PUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

NEWPORT NEWS HOLDINGS 

CORPORATION,

Plaintiff-Appellee,

v.  No. 09-1947

VIRTUAL CITY VISION,

INCORPORATED, d/b/a VCV Inc.;

VAN JAMES BOND TRAN,

Defendants-Appellants. 

Appeal from the United States District Court

for the Eastern District of Virginia, at Newport News.

F. Bradford Stillman, Magistrate Judge.

(4:08-cv-00019-FBS)

Argued: January 27, 2011

Decided: April 18, 2011

Before WILKINSON, MOTZ, and DUNCAN,

Circuit Judges.

Affirmed by published opinion. Judge Duncan wrote the opinion, in which Judge Wilkinson and Judge Motz joined.

COUNSEL

ARGUED: Geoffrey M. Bohn, BOHN & KOURETAS, PLC,

Arlington, Virginia, for Appellants. Lisa A. Ferrari, COHEN,
PONTANI, LIEBERMAN & PAVANE, New York, New

York, for Appellee. ON BRIEF: Robert A. Battey, BOHN &

KOURETAS, PLC, Arlington, Virginia; Shawn R. Farmer,

MUSKIN & CUSICK LLC, Lansdale, Pennsylvania, for

Appellants. Delphine Puybareau-Manaud, Martin B. Pavane,

COHEN, PONTANI, LIEBERMAN & PAVANE, New York,

New York, for Appellee.

OPINION

DUNCAN, Circuit Judge: 

This appeal raises numerous issues arising out of the grant

of summary judgment to Newport News Holdings Corporation ("NNHC") on its claims against Virtual City Vision and

its owner Van James Bond Tran (collectively, "VCV") under

the Anticybersquatting Consumer Protection Act ("ACPA").

In addition to challenging summary judgment, VCV argues

that the magistrate judge erred in refusing to recuse himself

and in improperly finding personal jurisdiction over Tran.1

VCV further contends that the district court abused its discretion in precluding VCV from filing a counterclaim, and in its

various rulings on damages, fees and costs, and sanctions. For

the reasons that follow, we affirm.

I.

A.

The number of issues raised on appeal necessitates a

1Pursuant to the Federal Magistrate Act of 1979, a magistrate judge presided over all aspects of this matter with the consent of the parties. See 28

U.S.C. § 636(c)(1). All references to "the district court" or "the court" in

this opinion denote the magistrate judge. For the sake of clarity, however,

in discussing the recusal issue we refer to the magistrate judge as such. 

2 NEWPORT NEWS HOLDINGS v. VIRTUAL CITY VISION
lengthy recitation of the facts and procedural history. We

begin with the factual background.

NNHC is a women’s clothing and accessories company that

has been in existence for over twenty years. It owns five federally registered trademarks for the mark "Newport News."

These trademarks cover the sale of women’s clothing and

accessories and the offering of these items for sale through

catalogs and the Internet. The trademarks also cover the

domain name newport-news.com, which NNHC purchased in

November 1997. NNHC attempted to acquire the domain

name newportnews.com as well, but VCV had already purchased that domain name in October 1997. NNHC began

offering its goods for sale over the Internet in 1999 using the

newport-news.com domain name.

VCV, an Alabama corporation, owns at least thirty-one

domain names that incorporate the names of geographic locations. Newportnews.com, which initially focused on Newport

News, Virginia, is one such example. VCV’s "original intent

. . . was to create websites . . . where residents of, and visitors

to, these cities could find information and advertising related

to th[e] cities." J.A. 1309 (internal quotations omitted).

VCV’s organization is skeletal. Tran is its president, sole

employee, and the only participating member of its board of

directors. He operates the business from his home.

NNHC and VCV first clashed in a private dispute resolution forum. In 2000, NNHC brought a complaint against VCV

under the Uniform Domain Name Dispute Resolution Policy

of the Internet Corporation for Assigned Names and Numbers

("ICANN").2 NNHC alleged that VCV’s newportnews.com

2

"ICANN is a private, non-profit public benefit corporation which was

established by agencies of the U.S. government to administer the Internet

domain name system." Register.com, Inc. v. Verio, Inc., 356 F.3d 393, 395

(2d Cir. 2004). Its dispute resolution proceedings are non-binding and are

not intended to replace formal arbitration. See Dluhos v. Strasberg, 321

F.3d 365, 372 (3d Cir. 2003). 

NEWPORT NEWS HOLDINGS v. VIRTUAL CITY VISION 3
website was "confusingly similar to [NNHC’s] family of registered trademarks for the mark ‘Newport News’"; that "any

rights [VCV] has in the domain name in contention are illegitimate"; and that VCV "registered this domain name in bad

faith." J.A. 432.

The ICANN panel rejected NNHC’s arguments and dismissed its complaint. In doing so, it found that, although the

mark and the domain name are identical, "visitors to

[NNHC’s] branded web site, who seek out the latest women’s

clothing and home fashions would clearly not be confused

when seeing a home page of another web site, bearing an

identical mark, that explicitly provides city information . . .

with no connection whatsoever to women’s and home fashions." J.A. 436. The panel further held that VCV’s website

provided "bona fide service offerings," which included "disseminat[ing] city information in an effort to increase tourism

and other visitor traffic to the city." J.A. 437. Significantly,

with respect to NNHC’s claim of bad faith, the panel noted

that "given the total absence of competition between the businesses of [NNHC and VCV] . . . [VCV] did not register the

contested domain name in an effort to cause any likelihood of

confusion." J.A. 438.

Between 2000 and 2004, newportnews.com remained relatively unchanged. It continued to provide information about

the city of Newport News and link visitors to local businesses,

such as hotels, movie theaters, real estate companies, and

entertainment venues. In 2004, the website began running

occasional advertisements for women’s clothing.3

3Between 2004 and 2007, the newportnews.com website ran advertisements for NNHC products on two occasions. The first occurred when an

advertising company hired by NNHC placed advertisements on the website for one of the brands managed by NNHC, Spiegel Brands, without

NNHC’s knowledge. Upon learning of this fact, NNHC ordered the advertising company to cancel the advertisements. Then, between February and

March 2007, NNHC placed advertisements on the website in order to measure revenue losses attributable to the website. 

