Friday, September 22, 2023

Out-of-state Royalties Rejected in CA

2000px-Flag_of_California.svgThe 9th Circuit of the U.S. Court of Appeals struck down a clause in a section of the 1976 California Resale Royalties Act, the only law in the country which requires sellers of art to pay the artist a 5% cut of the price when their work is resold. In the en banc decision, the court found that part of the law violated the dormant Commerce Clause of the U.S. Constitution and interfering with other states’ commerce by attempting to regulate sales which occur out of state on behalf of California owners.  In 2012, a district court struck down the entire law as unconstitutional because of this violation.  However, on appeal, the court upheld the artist royalty if the sale takes place within California, severing the offending section from the law.

Auction houses, collectors, and gallery owners are therefore not required to pay the royalty for non-California sales, which California art sellers have complained places an unfair burden on them by placing a premium on California art sales compared to those in other states.

JDSupra raises a question in response to the decision: whether the Resale Royalty Act interferes with the first-sale doctrine of the Copyright Act, which preempts any state intrusion into federal copyright laws, an issue which may be considered on remand. This decision demonstrates the necessity of aligning the royalty rights of visual artists with those of musicians and filmmakers, as recently proposed by the U.S. Copyright Office.

More via The LA Times.


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