The U.S. Court of Appeals for the Ninth Circuit this month held that the California Resale Royalties Act (“CRRA”) – a state statute that provided visual artists with ongoing downstream royalties for sales of their works occurring after the initial sale – is invalid as preempted by federal copyright law. The court, in Close v. Sotheby’s, — F.3d –, No. 16-56234, 2018 WL 3322222 (9th Cir. July 6, 2018), decided that visual artists are barred from receiving any ongoing royalties arising from later sales of their work due to the federal “first sale doctrine.” The decision affirms the U.S.’s long-held perspective on the limited nature of certain copyright privileges.
The provision of the CRRA at issue in Close granted artists an un-waivable right to 5% of the proceeds on any resale of their artwork under certain circumstances. Specifically, the CRRA required the seller of a piece of artwork (or the seller’s agent) to withhold 5% of the resale price and pay it to the original artist, or if the artist cannot be found, to the California Arts Council. The purpose behind the statute was to help visual artists capitalize on the appreciation of their work by requiring payments following the work’s first sale. The statute was effective on January 1, 1977 as “the first and thus far only, American recognition of the droit de suit,” or “right of following on” as recognized by France and other civil-law jurisdictions. Continue reading