4 NEWPORT NEWS HOLDINGS v. VIRTUAL CITY VISION
In the summer of 2007, NNHC made an offer to purchase

the newportnews.com domain name, which VCV rejected.

VCV responded that it would sell the domain name for a

"seven-figure" amount, or, in the alternative, sell NNHC

goods on its website for a commission. J.A. 246-59.

A substantive evolution in the VCV website began in the

fall of 2007. The site shifted from a city focus, similar to that

of VCV’s other locality sites, to one emphasizing women’s

fashions. By February of 2008, the homepage was dominated

by advertisements for women’s apparel.4

At about the same time, the management of the site

changed as well. Tran began managing the newportnews.com

website personally, taking control away from Local Matters,

the company that ran VCV’s locality sites. The changes to the

website were lucrative. Tran would later testify that most of

VCV’s revenue during that time came from the newportnews.com website instead of the locality sites, either individually or in total.

B.

On February 21, 2008, NNHC filed its complaint with the

district court, alleging trademark infringement under 15

U.S.C. § 1114, federal false advertising and unfair competition under 15 U.S.C. § 1125(a), copyright infringement under

15 U.S.C. § 501, and state law claims of common law trademark infringement, unfair competition, and unjust enrich4For example, the top of the website’s homepage contained two banners: one with the title "NewportNews.com #1 Shopping Destinations"

and the other with the "Top 5 Stores." Both banners included within them

a number of links to women’s fashion items. The right column of the

homepage consisted almost entirely of links to clothing stores. The left

column contained several large advertisements for women’s retailers. The

middle of the homepage contained numerous pictures of women’s apparel,

followed by the prices for those items and links to the retailers. 

NEWPORT NEWS HOLDINGS v. VIRTUAL CITY VISION 5
ment. The parties agreed to have the matter handled by a

federal magistrate judge.

While discovery was underway in September 2008, the

magistrate judge informed the parties that counsel for NNHC

had served on the advisory panel that voted to reappoint him.

Both because his only action in the case to that point had been

to issue a scheduling order, and because the reappointment

committee had concluded its work, he opined that he was not

obligated to recuse himself under the Code of Conduct for

United States Judges. He nevertheless asked the parties

whether they wanted to seek his recusal and promised to give

full consideration to any such request. On September 12,

2008, both parties indicated that they would not seek recusal.

VCV’s counsel specifically stated that he was satisfied that

the magistrate judge could preside.

Shortly thereafter, counsel for NNHC mentioned that he

and the magistrate judge had previously practiced at the same

law firm and had worked on cases together. VCV’s counsel

did not raise the issue of recusal during that discussion or the

subsequent pretrial conference.

In October 2008, NNHC informed VCV that it intended to

file an amended complaint. VCV responded that it would file

a counterclaim based on evidence obtained through discovery.

On November 20, 2008, after obtaining leave from the court,

NNHC filed its amended complaint adding a claim for violation of the ACPA and removing its copyright infringement

claim. On November 25, 2008, VCV answered the amended

complaint but did not raise any counterclaims. On November

28, 2008, the parties filed cross-motions for summary judgment, with VCV moving for summary judgment on all of

NNHC’s claims and NNHC moving for partial summary

judgment as to the ACPA claim. On January 9, 2009, VCV

filed its counterclaim. The court informed VCV that, under

the Federal Rules of Civil Procedure, VCV was required to

request leave from the court to amend its answer to include

6 NEWPORT NEWS HOLDINGS v. VIRTUAL CITY VISION
a counterclaim. VCV sought leave to file its counterclaim on

January 16, 2009.

On February 3, 2009, the magistrate judge issued an order

granting summary judgment to NNHC on its ACPA claim

pertaining to the newportnews.com domain name. Because

NNHC had not moved for summary judgment on its other

claims, those claims remained set for trial scheduled to begin

on February 9. During a telephone conference that same day,

VCV moved for the magistrate judge’s recusal for the first

time.

The magistrate judge vacated the February 9 trial date and

established a briefing schedule to consider the recusal motion.

On March 13, 2009, the magistrate judge held a hearing both

on VCV’s motion for recusal and its motion for leave to file

a counterclaim; he denied both.

On June 6, 2009, VCV sought reconsideration of its recusal

motion, which the magistrate judge denied on July 23. The

following day, the court issued a Final Order awarding VCV

costs on NNHC’s abandoned copyright infringement claim

but denying its motion for attorney’s fees on that claim. The

Final Order also awarded NNHC statutory damages and attorney’s fees on its ACPA claim and imposed sanctions on

VCV’s counsel.5 VCV timely appealed.

II.

VCV asserts numerous issues on appeal: the magistrate

judge’s failure to recuse; the court’s assertion of personal

jurisdiction over Tran; its grant of summary judgment to

NNHC on the ACPA claim; its denial of VCV’s request to

file a counterclaim; its award of statutory damages and attorney’s fees to NNHC and sanctions against VCV’s counsel;

5The district court dismissed all of NNHC’s remaining claims without

prejudice under Rule 41(a)(2) of the Federal Rules of Civil Procedure. 

NEWPORT NEWS HOLDINGS v. VIRTUAL CITY VISION 7
and its finding that VCV was not the prevailing party for purposes of an award of attorney’s fees on NNHC’s abandoned

copyright infringement claim. We address each argument in

turn. 

A.

VCV challenges the denial of its motion for recusal under

28 U.S.C. § 455 and the denial of its motion for reconsideration seeking recusal. We review for abuse of discretion.

United States v. Mitchell, 886 F.2d 667, 671 (4th Cir. 1989).

