1. That clause of § 25(b) of the Copyright Act which authorizes
recovery from an infringer, "in lieu of actual damages and
profits," of "such damages as to the court shall appear to be just"
is inapplicable where the only matter in question is the
apportionment of profits established. P.
309 U. S.
399.
2. The purpose of § 25(b) of the Copyright Act, in awarding to a
copyright proprietor against an infringer "all the profits which
the infringer shall have made from such infringement," is 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. P.
309 U. S.
399.
3. Where it is clear that the profits made by a copyright
infringer are attributable in part to use of copyright material,
but in part to what the infringer himself supplied, and where the
evidence provides a fair basis of division, so as to give the
copyright proprietor all the profits that can be deemed to have
resulted from the use that belonged to him, the profits will be
apportioned accordingly.
Callaghan v. Myers, 128 U.
S. 617, and
Belford v. Scribner, 144 U.
S. 488, distinguished. Pp.
309 U. S.
399-402.
4. Principles governing apportionment of profits in patent
infringement cases apply to cases of copyright infringement. P.
309 U. S.
402.
5. In apportionment of profits between copyright proprietor and
infringer, where mathematical exactness may be impossible, all that
is required is a reasonable approximation, which may be attained
with the aid of expert testimony. P.
309 U. S.
403.
6. The amendment of the Patent Law (R.S. § 4921; Act of February
18, 1922) which expressly recognizes the use of expert testimony in
establishing damages or profits from patent infringement, did not
enlarge in that respect the rules already applied in courts of
equity, and the fact that the copyright law was not similarly
amended does not detract from the jurisdiction to receive evidence
of experts in copyright infringement cases whenever found
competent. P.
309 U. S.
405.
Page 309 U. S. 391
7. Even in a case of deliberate plagiarism, the copyright owner,
upon an equitable accounting of profits, can have only such profits
as were due to the infringement. To award more would be to inflict
an unauthorized penalty. P.
309 U. S.
405.
8. Where the evidence showed that, in the production of a motion
picture which was exhibited at great profit, material had been
deliberately lifted from a copyrighted play, but that much the
greater part of the profits was due to the actors, scenery, skill
in production, expenses, etc., supplied and paid for by the
infringers, an apportionment, with the aid of expert testimony,
resulted in awarding one-fifth to the copyright proprietors. P.
406.
106 F.2d 45 affirmed.
Certiorari, 308 U.S. 545, to review the reversal of a decree,
26 F. Supp.
134, which awarded to the present petitioners all of the net
profits derived by the respondents from a motion picture infringing
the petitioners' copyright. No question of burden of proof was
involved.
Page 309 U. S. 396
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. 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.
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. 106 F.2d 45, 51. In view of the
importance of the question, which appears
Page 309 U. S. 397
to be one of first impression in the application of the
copyright law, we granted certiorari, December 4, 1939, 308 U.S.
545.
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."
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 scenery,
Page 309 U. S. 398
and the expert producers and directors. Both courts below have
sustained this contention.
The District Court 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 percent. 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., 175 F.
902, 903, 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.
Page 309 U. S. 399
The Copyright Act in Section 25(b) [
Footnote 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, 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,
58 U. S. 455.
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 aequo et bono, is theirs, and
nothing beyond this."
Livingston v.
Woodworth, 15 How. 546,
56 U. S. 560.
See Root v. Railway Co., 105 U. S. 189,
105 U. S.
194-195. Statutory provision for the recovery of profits
in patent cases was enacted
Page 309 U. S. 400
in 1870. [
Footnote 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,
125 U. S.
146:
"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 passing 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:
[
Footnote 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
Page 309 U. S. 401
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, and
Belford, Clarke & Co. v. Scribner, 144 U.
S. 488. In the
Callaghan case, the copyright of
a reporter of judicial decisions was sustained with respect to the
portions of the books of which he was the author, although he had
no exclusive right in the judicial opinions. On an accounting for
the profits made by an infringer, the Court allowed the deduction
from the selling price of the actual and legitimate manufacturing
cost. With reference to the published matter to which the copyright
did not extend, the Court found it impossible to separate the
profits on that from the profits on the other. And, in view of that
impossibility, the defendant, being responsible for the blending of
the lawful with the unlawful, had to abide the consequences, as in
the case of one who has wrongfully produced a confusion of goods. A
similar impossibility was encountered in
Belford, Clarke &
Co. v. Scribner, supra, a case of a copyright of a book
containing recipes for the household. The infringing books were
largely compilations of these recipes, "the matter and language"
being "the same as the complainant's in every substantial sense,"
but so distributed through the defendants' books that it was
"almost impossible to separate the one from the other." The Court
ruled that, when the copyrighted portions are so intermingled with
the rest of the piratical work "that they cannot well be
distinguished from it,"
Page 309 U. S. 402
the entire profits realized by the defendants will be given to
the plaintiff.
