Monday, July 9, 2018
California Resale Royalties Act Preempted Since 1978
By a MetNews Staff Writer
A panel of the Ninth U.S. Circuit Court of Appeals held Friday that the California Resale Royalties Act of 1976 is expressly preempted by the federal Copyright Act of 1976, and artists are only able to bring suits under that act for sales made in 1977, the only year when the state law and the earlier Copyright Act were both in effect.
Friday’s opinion was penned by Circuit Judge Jay S. Bybee. It addresses the preemptive effects of both the Copyright Act of 1976 and the previous version of that law, passed in 1909, on the California Resale Royalties Act of 1976 (“CRRA”).
A group of artists and their successors in interest brought the case against eBay Inc., Sotheby’s Inc., and Christie’s Inc. In their complaints, they assert what Bybee’s opinion calls the “droit de suite.”
The French term refers to an artist’s right to claim royalties for any sale of a work of fine art he or she created. The CRRA requires a seller of any fine art or the seller’s agent to reserve five per cent of the sale price for the artist, or to the California Arts Council if the artist cannot be found.
The plaintiffs first appealed from the dismissal of their case by U.S. District Judge Michael W. Fitzgerald of the Central District of California invalidating the CRRA for violating the dormant Commerce Clause. A majority of the Ninth U.S. Circuit, sitting en banc, held that that part of the CRRA was severable and remanded the case.
Bybee’s opinion affirms Fitzgerald’s subsequent dismissal of the case as it pertains to any sales made after the Copyright Act of 1976 went into effect in 1978, based on express preemption. It reverses the dismissal of any claims made in 1977, however, applying a 1980 Ninth Circuit opinion, Morseburg v. Balyon, which held that the Copyright Act of 1909, which has no express preemption clause, did not conflict with the CRRA requirement.
The case is Close v. Sotheby’s, Inc., 16-56234.
Michael A. Bowse of Browne George Ross LLP in Los Angeles argued for the plaintiffs, who were also represented by Ira Bibbero and Eric M. George of that firm.
Adam K. Lloyd, Matthew E. Delgado, Hillary A. Hamilton, and Jason D. Russell of Meagher & Flom LLP in Los Angeles represented Christie’s.
Angela Dunning of Cooley LLP in Palo Alto argued for eBay, and Deanne E. Maynard of Morrison & Foerster LLP’s Washington, D.C. office argued for Sotheby’s.
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