Section 455(a) states: "Any justice, judge, or magistrate

judge of the United States shall disqualify himself in any proceeding in which his impartiality might reasonably be questioned." As we have noted, "[t]imeliness is an essential

element of a recusal motion. . . . To prevent inefficiency and

delay, motions to recuse must be filed at the first opportunity

after discovery of the facts tending to prove disqualification."

United States v. Whorley, 550 F.3d 326, 339 (4th Cir. 2008)

(first alteration in original) (internal quotations omitted); see

also United States v. Owens, 902 F.2d 1154, 1155 (4th Cir.

1990) (noting that timeliness is a "judicially implied" element

of § 455). VCV’s recusal argument is predicated on two facts:

(1) that the magistrate judge and NNHC counsel once worked

at the same law firm and collaborated on cases; and (2) that

NNHC counsel participated in the committee that reappointed

the magistrate judge.

VCV learned of opposing counsel’s participation on the

reappointment committee no later than September 11, 2008,

and expressly declined to move for recusal when the court

held a phone conference on the issue the next day. In fact,

VCV affirmatively communicated its satisfaction with the

magistrate judge continuing to preside. VCV learned of the

law firm relationship on November 7, 2008, but did not raise

the issue during the scheduling conference that took place that

same day. In fact, it did not move for recusal until February

8 NEWPORT NEWS HOLDINGS v. VIRTUAL CITY VISION
3, 2009, the day the court issued a partial summary judgment

ruling in favor of NNHC. By way of explanation, VCV

asserts only that "[e]lucidation of the relevant facts took

time." Appellants’ Br. at 7. We are not persuaded.

VCV had an opportunity to raise the issue almost immediately after becoming aware of the facts of which it now complains, and it chose not to do so. Instead, it waited several

months, until the very day the magistrate judge granted summary judgment to NNHC on its ACPA claims. The timing of

VCV’s motion smacks of gamesmanship. Allowing such

belated and seemingly tactical recusal motions would permit

a party "to gather evidence of a judge’s possible bias and then

wait and see if the proceedings went his way before using the

information to seek recusal." Sine v. Local No. 992 Int’l Bhd.

of Teamsters, 882 F.2d 913, 916 (4th Cir. 1989). The magistrate judge’s denial of the motion for recusal is therefore justified on timeliness grounds alone. Id. at 915-16 (finding lack

of timeliness to be an alternative ground for affirming the

denial of a motion to recuse).

Furthermore, VCV’s allegations regarding recusal lack

merit. The issue of NNHC’s counsel’s involvement on the

reappointment committee is addressed in an advisory opinion

on the Code of Conduct for United States Judges, which provides that "after reappointment the magistrate judge is not

required to recuse or to notify the parties and attorneys in the

proceeding that a member of the panel is appearing as counsel." J.A. 1414 n.4 (citing Committee on Codes of Conduct,

Advisory Opinion No. 97: Recusal Due to Appointment or

Reappointment of a Magistrate Judge (Oct. 13, 1999)).

As to the law firm relationship between counsel and the

magistrate judge, the "objective standard asks whether the

judge’s impartiality might be questioned by a reasonable,

well-informed observer who assesses all the facts and circumstances." United States v. DeTemple, 162 F.3d 279, 286 (4th

Cir. 1998) (internal quotations omitted). The law firm relaNEWPORT NEWS HOLDINGS v. VIRTUAL CITY VISION 9
tionship in question ended more than ten years before the

instant action began, and VCV does not seem to dispute the

fact that the magistrate judge had little personal contact with

counsel in the intervening years. Under these circumstances,

the magistrate judge did not abuse his discretion in finding

that the circumstances would not cause a reasonable observer

to question his impartiality.6

B.

VCV also claims that the district court failed to make findings that would justify exercising personal jurisdiction over

Tran and holding him personally liable for VCV’s actions.

We review the district court’s legal findings de novo and the

facts underlying its determination for clear error. Mylan Lab.,

Inc. v. Akzo, N.V., 2 F.3d 56, 60 (4th Cir. 1993).

Contrary to VCV’s contention, the district court made sufficient findings to establish personal jurisdiction as part of its

analysis regarding piercing of the corporate veil between Tran

and VCV. As the Fifth Circuit has noted: 

[F]ederal courts have consistently acknowledged that

it is compatible with due process for a court to exercise personal jurisdiction over an individual . . . that

would not ordinarily be subject to personal jurisdiction in that court when the individual . . . is an alter

6VCV also argues that the magistrate judge’s representation of the city

of Newport News, Virginia in civil rights and employment matters over

ten years ago required his disqualification. VCV apparently relies on 28

U.S.C. § 455(b)(1), which states that a judge "shall also disqualify himself

. . . [w]here he has a personal bias or prejudice concerning a party, or personal knowledge of disputed evidentiary facts concerning the proceeding."

However, VCV fails to point to anything in the record that would support

the contention that the representation of the city of Newport News in completely unrelated matters more than a decade earlier gave the judge personal knowledge of facts relevant to the current proceedings. Accordingly,

its assertion is unpersuasive. 

10 NEWPORT NEWS HOLDINGS v. VIRTUAL CITY VISION
ego . . . of a corporation that would be subject to personal jurisdiction in that court.

Patin v. Thoroughbred Power Boats Inc., 294 F.3d 640, 653

n. 18 (5th Cir. 2002) (collecting cases); see also Mylan Labs,

2 F.3d at 63 (declaring in the analogous context of Maryland

law that the analysis of whether the court could pierce the corporate veil of a corporation to reach its parent company is

"virtually identical" to the analysis of whether the court could

exercise personal jurisdiction over that parent company);

Estate of Thomson v. Toyota Motor Corp. Worldwide, 545

F.3d 357, 362 (6th Cir. 2008) (endorsing "the use of the alterego theory to exercise personal jurisdiction").

