Through a fairly involved process (described in detail in the Federal Circuit's opinion), the plaintiff, Frank Gaylord, a nationally-recognized sculptor, was selected to create a sculpture for the Korean War Veterans Memorial in Washington, D.C. Ultimately, he created 19 stainless steel statues for the Memorial that represented a platoon of foot soldiers in formation that was referred to as The Column. Gaylord received five copyright registrations relating to the soldier sculptures.
In 1995, photographer John Alli took a number of photographs of the Memorial as a retirement gift for his father, a veteran of the Korean War. Some years later, Alli's photograph of the Memorial was selected to be used on a 37-cent stamp commemorating the 50th anniversary of the armistice of the Korean War to be issued by the Postal Service. The Postal Service paid Alli $1500 for the use of his photograph. It did not seek nor obtain Gaylord's permission to use The Column in the stamp. The Postal Service received more than $17 million from the sale of almost 48 million stamps before the stamp was retired on March 31, 2005.
Gaylord then sued the government in 2006, alleging copyright infringement of his copyright in The Column.
At trial, the government made several arguments: (1) that the stamp made fair use of Gaylord's work; (2) that it was a joint author of the work, which gave it an unlimited license in the work; and (3) that the stamp fell under the exclusion from copyright infringement liability for architectural works under the Architectural Works Copyright Protection Act.
The Court of Federal Claims disagreed with the government on two of its three arguments, finding that Gaylord was the sole copyright owner and that the work was not an "architectural work" under the AWCPA. The Court agreed, however, that the government was not liable for copyright infringement because it had made fair use of the work.
The Federal Circuit affirmed the trial court's conclusions that the government did not have rights as a joint owner of the work and that the work was not subject to the AWCPA. It parted ways with the trial court on the issue of fair use, however, concluding that the factors did not favor fair use and that "allowing the government to commercially exploit a creative and expressive work will not advance the purposes of copyright in this case."
The Federal Circuit found that the purpose and character of the stamp, including the fact that the stamp clearly had a commercial purpose, the expressive and creative nature of Gaylord's work and the fact that Gaylord's work was the focus ("essentially the entire subject matter") of the stamp did not favor a finding of fair use. The only factor working in favor of fair use was the trial court's conclusion, upheld on appeal, that the stamp had not and would not adversely impact Gaylord's efforts to market derivative works of The Column.
Circuit Judge Newman dissented from the majority opinion, arguing that:
[t]he 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. The court errs in its holding that Mr. Gaylord is entitled to damages for copyright infringement.
The majority and dissenting opinions in Gaylord v. United States, No. 2009-5044 (Fed. Cir. Feb. 25, 2010) can be found here (PDF, 36 pgs).