Defendants argue that this instruction was designed only to prevent the jury from considering the corporate profits of McDonald’s, which are derived from the purveying of food. They point instead to Jury Instruction No. 49, which reads:
“If you find that defendants infringed plaintiffs’ copyright, plaintiffs are entitled to all of the damages, if any, suffered as a result of such infringement. In arriving at any such damages, you may take into consideration the reasonable value, if any, of plaintiffs’ work including the publication and republication rights therein, and the value, if any, to defendants of the use of plaintiffs’ works.”
Defendants claim that the value of use provided in this instruction is equivalent to defendant’s profits from the infringement.
The value of use reference in Instruction No. 49 is defined as a part of the reasonable value of plaintiffs’ work. It amounts to a determination of what a willing buyer would have been reasonably required to pay to a willing seller for plaintiffs’ work. That is a different measure than the determination of defendants’ actual profits from the infringement. An author might license the use of his copyright either for a lump sum based on the reasonable value of the work or for a royalty derived from the licensee’s profits, or for a combination of both.[1]
The district court recognized the potential for confusion between these two instructions. It agreed upon an explanation offered by counsel for plaintiffs: “I think that the difference would be that a person may pay to use ‘Living Island’ and the characters, and then, even though they have paid for them, they may have suffered a loss and suffered no profit.” It was only because the district court concluded that there was a difference between profits and value of use that both Instructions 26 and 49 were delivered to the jury. We agree with this distinction.
Defendants argue further that profits in fact were considered by the jury. The record does not support this conclusion. No exhibits regarding either defendants’ profits were submitted to the jury in the infringement action.[2] We therefore find that the issue of profits was neither submitted to nor considered by the jury.
An Accounting of Profits as a Legal Remedy
In denying plaintiffs’ motion for an accounting of profits, the district court relied upon Dairy Queen v. Wood, 369 U.S. 469, 82 S.Ct. 894, 8 L.Ed.2d 44 (1962). That
- ↑ This same distinction is recognized in patent cases. For example, in Atlas-Pacific Engineering Co. v. Ashlock, 339 F.2d 288, 290 (9 Cir. 1964), cert. denied, 382 U.S. 842, 86 S.Ct. 55, 15 L.Ed.2d 83 (1965), this court recognized:
“[T]here is a variety of possible elements of damages for patent infringement, such as the profits made by the infringer, the actual damage to the patentee … or a reasonable royalty….”
- ↑ Defendants contend, for example, that an Exhibit No. 52 was submitted listing all of Needham’s commissions derived from production of the McDonaldland commercials from 1971 to 1973. No such exhibit appears in the record. A document numbered 112 contains this information but was not offered or received in evidence. What attention plaintiffs brought to the commissions of Needham arose from the claim for breach of contract, not copyright infringement. And certainly nothing was ever said or submitted regarding the amount of McDonald’s profits.
“MR. BERMAN: ‘It’s our position that’s a question for the Court if a favorable verdict on the infringement claim is returned.’
“THE COURT: ‘Mr. Liebig.’
“MR. LIEBIG [counsel for defendants]: ‘Well, the problem, of course, in that thing, I want to discuss it with the Court. In the ordinary context of the copyright case, of course, the defendant, infringer, publishes a book, and either he makes money or he doesn’t make money selling that book. Now, in that sort of a situation profits are allowable. Now, I would suppose that the rule would be translated into this case if somehow you could identify a profit with an infringement, but to say that the jury could consider the profits of McDonald’s corporation as an element of damages here I think would be totally improper, and the same with Needham, Harper & Steers. You get into the area of corporate profits, the—let’s see, that’s—’
“THE COURT: ‘Let’s proceed. 27.’”