Under Virginia law, a court may pierce the corporate veil

to find that an individual is the alter ego of a corporation

where it finds "(i) a unity of interest and ownership between

[the individual and the corporation], and (ii) that [the individual] used the corporation to evade a personal obligation, to

perpetrate fraud or a crime, to commit an injustice, or to gain

an unfair advantage." C.F. Trust, Inc. v. First Flight Ltd.

P’ship, 306 F.3d 126, 132 (4th Cir. 2002) (internal quotations

omitted). Here the district court found that such veil piercing

was appropriate because:

VCV had no separate identity from Tran. . . . Tran

is the President of VCV, Tran is the sole employee

of VCV, and Tran is the only participating member

of VCV’s Board of Directors. . . . Additionally, Tran

admits that VCV’s business is conducted out of his

home and Tran is the only board member invited to,

and present at, meetings of the VCV Board of Directors. . . . It is Tran, and Tran alone, who is responsible for the decisions and actions of VCV . . . and it

would present a manifest injustice if Tran were now

allowed to hide behind a non-existent corporate veil

to avoid personal liability for his actions. There is a

unity of interest and ownership between Tran and

NEWPORT NEWS HOLDINGS v. VIRTUAL CITY VISION 11
VCV, and Tran controlled and used VCV to commit

an injustice.

J.A. 2123 n.5. The court clearly found both a unity of interest

and an intent by Tran to "commit an injustice" using VCV.

C.F. Trust, Inc., 306 F.3d at 132. Accordingly, the district

court found sufficient facts to pierce the corporate veil and,

consequently, to exercise its jurisdiction over Tran.

C.

VCV challenges the district court’s grant of summary judgment in favor of NNHC on its claim under the ACPA. We

review de novo an award of summary judgment, viewing all

facts and drawing all reasonable inferences in the light most

favorable to the nonmoving party. See EEOC v. Navy Fed.

Credit Union, 424 F.3d 397, 405 (4th Cir. 2005). Summary

judgment is appropriate when there is no genuine dispute as

to any material fact and the movant is entitled to judgment as

a matter of law. Fed. R. Civ. P. 56(a). "[T]here is no issue for

trial unless there is sufficient evidence favoring the nonmoving party for a jury to return a verdict for that party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249 (1986).

To establish an ACPA violation, NNHC was required to

"(1) prove that [VCV] had a bad faith intent to profit from

using the [newportnews.com] domain name, and (2) that the

. . . domain name is identical or confusingly similar to, or

dilutive of, the distinctive and famous [Newport News]

Mark." People for the Ethical Treatment of Animals ("PETA")

v. Doughney, 263 F.3d 359, 367 (4th Cir. 2001) (citing 15

U.S.C. § 1125(d)(1)(A)).

VCV argues in particular that the district court erred in

finding that VCV acted in bad faith, and that it mistakenly

rejected VCV’s defenses of laches and acquiescence.7 We

address each contention in turn.

7VCV additionally claims that the district court erred by not considering

any of its sealed exhibits related to summary judgment. It cites as its only

12 NEWPORT NEWS HOLDINGS v. VIRTUAL CITY VISION
1.

We first consider the issue of bad faith. The ACPA directs

courts to consider several factors in making a determination

of bad faith. These include whether the defendant has a "bona

fide noncommercial or fair use of the mark in a site accessible

under the domain name" and whether the defendant intended

to divert customers away from the trademark holder by "creating a likelihood of confusion as to the source, sponsorship,

affiliation, or endorsement of the site." 15 U.S.C.

§ 1125(d)(1)(B)(i). Courts are not limited to consideration of

these factors. Instead, "[t]he ACPA allows a court to view the

totality of the circumstances in making the bad faith determination." Virtual Works, Inc. v. Volkswagen of Am., Inc., 238

F.3d 264, 270 (4th Cir. 2001).

support for this argument that the court failed to mention any of its exhibits in its opinion. Courts are not required to identify every piece of evidence they consider in making a decision. Accordingly, VCV’s argument

is wholly without merit. 

VCV also asserts that NNHC’s Newport News trademark is not valid

because it is not distinctive. We have held that, "[u]nder the Lanham Act,

the issuance of a certificate of registration arms the registrant with prima

facie evidence of the validity of the registered mark and of the registration

of the mark, of the registrant’s ownership of the mark, and of the registrant’s exclusive right to use the registered mark." Retail Servs. v. Freebies

Publ’g, 364 F.3d 535, 542 (4th Cir. 2004) (internal quotations omitted).

Here, VCV asserts that it overcame this presumption because it presented

evidence that NNHC’s mark related to its city of origin and was therefore

geographically descriptive, not distinctive. A geographically descriptive

mark is nevertheless distinctive if it has acquired a secondary meaning,

that is, if "the mark no longer causes the public to associate the goods with

the geographical location, but to associate the goods with a particular

product or source of the product." OBX-Stock, Inc. v. Bicast, Inc., 558

F.3d 334, 340 (4th Cir. 2009). Thus, assuming for the sake of argument

that the mark is geographically descriptive, the presumption of validity

derived from the mark’s registration would necessarily create a presumption that the mark has a secondary meaning. Given that VCV presented no

evidence to refute this presumption, the district court was correct in rejecting VCV’s challenge to the validity of the mark. 

NEWPORT NEWS HOLDINGS v. VIRTUAL CITY VISION 13
VCV challenges the district court’s finding of bad faith in

several respects. It attacks the court’s determination that VCV

did not provide legitimate services that would constitute a fair

use of the domain name. VCV also asserts that the evidence

does not support a finding that it intended to create a likelihood of confusion. Finally, it challenges the court’s reliance

on the ICANN ruling as evidence that VCV knew it was acting unlawfully when it changed its website.

a.

VCV claims that, contrary to the district court’s conclusion,

its website offered a legitimate service by providing information about the city of Newport News.

