Sheldon v. Pictures Corporation

Citation60 S.Ct. 681,309 U.S. 390,84 L.Ed. 825
Decision Date25 March 1940
Docket NumberNo. 482,METRO-GOLDWYN,482
PartiesSHELDON et al. v. PICTURES CORPORATION et al
CourtU.S. Supreme Court

Mr. Arthur F. Driscoll, of New York City, for petitioners.

[Argument of Counsel from pages 391-395 intentionally omitted] Mr. John W. Davis, of New York City, for respondents.

Mr. Chief Justice HUGHES delivered the opinion of the Court.

The questions presented are whether, in computing an award of profits against an infringer of a copyright, there may be an apportionment so as to give to the owner of the copyright only that part of the profits found to be attributable to the use of the copyrighted material as distinguished from what the infringer himself has supplied, and, if so, whether the evidence affords a proper basis for the apportionment decreed in this case.

Petitioners' complaint charged infringement of their play 'Dishonored Lady' by respondents' motion picture 'Letty Lynton', and sought an injunction and an accounting of profits. The Circuit Court of Appeals, reversing the District Court, found and enjoined the infringement and directed an accounting. 2 Cir., 81 F.2d 49. Thereupon the District Court confirmed with slight modifications the report of a special master which awarded to petitioners all the net profits made by respondents from their exhibitions of the motion picture, amounting to $587,604.37. D.C., 26 F.Supp. 134, 136. The Circuit Court of Appeals reversed, holding that there should be an apportionment and fixing petitioners' share of the net profits at one-fifth. 2 Cir., 106 F.2d 45, 51. In view of the importance of the question, which appears to be one of first impression in the application of the copyright law, we granted certiorari, December 4, 1939, 308 U.S. 545, 60 S.Ct. 261, 84 L.Ed. —-.

Petitioners' play 'Dishonored Lady' was based upon the trial in Scotland, in 1857, of Madeleine Smith for the murder of her lover,—a cause celebre included in the series of 'Notable British Trials' which was published in 1927. The play was copyrighted as an unpublished work in 1930, and was produced here and abroad. Respondents took the title of their motion picture 'Letty Lynton' from a novel of that name written by an English author, Mrs. Belloc Lowndes, and published in 1930. That novel was also based upon the story of Madeleine Smith and the motion picture rights were bought by respondents. There had been negotiations for the motion picture rights in petitioners' play, and the price had been fixed at $30,000, but these negotiations fell through.

As the Court of Appeals found, respondents in producing the motion picture in question worked over old material; 'the general skeleton was already in the public demesne. A wanton girl kills her lover to free herself for a better match; she is brought to trial for the murder and escapes'. (106 F.2d 50). But not content with the mere use of that basic plot, respondents resorted to petitioners' copyrighted play. They were not innocent offenders. From comparison and analysis, the Court of Appeals concluded that they had 'deliberately lifted the play'; their 'borrowing was a deliberate plagiarism'. It is from that standpoint that we approach the questions now raised.

Respondents contend that the material taken by infringement contributed in but a small measure to the production and success of the motion picture. They say that they themselves contributed the main factors in producing the large net profits; that is, the popular actors, the scen- ery, and the expert producers and directors. Both courts below have sustained this contention.

The District Court (26 F.Supp. 141) thought it 'punitive and unjust' to award all the net profits to petitioners. The court said that, if that were done, petitioners would receive the profits that the 'motion picture stars' had made for the picture 'by their dramatic talent and the drawing power of their reputations'. 'The directors who supervised the production of the picture and the experts who filmed it also contributed in piling up these tremendous net profits'. The court thought an allowance to petitioners of 25 per cent. of these profits 'could be justly fixed as a limit beyond which complainants would be receiving profits in no way attributable to the use of their play in the production of the picture'. But, though holding these views, the District Court awarded all the net profits to petitioners, feeling bound by the decision of the Court of Appeals in Dam v. Kirk La Shelle Co., 2 Cir., 175 F. 902, 903, 41 L.R.A.,N.S., 1002, 20 Ann.Cas. 1173, a decision which the Court of Appeals has now overruled.

