IP FORUM : PUBLICATIONS

USA / COPYRIGHT / DAMAGES

Intellectual property Forum, Issue 44, March 2001

It pays to pay attention to intellectual property

Ronald S Katz, Mark H Wildasin, Martin J O'Connor

This article consists essentially of a study of the United States Federal Court's decision in the copyright action between Flying J Inc and developer Tommy G Pistacchio, his company Central California Kenworth Inc and his architect Ron Daggett. The defendants had copied the plaintiff's floor plan for its Bakersfield truck shop. Some of the legal points are interesting; but the main interest lies in the assessment of damages for copyright infringement. On the legal side, the principal issue was evidence of copying: as the authors point out, "because evidence of direct copying rarely exists, copying may be shown by evidence of access to the copyrighted work and substantial similarity between the copyrighted work and the defendant's work". As United States courts had previously held, a lower standard of proof is required of substantial similarity when a high degree of access is shown; and the existence of differences does not necessarily negate infringement. Under the United States Copyright Act, the copyright owner is entitled to recover the actual damages as suffered by him or her as a result of the infringement and any profits of the infringer attributable to the infringement and not taken into account in computing actual damages. A starting point is the architect's costs; but since the value of architects' plans lies not only in the costs of preparing them but also in the savings and efficiencies resulting from their use, the jury was entitled to take into account the fact that Flying J's truck shop floor plan enabled them to pump twice as much fuel with half as many employees. Actual damages may be measured by the value of use to the infringer; and, in addition to actual damages, the plaintiff may also recover lost profits. Where there is a direct correlation between the plaintiff's losses and the defendant's wrongful gains, the additional damages, if any, are relatively small. But in the Flying J case there was no such correlation; and, as a result, the jury awarded damages which, at $7.7 million, "were 26 times higher than any damage award ever given for misappropriation of architects/ plans". [20052]