The ACPA permits a registered trademark to be used by

someone other than the mark owner if it is a "use, otherwise

than as a mark, . . . of a term or device which is descriptive

of and used fairly and in good faith only to describe the goods

or services of such party, or their geographic origin." 15

U.S.C. § 1115(b)(4). The district court found that this provision did not apply here because "[o]n VCV’s website, Newport News is no longer used to describe VCV’s goods or

services, or their geographic origin, because the site is dedicated primarily to women’s fashion." J.A. 1323-24. VCV disputes this characterization, contending to the contrary that its

website offered the legitimate service of providing information about the city of Newport News. We disagree.

The record conclusively shows that in making changes to

its website in 2007, VCV shifted its focus away from the

legitimate service of providing information related to the city

of Newport News and became instead a website devoted primarily to women’s fashion. Most of the items on its homepage, as well as those most prominently placed, related to

women’s attire. Not only was the site dominated by advertisements for apparel, it also contained dozens of links to shopping websites. The website’s references to the city of Newport

14 NEWPORT NEWS HOLDINGS v. VIRTUAL CITY VISION
News became minor in comparison to the fashion-related content. VCV cannot escape the consequences of its deliberate

metamorphosis. VCV would apparently have us hold that as

long as it provided any information about the city of Newport

News, it continued to provide a "bona fide" service. Such a

formalistic approach would allow a cybersquatter seeking to

profit from another company’s trademark to avoid liability by

ensuring that it provides some minimal amount of information

about a legitimate subject. It would also undermine the purpose of the ACPA, which seeks to prevent "the bad-faith and

abusive registration of distinctive marks as Internet domain

names with the intent to profit from the goodwill associated

with such marks." Barcelona.com, Inc. v. Excelentisimo

Ayuntamiento de Barcelona, 330 F.3d 617, 624 (4th Cir.

2003) (quoting S. Rep. No. 106-140, at 4 (1999)). 

As we have noted, in analyzing bad faith, we "view the

totality of the circumstances." Virtual Works, 238 F.3d at 270.

Here, even drawing all reasonable inferences in favor of

VCV, the record is clear that after November 2007, VCV was

no longer in the business of providing information about the

city of Newport News. The contrast between the newportnews.com website and VCV’s other locality websites, which

were dominated by links and advertisements for businesses

and activities in those cities, is stark. Unlike those websites,

newportnews.com went from being a website about a city that

happened to have some apparel advertisements to a website

about women’s apparel that happened to include minimal references to the city of Newport News. The district court correctly held that, once VCV largely abandoned its city

information service, it ceased to have a right to use the name

of Newport News to describe such service.8

8We also note that, even if VCV had been able to show some measure

of fair use, that would not be enough to preclude liability. "[T]he use of

a domain name in connection with a site that makes a . . . fair use of the

mark does not necessarily mean that the domain name registrant lacked

bad faith." Coca-Cola Co. v. Purdy, 382 F.3d 774, 778 (8th Cir. 2004)

(internal quotations omitted). 

NEWPORT NEWS HOLDINGS v. VIRTUAL CITY VISION 15
b.

VCV argues that the district court failed to properly analyze whether there was a likelihood of confusion between

NNHC’s website and VCV’s website. Its argument, however,

mischaracterizes the nature of an ACPA claim. The standard

under the ACPA is not whether there is a likelihood of confusion between the two websites but rather whether the allegedly offending website "creat[es] a likelihood of confusion as

to the source, sponsorship, affiliation, or endorsement of the

site." 15 U.S.C. § 1125(d)(1)(B)(v). The ACPA provides for

liability "without regard to the goods or services of the parties." Id. § 1125(d)(1)(A). 

VCV argues that, under our precedent in Lamparello v.

Falwell, 420 F.3d 309 (4th Cir. 2005), we must "determine

whether a likelihood of confusion exists by ‘examin[ing] the

allegedly infringing use in the context in which it is seen by

the ordinary consumer.’" Id. at 316 (alteration in original).

However, the court in Lamparello made that statement in the

context of trademark infringement, not the ACPA. See id. As

the Eighth Circuit court has noted, "[t]he inquiry under the

ACPA is . . . narrower than the traditional multifactor likelihood of confusion test for trademark infringement." CocaCola Co. v. Purdy, 382 F.3d 774, 783 (8th Cir. 2004); see also

N. Light Tech., Inc. v. N. Lights Club, 236 F.3d 57, 66 n.14

(1st Cir. 2001) ("[T]he likelihood of confusion test of trademark infringement is more comprehensive than the identical

or confusingly similar requirement of ACPA, as it requires

considering factors beyond the facial similarity of the two

marks." (internal quotations omitted)). "The question under

the ACPA is . . . whether the domain names which [the defendant] registered . . . are identical or confusingly similar to a

plaintiff’s mark." Coca-Cola Co., 382 F.3d at 783. Here

VCV’s domain name was identical to NNHC’s mark.

VCV further alleges that its disclaimer, "We are Newport

News, Virginia," which appeared near the top of the new ver16 NEWPORT NEWS HOLDINGS v. VIRTUAL CITY VISION
sion of the website, eliminated any likelihood of confusion.

Again, VCV misinterprets the applicable law. For ACPA purposes, "[t]he fact that confusion about a website’s source or

sponsorship could be resolved by visiting the website is not

relevant to whether the domain name itself is identical or confusingly similar to a plaintiff’s mark." Id.; see also Virtual

Works, 238 F.3d at 271 (finding that the domain name vw.net

was confusingly similar to the Volkswagen "VW" mark for

purposes of the ACPA, even though the domain name was

being used as an internet service provider’s website); PETA,

263 F.3d at 366-67 (finding likelihood of confusion under the

ACPA where the domain name was identical to the trademark

at issue, even though the "website’s content ma[de] it clear

that it [was] not related to" the mark holder). Given that

VCV’s domain name was identical to NNHC’s mark, we find

that the district court correctly held that VCV created a likelihood of confusion as to the source of the site.

c.

