Sheldon v. Metro-Goldwyn Pictures Corp.
Headline: Copyright owners cannot automatically take all movie profits for copied material; Court affirmed apportionment and upheld a 20% award to the playwrights instead of the film’s full net earnings, limiting recovery to attributable gains.
Holding: The Court held that courts may apportion profits in copyright infringement cases and on these facts limited the playwrights to twenty percent of the film’s net profits because only that portion was attributable to the copied material.
- Prevents copyright owners from automatically receiving all profits from an infringing film.
- Allows courts to use expert testimony to apportion profits between source material and filmmakers.
- Limits awards to profits actually attributable to the copied material.
Summary
Background
A team of playwrights sued a movie company after the company released a film based on the same true-crime story and after negotiations to buy the play’s rights (priced at $30,000) had failed. The play "Dishonored Lady" was copyrighted in 1930. The movie, titled "Letty Lynton," took elements from the same historical story and, according to lower courts, also copied the playwrights’ work. The District Court originally awarded the playwrights all net film profits, but the Circuit Court of Appeals found infringement and ordered an accounting that gave the playwrights one-fifth of the profits.
Reasoning
The key question was whether a court can divide movie profits so the copyright owner gets only the part caused by the copied material. The Court said yes. It explained that the law allows recovery only for profits made from the infringement, not the infringer’s separate contributions. The Court relied on equitable principles and comparable patent cases to say apportionment is proper. Here evidence showed most profits came from actors, production, direction, and other film-specific features. Experts estimated the play’s contribution as small; the lower court used a cautious twenty percent figure for the playwrights and the Supreme Court found that a reasonable approximation.
Real world impact
The ruling means courts may divide profits between copyright owners and infringers when the infringer’s own work drove most earnings. Copyright owners will recover only what can reasonably be tied to the copied material, and courts may rely on expert testimony to make fair, approximate allocations.
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