A sculptor who created a replica of the Statue of Liberty for a Las Vegas casino was awarded $3.5 million in damages last week after the US Postal Service (USPS) accidentally used a photo of his statue—rather than a photo of the original statue in New York harbor—on one of its most common stamps.

If you bought a "forever" stamp between 2011 and 2014, there's a good chance that it showed the face of the Statue of Liberty replica that sculptor Robert Davidson constructed for the New York-New York Hotel and Casino in Las Vegas. The Post Office licensed a photo of Davidson's statue from the image service Getty for $1,500, initially believing it was a photograph of the original statue. (The license only covered the rights to Getty's photograph of the statue—not the statue itself.)

The stamp with the resulting image was released to the public in December 2010; it took four months before anyone pointed out the mistake to the Post Office. In March 2011, a spokesperson said that the USPS "still loves the stamp design and would have selected this photograph anyway." The Post Office continued using the photo for almost three years before retiring it in January 2014.

Davidson sued, arguing that he was owed royalties for unauthorized use of an image of his statue. But the Post Office argued that as a mere copy of a famous statue, Davidson's work wasn't entitled to copyright protection. The Post Office also argued that the use of the image was permitted by copyright's fair use doctrine because the Post Office derived little value from using an image of Davidson's slightly different version of the statue rather than the original.

The US Court of Federal Claims disagreed. Davidson testified that he had tried to feminize the rather masculine look of the original Lady Liberty's face. The court agreed and concluded that Davidson's modifications to the face were sufficiently large to grant his work originality and defeat the government's fair use claim.

The final issue the court needed to decide was how much money Davidson was owed. The USPS argued that lots of artists were eager to have their work on stamps, and so the Post Office never has to pay more than $5,000 for a license to use a work. USPS argued that Davidson should get no more than $10,000.

Davidson countered that he should get a percentage rate for every stamp issued. And with billions of stamps sold, that could be a very large number.

The court ultimately focused on the 3.24 percent of the stamps that were never used—either because they were lost or because they were retained by stamp collectors. These stamps represent pure profit for the Post Office, and the court concluded that it was reasonable for the Post Office to pay a per-stamp royalty for these stamps.

These unused stamps accounted for more than $70 million in Post Office revenue during the three years Davidson's image was used. The court awarded Davidson a five percent royalty for those unused stamps; it also awarded him $5,000 in damages for the nearly $5 billion worth of stamps that were used to pay postage. Total damages: $3.55 million.

The Post Office says it has new procedures in place to make sure that it doesn't make a mistake like this again.