VCV argues that the district court erred in finding that the

ICANN decision was further proof of VCV’s bad faith in

making the November 2008 changes to its website. It asserts

that, because the ICANN decision did not prohibit any of the

changes made by VCV, VCV’s awareness of the decision

does not support a finding that it made the changes in bad

faith. 

VCV’s argument misses the mark here as well. What the

court deemed most significant was that the ICANN decision

found VCV’s use proper precisely because its business of providing city information was unrelated to NNHC’s clothing

business. The ICANN decision found that VCV was not in

competition with NNHC precisely because of their disparate

business models. Indeed, in holding that there was no evidence of bad faith on the part of VCV, the ICANN relied on

"the total absence of competition between the businesses of

[NNHC and VCV]." J.A. 438 (emphasis added). The fact that,

NEWPORT NEWS HOLDINGS v. VIRTUAL CITY VISION 17
in the face of this cautionary language, VCV later purposefully transformed its website into one that competed with

NNHC by advertising women’s apparel is a legitimate factor

within the totality of the circumstances supporting the district

court’s finding of bad faith.9

2.

VCV next asserts that the district court mistakenly rejected

its defense of laches. VCV argues that laches applied because

NNHC did not bring a claim in 2005, when, under VCV’s

view, "the allegedly infirming use (the ads for women’s clothing) actually commenced." Appellants’ Br. at 21.

Preliminarily, we note that VCV points to no case in this

or other circuits that has ever applied the laches defense in the

ACPA context. Nor are we aware of any. However, even

assuming, without deciding, that the doctrine of laches is

applicable to ACPA claims, it would not bar relief here. In the

trademark context, "courts may apply the doctrine of estoppel

by laches to deny relief to a plaintiff who, though having

knowledge of an infringement, has, to the detriment of the

defendant, unreasonably delayed in seeking redress." Sara

Lee Corp. v. Kayser-Roth Corp., 81 F.3d 455, 461 (4th Cir.

1996). We have explained that "regardless of when the trademark owner initially discovers the use of a similar mark,

action against the infringing user is not necessary until, in

light of the circumstances, the ‘right to protection has clearly

9VCV’s argument that the district court failed to consider the safeharbor fair use defense fails as well. Under the ACPA’s safe-harbor provision, "[b]ad faith intent . . . shall not be found in any case in which the

court determines that the person believed and had reasonable grounds to

believe that the use of the domain name was a fair use or otherwise lawful." 15 U.S.C. § 1125(d)(1)(B)(ii). The district court’s specific finding

that "VCV knew or should have known" that the November 2007 changes

to its website "would give rise to some type of liability," J.A. 1329,

defeats any contention that VCV "believed and had reasonable grounds to

believe" that its use of the domain name was lawful. 

18 NEWPORT NEWS HOLDINGS v. VIRTUAL CITY VISION
ripened.’" What-A-Burger of Va., Inc. v. Whataburger, Inc. of

Corpus Christi, 357 F.3d 441, 449 (4th Cir. 2004). In other

words, the plaintiff must be aware of the facts giving rise to

infringement.

An ACPA claim, as we have noted, requires a "bad faith

intent to profit from using the . . . domain name." PETA, 263

F.3d at 367. Here, as the ICANN panel decision found, before

the changes in the website NNHC had no reason to believe

that VCV’s use of the domain name would support a finding

of bad faith. Even when VCV started to place a few apparel

ads on its otherwise city-focused website in 2005, VCV’s bad

faith was not obvious, as VCV was still providing a legitimate

city-information service and not competing with NNHC. It

was not until November 2007, when VCV essentially abandoned its legitimate purpose of providing city-based information in favor of a website focused on women’s fashions, that

it became clear that NNHC had a viable ACPA claim.

Accordingly, NNHC’s decision to bring its ACPA claim in

November 2008, a year after the relevant changes in VCV’s

website occurred, did not constitute an unreasonable delay

that would support a finding of laches.

3.

VCV also asserts that NNHC’s ACPA claim "should have

been completely barred by NNHC’s acquiescence." Appellants’ Br. at 22. Again, VCV cites no support for the proposition that this defense applies in the ACPA context. However,

once again assuming, without deciding, that it does, it is nevertheless inapplicable to the facts here.

In the trademark infringement context we have stated that

"[a]n infringement action may be barred by the doctrine of

estoppel by acquiescence where the owner of the trademark,

by conveying to the defendant through affirmative word or

deed, expressly or impliedly consents to the infringement."

Sara Lee Corp., 81 F.3d at 462. VCV argues that NNHC

NEWPORT NEWS HOLDINGS v. VIRTUAL CITY VISION 19
impliedly consented to the infringement by "knowingly and

deliberately plac[ing] paid ads on the VCV website in February 2007." Appellants’ Br. at 22. However, as discussed

above, VCV’s use of the domain name did not become a clear

infringement until November 2007, when VCV transformed

its website into one focused on women’s fashion. Therefore

NNHC’s advertisements in February 2007 cannot establish its

acquiescence to VCV’s later infringing conduct, and we agree

with the district court that NNHC’s ACPA claim was not

barred on that ground.

D.

VCV next argues that the court erred in denying it permission to file counterclaims. In determining whether a defendant

should be permitted to file a new counterclaim after it has

filed its responsive pleading, "Rule 13(f) of the Federal Rules

of Civil Procedure, which permits amendment of the pleadings to add an omitted counterclaim, is interpreted together

with Rule 15(a) on amendment of pleadings, which provides

that ‘leave [to amend] shall be freely given when justice so

requires.’" Lone Star Steakhouse & Saloon v. Alpha of Va.,

Inc., 43 F.3d 922, 940 (4th Cir. 1995) (alteration in original).

We have further pointed out "that a motion to amend may be

denied when it has been unduly delayed and when allowing

the motion would prejudice the nonmovant." Id. at 941. Leave

to amend by filing a counterclaim may also be denied based

on bad faith or futility of the amendment. Foman v. Davis,

371 U.S. 178, 182 (1962). We review a district court’s ruling

in this regard for abuse of discretion. Lone Star, 43 F.3d at

940.

