Hamil America, Inc. v. GFI
United States Court of Appeals for the Second Circuit
193 F.3d 92 (1999)
GFI (defendant) infringed Hamil America's (plaintiff) copyright in a floral fabric pattern, supplying fabric to SGS Studio (defendant), which made garments sold by J.C. Penney (defendant). Hamil sued and won at trial, where the infringement was found willful. Hamil elected to recover GFI's profits rather than statutory damages. The trial court accepted Hamil's proof of GFI's gross revenue but refused to let GFI deduct any overhead expenses, reasoning that the willfulness of the infringement barred any deduction. GFI appealed.
Whether, under the Copyright Act, overhead expenses sufficiently related to the production or sale of an infringing product may be deducted in calculating an infringer's profits, using a fair, accurate, and practical method of allocation.