This case involves allegations of copyright infringement against a virtual reality game studio that produced a series of architectural design games. One of the buildings in the game is depicted with real-life murals, which were commissioned and designed by an established visual artist. The artist alleged that his work was depicted in the game without his permission. The artist contacted the game studio to raise the issue and was offered a small sum of money in exchange for exclusive rights to depict the artwork. He declined the offer. The games were produced anyway depicting the murals in meticulous detail without his permission. An expert in licensing and copyrights was sought to assess the value and damages of the alleged infringement.
Question(s) For Expert Witness
- 1. How often do you conduct valuations for copyright cases?
- 2. What factors would you consider when placing a value on the alleged infringement of the work in question?
Expert Witness Response E-367318
My experience and expertise are centered on analyzing finance, valuation, accounting, and licensing issues related to intellectual properties including patents, copyrights, trademarks, and trade secrets. I have significant experience evaluating the damages that result from copyright infringement, including determining what actual damages the copyright holder may have suffered, including analyzing lost licensing fees that reflect the fair market value of the copyrighted work. In doing this work, I have evaluated different types of copyrights, ranging from images, websites, software code, and other copyrightable works. My analysis would focus on two separate measures of damages: lost licensing fees and the infringer’s profits attributable to the use of the copyrights. With respect to lost license fees, the main factors I would consider are the license fees typically received (if applicable) by the copyright owner for the usage of the copyrighted works. Given the distinct fact pattern at issue in this case, I do not expect that the visual artist has previously granted rights for similar use of the copyrighted works. I would also consider the amount paid by the defendant and other similar entities for rights to other copyrighted works or likenesses that contribute in a similar manner to the video game products that they develop and sell. These comparable transactions may provide a benchmark for determining the fair market value for the copyrighted works and lost license fees. With respect to the infringer’s profits, I would first analyze the revenues that have been realized from the sales of the video game in question. I would then evaluate the costs incurred in developing and marketing the game to arrive at an overall amount of profit. While it is the infringer’s burden to determine the portion of the profits that are attributable to the use of the copyrighted works as opposed to other factors, I would anticipate also performing an apportionment analysis that would focus on evaluating how the presence of realistic depictions of the murals contribute to consumer demand and a portion of the sales and profits of the game.