In October 2008, VCV informed NNHC that VCV would

seek leave to file a counterclaim based upon evidence

obtained through discovery. On November 20, 2008, after

obtaining leave from the court, NNHC filed an amended complaint adding a new claim for violation of the ACPA. On

20 NEWPORT NEWS HOLDINGS v. VIRTUAL CITY VISION
November 25, VCV filed an answer to the amended complaint, but that answer did not raise any counterclaims. 

VCV filed its counterclaim, without leave from the court,

on January 9, 2009, one month before the then-scheduled trial

date of February 9. The counterclaim included allegations of

conspiracy and fraud by NNHC. The court informed VCV

that leave from the court was required to file a counterclaim.

VCV sought leave on January 16, 2009. The motion was not

fully briefed until January 28, 2009, two weeks before the

scheduled trial date. On February 3, 2009, the district court

issued an opinion granting in part NNHC’s motion for summary judgment on its cybersquatting claim. The court ultimately denied VCV’s motion for leave to file its counterclaim

on March 13, 2009, finding that it was prejudicial and unduly

delayed in bad faith.10

"Whether an amendment is prejudicial will often be determined by the nature of the amendment and its timing. . . .

[T]he further the case progressed before judgment was

entered, the more likely it is that the amendment will prejudice the defendant or that a court will find bad faith on the

plaintiff’s part." Laber v. Harvey, 438 F.3d 404, 427 (4th Cir.

2006). Here, the court’s finding of prejudice was based on the

fact that the counterclaim was filed at the "eleventh hour

before the then-scheduled trial date" and contained six claims

that had never before been raised and "if allowed, [would]

substantially change the nature and scope of the trial." J.A.

1434-35. The counterclaim included counts for intentional

10The court also found that the counterclaims were probably moot

because they "would almost certainly not survive a . . . motion to dismiss"

and "VCV acknowledged the likely futility of the Counterclaim." J.A.

1438. It also noted that VCV’s claims "assume[ ] VCV’s right to use the

. . . domain name, but the Court held that VCV’s use of that domain name

violated the [ACPA] and ordered VCV to transfer the domain name to

NNHC." Id. However, because we find that the district court’s other reasons for denying the claim were independently sufficient, we need not

address the issue of futility. 

NEWPORT NEWS HOLDINGS v. VIRTUAL CITY VISION 21
interference with contract, tortious interference with prospective economic advantage, fraud, constructive fraud, civil conspiracy between NNHC and Spiegel, and intentional infliction

of emotional harm. The district court found that discovery in

the case had closed and "the introduction of six new claims,

particularly a claim of fraud, may introduce new factual issues

that were not heretofore addressed by counsel." J.A. 1435.

Indeed, several of VCV’s assertions, such as its claim that

NNHC and Spiegel "entered into an unlawful agreement and

conspiracy with each other to . . . wrongfully take ‘newportnews.com,’" J.A. 846, would likely have required further discovery.

A district court has the discretion to deny leave to amend

to add a counterclaim "based upon a balancing of the equities,

including whether . . . additional discovery [would] be

required." Barnes Group, Inc. v. C & C Products, Inc., 716

F.2d 1023, 1035 n.35 (4th Cir. 1983). The fact that allowing

the counterclaim would probably have necessitated additional

discovery supports our conclusion that the district court’s

finding of prejudice was not an abuse of discretion.

We note as well that VCV appeared to have no valid reason

for its belated request. VCV first informed NNHC of the possibility of the counterclaim in October 2008. Indeed, VCV

now concedes that, by October 15, 2008, it suspected the

grounds for the claim. However, VCV argues that it did not

seek to file the counterclaim at that point because "until VCV

actually received NNHC’s financial records in late December

2008, and had them interpreted by an expert, VCV lacked sufficient legal foundation to file the counterclaim." Appellants’

Br. at 25.

This explanation rings hollow because none of the counts

in the counterclaim relied primarily on allegations regarding

NNHC’s financial records. Each of the claims was based on

the theory that VCV was fairly and lawfully using the domain

name and NNHC was unlawfully interfering with its right to

22 NEWPORT NEWS HOLDINGS v. VIRTUAL CITY VISION
do so in an attempt to obtain the domain name free of charge.

None of the counts directly mention any wrongdoing related

to NNHC’s financial documents. In fact, the financial data

that NNHC disclosed to VCV in December 2008, which

allegedly triggered the counterclaim, is only mentioned in the

background facts. Thus, VCV’s assertion that it was justified

in waiting until December 2008 to file the claim is unsupported by the record.

We have upheld a district court’s denial of leave to file a

counterclaim in substantially similar circumstances. In Lone

Star Steakhouse, the defendant in a trademark infringement

suit sought leave, in the last days of discovery, to add a counterclaim alleging that the plaintiff had committed fraud. See

43 F.3d at 940-41. The defendant based its claim on information that, according to the district court, it possessed approximately three months before requesting leave to file the

counterclaim. The district court refused to "inject the defense

of fraud," because it "considered the motion unduly delayed

and reasoned that the amendment would have seriously prejudiced Plaintiffs and placed them at risk of further infringement because the amendment would have delayed the

resolution of the case." Id. at 940. In affirming the decision

of the district court, we found that the record did not support

the defendant’s contention that it delayed its counterclaim

because it needed to conduct further investigation. Id.

We also held that the amendment "would have substantially

prejudiced Plaintiffs and would have significantly changed

the nature of the litigation" because "[i]nserting the defense of

fraud in the case on the last day of discovery would have

raised new issues, which were not involved in the case during

the discovery and were not the subject of Plaintiff’s discovery

and trial preparation." Id. Under the similar circumstances

presented here, we hold that, given VCV’s undue delay and

the prejudice to NNHC, the district court did not abuse its discretion in denying VCV’s motion for leave to file a counterclaim. 

