Wednesday, February 4, 2015

Copyright in a War Memorial

The Korean War continues to cost the federal government money.

In 2012, my blog post addressed the copyright infringement claim brought by Frank Gaylord against the U.S. Postal Service for printing a photo of The Column -- the Korean War Memorial standing on the National Mall in Washington, D.C -- on U.S. postage stamps.

The Memorial

Mr. Gaylord, a World War II veteran and renowned sculptor, was selected to create the central focus of the Memorial -- 19 statues depicting an infantry squad on patrol. Mr. Gaylord was paid $775,000 for his work. But the U.S. government never obtained a license to use the statues for any purpose other than as a display on the National Mall.

In 2002, the Postal Service wanted to issue a stamp commemorating the 50th anniversary of the Korean War armistice. For this purpose, the Postal Service paid a photographer $1,500 for the right to use a photograph of The Column, but did not pay Mr. Gaylord a royalty for the use of the statues. Nor did the Postal Service seek Mr. Gaylord's consent to use a photo of the statues.

The Stamp

Mr. Gaylord held a copyright interest in the statues by virtue of his creation, and his contract with the federal government did not transfer the copyright interest or give the government any rights other than to display the statues. The government certainly did not have the right to use a photograph of the statues on a postage stamp. But it did. The Postal Service printed 86.8 million stamps of The Column at a cost of $181,412. The stamps had a face value of 37 cents each for a total of $31.82 million. At least 47.9 million stamps were sold.

Mr. Gaylord sought copyright damages from the Postal Service for its profits in copying The Column without a license. The stamps were used for three purposes: to send mail, as an image on commercial merchandise, and on unused stamps sold to collectors. The parties agreed that no damages would be awarded for use of the stamps to send mail (the Postal Service regularly loses money on its postal operations), and agreed to a per-unit royalty of ten percent for commercial merchandise. But the parties disagreed on the amount and type of royalty for the stamps sold to collectors.

The Court of Federal Claims determined that a reasonable royalty for the collector stamps was a per-unit royalty of ten percent, based on its finding of what a reasonable licensor and a reasonable licensee would agree to in a hypothetical negotiation. The Postal Service disagreed and sought a limited up-front, one-time lump-sum payment of $5,000. The trial court determined that $5.4 million was earned by the Postal Service on the collector stamps and that virtually this entire sum represented a profit. The court awarded Mr. Gaylord a royalty on the collector stamps of $540,000, plus an additional $33,092 in royalties for the commercial merchandise. The Postal Service appealed to the Federal Circuit, which upheld the trial court's determination.

Three things are noted by this case. First, Mr. Gaylord as a private citizen owns the copyright in a renown and beloved memorial to the veterans of the Korean War. Second, the U.S. government failed to secure any right of use of the statues apart from the display on the National Mall. Third, a per-unit royalty of ten percent is reasonable for this particular form of special edition, collector memorabilia -- a postage stamp. Why Mr. Gaylord should have been paid $775,000 to create the statues and allowed further to own the copyright is beyond belief. And why the federal government did not retain any meaningful use interest apart from the Mall display compounds the disbelief. And why the U.S. government cannot control the central component of the memorial that honors the veterans and war effort of a significant post-World War II conflict is befuddling.

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