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CA royalty law re resold artwork largely scrapped by appeals court

Until late last week, it worked as follows. California individuals whose artwork was resold at an auction or to a private party by a gallery were entitled to 5% of the purchase price as a form of copyright protection. That was the stipulation at the center of the California Resale Royalties Act, the only such law of its kind ever passed in the United States.

The CRRA came with a caveat, namely this: An artist claiming the royalty had to establish that his or her creation was sold within California or by a state resident.

It’s hard to estimate how many California artists profited from the law, but it’s certainly safe to assume that a good many did.

Now, by virtue of a legal ruling rendered last Friday by the 9th U.S. Circuit Court of Appeals, the CRRA is gutted.

Not completely, though. The judicial panel noted that, although the state enactment is preempted by the U.S. Copyright Act, that federal legislation did not take legal effect until January 1, 1978. The CRRA was effective from 1977. Ergo, the court ruled, the California law will continue to have effect going forward, but only regarding affected works sold during the first year of its existence. The cutoff date for any such transaction is now of course 40-plus years old.

“Our decision today means that the CRRA had a short effective life,” stated the appellate court’s ruling.

Some artists will certainly object to the limitation – indeed, to any law that curtails royalty rights to their created works. An article discussing the court’s decision notes, though, the viewpoint held by many that the CRRA’s application “unfairly constrained California’s art market.”

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