Woolworth Co v. Contemporary Arts

• Decision Date: 22 December 1952
• Docket Number: No. 42,42
• Citation: 344 U.S. 228,97 L.Ed. 276,73 S.Ct. 222
• Parties: F. W. WOOLWORTH CO. v. CONTEMPORARY ARTS, Inc
• Court: U.S. Supreme Court

344 U.S. 228

73 S.Ct. 222

97 L.Ed. 276

F. W. WOOLWORTH CO.

v CONTEMPORARY ARTS, Inc.

No. 42.

Argued Nov. 17, 1952.

Decided Dec. 22, 1952.

Mr. Kenneth W. Greenawalt, New York City, for petitioner.

Mr. Cedric W. Porter, Boston, Mass., for respondent.

Mr. Justice JACKSON delivered the opinion of the Court.

Respondent brought this action under the Copyright Act to recover for infringement of copyright on a work of art entitled 'Cocker-Spaniel in Show Position.' The District Court found the copyright, of which respondent was assignee, valid and infringed and awarded statutory damages of $5,000, with a $2,000 attorney's fee. The Court of Appeals affirmed.¹ We granted certiorari,² limiting the issues to the measure of the recovery, as to which conflict appears among lower courts.³

Respondent made small sculptures and figurines, among which were statutes of the cocker spaniel, and marketed them chiefly through gift and art shops. Petitioner, from a different source, bought 127 dozen cocker spaniel statuettes and distributed them through thirty-four Woolworth stores. Unbeknown to Woolworth, these dogs had been copied from respondent's and by marketing them it became an infringer.

By the Act an infringer becomes liable—

'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, and in proving profits the plaintiff shall be required to prove sales only, and the defendant shall be required to prove every element of cost which he claims, or in lieu of actual damages and profits, such damages as to the court shall appear to be just, and in assessing such damages the court may, in its discretion, allow the amounts as hereinafter stated * * * and such damages shall in no other case exceed the sum of $5,000 nor be less than the sum of $250, and shall not be regarded as a penalty. * * *' 17 U.S.C. § 101(b), 17 U.S.C.A. § 101(b).

Profits made by the petitioner from the infringement were sufficiently proved to enable assessment of that element of liability. Petitioner itself showed, without contradiction, that the 127 dozen dogs were bought at 60 cents apiece and sold for $1.19 each, yielding a gross profit of $899.16. The infringer did not assume the burden, which the statute casts upon it, of proving any other costs that might be deductible, so the gross figure is left to stand as the profit factor of the infringer's total liability.

As to the other ingredient in computing liability, damages suffered by the copyright proprietor, the record is inadequate to establish an actually sustained amount. Enough appears to indicate that real and substantial injury was inflicted. Respondent had gross annual income of about $35,000 and engaged only eight employees, indicating its small production. Its statuettes were of three media and prices: red plaster retailed at $4, red porcelain at $9, while a black and white porcelain brought $15. There was evidence that the cheaper infringing statuette was inferior in quality. Respondent proved loss of some customers and offered, but was not allowed, to show complaints from sales outlets about the Woolworth competition, decline in respondent's sales, and eventual abandonment of the line with an unsalable stock on hand. The trial judge excluded or struck most of this testimony on the ground that authority to allow statutory damages rendered proof of actual damage unnecessary. It might have been better practice to have received the evidence even if it fell short of establishing the measure of liability; for when recovery may be awarded without any proof of injury, it cannot hurt and may aid the exercise of discretion to hear any evidence on the subject that has probative value. However, petitioner cannot complain of this exclusion, which was in response to its objections. At length, the court said: 'If you establish this was an infringement of copyright, it is inescapably clear there is enough evidence in this case upon which to predicate damage up to $5,000. I don't think Mr. Barnes (counsel for defendant) disagrees with that. Do you?' Mr. Barnes: 'No, your honor.'

The court, having found infringement, accordingly allowed recovery of 'statutory damages in the amount of Five Thousand Dollars ($5,000) as provided by the Copyright Laws of the United States,' with an injunction and attorney's fee.

Petitioner's contention here is that the statute was misapplied because its own gross profit of $899.16 supplied an actual figure which became the exclusive measure of its liability. It argues that an infringing defendant, by coming forward with an undisputed admission of its own profit from the infringement, can tie the hands of the court and limit recovery to that amount. We cannot agree.

In Douglas v. Cunningham, 294 U.S. 207, 209, 55 S.Ct. 365, 366, 79 L.Ed. 862, we said:

'The phraseology of the section was adopted to avoid the strictness of construction incident to a law imposing penalties, and to give the owner of a copyright some recompense for injury done him, in a case where the rules of law render difficult or impossible proof of damages or discovery of profits.'

To fulfill that purpose, the statute has been interpreted to vest in the trial court broad discretion to determine whether it is more just to allow a recovery based on cal- culation of actual damages and profits, as found from evidence, or one based on a necessarily somewhat arbitrary estimate within the limits permitted by the Act.

'In other words, the court's conception of what is just in the particular case, considering the nature of the copyright, the circumstances of the infringement and the like, is made the measure of the damages to be paid, but with the express qualification that in every case the assessment must be within the prescribed limitations, that is to say, neither more than the maximum nor less than the minimum. Within these limitations the court's discretion and sense of justice are controlling, but it has no discretion when proceeding under this provision to go outside of them.' L. A. Westermann Co. v. Dispatch Printing Co., 249 U.S. 100, 106—107, 39 S.Ct. 194, 195, 63 L.Ed. 499.

Few bodies of law would be more difficult to reduce to a short and simple formula than that which determines the measure of damage recoverable for actionable wrongs. The necessary flexibility to do justice in the variety of situations which copyright cases present can be achieved only by exercise of the wide judicial discretion within limited amounts conferred by this statute. It is plain that the court's choice between a computed measure of damage and that imputed by statute cannot be controlled by the infringer's admission of his profits which might be greatly exceeded by the damage inflicted. Indeed sales at a small margin might cause more damage to the copyright proprietor than sales of the infringing article at a higher price.

Whether discretionary resort to estimation of statutory damages is just should be determined by taking into account both components and the difficulties in the way of proof of either. In this case the profits realized were established by uncontradicted evidence, but the court was within the bounds of its discretion in concluding that the amount of damages suffered was not computable from the testimony. Lack of adequate proof on either element would warrant resort to the statute in the discretion of the court, subject always to the statutory limitations.

The case before us illustrates what capricious results would follow from the practice for which petitioner contends. It has admitted gross profits, which make no deduction for sales costs, overheads or taxes and, hence, may appear substantial on this particular record. But gross profits is not what a copyright owner is entitled to recover, but only such profits as remain after the defendant reduces them, as it may, by proof of allowable elements of cost. If we sustain petitioner's contention that profits may be the sole measure of liability as matter of law, such profits could be diminished even to the vanishing point.

Net profits realized by a far-flung distributing enterprise like Woolworth's upon sales of a given item in a few of...