We agree with the court below that these cases do not decide
that no apportionment of profits can be had where it is clear that
all the profits are not due to the use of the copyrighted material,
and the evidence is sufficient to provide a fair basis of division
so as to give to the copyright proprietor all the profits that can
be deemed to have resulted from the use of what belonged to him.
Both the Copyright Act and our decisions leave the matter to the
appropriate exercise of the equity jurisdiction upon an accounting
to determine the profits "which the infringer shall have made from
such infringement."
Second. -- The analogy found in cases of patent
infringement is persuasive. There are many cases in which the
plaintiff's patent covers only a part of a machine, and creates
only a part of the profits. The patented invention may have been
used in combination with additions or valuable improvements made by
the infringer, and each may have contributed to the profits. In
Elizabeth v. American Nicholson Pavement Co., 97 U. S.
126,
97 U. S. 142,
cited in the
Callaghan and
Belford cases,
supra, it had been recognized that, if a separation of
distinct profit derived from such additions or improvements was
shown, an apportionment might be had.
See Garretson v.
Clark, 111 U. S. 120,
111 U. S. 121.
The subject was elaborately discussed in the case of
Westinghouse Electric & Mfg. Co. v. Wagner Electric &
Mfg. Co., 225 U. S. 604,
where it was distinctly ruled that, "if plaintiff's patent only
created a part of the profits, he is only entitled to recover that
part of the net gains." There, the Court was concerned with the
question of burden of proof. It was said that the plaintiff suing
for profits was under the burden of showing that they had been
made. The defendant had submitted evidence tending to show that it
had added noninfringing and valuable
Page 309 U. S. 403
improvements which had contributed to the making of profits, and
the plaintiff, in reply, had insisted that these additions had made
no such contribution. But, assuming, as had been found, that the
additions were noninfringing and valuable improvements, and a
prima facie case of contribution to profits thus
appearing, the burden of apportionment would rest upon the
plaintiff. But, in that relation, it had still to be considered
that the act of the defendant had made it "not merely difficult,
but impossible, to carry the burden of apportionment," and, in such
case, as the "inseparable profit must be given to the patentee or
infringer," the law placed the loss on the wrongdoer.
The question of burden of proof does not arise in the instant
case, as here the defendants voluntarily assumed that burden and
the court below has held that it has been sustained. What is
apposite, however, is the ruling in the
Westinghouse case
as to apportionment and the sort of evidence admissible upon that
question. The Court pointed to the difficulties of working out an
account of profits, and thought that the problem was analogous to
that presented where it is necessary to separate interstate from
intrastate earnings and expenses in order to determine whether an
intrastate rate is confiscatory. The Court observed that, "while
recognizing the impossibility of reaching a conclusion that is
mathematically exact," there has been received, in addition to
other relevant evidence, "the testimony of experts as to the
relative costs of doing a local and through business."
Chicago,
M. & St.P. Ry. Co. v. Tompkins, 176 U.
S. 167,
176 U. S. 178.
The Court thought that "[w]hat is permissible in an effort to
separate costs may also be done in a patent case where it is
necessary to separate profits."
The principle as to apportionment of profits was clearly stated
in the case of
Dowagiac Mfg. Company v.
Minnesota Moline Plow Co., 235
Page 309 U. S. 404
U.S. 641 -- a case which received great consideration. The Court
there said:
"We think the evidence, although showing that the invention was
meritorious and materially contributed to the value of the
infringing drills as marketable machines, made it clear that their
value was not entirely attributable to the invention, but was due
in a substantial degree to the unpatented parts or features. The
masters and the courts below so found, and we should hesitate to
disturb their concurring conclusions upon this question of fact,
even had the evidence been less clear than it was."
