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Rejecting the application of the “royalty rate” method for calculating damages in a copyright infringement case, the U.S. Court of Federal Claims ruled April 22 that the sculptor who created the Korean War Veterans Memorial should be awarded $5,000 for the U.S. Postal Service's use of an image of the memorial on a stamp (Gaylord v. United States, Fed. Cl., No. 1:06-cv-00539-TCW, 4/22/11).
Addressing a question of damages on remand from the U.S. Court of Appeals for the Federal Circuit, the court stated that because the Postal Service has never paid more than $5,000 for the use of an image on a stamp, this figure is the maximum reasonable damages that can be awarded for infringement in such circumstances.
In 1986, the American Battle Monuments Commission was authorized to establish a memorial for veterans of the 1950-1953 Korean War. A group from the Pennsylvania State University won a contest for a design for the memorial, but the group withdrew from the project. To complete the memorial, the Army Corps of Engineers engaged Cooper-Lecky Architects P.C. as the principal contractor.
Frank Gaylord was eventually selected as the sculptor of the memorial after a contest conducted by Cooper-Lecky. Gaylord used the Penn State design as a starting point to complete the memorial, but made significant changes, such as reducing the number of soldiers depicted from 38 to 19 and using stainless steel casts instead of granite sculptures. Gaylord registered five works related to the Korean War Veterans Memorial, completed in 1995, with the Copyright Office.
In 1996, photograph John Alli took a picture of the memorial and obtained permission from Cooper-Lecky to sell prints of the photograph in exchange for royalties. In 2002, the U.S. Postal Service designed and issued a stamp to commemorate the armistice ending the Korean War and paid Alli for use of the photograph on the stamps. Through March 2005, the Postal Service issued 86.8 million of the stamps. The Postal Service also sold framed art and other items incorporating the picture.
In 2006, Gaylord sued the government, alleging copyright infringement. The government argued that it was a joint author of the memorial and thus held an unlimited license. Furthermore, the government argued that the memorial was an architectural work and under the Architectural Works Copyright Protection Act of 1990, photographs of architectural works were not protected by copyright law.
The Federal Claims court ruled that Gaylord was the sole author of the statutes and that they were not excluded from full copyright protection. However, it also ruled that the Postal Service's use constituted fair use and thus was not infringing. Gaylord v. United States, 85 Fed. Cl. 59 (2008).
On appeal, the U.S. Court of Appeals for the Federal Circuit ruled that the use was not fair use. Gaylord v. United States, 595 F.3d 1364, 94 USPQ2d 1116 (Fed. Cir. 2010) (79 PTCJ 501, 3/5/10).
The Federal Circuit remanded the matter to the claims court for determination of damages.
On remand, Judge Thomas C. Wheeler evaluated Gaylord's claim of royalties under 28 U.S.C. §1498(b), which provides for “reasonable and entire compensation” when the government has infringed a copyright. Section 1498(b) refers to 17 U.S.C. §504(c), the Copyright Act's statutory damages provision.
However, according to the court, “The Court's objective, as in any copyright action, is to determine the actual damages of the copyright owner resulting from the infringement.”
With this in mind, the court set as minimum reasonable damages $1,500, which was the amount paid to Alli by the Postal Service. The maximum reasonable damages was set by the court at $5,000, which was derived from testimony stating that this was the largest amount that the Postal Service had ever paid to the creator of an image.
Looking at the facts in this case, the court noted that Gaylord was never given the opportunity to negotiate a licensing fee or royalties. Thus, the court said, it was reasonable to award him $5,000, the highest figure in the range defined by the court.
Gaylord argued that he should be awarded $3.02 million, or 10 percent of the revenue earned by the Postal Service from sales of the stamp. The court rejected this method of calculating damages on the basis that it was “a method unique to patent infringement claims, and does not apply to copyright infringements.” Even were the royalty rate method appropriate in the copyright context, the court said, $3 million “is not within the zone of reasonableness,” the court said.
“By awarding Mr. Gaylord $5,000, the Court is granting him the highest amount the Postal Service has ever paid for the right to use a copyrighted image on a stamp,” the court emphasized.
Turning to Gaylord's claim for pre-judgment interest, the court found no basis to conclude that the government had waived its sovereign immunity as it applied to such a claim.
Gaylord was represented by Heidi E. Harvey of Fish & Richardson, Boston. The government was represented by Scott Bolden of the Commercial Litigation Branch, Civil Division, U.S. Department of Justice, Washington, D.C.
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