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05 Feb 2016

California Resale Royalty Act – Supreme Court refuses artists' appeal


On 11 January 2016, the Supreme Court of the United States declined to hear an appeal against the decision of the Ninth Circuit Court of Appeals that the California Resale Royalty Act 1976 ("CRA") was unconstitutional insofar as it applies to sales of artworks outside the state of California.


The CRA (as enacted) provided that a 5% royalty should be paid to artists on re-sales of their works where such sales take place in California or where the sellers are based in California.

Various artists and their successors commenced proceedings against Christie's, Sotheby's and eBay to enforce their rights to royalties under the CRA in respect of sales concluded outside of California.

The defendants filed a motion to dismiss the action arguing that the CRA was unconstitutional on the basis that it regulated interstate trade and was therefore a breach of the so-called "Dormant Commerce Clause" (an implied restriction on the power of states to regulate interstate trade based on the express recognition of the power of Congress to regulate interstate trade).

The US District Court struck out the CRA in its entirety. It held that the provisions regulating sales outside of California were an unlawful regulation of interstate commerce and that, as the offending provisions were not severable from the rest of the CRA, the entire law was unconstitutional.

The plaintiffs appealed to the Ninth Circuit Court of Appeals. This court held that, while the CRA was unlawful insofar as it regulated sales of fine art outside of California, the offending provisions were severable from the remainder of the CRA. The decision meant that royalties would only be payable under the CRA in respect of sales of artworks within California. The plaintiffs petitioned the US Supreme Court to review this decision. By notice dated 11 January 2016, the Supreme Court denied their petition, bringing these proceedings to an end.



Roland Foord

Roland Foord

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