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If you have been to Las Vegas (or seen the city in documentaries or movies), you probably know it’s a land of knock-offs. They have recreated everything in that desert city, from the Statue of Liberty, the Pyramids, and many other iconic landmarks fancied by the Americans looking for some good time.

Now, a picture of the Statue of Liberty licensed to Getty taken from a sculptured replica the real Statue of Liberty at the New York harbor has gotten the US Postal Service (USPS) into trouble. A $3.55 million worth of trouble to be precise.

As the story goes, a sculptor Robert Davidson, who sculptured a replica of the real Statue of Liberty at the New York harbor for the New York-New York Hotel and Casino in Las Vegas, sued the USPS for using his image on their stamps without giving him any royalties or asked permission from him.

But let us start from the very beginning. In December 2010, the USPS began to issuing out stamps with an image of Davidson’s knock off Statue of Liberty. The USPS licensed the photo from the image service Getty for $1,500. At the time, the USPS believed it was the photo of the real Statue of Liberty; the license only covered the rights to use Getty’s picture of the statue, but not the statue itself.

After the stamp had been in circulation for four months, it came to the attention of the USPS that the image in the stamps was a replica of the real statue. However, the company argued since the image was a replica of the real statue, it was not entitled for copyright protection.

Davidson sued USPS arguing he deserved royalties for the unauthorized use of a picture of his creation. The USPS insisted the use of the image was permitted under the copyrights law of fair use doctrine, as they (the Post Office) did get little value from use it (the image). Then the image itself was a replica of the real Statue of Liberty.

The US Court of Federal Claims differed with USPS argument and found Davidson to be deserving of some level of royalties. In court, Davidson argued that his statue was not a replica of the New York harbor statue since he went out of his way and feminized his version.

The court agreed that indeed Davidson’s statue had a more feminine face compared to the real Statue of Liberty at the New York harbor. The court granted that Davidson modification on the statue was sufficiently big to make his work an original and thus the clause of fair use on the image’s copyright does not apply.

How much royalties then?

USPS made the case that it uses images by lots of artists, and many more are eager to have their work featured in postage stamps. So the maximum it has ever paid someone for using their creation on their stamp is no more than $5,000 for the license. Therefore, USPS proposed to pay Davidson not more than $10,000.

Davidson countered that argument by demanding for a percentage rate for all the stamp issued. Given the USPS sold billions of the stamp that could easily be a check in billions being signed to Davidson. The court then decided that Davidson should get 3.24% of the total stamps that were never used; because they were either lost or kept by stamp collectors. These stamps are pure profits for USPS, and thus the court deemed it fit to the company to pay a per-stamp royalty for each of those stamps to Davidson. The unused stamps totaled $70 million in Post Office revenue for the three years USPS was using Davidson’s image. The court ruled that USPS to pay the complainant 5% of the total value of the stamps unused.

Additionally, the court also ruled that Davidson gets $5,000 in damages for the over $5 billion worth of stamps used to pay postage. Davidson is, therefore, eligible to get $3.55 million check from the Post Office.

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