In the 1980’s, self-employed artist and former WWII army paratrooper, Frank Gaylord, won a competition to create the figurative sculpture element of the Korean War Memorial in Washington D.C. His design consists of very lifelike cast-metal soldiers moving in formation, adorned in helmets and ponchos, looking about as if they are deep in unfamiliar territory. The piece, entitled “The Column,” was constructed between 1990 and 1995. By 1994 the various bodies supervising Gaylord’s creation of the sculptures had withdrawn all claims for copyright ownership and/or royalties in “The Column,” and thus Gaylord was allowed to retain all copyrights to the piece.
In 1996, an amateur photographer and retired U.S. marine, John Alli, visited the Korean War memorial during a snowstorm. He photographed “The Column” in black and white, its figures swathed in snow and called the piece “Real Life.” The photograph won first prize in a photo contest and Alli became interested in selling prints and posters. Unfortunately, in his search for the copyright holder to “The Column,” Alli was misled by another individual claiming to own all the copyrights to the sculpture. Alli entered into a licensing agreement with this individual and diligently tracked and paid royalties on the photo. He did not locate or pay royalties to Gaylord.
In 2002, the U.S. Postal Service decided to issue at postage stamp commemorating the 50th anniversary of the armistice of the Korean War, and paid Alli $1,500 for use of the photograph on the stamp. The Postal Service sold stamps and other merchandise bearing the image of the stamp incorporating “Real Life.”
Gaylord then filed two lawsuits for copyright infringement—one against Alli and one against the Postal Service. Although Gaylord settled with Alli years ago, his case against the Postal Service has been pending for six years now and has gone up to the Court of Appeals for the Federal Circuit twice. Because the case involves infringement by the federal government, Gaylord is suing under a separate statute waiving the federal government’s sovereign immunity for infringement of copyrights and patents, instead of under the general statutory scheme of U.S. copyright law. Gaylord prevailed in proving that the Postal Service’s subsequent use of “Real Life” infringed upon his copyrights in “The Column.”
In its most recent opinion, issued May 14, 2012, the Federal Circuit held that the district court had erred in calculating Gaylord’s entitlement to damages. The lower court employed a "zone of reasonableness" test to determine that the Postal Service owed Gaylord $5,000 (representing the upward bound that it usually pays for use of an image on a postage stamp). The Federal Circuit agreed with Gaylord that this one-sided analysis was improper. Instead, the court determined that the damages calculation should mirror that of the statutes addressing damages for copyright infringement generally. In a case like Gaylord’s, when a plaintiff cannot show lost sales or lost opportunities to license, the determination of damages is a based on the fair market value of a license covering the defendant’s use. The court parceled out several different uses of the stamp: to send mail, as a collector’s item, and as used on various secondary merchandise like postcards and pins. The court concluded that the damages calculation may vary on stamps that were used for the purpose of sending mail as opposed to those that were bought and remain unused because they depict Gaylord’s work—these stamps represent almost pure profit for the Postal Service. The case was then remanded and the lower court was directed to consider all evidence regarding a theoretical negotiation between Gaylord and the Postal Service, not just the evidence set forth by the Postal Service regarding its policies on the amount it is willing to pay to license artwork for stamps. As the court pointed out, such logic allows an infringer to limit its liability by dictating what it wishes to pay, instead of what a plaintiff is owed. Gaylord’s evidence will most likely show that he is entitled to a higher damages calculation, as he typically earns 8-10% royalty rate on licensing agreements related to his works. The court also held that Gaylord is entitled to prejudgment interest, adding to his damages many years’ worth of interest.
The case has set some important new precedents related to copyright infringement by the U.S. government, especially with respect to the determination of damages. More information about the commemoration of the Korean War, including an image of the stamp is available here. A website about Gaylord’s sculptural works is located here.