Opinion ID: 772795
Heading Depth: 4
Heading Rank: 4

Heading: Governing Authority

Text: 61 The decisions of this and other courts support the view that the owner's actual damages may include in appropriate cases the reasonable license fee on which a willing buyer and a willing seller would have agreed for the use taken by the infringer. 62 Although the Supreme Court has never directly addressed this question, it has suggested in the somewhat different context of a fair use analysis that a critical question is whether the user stands to profit from exploitation of the copyrighted material without paying the customary price. Nation Enters., 471 U.S. at 562. 63 In Szekely, a 1909 Act case, we awarded such damages. A screenwriter sued a film distributor for damages based on its distribution of a film employing the plaintiff's screenplay. The plaintiff had contracted with a movie producer to sell the screenplay for $35,000. However, the producer encountered financial difficulties, and failed to complete the purchase, leaving the ownership of the screenplay with the plaintiff. The production company nonetheless made the film using the plaintiff's screenplay. The screenwriter sued the distributor for infringement, and the distributor was held liable. The plaintiff's award of damages was based on the amount of the license fee the plaintiff would have been entitled to charge, calculated by reference to the contract the plaintiff had made with the production company. See Szekely, 242 F.2d at 268-69. 64 In Abeshouse, under the current Act, we again awarded such damages. The plaintiff had licensed the defendant to be the plaintiff's exclusive distributor for a poster design showing a Rubik's Cube solution. The defendant secretly caused infringing posters to be printed by an independent source and sold them. We upheld an award of damages under § 504(b) in two parts: one part consisting of the infringer's profits from its sale of the infringing posters; the second part representing the payments the plaintiff would have received if the defendant had obtained the infringing posters from the plaintiff. See Abeshouse, 754 F.2d at 470-71. 65 In Koons, the defendant, a famous pop art sculptor, appropriated the plaintiff's copyrighted photograph of a couple with a litter of puppies, and caused his workshop to fabricate a work of sculpture copying the plaintiff's image. In rejecting the defendant's claim of fair use, we observed that while a finding of infringement would not necessarily prevent the defendant from publishing his expression, it does recognize that any such exploitation must at least entail 'paying the customary price.' Koons, 960 F.2d at 310 (quoting Nation Enters., 471 U.S. at 562). In remanding to the district court to assess the plaintiff's actual damages we observed that a reasonable license fee for the use of [the plaintiff's work] best approximates the market injury sustained by [the plaintiff] as a result of [the defendant's] misappropriation. Id. at 313. See also Ringgold v. Black Entertainment Television, 126 F.3d 70, 81 (2d Cir. 1997) (fact that infringement had little likelihood of adversely affecting sales of licensed poster of copyrighted artwork deserves little weight [in fair use analysis] against a plaintiff alleging appropriation without payment of a customary licensing fee). 66 Szekely, Abeshouse, and Koons are supported by the decisions of other Circuits, as well as district courts. In Nucor Corp. v. Tennessee Forging Steel Serv., Inc., 513 F.2d 151, 152 (8th Cir. 1975), a 1909 Act case, the defendant infringed on the plaintiff's architectural plans. After a trial on damages, the jury returned with a verdict of no damages. See id. On appeal, the Eighth Circuit held that the district court had erred by failing to instruct the jury that the defendants were liable for the fair value, or market value, of the infringed plans. See id. at 153 & n.3. 67 In Sid & Marty Krofft Television Prods. Inc. v. McDonald's Corp., 562 F.2d 1157, 1174 (9th Cir. 1977), where the defendant had produced commercials infringing on the plaintiff's television show, the Ninth Circuit approved a jury instruction that allowed the jury to award an amount approximating what a willing buyer would have been reasonably required to pay to a willing seller for plaintiffs' work. 68 In Kleier Adver., Inc. v. Premier Pontiac, Inc., 921 F.2d 1036, 1039 (10th Cir. 1990), the defendant automobile dealership infringed for twenty-two months upon an advertising agency's syndicated advertising program. The Tenth Circuit upheld the jury's award of damages, concluding that the jury had intended an award of actual damages that represented the plaintiff's lost license fees over the twenty-two month period. See id. at 1040. 69 In Encyclopedia Brown, a cable television company and various cable operators infringed on the plaintiff's television program. The district court rejected the defendants' argument that the plaintiff's claim for a reasonable license fee was not cognizable as a matter of law. The court reasoned that if the lost sale of a product to a third party customer constitutes actual damages, then the lost sale of a license to a defendant who, absent the infringement would have paid for a license, may constitute actual damages as well. See Encyclopedia Brown, 25 F. Supp. 2d at 399-402. The court found authorization for such an award in Koons. See Encyclopedia Brown, 25 F. Supp. 2d at 401 (quoting Koons, 960 F.2d at 313). 70 In Aitken, Hazen, Hoffman, Miller, P.C. v. Empire Constr. Co., 542 F. Supp. 252 (D. Neb. 1982) the defendant construction company, after first engaging the plaintiff architectural firm to design an apartment complex, subsequently copied and used the plaintiff's plans in construction of an apartment complex on a neighboring parcel of land. The court determined that the fair market value of the modified architectural plans was the relevant measure for actual damages, and calculated that amount by determining the amount [defendant] would reasonably have paid to the plaintiff and the plaintiff would reasonably have expected to receive for the revision and use of the [first set of] plans. Id. at 263. In Kleier Adver. Co. v. James Miller Chevrolet, Inc., 722 F. Supp. 1544, 1546 (N.D. Ill. 1989), where the facts were similar to the Tenth Circuit's Kleier case cited above, the court awarded lost license fees, which it characterized as actual damages, as well as the infringer's profits. See also Curtis v. General Dynamics Corp., No. C89-566S, 1990 WL 302725, at  (W.D. Wash. Sept. 26, 1990) (awarding plaintiff photographer the fee he would have been paid had defendant hired him instead of infringing his copyright); Bishop v. Wick, No. 88 C 6369, 1988 WL 166652, at  (N.D. Ill. Dec. 29, 1988) (Plaintiffs shall recover the fair market value of the [infringed computer program] in an amount equal to the ordinary licensing fees charged to licensees of plaintiffs, multiplied by each time that defendants illegally copied or utilized the [program]. (emphasis omitted)); Sherry Mfg. Co. v. Towel King, 220 U.S.P.Q. 855, 859 (S.D. Fla. 1983) (awarding actual damages based on reasonable royalty which should have been paid for license to use infringed design), rev'd on other grounds, 753 F.2d 1565 (11th Cir. 1985). 71