Gaylord v. United States, 678 F.3d 1339 (Fed. Cir. 2012)
Plaintiff sculpted a series of nineteen sculptures as part of the Korean War Veterans’ Memorial in Washington, D.C. The United States Postal Service issued a stamp that included a photograph of Plaintiff’s sculptures—a photograph that Plaintiff did not take. The Postal Service did not obtain Plaintiff’s permission to use the image of his sculptures. Plaintiff sued for copyright infringement. In a previous appeal in this same case, the Federal Circuit held that the Postal Service infringed on Plaintiff’s copyright by using the photo of the sculptures on stamps and other retail merchandise. The Federal Circuit remanded for a determination of damages.
On remand, the lower court refused to award Plaintiff prejudgment interest. Additionally, the court only awarded Plaintiff a “one-time royalty of $5,000,” relying on the Postal Service’s evidence of the amount it paid to the photographer of Plaintiff’s sculptures and testimony that it had never paid anyone more than $5,000 to license an image for a stamp. The court rejected Plaintiff’s argument that he normally gets a 10% royalty when he licenses his work.
The Federal Circuit vacated the district court’s decision. The Federal Circuit held that actual damages should have been based on the “fair market value of a license covering the defendant’s use,” and “[t]he value of this license should be calculated based on a hypothetical, arms-length negotiation between the parties.” The lower court gave too much weight to the Postal Service’s evidence, and the Federal Circuit instructed the lower court, on remand, to consider all of the evidence. The Federal Circuit also held that the court erred in not awarding Plaintiff prejudgment interest.