Considering whether the U.S. government is liable for copyright infringement, the U.S. Court of Appeals for the Federal Circuit reversed the decision of the U.S. Court of Federal Claims and answered in the affirmative, holding that the U.S. Postal Service’s use of a photograph depicting a national memorial was not a fair use of the underlying sculptural works. Gaylord v. United States, Case No. 09-5044 (Fed. Cir. Feb. 25, 2010) (Moore, J.) (Newman, J., dissenting).

In 1986, Congress enacted legislation to erect the Korean War Veterans Memorial (Memorial) in Washington, D.C. The architectural firm Cooper-Lecky Architects, P.C. was selected as the primary contractor; it then selected Frank Gaylord as the sculptor for the project. Gaylord created 19 stainless steel statues of soldiers to represent a platoon of foot soldiers, which were arranged in a formation referred to as The Column. During his work on the project, Gaylord made certain revisions to his original statute designs based on suggestions from Cooper-Lecky and members of the Korean War Veterans Memorial Advisory Board (VAB) and Commission on Fine Arts (CFA). Gaylord applied for and received five copyright registrations relating to the soldier sculptures, all of which list Gaylord as the sole author. The Memorial was dedicated in May 1995.

In 1996, John Alli photographed the Memorial just after a snowstorm. Alli decided to sell prints of his photograph and sought permission from the copyright owner of the underlying work. Alli located William Lecky of Cooper-Lecky, who represented that he was the outright owner of the copyright. Alli agreed to pay royalties to Lecky, who did not notify Gaylord of the agreement.

In 2002, the U.S. Postal Service commissioned a postage stamp to commemorate the 50th anniversary of the armistice of the Korean War. The Postal Service selected Alli’s photograph and paid Alli $1,500 for its use. Alli informed the Postal Service that it would need to secure permission of the underlying copyright owner, Lecky. The Postal Service issued the stamp featuring Alli’s photograph, depicting 14 of the 19 soldier statues in The Column. The Postal Service produced approximately 86.8 million of the stamps and earned over $17 million from sales of the stamps and related items before retiring it. The Postal Service did not seek or obtain Gaylord’s permission to feature the soldier statutes in the stamp or on any related goods.

Gaylord sued the U.S. government for copyright infringement in the Court of Federal Claims in July 2006. During trial, the government argued that the stamp made fair use of the work. The government also argued that it possessed rights to the work as a joint author due to contributions from governmental entities VAB and CFA (which would have given the government an unlimited license in the work). The government also argued that the stamp fell under the exclusion from copyright infringement liability for architectural works. The Claims Court held that Gaylord was the sole copyright owner because the evidence did not show that Gaylord and the governmental entities intended the work to be a joint work, and the suggestions of the governmental entities did not rise to the level of protectable expression such that they could be considered joint authors. The Claims Court also held that The Column did not qualify as an architectural work. Ultimately, however, the Claims Court held that the government was not liable for copyright infringement because the Postal Service’s use of The Column in its stamp was fair use. The fair use determination was largely based on the Claim Court’s finding that the stamp was transformative, as Alli’s photograph and the Postal Service’s stylistic changes transformed the underlying work. Gaylord appealed.

The Federal Circuit upheld the determinations that Gaylord was the sole author of The Column and that it did not qualify as an architectural work, However, the Federal Circuit disagreed with the determination that the Postal Service’s use of the work in its stamp was fair use, finding three out of the four factors of the fair use test weighed against a finding of fair use—purpose and character of the infringing use; the nature of the copyrighted work; and the amount and substantiality of the portion of the work used.

The Federal Circuit disagreed with the Claims Court finding that the use was transformative, noting that the inquiry must focus on the purpose and character of the stamp, rather than that of Alli’s photograph. The Court held that because both the stamp and the photograph shared the common purpose of honoring Korean War veterans, the stamp did not transform the character of the work. The stamp’s commercial purpose, shown by its commercial success, also weighed against fair use. Concerning the nature of the work, the Federal Circuit found that the expressive and creative nature of the work weighed against fair use. Finally, the substantiality of the work used weighed against fair use because the stamp depicted nearly all of the underlying work—14 of the 19 soldier statutes.

On the remaining fair use factor, the Federal Circuit agreed with the Claims Court that the stamp had no negative impact on the value of the work or the market for derivative works. Therefore, this factor weighed in favor of fair use. Weighing the factors together, however, the Federal Circuit ultimately concluded that the Postal Service’s use of the work in its stamp was not a fair use, explaining that, “Even thought the stamp did not harm the market for derivative works, allowing the government to commercially exploit a creative and expressive work will not advance the purposes of copyright in this case.”