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9th Circuit Chops Down Artists' Royalty Law

By William Vogeler, Esq. on July 10, 2018 | Last updated on March 21, 2019

The U.S. Ninth Circuit Court of Appeals chopped down California's royalties law for visual artists -- again.

In 2015, the federal appeals court said one part of the California Resale Royalties Act was unconstitutional. The artists sued again, and wound up right back where they started from.

In Close v. Southeby's, Inc., the Ninth Circuit said federal law preempts the state law and applies only to art sold before the U.S. Copyright Act. As a result, the artists litigated for seven years over one year of resale royalties.

No Five Percent Rule

Under the California law, artists may claim five percent of the profits from the sale of their art in the state. The Resale Royalties Act went into effect on Jan. 1, 1977; the U.S. Copyright Act followed on Jan. 1, 1978.

The federal law excluded royalties for resales, but the plaintiffs sued when they discovered auction houses were not paying the California royalty. They made two trips to the Ninth Circuit, but largely lost both times.

Writing for the court, Judge Jay Bybee said the federal law preempted the state law. The California law tried to change the first-sale doctrine of the Copyright Act.

"In short, the [state law] does not merely grant an additional right beyond what federal copyright law already provides but fundamentally reshapes the contours of federal copyright law's existing distribution right," the appeals court said.

One Year Rule

However, the appeals panel said California's law on resale royalties did apply between Jan. 1, 1977 and Jan. 1, 1978. The judges reversed and remanded as to those sales.

According to stories, the legal battle began with a literal shoving match. Artist Robert Rauschenberg was upset at a man who bought his painting.

The buyer had just sold a Rauschenberg piece at auction for nearly 10,000 percent more than he had paid. The artist shoved and yelled at the man.

"I didn't work so hard for you to make that profit!" the artist famously declared.

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