St. Luke's Cataract and Laser Inst. v. Sanderson

• Decision Date: 09 July 2009
• Docket Number: No. 08-11848.,08-11848.
• Citation: 573 F.3d 1186
• Parties: ST. LUKE'S CATARACT AND LASER INSTITUTE, P.A., Plaintiff-Counter-Defendant-Appellant Cross-Appellee, v. James C. SANDERSON, individually, James C. Sanderson, M.D., LLC, Defendants-Counter-Claimants-Appellees Cross-Appellant, Mark Erickson, Defendant-Counter-Claimant.
• Court: U.S. Court of Appeals — Eleventh Circuit

573 F.3d 1186

ST. LUKE'S CATARACT AND LASER INSTITUTE, P.A., Plaintiff-Counter-Defendant-Appellant Cross-Appellee, v. James C. SANDERSON, individually, James C. Sanderson, M.D., LLC, Defendants-Counter-Claimants-Appellees Cross-Appellant, Mark Erickson, Defendant-Counter-Claimant.

No. 08-11848.

United States Court of Appeals, Eleventh Circuit.

July 9, 2009.

David Scott Frist, David J. Stewart, Jason Demian Rosenberg, Alston & Bird, LLP, Atlanta, GA, John Daniel Goldsmith, Trenam, Simmons, Kemker, Scharf, Barkin, Frye, & O'Neill, P.A., Tampa, FL, for Plaintiff.

Ethan F. Hayward, Robert Hill Smeltzer, Lowis & Gellen, LLP, Chicago, IL, Deborah Marie O'Brien, Lowis & Gellen, LLP, Altamonte Spring, FL, for Defendants.

Appeals from the United States District Court for the Middle District of Florida.

Before CARNES, HULL and COX, Circuit Judges.

HULL, Circuit Judge:

This appeal arises out of an intellectual property dispute between Plaintiff St. Luke's Cataract and Laser Institute, P.C. ("St. Luke's") and Defendants Dr. James C. Sanderson and James C. Sanderson, M.D., LLC ("Dr. Sanderson") regarding the ownership and use of two Internet domain names (laserspecialist.com and lasereyelid.com) and an Internet website ("the LaserSpecialist.com website").¹ The domain names and website were used to advertise and promote St. Luke's cosmetic surgery services while Dr. Sanderson worked for St. Luke's.

St. Luke's complaint alleged that, after he resigned from St. Luke's, Dr. Sanderson improperly used the domain names and website to advertise and promote his solo practice, James C. Sanderson, M.D., LLC.² After a three-week trial, the jury found in favor of Dr. Sanderson on St. Luke's copyright infringement claim, but found in favor of St. Luke's on its six other claims, which included service mark infringement, cyberpiracy, and unfair competition. The jury awarded St. Luke's a total of $150,000 in profits and actual, statutory, and punitive damages, but the district court later reduced the jury's award to $98,000 after concluding some damages were duplicative. The district court also awarded St. Luke's $550,134.00 in attorney's fees and $37,307.49 in costs.³

On appeal, St. Luke's argues that the district court erred by: (1) denying its motion for a new trial on its copyright infringement claim; (2) limiting the scope of its copyright to the 2003 version of the LaserSpecialist.com website; (3) finding that the damages awarded on its cyberpiracy and service mark infringement claims were duplicative; and (4) failing to exclude the testimony of Dr. Sanderson's expert witness Patricia Perzel. Dr. Sanderson cross-appeals and challenges: (1) the district court's denial of his motion for judgment as a matter of law on St. Luke's service mark infringement and unfair competition claims; (2) the sufficiency of the evidence to support the award of profits, punitive damages, and attorney's fees to St. Luke's; and (3) the number of attorney hours in the district court's attorney's fees award. After review and oral argument, we vacate and remand as to the district court's determination of duplicative damages, but affirm as to all other issues raised in St. Luke's appeal and Dr. Sanderson's cross-appeal.

I. TRIAL EVIDENCE

We begin by reciting the trial evidence. Because one of St. Luke's copyright registrations at issue came after its complaint was filed, we outline the facts in chronological order, placing the complaint in the context of the factual events.

A. Website Launch during Dr. Sanderson's Employment with St. Luke's

St. Luke's is a privately owned eye care and ambulatory surgery center. In August 1993, Dr. Sanderson joined St. Luke's as a general ophthalmologist to perform eye care and cataract surgery. In 1994, Dr. Sanderson left St. Luke's to complete a fellowship in oculoplastic surgery of the face and eyes.

In January 1995, Dr. Sanderson rejoined St. Luke's as a full-time employee and started an oculoplastic surgery practice, which was called the St. Luke's Cosmetic Laser Center.⁴ At the time, St. Luke's did not have any other doctors who performed cosmetic surgery. St. Luke's paid for the equipment and staff that Dr. Sanderson needed to establish an oculoplastic surgery practice and advertised Dr. Sanderson as its resident specialist in oculoplastic surgery.⁵ However, St. Luke's informed Dr. Sanderson that he would need to participate in advertising and promoting the practice as well.

