An Expensive, Protracted Lawsuit Resulting In What Might Have Been Surprised Plaintiff’s Lawyers

Gaylord v. United States,
(Fed. Cir. 4/22/11)

A 37 cent stamp is at the heart of this copyright dispute that has been percolating through the courts like coffee in an old stovetop pot. It began in the Court of Claims; went up to the Court of Appeals for the Federal Circuit (CAFC); was remanded and is now issuing from the Court of Claims again, but narrowly this time, solely on a determination of damages.

For those who have not been following this case here is a thumbnail summary: This is a case that arose from a sort of fairy tale with a twist. An amateur photographer visiting the Korean War Veterans’ during a snowstorm took a terrific picture. To the amateur photographer’s delight, the U.S. Postal Service paid him $1,500 for that photograph to be the subject of a stamp. Up to that point, it is sort of a sweet story of an amateur photographer getting a bit of recognition and reward.

But, then the story takes on a darker tone in that the photographer sued the postal service claiming copyright infringement; and the postal service raised the usual battery of defenses including VARA, Fair Use and others.

The photographer claimed that he was owed damages in the amount of $3,024,276.20 (three million dollars and change) as representing ten percent on the 86.8 million 37-cent stamps and related merchandise that the postal service sold in the two years between 2003 when the stamp was issued, and 2005 when the stamp was retired. The CAFC found that the postal service’s use was not protected by the fair use defense; and the issue of damages was remanded for calculation to the lower court.

The court addressed two questions. First what damages are owed to the photographer; and second, whether pre-judgment interest applies?

As to question 1, the court found that $5,000 was the amount owed. The court was governed by the relevant statute that provides for a ‘zone of reasonableness’ to determine the actual damages; and the court found compelling the testimony of U.S. Postal Service management that the postal service is barred from paying royalties by long standing policy; and that the absolute top amount ever paid in the one-time negotiations was $5,000 dollars. The court ruled that $5,000 was the amount owed to the plaintiff photographer as that amount represents the top amount that the plaintiff would have obtained in the one-time negotiations with the postal service.

Question 2 was answered in the negative. The court noted that while pre-judgment interest may be possible in private copyright suits, there is no provision for pre-judgment interest in claims against the United States unless specifically permitted by contract or by act of Congress. Pre-judgment interest on the $5,000 award was denied.

An open question is whether the plaintiff photographer is entitled to a new amount of $5,000 from the postal service or whether the postal service can offset the $1,500 paid to the plaintiff photographer in 2002.



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