United States Naval Institute v. Charter Communications


  • Naval granted Berkley (in September, 1984) exclusive rights to publish a paperback edition “not sooner than October 1985” of the paperback edition of The Hunt for Red October.
  • Berkley started selling on September 15th, 1985. Sufficient early sales
  • Commenced action when learned of early shipments.
  • District court, said Berkley, was entitled due to industry custom to ship early, awarded Naval nothing.
  • Appealed, naval asserted that there was copyright infringement and wanted ALL profits from pre-October 1985 sales @ $724,300.
  • $35, 380 Naval lost sales as the difference between  the actual hardcover sales for those two months of August and September.
  • Profits “attributable to the infringement”, was only sales to customers who would not have bought the paperback but for the fact it became available in September – $7,760.12.

Procedural History

  • At first, district court dismissed the allegation of breach of contract.
  • On appeals, appellate court remanded that Naval breached contract and remanded entry of judgment for appropriate relief AND copyright infringement.
  • District court awarded Naval $35,380 in damages AND $7,760.12 in profits.
  • Naval appeals for demands for greater monies.
  • Berkley cross-appeals from judgment as a whole for awarding any monies to naval institute
    • U.S. Court of appeals, second circuit, reversed the awards of profits as decided below…affirm award of damages ($35,380).


  • District court awarded BOTH damages and copyright infringement.
    • Copyright infringement- court rejected this claim because an exclusive licensee cannot be liable for infringing the copyright conveyed to it, even though liable for breach of contract.
  • Appeals court awarded just damages for sales regards to damages resulting from breach of contract, not copyright infringement.
  • Purpose of contract breach, is to compensate the injured party for the loss of the breach…by plaintiff’s actual loss.
  • Whether or not the district court finding $35,380.50 is correct or erroneous? $724,300 is clearly too much.
    • District court found that the people buying the soft cover would have waited, and not bought the hard cover anyways
  • Reject Berkley’s contentions.
  • Paperback distribution CLEARLY affected hard cover sales of the book.
  • Prerogative of the court to look at the sales of August, 1985….
    • Doubts are generally resolved AGAINST the party in breach.


–           YES.


  • Doubts are generally resolved AGAINST the party in breach. Thus damages are awarded for loss of sales, but not copyright infringement.



  • District court didn’t err in 35,380.50 for lost sales that were on par for August, the previous month
  • Book sales are unpredictable and can’t calculate sales of the first half of September, thus they used the month of August, the previous month.


  • District court erred in copyright infringement amount, but damages for loss of sales was correct. Thus affirmed.


Berkley’s case was un-substantial because books sales in a month are un-predictable and you can’t use first half of September as a bench mark. You must be in favor of the plaintiff, for he is the one that had the contract breached. Thus, underlying message is that when vague, the person being breached will be in favor over the defendant, thus coming to Augusts sales as a good benchmark.

  • Defendants gain as plaintiff’s loss, relief of promises to redress breach. Court can’t assume that one’s gain is your loss…
  • Disgorgement in non-contract cases.

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