In 1998, Dr. Sanderson worked with St. Luke's webmaster Mark Erickson to create an Internet website to promote Dr. Sanderson's oculoplastic surgery practice at St. Luke's. Erickson registered the domain names laserspecialist.com and lasereyelid.com to use for the website. Dr. Sanderson was listed as the registrant with a St. Luke's physical address. St. Luke's paid the domain name registration and Internet hosting fees while Dr. Sanderson worked at St. Luke's. Erickson regularly provided Dr. Sanderson with backup disks containing the content of the LaserSpecialist.com website.

St. Luke's LaserSpecialist.com website contained information about St. Luke's, Dr. Sanderson's education and training, the surgical procedures that Dr. Sanderson performed, before and after photographs of patients, surgical videos, and other information for prospective patients. St. Luke's employees took and edited some of these photographs and videos. Dr. Sanderson wrote the text for the website. Erickson wrote the computer code for the website. Dr. Sanderson and Erickson collaborated on the graphics and layout of the LaserSpecialist.com website. Erickson placed a copyright notice on each page of St. Luke's LaserSpecialist.com website that stated "Copyright © [Year] St. Luke's Cosmetic Laser Center, All Rights Reserved."

In approximately 2000, Erickson and Dr. Sanderson added to the website a stylized version of the "LaserSpecialist.com" name in a blue and gold color scheme with a "swoosh" design to the right of the name, as shown below.

NOTE: OPINION CONTAINING TABLE OR OTHER DATA THAT IS NOT VIEWABLE

This logo appeared on the upper left corner of each page of the LaserSpecialist.com website. The logo served as a common navigational tool that linked the user to St. Luke's home page when clicked.

The website originally was located at the lasereyelid.com domain name but later was moved to the laserspecialist.com domain name in 1998.⁶ The lasereyelid.com domain name then was "parked" to the laserspecialist.com domain name so that any user visiting the lasereyelid.com domain name would be automatically redirected to St. Luke's LaserSpecialist.com website. St. Luke's LaserSpecialist.com website was linked to St. Luke's primary website. Other registered domain names used to promote St. Luke's specific practices were similarly linked to St. Luke's primary website.

Dr. Sanderson worked at St. Luke's for over eight years from 1995 to 2003. St. Luke's LaserSpecialist.com website and logo, as well as its two domain names, were part of St. Luke's oculoplastic surgery service for over five years from 1998 to 2003.

B. Dr. Sanderson Leaves St. Luke's, Opens Solo Practice, and Relaunches the LaserSpecialist.com Website

In 2003, St. Luke's employees began to hear rumors that Dr. Sanderson was planning to leave St. Luke's to open his own oculoplastic surgery practice. St. Luke's was concerned because it was planning a major renovation and expansion of its facilities used by Dr. Sanderson. In May 2003, Dr. James Gills, St. Luke's founder, and Bradley Houser, St. Luke's administrator, met with Dr. Sanderson to discuss the renovation plans. They asked Dr. Sanderson about the rumors that he was planning to leave. Dr. Sanderson denied the rumors and did not inform them that he was making arrangements to open his own practice. By the time of their May 2003 meeting, Dr. Sanderson already had incorporated James C. Sanderson M.D., LLC and had begun negotiating a lease for office space for his own practice.

Less than a month later, on June 13, 2003, Dr. Sanderson tendered his letter of resignation to St. Luke's. Dr. Sanderson's letter requested that St. Luke's pay him 50 percent of the accounts receivable for services rendered as of May 31, 2003. According to administrator Houser, St. Luke's accounts receivable was comprised primarily of claims from insured patients for whom St. Luke's generally received payment of only 40 to 50 percent of the amount owed. Houser told Dr. Sanderson that his request was "outlandish," but Dr. Sanderson demanded that St. Luke's agree that day to pay him the requested amount. Dr. Sanderson also requested that St. Luke's send letters to all of his patients and post notices in St. Luke's lobby announcing that he was leaving St. Luke's to start his own practice and providing his new contact information. St. Luke's denied Dr. Sanderson's requests.

Dr. Sanderson's June 13, 2003 resignation letter stated that he would work for two more weeks. However, he stopped working at St. Luke's on June 13, even though he had a surgery scheduled that day. St. Luke's immediately began searching for Dr. Sanderson's replacement but did not hire a new oculoplastic surgeon until nearly two years later.

C. Dr. Sanderson's Website Launch in October 2003

After Dr. Sanderson resigned from St. Luke's, he sought to transfer the administrative contact information for the domain names and website to his new solo practice. At Dr. Sanderson's request, the registrar of the domain names, Register.com, Inc., sent an email notice to St. Luke's webmaster Erickson stating that it had received a request to change the administrative contact information for the domain names from Erickson to Dr. Sanderson. Erickson approved this change by clicking on certain links in the email, which effectively gave Dr. Sanderson all control of the domain names. The registrar responded in an email to Erickson, "Thank you for contacting Register.com. The transfer of Registrant for the domain names...