"Insofar as the profits from the infringing sales were
attributable to the patented improvements, they belonged to the
plaintiff, and insofar as they were due to other parts or features,
they belonged to the defendants. But, as the drills were sold in
completed and operative form, the profits resulting from the
several parts were necessarily commingled. It was essential,
therefore, that they be separated or apportioned between what was
covered by the patent and what was not covered by it, for, as was
said in
Westinghouse Electric & Mfg. Co. v.
Wagner Electric & Mfg. Co., supra, (225 U.S.
615): 'In such case, if plaintiff's patent only created a part of
the profits, he is only entitled to recover that part of the net
gains.'
Id., 235 U. S. 646."
In the
Dowagiac case, we again referred to the
difficulty of making an exact apportionment, and again observed
that mathematical exactness was not possible. What was required was
only "reasonable approximation," which usually may be attained
"through the testimony of experts and persons informed by
observation and experience." Testimony of this character was said
to be "generally helpful, and at times indispensable, in the
solution of such problems." The result to be accomplished "is a
rational separation of the net profits so that neither party may
have what rightfully belongs to the other."
Id.,
235 U. S.
647.
Page 309 U. S. 405
We see no reason why these principles should not be applied in
copyright cases. Petitioners cite our decision in the trademark
case of
Hamilton-Brown Shoe Co. v. Wolf Brothers,
240 U. S. 251, but
the Court there, recognizing the rulings in the
Westinghouse and
Dowagiac cases, found on the
facts that an apportionment of profits was "inherently impossible."
The burden cast upon the defendant had not been sustained.
In 1922, some years after the
Dowagiac decision and in
harmony with it, Congress amended Section 70 of the patent law
[
Footnote 4] so as to provide
expressly that, if
"damages or profits are not susceptible of calculation and
determination with reasonable certainty, the court may, on evidence
tending to establish the same, in its discretion, receive opinion
or expert testimony, which is hereby declared to be competent and
admissible, subject to the general rules of evidence applicable to
this character of testimony."
The amendment, so far as it relates to the reception of expert
testimony, recognized, and cannot be deemed to enlarge, the rules
already applied in courts of equity, and the fact that the
copyright law was not similarly amended cannot be considered to
detract from the jurisdiction of the Court to receive similar
evidence in copyright cases whenever it is found to be
competent.
Petitioners stress the point that respondents have been found
guilty of deliberate plagiarism, but we perceive no ground for
saying that, in awarding profits to the copyright proprietor as a
means of compensation, the court may make an award of profits which
have been shown not to be due to the infringement. That would be
not to do equity, but to inflict an unauthorized penalty. To call
the infringer a trustee
ex maleficio merely indicates "a
mode of approach and an imperfect analogy by which the wrongdoer
will be made to hand over the
Page 309 U. S. 406
proceeds of his wrong."
Larson Co. v. Wrigley Co.,
277 U. S. 97,
277 U. S.
99-100. He is in the position of one who has confused
his own gains with those which belong to another.
Westinghouse
Co. v. Wagner Co., supra, p.
225 U. S. 618.
He "must yield the gains begotten of his wrong."
Duplate Corp.
v. Triplex Safety Glass Co., 298 U. S. 448,
298 U. S. 457.
Where there is a commingling of gains, he must abide the
consequences, unless he can make a separation of the profits so as
to assure to the injured party all that justly belongs to him. When
such an apportionment has been fairly made, the copyright
proprietor receives all the profits which have been gained through
the use of the infringing material, and that is all that the
statute authorizes and equity sanctions.
Both courts below have held in this case that but a small part
of the profits were due to the infringement, and, accepting that
fact and the principle that an apportionment may be had if the
evidence justifies it, we pass to the consideration of the basis of
the actual apportionment which has been allowed.
Third. The controlling fact in the determination of the
apportionment was that the profits had been derived not from the
mere performance of a copyrighted play, but from the exhibition of
a motion picture which had its distinctive profitmaking features,
apart from the use of any infringing material, by reason of the
expert and creative operations involved in its production and
direction. In that aspect, the case has a certain resemblance to
that of a patent infringement, where the infringer has created
profits by the addition of noninfringing and valuable improvements.
And, in this instance, it plainly appeared that what respondents
had contributed accounted for by far the larger part of their
gains.
