## Facts

- Frank Gaylord created *The Column*, a group of 19 stainless-steel soldier statues forming a central feature of the Korean War Veterans Memorial in Washington, D.C.
- The U.S. Postal Service issued a 37-cent commemorative stamp in 2002 featuring a photograph depicting *The Column* and did so without obtaining a license from Gaylord.
- Prior liability for copyright infringement had been established on appeal; the case returned to the Court of Federal Claims to determine damages as the fair market value of a license under 28 U.S.C. § 1498(b).
- The infringement involved (1) stamps used for postage, (2) stamps sold but not used (collector/unused stamps), and (3) retail products bearing the stamp image.
- On remand, Gaylord elected not to seek damages for stamps actually used to send mail, focusing instead on unused stamps and retail goods.
- Relevant revenue figures included approximately $5.4 million from sold but unused stamps, $330,919.49 from USPS’s direct sales of retail goods using the stamp image, and $17,831.93 in third-party licensing revenue tied to the stamp image.
- Evidence showed Gaylord had consistently licensed images of *The Column* on a running-royalty basis at about 10% of sales for derivative uses.

## Issues

1. What is the fair market value of a license that would have authorized USPS’s unauthorized use of *The Column* on the stamp and related merchandise under 28 U.S.C. § 1498(b)?
2. Should the license value be measured as a running royalty or a lump-sum payment, and what royalty rate falls within a reasonable range based on the evidentiary record?
3. To what revenue bases should any reasonable royalty apply when damages are sought only for unused stamps and retail merchandise?

## Decision

- The court determined that the appropriate measure of “reasonable and entire compensation” was the fair market value of a hypothetical license for USPS’s infringing uses.
- The court rejected a $5,000 lump-sum measure as a controlling benchmark and treated past USPS payment practices as only one relevant data point.
- The court found a 10% running royalty best reflected the bargain that would have resulted from a hypothetical arm’s-length negotiation.
- Applying a 10% royalty to the relevant revenue streams, the court awarded Gaylord $684,844.94 as just compensation (including prejudgment interest as calculated by the court).

## Legal Principles

- Under 28 U.S.C. § 1498(b), the United States is liable for “reasonable and entire compensation” for unauthorized use of copyrighted works, commonly determined by the fair market value of a hypothetical license.
- A hypothetical negotiation analysis may rely heavily on the copyright owner’s established licensing history when it is sufficiently comparable to the infringing use.
- A prior maximum fee paid by the government for other licenses may inform, but does not cap, the fair market value for a different work and use.
- A running royalty may be appropriate where the evidence supports ongoing value tied to sales or revenues attributable to the infringing use.
- Where the plaintiff limits damages to readily quantifiable commercial exploitation (e.g., collectible items and merchandise), the royalty base may be confined to those revenue streams rather than broader, harder-to-value uses.

## Conclusion

The Court of Federal Claims set damages for USPS’s unauthorized stamp and merchandise use of *The Column* by valuing a hypothetical license at a 10% running royalty and entered judgment awarding $684,844.94 in just compensation under 28 U.S.C. § 1498(b).


Gaylord v. United States, 112 Fed. Cl. 539 (Fed. Cl. 2013)