Federal Circuit Stamps Out Feud Between Postal Service and Sculptor

By Nicole Rizzo Smith

March 2010 IP Update

A federal appeals court has ruled that the U.S. Postal Service violated an artist’s copyright when it issued a stamp based on a photograph of his war memorial sculptures.

In 1990, a sculptor and Korean War veteran, Frank Gaylord, won a contest to create a Korean War Veterans Memorial in Potomac Park in Washington, D.C. Mr. Gaylord’s design was a haunting tribute to Korean War veterans, featuring 19 stainless steel statues of foot soldiers in formation.

GaylordMr. Gaylord and the contractor hired by the government to supervise the project agreed that Mr. Gaylord would hold rights in the work, and he went on to receive five copyright registrations on the sculptures.

In 1995, an amateur photographer named John Alli decided to present his father, a Korean War veteran, with a photo of the Memorial as a retirement gift. Mr. Alli visited the Memorial on many different occasions, taking photographs at various times of year and day, but eventually selected a photo which shows the soldiers covered in snow under a gray sky.

When Mr. Alli decided to sell prints of the photograph, the contractor wrongly informed him that it owned rights in the statues, and offered to license the copyright to him.

When the U.S. Postal Service issued a 37-cent Korean War commemorative stamp in 2002, it paid Mr. Alli for use of his photograph. The Postal Service did not seek or obtain Gaylord’s permission.

The stamp generated over $17 million for the Postal Service from the sale of nearly 48 million stamps between 2003 and 2005.  In 2006, Mr. Gaylord sued both Mr. Alli and the Postal Service for copyright infringement (but later settled with Mr. Alli out of court).

The Court of Federal Claims (a specialized court that hears monetary claims against the United States) found that the Postal Service’s use of the photograph was “fair use” under the Copyright Act, and therefore did not infringe Mr. Gaylord’s copyright.

The fair use doctrine provides an exception to copyright infringement in order to encourage the promotion of ideas and information conveyed by a copyrighted work, and requires the court to apply a four-factor test.  For the lower court’s analysis of the fair use factors, see our earlier article on this litigation.jhfjshfjsjdfhjkfh

On the appeal in Gaylord v. United States, the Federal Circuit has now reversed the lower court’s ruling. The trial judge and the appeals court took different approaches to the fair use defense, and expressed divergent opinions as to a fair and just decision in this case.

The lower court focused its analysis on the “transformative” nature of the Postal Service’s stamp, that is, the degree to which the image on the stamp lends a new expression or meaning to the sculptures.  The transformation analysis is called for by the first factor enumerated in the fair use statute, which addresses the purpose and character of the allegedly infringing use.  The lower court had resoundingly determined that the photograph of the snow-covered Memorial was transformative, and this finding dictated the rest of its analysis.

The Federal Circuit criticized the reasoning of the lower court, noting that the inquiry into the transformative nature of the use must focus on the purpose and character of the stamp, not that of the photograph.

The lower court judge had devoted much of his discussion to analyzing the impact of the snow in the photograph, as well as the lighting conditions, angles, and exposures, all of which created a “surrealistic effect” which the judge found to be highly transformative of the sculpture.

The Federal Circuit, on the other hand, found that the stamp does not reflect any “further purpose” than the Memorial itself, and that, indeed, the stamp and the Memorial share a common purpose of honoring veterans of the Korean War.

Finding that the snow altered only the appearance of the sculptures and did not transform the character of the sculptures, the court concluded, “Nature’s decision to snow cannot deprive Mr. Gaylord of an otherwise valid right to exclude.”

The court marched through the remaining factors of the fair use analysis, finding that at least three of the four factors weighed against a finding of fair use. Despite the dismissive tone of the court’s “snow” comment, the analysis on the narrow issue of fair use is sound, following the letter of the law.

Yet, the basis for Mr. Gaylord’s “otherwise valid right to exclude” stirred the sentiments of Judge Newman, whose dissent looks beyond the statutory analysis of fair use to the broader question of the equity of the result.

Judge Newman focuses not on whether the government’s use of the image of the sculptures is transformative (which, incidentally, she does not believe was a clearly erroneous finding by the lower court). Instead, she fastens on the conundrum at the heart of this case, namely, that the government must pay royalties to use an image of a War Memorial which it commissioned and which it operates for the public’s enjoyment.

Judge Newman ponders how the majority came to a decision which is “contrary to the contract provisions, contrary to the statute for works done in the service of the United States, contrary to copyright law, and contrary to national policy governing access to public monuments.” Nearly all of these policies are grounded in notions of equity and public policy, and not in the machinations of the fair use analysis under the copyright statute.

Thus, even if it is debatable whether the Postal Service’s use of the image of the sculptures constitutes a fair use under the highly subjective statutory analysis, it is not difficult to understand the larger notion of fairness which provoked Judge Newman’s dissent. As Judge Newman concluded, “The use for governmental purposes of a photograph of the Korean War Veterans Memorial, a public monument that was designed and built with public money, is unambiguously covered by the contract and statutes under which this Memorial was built.”

Despite Judge Newman’s misgivings, the government must now pay Mr. Gaylord some fraction of the thirty-seven cents it has earned for each stamp bearing an image of his creation. This result, for Judge Newman and perhaps for other citizens, calls into question the fairness of the fair use defense.