Respondents had stressed the fact that, although the
negotiations had not ripened into a purchase, the price which had
been set for the motion picture rights in "Dishonored
Page 309 U. S. 407
Lady" had been but $30,000. And respondents' witnesses cited
numerous instances where the value, according to sales, of motion
picture rights had been put at relatively small sums. But the court
below rejected as a criterion the price put upon the motion picture
rights, as a bargain had not been concluded and the inferences were
too doubtful. The court also ruled that respondents could not count
the effect of "their standing and reputation in the industry." The
court permitted respondents to be credited "only with such factors
as they bought and paid for; the actors, the scenery, the
producers, the directors and the general overhead."
The testimony showed quite clearly that, in the creation of
profits from the exhibition of a motion picture, the talent and
popularity of the "motion picture stars" generally constitutes the
main drawing power of the picture, and that this is especially true
where the title of the picture is not identified with any well
known play or novel. Here, it appeared that the picture did not
bear the title of the copyrighted play, and that it was not
presented or advertised as having any connection whatever with the
play. It was also shown that the picture had been "sold" -- that
is, licensed to -- almost all the exhibitors as identified simply
with the name of a popular motion picture actress before even the
title "Letty Lynton" was used. In addition to the drawing power of
the "motion picture stars," other factors in creating the profits
were found in the artistic conceptions and in the expert
supervision and direction of the various processes which made
possible the composite result with its attractiveness to the
public.
Upon these various considerations, with elaboration of detail,
respondents' expert witnesses gave their views as to the extent to
which the use of the copyrighted material had contributed to the
profits in question. The underlying facts as to the factors in
successful production and exhibition
Page 309 U. S. 408
of motion pictures were abundantly proved, but, as the court
below recognized, the ultimate estimates of the expert witnesses
were only the expression "of their very decided opinions." These
witnesses were in complete agreement that the portion of the
profits attributable to the use of the copyrighted play in the
circumstances here disclosed was very small. Their estimates, given
in percentages of receipts, ran from five to twelve percent; the
estimate apparently most favored was ten percent as the limit. One
finally expressed the view that the play contributed nothing. There
was no rebuttal. But the court below was not willing to accept the
experts' testimony "at its face value." The court felt that is must
make an award "which by no possibility shall be too small."
Desiring to give petitioners the benefit of every doubt, the court
allowed for the contribution of the play twenty percent of the net
profits.
Petitioners are not in a position to complain that the amount
thus allowed by the court was greater than the expert evidence
warranted. Nor is there any basis for attack, and we do not
understand that any attack is made, upon the qualifications of the
experts. By virtue of an extensive experience, they had an intimate
knowledge of all pertinent facts relating to the production and
exhibition of motion pictures. Nor can we say that the testimony
afforded no basis for a finding. What we said in the
Dowagiac case is equally true here -- that what is
required is not mathematical exactness, but only a reasonable
approximation. That, after all, is a matter of judgment, and the
testimony of those who are informed by observation and experience
may be not only helpful, but, as we have said, may be
indispensable. Equity is concerned with making a fair
apportionment, so that neither party will have what justly belongs
to the other. Confronted with the manifest injustice of giving to
petitioners all the profits made by the motion picture, the court,
in making
Page 309 U. S. 409
an apportionment, was entitled to avail itself of the experience
of those best qualified to form a judgment in the particular field
of inquiry, and come to its conclusion aided by their testimony. We
see no greater difficulty in the admission and use of expert
testimony in such a case than in the countless cases involving
values of property rights in which such testimony often forms the
sole basis for decision.
Petitioners also complain of deductions allowed in the
computation of the net profits. These contentions involve questions
of fact which have been determined below upon the evidence, and we
find no ground for disturbing the court's conclusions.
The judgment of the Circuit Court of Appeals is
Affirmed.
MR. JUSTICE McREYNOLDS took no part in the decision of this
case.
[
Footnote 1]
Act of March 4, 1909, § 25, 35 Stat. 1081, as amended by Act of
August 24, 1912, 37 Stat. 489. 17 U.S.C. § 25(b).
[
Footnote 2]
Act of July 8, 1870, § 55, 16 Stat. 198, 206, R.S. § 4921.
[
Footnote 3]
House Report No. 2222, 60th Cong., 2d sess., p. 15.
See
also Senate Report No. 1108, 60th Cong., 2d sess., p. 15.
[
Footnote 4]
Act of February 18, 1922, § 8, 42 Stat. 392, amending R.S. §
4921. 35 U.S.C. § 70.