Frank Gaylord v. United States
112 Fed. Cl. 539
Fed. Cl.2013Background
- Gaylord sued the United States in the Court of Federal Claims for copyright infringement and damages related to the KWVM stamp image used on stamps and merchandise.
- The Federal Circuit held the Postal Service infringed in three categories: stamps used to mail, unused stamps by collectors, and retail merchandise bearing the image.
- On remand, the court must determine the fair market value of a license to the infringing use, based on a hypothetical arms-length negotiation.
- Key evidence shows 47,910,587 KWVM stamps were sold before retirement, with a large portion retained by collectors; $330,919.49 revenue from merchandise featuring the stamp.
- The court ultimately awards damages of $684,844.94, applying a 10% running royalty to unused stamps and merchandise, plus prejudgment interest at 19.5%.
- Damages for stamps used to mail were proposed not to be pursued; the court focuses on unused stamps and merchandise.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| FMV license type for unused stamps | Gaylord supports a 10% running royalty. | Not explicitly stated in the opinion. | 10% running royalty applies to unused stamps. |
| FMV license for merchandise featuring the image | Gaylord would receive a 10% royalty for merchandise. | Not explicitly stated in the opinion. | 10% running royalty applied to merchandise revenue. |
| Stamps used to send mail damages | No damages sought for this category. | Not stated in the opinion. | No damages awarded for stamps used to mail. |
| Prejudgment interest rate | Interest required to complete compensation. | Parties stipulated a 19.5% delay compensation factor. | Prejudgment interest at 19.5% added to damages. |
| Total damages after adjustments | FMV-based license damages aggregate to the requested amount. | Aggregate damages calculated per FMV license framework. | Total damages awarded: $684,844.94. |
Key Cases Cited
- Gaylord v. United States, 678 F.3d 1339 (Fed. Cir. 2012) (mandate to determine FMV of license for full scope of infringing use)
- Gaylord v. United States, 595 F.3d 1364 (Fed. Cir. 2010) (three categories of infringing goods and fair use guidance)
- Waite v. United States, 282 U.S. 508 (U.S. 1931) (prejudgment interest supported to complete compensation)
- Fromson v. Western Litho Plate & Supply Co., 853 F.2d 1568 (Fed. Cir. 1988) (Book of Wisdom approach to post-judgment facts in FMV analysis)
- Jarvis v. K2 Inc., 486 F.3d 526 (9th Cir. 2007) (FMV determination via hypothetical negotiation)
- Exxon Chem. Patents, Inc. v. Lubrizol Corp., 137 F.3d 1483 (Fed. Cir. 1998) (mandate interpretation and remand proceedings framework)