Fine Arts Royalty Fight Returns to Fed Court

PASADENA, Calif. (CN) - Does the U.S. Copyright Act trump a California law that allows artists to collect royalties when auction houses sell their work out of state?

That's the question facing a federal judge after a four-year fight between eBay, auction houses Sothebys and Christies, and a group of artists has wound its way from the Ninth Circuit back to the LA Federal Court.

Whether artists can claim a 5 percent royalty on sales of their work under the California Resale Royalties Act is something the Ninth Circuit considered with more than just broad strokes, after hearing the case before a three-judge panel and again before the full court.

The nation's busiest appeals court ruled in May that the resale law regulating sales outside of California violates the Commerce Clause of the U.S. Constitution but stopped short of striking it down.

Instead, it found that the provision can be severed from the rest of the resale law. The decision overturned current Ninth Circuit Judge Jacqueline Nguyen, who struck it down in its entirety when she was a federal judge in LA.

The en banc panel sent the case back to the three-judge panel to consider the auction houses' remaining arguments against the resale act. That panel remanded the case to U.S. District Judge Michael Fitzgerald.

Neither Nguyen nor the appeals court reached the question of whether the Copyright Act of 1976 preempts the artists' state claims because the federal law provides its own protections for compensation of fees.

Fitzgerald, who will decide that issue on the 16th floor of a downtown federal courthouse, held a status conference with attorneys on Monday morning.

Sothebys' attorney Howard Comet said they would like to see an amended complaint that makes clear the artists have standing to pursue their claims against the auction houses in the first place.

"It's not at all clear to us that plaintiffs are alleging sales in California," Comet told Fitzgerald via telephone.

The artists' attorney Eric George countered that the evidence would show the auction houses had sold artworks in the state for close to 40 years. That is "manifestly clear," George told the judge.

At this time, the artists do not have to amend their complaint unless they want to, Fitzgerald said. He added that he would allow lawyers for the defendants to file legal briefs to support their arguments in light of changes to copyright law.

Christies' attorney Jason Russell also asked the court to consider staying the case if the artists file a petition for writ of certiorari with the U.S. Supreme Court.

Fitzgerald said he would consider staying the case but only if the high court grants the writ.

Parties to the three 2011 class action lawsuits include painter and photographer Chuck Close, artist Laddie John Dill, heirs of California sculptor Robert Graham, and the foundation for painter and printmaker Sam Francis.

Subscribe to Closing Arguments

Sign up for new weekly newsletter Closing Arguments to get the latest about ongoing trials, major litigation and hot cases and rulings in courthouses around the U.S. and the world.

Email *

Submit