The United States Court of Appeals for the Federal Circuit delivered a second win on appeal in favor of Fish & Richardson client, Frank Gaylord, and against the United States in an ongoing dispute over the copyright in the “The Column,” the centerpiece sculpture of the Korean War Veterans’ Memorial on the National Mall in Washington D.C. On May 14, 2012, the Court of Appeals reversed and remanded the damages judgment of the United States Court of Federal Claims, holding that the Court of Federal Claims erred in determining that Frank Gaylord could not seek damages against the Government for copyright infringement based upon lost licensing fees, disregarding Gaylord’s evidence of past licenses for the work, and capping the damages award at $5,000 because it was the highest amount the Postal Service had ever paid in the past for the use of an image on a stamp. The Court held, in a matter of first impression, that damages based upon lost licensing fees are available against the government in a copyright infringement case brought under 28 U.S.C. Section 1498(b) and should be determined based upon a hypothetical negotiation that “looks at the evidence presented by both parties to determine the fair market value of a license to which the parties would have agreed.” In reaching this decision, the Court also held for the first time damages for the fair market value of a license covering defendant’s use are “actual damages” under the Copyright Act, aligning itself with several other circuits that have considered the issue.
In an opinion authored by Judge Moore, the Court wrote, ” It is incorrect in a hypothetical negotiation inquiry for a court to limit its analysis to only one side of the negotiating table because the court’s task is to determine the “reasonable license fee on which a willing buyer and a willing seller would have agreed for the use taken by the infringer.” See On Davis, 246 F.3d at 167. The trial court erred in this case by restricting its focus to the Postal Service’s past payments: $1,500-$5,000. Defendants cannot insulate themselves from paying for the damages they caused by resting on their past agreements and by creating internal “policies” that shield them from paying fair market value for what they took. See Rite-Hite Corp. v. Kelley Co., 56 F.3d 1538, 1555 (Fed. Cir. 1995) (“[W]hat an infringer would prefer to pay is not the test for damages.”). Instead, the trial court must look at the evidence presented by both sides to determine the fair market value of a license to which the parties would have agreed. Hence, while the evidence may indicate that the Postal Service has not paid more than $5,000, it is equally clear that Mr. Gaylord has consistently licensed images of The Column for retail and commemorative items at approximately 10%.”
Mr. Gaylord, a well known sculptor from Barre VT and a World War II veteran, created The Column between 1991-1995, expressly retaining and registering his copyrights in the work. In 2002, to commemorate the 50th anniversary of the armistice of the Korean War, the United States Postal Service incorporated a photo of The Column into a 37-cent postage stamp and eventually sold $17 million worth of the stamps without Mr. Gaylord’s authorization. Mr. Gaylord sued the Postal Service in the Court of Federal Claims, which found that Mr. Gaylord was the sole author of The Column and held valid copyrights that had been infringed, but that the Postal Service had made a “fair use” of the sculpture, and thus was not liable for copyright infringement. In an earlier decision on appeal, Gaylord v. U.S., 595 F.3d 1364 (Fed. Cir. 2011), also authored by Judge Moore, the Federal Circuit affirmed the findings of ownership and liability, but reversed the finding of “fair use” and remanded the case to the Court of Federal Claims for a determination of damages. That decision was the first significant analysis of “fair use” from the Federal Circuit, which held that that the Postal Service’s stamp was not “transformative” of the sculpture, stating “Both the stamp and The Column share a common purpose: to honor veteran’s of the Korean War…..Nature’s decision to snow cannot deprive Mr. Gaylord of an otherwise valid right to exclude. ” The Federal Circuit also stated for the first time in that Court that a claim of joint authorship requires a showing that each author contributed independently copyrightable expression.
Mr. Gaylord has been represented at trial and on both appeals by Heidi E. Harvey, who is Of Counsel to the Boston office of Fish & Richardson. Frank Porcelli, a principal in the Boston office and the co-chair of the Fish & Richardson appellate group argued the most recent appeal.