California appeal court reports
The appeals court in California ruled that the state’s resale right law conflicted with federal law. Image: Coolcaesar via Commons Wikimedia.

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The appeals court decision on July 6 found that the state law conflicts with the federal Copyright Act of 1978.

The 5% royalty applied to secondary market sales of contemporary art has been challenged and narrowed in court on many occasions and has long been neglected by most of the state’s auction houses and galleries.

However, it is often cited as a reason why the major auctioneers are reluctant to sell in the state where so many of their clients are based. That could now change.

The new ruling “basically drowns the act in the bathtub,” says Nicholas O’Donnell, a lawyer at Sullivan & Worcester. He also believes it will quieten calls for pan-American ARR legislation of the type currently operating in Europe.

“There is, for better or worse, clearly no political constituency for resale royalties in the US. This decision is probably the end of the line for the foreseeable future in the US for droit de suite,” O’Donnell says.