HOW THE STATUE OF LIBERTY COMBINED WITH COPYRIGHT INFRINGEMENT BRINGS GREAT PROSPERITY

Even on the surface, this is a remarkable case, just decided at the end of June. Davidson v The United States (U.S. Court of Federal Claims, No. 13-942C, 6/29/18)

The Facts:

A sculptor is hired to create a Statue of Liberty replica for the New York New York Hotel & Casino in Las Vegas. The sculptor’s net profit from the project was $233,000. The U.S. Postal Service obtains a photo of the replica and mistakenly believes it’s the real Lady Liberty located in New York Harbor and produces a Forever Stamp using the photo. The sculptor sues the U.S. Postal Service for copyright infringement and the U.S. Court of Federal Claims awards the sculptor $3,554,946.

Quite a win – even by Las Vegas standards.


Lady Liberty-1

How did the U.S. Postal Service make such a mistake?

The U.S. Postal Service decided that it wanted to use an image of Lady Liberty for a new version of the Forever Stamp. It located an image on Getty Images and did not realize that the image was of the replica in Las Vegas. The photograph was taken by an independent photographer and licensed to Getty Images for resale. The U.S. Postal Service purchased a 3-year license from Getty Images for making 1 million copies for $1,500.

The U.S. Postal Service realized its mistake after it had printed 3 billion stamps at a cost of $8 million. Ultimately, 10.5 billion were printed before the stamp was retired.

It’s important to note that while sovereign immunity prevents many claims against the federal government, 28 U.S.C. § 1498(b) waives immunity for claims for copyright infringement.

Interesting defense claims that failed

  1. The sculpture was a mere replica of the Lady Liberty in New York Harbor.

In order to be copyrightable, U.S. copyright law requires that a work be “original.” See Feist Publications, Inc. v. Rural Telephone Service Co., Inc., 499 U.S. 340, 347 (1991). The court found the sculpture to be original because the sculptor made various artistic decisions in the making of the statue, like deciding to make the face more modern and feminine than the original, and he even looked to a photo of his mother-in-law for inspiration. 

  1. The sculpture is an architectural work.

The U.S. Copyright Act exempts from claims of infringement architectural works. See 17 U.S. Code § 120(a). This is an interesting exemption. Without it every photograph with buildings would be a possible copyright infringement – because architectural works are protected by copyright. Nevertheless, the court found this claim to be completely without basis as the statue is not a building. 

  1. The use was subject to the Fair Use defense.

One of the prime elements of the Fair Use defense is a consideration of whether the use was for commercial purposes (as opposed to for editorial purposes for example). The U.S. Postal Service argued that the revenue received from sales of the stamp was for postal delivery and did not relate to the image used. However, this defense was undercut do the fact that $71 million in revenue was estimated for stamps that would never be used, which translates into pure profit for the U.S. Postal Service.

How were damages calculated?

The percentage of sold stamps that will not be used is calculated by the U.S. Postal Service and represents pure profit. The percentage for this stamp was calculated at 3.24% and worth about $71 million in revenue. Based upon expert testimony, the court calculated that a reasonable royalty would be 5% and arrived at damages of $3,554,946. This is in spite of the fact that the U.S. Postal Service would never have paid anything near this amount for stamp artwork (it had never paid more than $5,000 in the past), and the sculptor had never even sought to monetize his Lady Liberty sculpture.

Lessons learned

The U.S. Postal Service purchased a license to use the photo from Getty Images. Even if it had purchased a license for the full printing volume, Getty Images had no rights to license the underlying image. For instance, if someone takes a photo of a copyrighted painting, that does not give the photographer the right to grant others the right to use the photographed image of the painting. Only the copyright owner (in this example, the painter) has that right.

The important lesson here is that just obtaining the license rights to an image from a reputable source does not guaranty that the source has the rights to grant the license. And I guaranty that the Getty Images license terms do not provide any meaningful recourse against Getty Images.

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William Galkin manages GalkinLaw. Mr. Galkin has dedicated his legal practice to representing Internet, e-commerce, computer technology and new media businesses across the U.S. and around the world. He serves as a trusted adviser to both startup and multinational corporations on their core commercial transactions.

  
                                                                                                         
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