(CN) – After making millions with its unauthorized postage-stamp depiction of the Korean War memorial, the U.S. Postal Service owes the memorial’s artist 10 percent of profits, the Federal Circuit ruled.
“The Column” is a group of 19 stainless steel sculptures, representing a platoon of soldiers, that serves as the centerpiece of the Korean War Veterans’ Memorial on the National Mall in Washington, D.C.
Artist Frank Gaylord designed and created the sculptures, which were dedicated with the rest of the Korean War Memorial in 1995.
A photograph of the memorial appeared on the 37-cent stamp that the U.S. Postal Service issued in 2002 to commemorate the 50th anniversary of the armistice that ended the Korean War.
More than 86 million stamps were issued, and the service also sold retail goods carrying the stamp image, and licensed these products to retailers.
Though the service licensed the photograph from photographer John Alli, it never asked Gaylord’s permission to depict “The Column” on its stamp or any of its retail merchandise.
Gaylord sought damages of 10 percent on total stamp and merchandise sales of $30.2 million, plus prejudgment interest.
A federal judge awarded the artist just $5,000 after finding that the Postal Service had never paid more than that to license an existing image for use on a stamp.
But the Federal Circuit’s appellate panel balked in 2012 at the agency’s “self-serving” testimony about an in-house policy that prohibited it from paying ongoing royalties on stamps.
On remand, the Court of Federal Claims held that Gaylord is entitled to 10 percent of the $5.4 million in profit that the postal service earned on sales of stamps to collectors.
The parties agreed that no damages would be awarded for used stamps, and that Gaylord should receive 10 percent of revenue for sales of commercial merchandise featuring the image.
Over the Postal Service’s objections, the Federal Circuit on Wednesday affirmed the award, which will total more than $500,000.
“The trial court could reasonably conclude that the Postal Service had sufficient incentive to agree to a 10% per-unit royalty for sales of unused stamps to collectors,” Judge Richard Taranto said, writing for the three-judge panel.
This is especially true given that the Postal Service knew that the stamp would raise a substantial amount of money, and that past military-themed stamps had been popular with collectors, the court said. With this expectation, it printed approximately 50 percent more of “The Column” stamps than typical commemorative stamps.
“An arrangement under which it kept 90% of the profits from this opportunity was a good economic deal,” Taranto wrote.
While no past artist has received such a large royalty payment from the Postal Service, other artworks featured on stamps have not had the same household recognition. And others, such as the Disney Concert Hall, might have an indirect interest in stamp-generated publicity.
“There is only one nationally recognized Korean War memorial, and the evidence readily allows the finding that, by 2003, that memorial – and particularly The Column within it – was a distinctively valuable subject for a commemoration of the veterans who sacrificed through service in that war,” the 15-page opinion concludes. “Under these circumstances, the trial court did not err in concluding that, faced with limited alternatives, the Postal Service would have agreed to a per-unit license.”
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