The US Court of Appeals for the Federal Circuit ruled that the US government must pay more than $500,000 based on sales of a postage stamp infringed the copyright of a sculptor.

The case of Gaylord v. United States involves a stamp issued to commemorate the 50th anniversary of the end of the Korean War.

The image shown on the stamp was derived from a photo taken by an amateur photographer, showing the Korean War Veterans Memorial, seen above, in the snow.

The Sculpture

The photographer was paid $1500 for the right to use the photo. However, the US Postal Service failed to seek the consent the artist who created the sculpture itself, Frank Gaylord.

Gaylord, himself a World War II veteran, had been paid $775,000 for creating a monumental work called The Column that was the centerpiece of the Memorial.

When the stamp was released, Gaylord sued the US government for copyright infringement. The case was heard in the Court of Federal Claims, which deals with copyright and patent cases against the US government, breach of contract cases involving the government, and other matters.

Damages

Originally, the court awarded Gaylord only $5000 as compensation for the use of his work. However, the court later reopened the case to reconsider damages based not only on the sales of stamps use to send mail but also on the sales of merchandise featuring the image on the stamps and stamps sold to collectors.

At a new trial, the court awarded Gaylord $33,000 for the merchandise sales. Evidence showed that the Postal Service had received $5.4 million from stamp sales to collectors. This amount was close to 100% profit for the Postal Service, since it was not required to provide any delivery services in exchange for these stamp purchases.

The court awarded Gaylord 10% of the collector sales — $540,000 — noting 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.’”

The court found that this 10% royalty rate was reasonable given that Gaylord had received a comparable rate for sales of other derivative works.