The Court of Appeals for the Eleventh Circuit reversed the district court’s ruling that statutory damages awarded for cybersquatting under the ACPA are duplicative of actual damages awarded for infringement under the Lanham Act. The appeals court found that these two types of damages are not duplicative because they serve different purposes-ACPA statutory damages serve as a sanction to deter wrongful conduct, whereas Lanham Act actual damages serve as compensation for the wronged party.
Plaintiff St. Luke’s Cataract and Laser Institute, P.A. (“St. Luke’s”) is a privately owned eye care and ambulatory surgical center. Defendant Dr. Sanderson (“Sanderson”), an oculoplastic surgeon, joined St. Luke’s in 1995 and started an oculoplastic cosmetic surgery practice called the St. Luke’s Cosmetic Laser Center. St. Luke’s paid for Sanderson’s staff, equipment, and advertising expenses. In 1998, Sanderson worked with St. Luke’s webmaster Erickson to create a promotional website for his oculoplastic cosmetic surgery practice a twww.laserspecialist.com (as well as www.lasereyelid.com, which automatically redirected to the www.laserspecialist.com site). The www.laserspecial.com website was linked to St. Luke’s primary website. Erickson registered the domain names listing Sanderson as the registrant using St. Luke’s physical address. Erickson listed himself as the administrative contact, which gave him control over the domain names. While Sanderson was an employee, St. Luke’s paid the domain registration and Internet hosting fees for the domain names and regularly provided Sanderson with backup disks of the laserspecialist.com website content.
In June 2003, Sanderson abruptly left St. Luke’s to open his own practice. After he resigned, Sanderson sought to change the administrative contact information. At Sanderson’s request, the domain name registrar emailed St. Luke’s to confirm the requested change of the administrative contact from Erickson to Sanderson. Erickson responded by approving this change, which gave Sanderson control over the domain names. Sanderson also changed Internet hosting companies for the domain names. Sanderson used a modified backup copy of the Laser Specialist website content he obtained while employed by St. Luke’s to create the website for his new practice. Sanderson launched his new site in October 2003 using the laserspecialist.com and lasereyelid.com domain names.
Almost two years later, during which time St. Luke’s did not replace Sanderson and had no oculoplastics practice, St. Luke’s learned that Sanderson was using the domain names and Laser Specialist website content for his own practice and that the laserspecialist.com domain name was still linked to St. Luke’s home page. St. Luke’s sued Sanderson for trademark infringement, cybersquatting, and copyright infringement. In response, Sanderson took down the laserspecialist.com website.
The district court granted St. Luke’s motion for preliminary injunction in part, ordering Sanderson to delete content from the website that the parties identified as likely owned by St. Luke’s. But the district court allowed Sanderson to keep the two domain names. Following a jury trial, the jury found in St. Luke’s favor on all claims except for copyright infringement and awarded St. Luke’s monetary relief, including $25,000 in actual damages and $13,000 for profits for trademark infringement under the Lanham Act, $7,000 in actual damages under its Florida unfair-trade-practices statutory claim, $10,000 in actual damages on its common-law unfair-competition claim under Florida law, and $10,000 in ACPA statutory damages for cybersquatting. On postverdict motions, the district court held, among other things, that the $25,000 in Lanham Act actual damages was duplicative of the $10,000 in ACPA statutory damages. It also awarded St. Luke’s $587,441.49 in attorneys’ fees and costs, permanently enjoined Sanderson from the complained-of activities, and ordered transfer of the domain names to St. Luke’s. St. Luke’s appealed the district court’s denial of the $10,000 in ACPA statutory damages, among other things.
The court of appeals reversed, holding that the damages awarded on St. Luke’s ACPA cybersquatting claim were not duplicative of the actual damages awarded on its Lanham Act trademark-infringement claim. As an initial matter, the ACPA expressly states that a statutory damages award “shall be in addition to any other civil action or remedy otherwise applicable.” 15 U.S.C. § 1125(d)(3). Accordingly, Congress has statutorily “prescribed recovery under the ACPA even if it is duplicative of other damages awarded.” The court further noted that the damage awards for cybersquatting and infringement were not duplicative because the statutory elements of cybersquatting and trademark-infringement claims were different, and the two damages awards served different purposes. An ACPA cybersquatting claim, unlike a trademark-infringement claim under the Lanham Act, requires a showing of a bad-faith intent to profit from a protected trademark. As a result, the ACPA statutory damages award served to “sanction or punish” Sanderson’s bad-faith conduct and deter him from future ACPA violations. In contrast, the Lanham Act actual damages award compensated St. Luke’s for its injuries and losses due to Sanderson’s infringement. The Eleventh Circuit noted that other circuits have also taken the view that ACPA statutory damages serve to deter similar to the purpose of statutory damages in copyright law, while Lanham Act damages serve to compensate. The appeals court thus remanded the case with instructions to reinstate the jury’s award of $10,000 to St. Luke’s for ACPA statutory damages.
Consistent with a number of other courts, the Eleventh Circuit held that the ACPA statutory damages provision contains a deterrence element. However, the Eleventh Circuit appears to be the first circuit court to specifically hold that an award of ACPA statutory damages is not duplicative of an award of Lanham Act actual damages.