The U.S. Court of Appeals for the Federal Circuit set the damages in Gaylord v. U.S. This fair use and unfair licensing action involved the Korean War Veterans Memorial sculpture and the government’s decision to license an unauthorized photograph of the sculpture without securing rights to the sculpture itself.
Frank Gaylord created the memorial. Later John Alli photographed the Memorial. Given the beauty of his photographs, Mr. Alli decided to license his photographs. He purchased a license to reproduce the Memorial from Mr. Lecky, an architect with Cooper-Lecky Architects, P.C. the prime contractor for the creation, construction, and installation of the Memorial. Lecky did not inform Mr. Gaylord of the license fee, instead holding himself out as author of the sculpture. Eventually, however, Mr. Alli settled with Mr. Gaylord by paying a ten percent net licensing royalty.
Mr. Alli licensed his photograph to the Postal Service for $1500. “The Postal Service produced approximately 86.8 million stamps before retiring the stamp on March 31, 2005,” noted the court.
In the 2010 decision, the Federal Circuit rejected the notion that the use of the postal service stamp was fair use of the sculpture. It noted that the “Postal Service acknowledged receiving $17 million from the sale of nearly 48 million 37-cent stamps. An estimated $5.4 million in stamps were sold to collectors in 2003. The stamp clearly has a commercial purpose.” Presumably the collector stamps do not purchase mail services from the Postal Service, turning almost all of that revenue into net profit. Although the court did not see market harm stemming from the unauthorized postage stamp on other licensing opportunities for the sculpture, it nonetheless rejected fair use. “Even though 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.”
The court also rejected claims the suggestions to the sculpture transformed the ownership into a joint work or the rather bizarre suggestion that the sculpture is an architectural work – meaning “the design of a building as embodied in any tangible medium of expression…” and a building as “humanly habitable structures.” Looking at the photograph below, it is difficult to see where one might inhabit the work.
Last week, the Federal Circuit answered the question as to the value of Mr. Gaylord’s sculpture depicted so beautifully in the photograph. According to Mr. Gaylord’s counsel, “the sculptor of the Korean War Veterans Memorial … has been awarded 10 percent of the United States Post Service profits from selling the collector stamps that featured the sculptures.”
The choice of the ten percent net licensing royalty seems particularly appropriate given the license granted by Mr. Alli to Mr. Gaylord. According to Mr. Gaylord’s attorneys, he was awarded $685,000.
Heidi Harvey of Fish & Richardson represented the artist on a pro bono-contingency hybrid basis. While it is disheartening that the U.S. did not settle this case earlier and that it took the position the work was not owned by the artist, the robust licensing fee hopefully rectifies the damage done by the Postal Service.
(Photographs from the 2010 Federal Circuit decision)