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Sotheby’s, eBay Win Bid For Attorneys’ Fees in Royalty Suit

Dec. 3, 2018, 8:47 PM

Sotheby’s and eBay Inc. are entitled to attorneys’ fees for litigating whether artists were entitled to royalties when their art is resold in California, the U.S. Court of Appeals for the Ninth Circuit ruled Dec. 3.

The court ruled in June that the artists could only get California-based resale royalties for works resold in 1977, as the federal Copyright Act entered into force in 1978 and thereafter preempted state law.

Although preempted on the merits of the claim, the California Resale Royalty Act’s fee-shifting clause—granting a prevailing party attorneys’ fees—isn’t, the court said.

Preemption requires courts to apply federal law when it conflicts with state law, but “the state law continues to exist until the legislature that enacted it repeals it,” the court said.

The Copyright Act only preempts state laws when it comes to the legal and equitable “right of reproduction, preparation or derivative works, distribution, display, and performance,” the court said. Therefore, the CRRA’s fee-shifting clause is still good law and applies here, the court said.

The case is Close v. Sotheby’s, Inc., 9th Cir., No. 16-56234, 12/3/18.

To contact the reporter on this story: Porter Wells in Washington at pwells@bloomberglaw.com

To contact the editors responsible for this story: Jo-el J. Meyer at jmeyer@bloomberglaw.com; Nicholas Datlowe at ndatlowe@bloomberglaw.com

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