The Court of Appeals was satisfied that but a small part of the net profits was attributable to the infringement, and, fully recognizing the difficulty in finding a satisfactory standard, the court decided that there should be an apportionment and that it could fairly be made. The court was resolved 'to avoid the one certainly unjust course of giving the plaintiffs everything, because the defendants cannot with certainty compute their own share'. The court would not deny 'the one fact that stands undoubted', and, making the best estimate it could, it fixed petitioners' share at one-fifth of the net profits, considering that to be a figure 'which will favor the plaintiffs in every reasonable chance of error'.

First.—Petitioners insist fundamentally that there can be no apportionment of profits in a suit for a copyright infringement; that it is forbidden both by the statute and the decisions of this Court. We find this basic argument to be untenable.

The Copyright Act in Section 25(b)1 provides that an infringer shall be liable—

'(b) To pay to the copyright proprietor such damages as the copyright proprietor may have suffered due to the infringement, as well as all the profits which the infringer shall have made from such infringement, * * * or in lieu of actual damages and profits such damages as to the court shall appear to be just, * * *'.

We agree with petitioners that the 'in lieu' clause is not applicable here, as the profits have been proved and the only question is as to their apportionment.

Petitioners stress the provision for recovery of 'all' the profits, but this is plainly qualified by the words 'which the infringer shall have made from such infringement'. This provision in purpose is cognate to that for the recovery of 'such damages as the copyright proprietor may have suffered due to the infringement'. The purpose is thus to provide just compensation for the wrong, not to impose a penalty by giving to the copyright proprietor profits which are not attributable to the infringement.

Prior to the Copyright Act of 1909, 17 U.S.C.A. § 1 et seq., there had been no statutory provision for the recovery of profits, but that recovery had been allowed in equity both in copyright and patent cases as appropriate equitable relief incident to a decree for an injunction. Stevens v. Gladding, 17 How. 447, 455, 15 L.Ed. 155. That relief had been given in accordance with the principles governing equity jurisdiction, not to inflict punishment but to prevent an unjust enrichment by allowing injured complainants to claim 'that which, ex oequo et bono, is theirs, and nothing beyond this'. Livingston v. Woodworth, 15 How. 546, 560, 14 L.Ed. 809. See Root v. Lake Shore & M.S. Railway Company, 105 U.S. 189, 194, 195, 26 L.Ed. 975. Statutory provision for the recovery of profits in patent cases was en- acted in 1870.2 The principle which was applied both prior to this statute and later was thus stated in the leading case of Tilghman v. Proctor, 125 U.S. 136, 146, 8 S.Ct. 894, 899, 31 L.Ed. 664: 'The infringer is liable for actual, not for possible, gains. The profits, therefore, which he must account for, are not those which he might reasonably have made, but those which he did make, by the use of the plaintiff's invention; or, in other words, the fruits of the advantage which he derived from the use of that invention over what he would have had in using other means then open to the public and adequate to enable him to obtain an equally beneficial result. If there was no such advantage in his use of the plaintiff's invention, there can be no decree for profits, and the plaintiff's only remedy is by an action at law for damages'.

In possing the Copyright Act, the apparent intention of Congress was to assimilate the remedy with respect to the recovery of profits to that already recognized in patent cases. Not only is there no suggestion that Congress intended that the award of profits should be governed by a different principle in copyright cases but the contrary is clearly indicated by the committee reports on the bill. As to section 25(b) the House Committee said:3

'Section 25 deals with the matter of civil remedies for infringement of a copyright. * * * The provision that the copyright proprietor may have such damages as well as the profits which the infringer shall have made is substantially the same provision found in section 4921 of the Revised Statutes relating to remedies for the infringement of patents. The courts have usually construed that to mean that the owner of the patent might have one or the other, whichever was the greater. As such a provision was found both in the trademark and patent laws, the committee felt that it might be properly included in the copyright laws'.

