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Gaylord v. U.S.

By Barry Werbin

This case involving use of a photo of the Korean War memorial sculpture on a .U.S stamp, has been up and down to the Federal Circuit twice and ongoing for a long time. In this final chapter (we hope), the district court's after-remand copyright damages award in favor of the plaintiff and against the U.S. Postal Service based on a 10% per-unit royalty, resulting in an award of $540,000 from sales of collector stamps sold by the Post Office, plus prejudgment interest, was affirmed by the Federal Circuit. The district court based the royalty on survey evidence showing the Postal Service's commissions in its ordinary course of business, and determined that the Postal Service received $5.4 million in revenue -- "'almost pure profit'"--from unused stamps depicting the image that had been sold to collectors during the limited life of the stamp issue.

Of particular interest is the Federal Circuit's re-affirmance of a reasonable royalty for copyright damages, an idea common in patent cases. The Court noted that: "Consistent with the conclusions of other circuits that have considered the issue, we held [in Gaylord II, 678 F.3d 1339 (Fed. Cir. 2012)] that actual damages for copyright infringement may be based on a reasonable royalty representing 'the fair market value of a license covering the defendant's use.'" While setting a royalty is typically tied to a hypothetical license/royalty negotiation, the Court emphasized that this "determination must be tied to the particular work at issue and its marketplace value--much as, in patent law, the determination must be tied to the particular patented technology and its footprint in the market."

After reviewing all the evidence assessed by the district court, the Federal Circuit concluded that "giving the Postal Service 90% of the profits and Mr. Gaylord 10%--is within the range of reasonable findings from the evidence." This was so even if the Postal Service might have negotiated a flat license fee instead of a running royalty due to "the uniqueness of the work at issue here, including its status as a distinctively recognized symbol of the Korean War for most Americans...."

A copy of the decision is available here Gaylord v. US.pdf

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