
information, please contact alm@cwsl.edu. 
BOOKS IN BRIEF
CLONING AND THE CONSTITUTION: AN INQUIRY INTO GOVERN-
MENTAL POLICYMAKING AND GENETIC EXPERIMENTATION. By
Ira H. Carmen. University of Wisconsin Press: Madison, Wis-
consin. 1986. Pp. 223. $22.50. The author examines genetic en-
gineering from a political science analysis rather than from a
biological science standpoint. The underlying view of the author
is that the understanding of the appropriateness of genetic engi-
neering, specifically recombinant DNA experimentation, lies
within the Constitution. The author approaches this subject in
chapter one by examining science in American constitutional
history. Next, in chapter two, cloning as an American constitu-
tional freedom is examined. In chapter three, the author ana-
lyzes the recent debate concerning human genetic engineering.
Chapter four explores the recombinant DNA cloners and their
watchdogs. Finally, chapter five examines recombining constitu-
tional images. As the author describes his work "[t]he book's
essential themes are political science inquiry, governmental poli-
cymaking and genetic experimentation. But more than that, it
endeavors to dramatize the inevitable tensions between science
as personal liberty and law as necessary social adhesive. It is, in
short, a portrayal of reciprocal constitutional relationships."
NEWS CAMERAS IN THE COURTROOM: A FREE PRESS-FAIR TRIAL
DEBATE. By Susanna Barber. Ablex Publishing Corporation:
Norwood, New Jersey. 1987. Pp. 176. $29.50. The focus of this
book is the 1978 conference of State Chief Justices where those
in attendance approved a resolution which allowed the highest
court of each state to set standards regulating radio, television
and other photographic coverage of court proceedings. The pas-
sage of this resolution was followed by the Supreme Court's de-
cision in Chandler v. Florida, 449 U.S. 560 (1981), in which
the Court held that television coverage of a criminal trial did
not constitute a denial of due process. Thus, this book in part
one examines the background of the courtroom cameras debate.
In part two, the constitutional issues and popular arguments to
the issue of news cameras in the courtroom are examined. Part
three is a summary and discussion of the courtroom cameras
research. Finally, in part four, changing her focus from the
courtroom to the audience, the author performs a risk-benefit
1
Law Review: Books in Brief
Published by CWSL Scholarly Commons, 1986
1987] BOOKS IN BRIEF 373
analysis. Thus, a basic question of the compatibility of news
cameras in the court versus the goal of the courts to try cases
according to law is explained.
2
California Western Law Review, Vol. 23 [1986], No. 2, Art. 8
https://scholarlycommons.law.cwsl.edu/cwlr/vol23/iss2/8


Books in Brief

Chayet, Zack V.

Maquiladora Operations: A Comment on the Maquiladora Program in Mexico