We shall presently consider the doctrine which has been established upon equitable principles with respect to the apportionment of profits in cases of patent infringement. We now observe that there is nothing in the Copyright Act which precludes the application of a similar doctrine based upon the same equitable principles in cases of copyright infringement.

Nor do the decisions of this Court preclude that course. Petitioners invoke the cases of Callaghan v. Myers, 128 U.S. 617, 9 S.Ct. 177, 32 L.Ed. 547, and Belford, Clarke & Co. v. Scribner, 144 U.S. 488, 12 S.Ct. 734, 740, ...

To continue reading

Request your trial
210 cases
  • Lugosi v. Universal Pictures
    • United States
    • California Supreme Court
    • December 3, 1979
    ...several factors which he has confused." (Sheldon v. Metro-Goldwyn Pictures Corporation (2d Cir. 1939) 106 F.2d 45, 48, affd. 309 U.S. 390, 60 S.Ct. 681, 84 L.Ed. 825.) If the defendant provides sufficient evidence, a fair division of the profits will result. "Mathematical exactness" in the ......
  • USM Corp. v. Marson Fastener Corp.
    • United States
    • United States State Supreme Judicial Court of Massachusetts Supreme Court
    • June 28, 1984
    ...214 F.Supp. 383, 403 (D.Md.1963), and Sheldon v. Metro-Goldwyn Pictures Corp., 106 F.2d 45, 54 (2d Cir.1939), aff'd, 309 U.S. 390, 60 S.Ct. 681, 84 L.Ed. 825 (1940). The result of this approach is that, where proof is impossible (perhaps because of the unavailability of precise data), the o......
  • Spiegel Estate v. Commissioner of Internal Revenue Commissioner of Internal Revenue v. Church Estate
    • United States
    • U.S. Supreme Court
    • January 17, 1949
    ...261, 84 L.Ed. 738; Germantown Trust Co. v. Commissioner, 309 U.S. 304, 60 S.Ct. 566, 84 L.Ed. 770; Sheldon v. Metro-Goldwyn Pictures Corp., 309 U.S. 390, 60 S.Ct. 681, 84 L.Ed. 825; United States v. City and County of San Francisco, 310 U.S. 16, 60 S.Ct. 749, 84 L.Ed. 1050; Sunshine Anthrac......
  • West Pub. Co. v. Mead Data Cent., Inc.
    • United States
    • U.S. Court of Appeals — Eighth Circuit
    • September 4, 1986
    ...comment in regard to Keats' work in Sheldon v. Metro-Goldwyn Pictures Corp., 81 F.2d 49, 54 (2d Cir.1936), aff'd, 309 U.S. 390, 392, 60 S.Ct. 681, 84 L.Ed. 825 (1940), where he stated that " * * * if by some magic a man who had never known it were to compose anew Keats's Ode On a Grecian Ur......
  • Request a trial to view additional results
2 books & journal articles
  • Proving disgorgement damages in a copyright infringement case is a three-act play.
    • United States
    • Florida Bar Journal Vol. 84 No. 2, February 2010
    • February 1, 2010
    ...of a new musical work. (43) The case most cited regarding the apportionment of damages is Sheldon v. Metro-Goldwyn Pictures Corporation, 309 U.S. 390 (1940) (Sheldon II). Sheldon II established that apportionment is appropriate when the evidence shows that not all of the infringer's profits......
  • Thwack!! Take that, user-generated content! Marvel Enterprises v. NCSoft.
    • United States
    • Federal Communications Law Journal Vol. 62 No. 3, June 2010
    • June 1, 2010
    ...liable on an implied contract simply because he or she has received such services."). (41.) See Sheldon v. Metro-Goldwyn Pictures Corp., 309 U.S. 390, 399 (1940) (stating that copyright laws were written to prevent flee (42.) For example, the Supreme Court created the active inducement test......

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT