Artists whose works were resold in California in 1978 or thereafter will not be due a portion of the proceeds, according to a federal appeals court ruling.

The U.S. Court of Appeals for the Ninth Circuit said a California state law enacted 42 years ago to compensate artists was effective for only one year, in 1977, before it was preempted by federal copyright law.

The ruling represents a blow to artists, including Chuck Close and Laddie John Dill, who sought to bring a class action against art auction houses Sotheby’s Inc. and Christie’s Inc. and online auctioneer EBay Inc. to...