NEWPORT NEWS HOLDINGS v. VIRTUAL CITY VISION 23
E.

VCV argues that its conduct did not merit an award of

attorney’s fees under the Lanham Act. The Act states that

"[t]he court in exceptional cases may award reasonable attorney fees to the prevailing party." 15 U.S.C. § 1117(a). We

review "a decision to award attorneys’ fees under § 1117 for

abuse of discretion and the district court’s underlying finding

as to whether the case is exceptional for clear error." Scott

Fetzer Co. v. House of Vacuums Inc., 381 F.3d 477, 490 (5th

Cir. 2004); see also Williams v. Metro. Life Ins. Co., 609 F.3d

622, 634 (4th Cir. 2010).

We have noted that the legislative history of the Lanham

Act shows that fees were intended to be provided in cases

involving "[d]eliberate and flagrant infringement." Scotch

Whisky Ass’n v. Majestic Distilling Co., 958 F.2d 594, 599

(4th Cir. 1992) (quoting legislative history). Here, the district

court found that VCV’s conduct was exceptional precisely

because "its actions in transforming the virtual city website

into a women’s fashion website after being made aware [by

the ICANN decision] of the rights that NNHC had in the

NEWPORT NEWS mark were clearly willful and deliberate."

J.A. 2125. Significantly, VCV advances no factual basis for

finding to the contrary. Neither during the proceedings below

nor in response to repeated questioning at oral argument on

appeal was VCV able to provide a legitimate justification for

its decision to shift its website’s focus to women’s clothing,

particularly in the face of the ICANN panel’s implicit suggestion that to do so courted the risk of a finding of bad faith. On

these facts, we cannot say that the court clearly erred in finding that VCV’s infringement was exceptional or abused its

discretion in awarding attorney’s fees.

F.

VCV also challenges the district court’s grant of statutory

damages of $80,000 under 15 U.S.C. § 1117(d), which pro24 NEWPORT NEWS HOLDINGS v. VIRTUAL CITY VISION
vides that "the plaintiff may elect, at any time before final

judgment is rendered by the trial court, to recover, instead of

actual damages and profits, an award of statutory damages in

the amount of not less than $1,000 and not more than

$100,000 per domain name, as the court considers just." VCV

claims the damages awarded here were excessive. "While we

review for clear error any factual finding that would determine the appropriate level of statutory damages, we would

review an award of those damages within the statutory range

for abuse of discretion." Lyons P’ship, L.P. v. Morris Costumes, Inc., 243 F.3d 789, 799 (4th Cir. 2001).

In deciding whether the court’s damages were excessive,

we must first determine the nature and purpose of such damages. Our analysis of ACPA statutory damages is guided, in

part, by their similarity to statutory damages under the Federal

Copyright Act, 17 U.S.C. § 501(a)—a similarity noted by

other circuit courts. See, e.g., St. Luke’s Cataract & Laser

Inst., P.A. v. Sanderson, 573 F.3d 1186, 1205 (11th Cir. 2009)

("[T]he statutory damages provision in the ACPA, 15 U.S.C.

§ 1117(d), is similar to the statutory damages provision in

copyright law."); E. & J. Gallo Winery v. Spider Webs Ltd.,

286 F.3d 270, 278 (5th Cir. 2002). Both statutory damages

provisions have similar structures and language. See 17

U.S.C. § 504(c)(1) ("[T]he copyright owner may elect, at any

time before final judgment is rendered, to recover, instead of

actual damages and profits, an award of statutory damages for

all infringements involved in the action . . . in a sum of not

less than $750 or more than $30,000 as the court considers

just."). Also, like the Copyright Act, the ACPA reflects a

Congressional intent to deter offenders. See St. Luke’s, 573

F.3d at 1206 & n.32. Based on this goal of deterrence, the

Supreme Court has found that the statutory damages provision

of the Copyright Act does "not merely compel[ ] restitution of

profit and reparation for injury but also is designed to discourage wrongful conduct." E. & J. Gallo Winery, 286 F.3d at 278

(quoting F.W. Woolworth Co. v. Contemporary Arts, Inc., 344

U.S. 228, 233 (1952)). "In light of the similarities in the lanNEWPORT NEWS HOLDINGS v. VIRTUAL CITY VISION 25
guage of these two statutory provisions and Congress’s intent

to deter cyberpiracy, other circuits have interpreted the

ACPA’s statutory damages provision to contain a [similar]

deterrence element." St. Luke’s, 573 F.3d at 1206 (citing E. &

J. Gallo Winery, 286 F.3d at 278) (footnote omitted). We find

such interpretations persuasive. Because these damages

"serve[ ] as a sanction to deter wrongful conduct," id., a district court may properly weigh the seriousness of the conduct

in determining the amount of the award. 

Here the district court found that damages at the high end

of the statutory range were proper because VCV’s conduct

was "exceptional and egregious."11 JA 2123. VCV asserts that

the damages award was unjust for reasons that both mirror its

laches and acquiescence arguments and fail for reasons similar to those already set forth. VCV claims that it advertised

women’s clothes for over two years (2005-2007) before

NNHC brought its claim, and that during that time, NNHC

profited from advertising with VCV and had discussions with

VCV about its website in which no infringement was mentioned. However, as noted above, the district court made clear

throughout its opinion that VCV’s wrongdoing did not crystallize until its "transformation of the NEWPORTNEWS.COM website into a women’s fashion website" in

November 2007 "in direct contradiction to a written [ICANN]

arbitration opinion." J.A. 1222. It is this conduct that the court

found "exceptional and egregious" for purposes of statutory

sanctions. J.A. 2123. VCV’s arguments about why its conduct

may not have been egregious prior to November 2007 are

irrelevant. We conclude that the district court did not abuse its

discretion by finding that VCV’s attempt to profit from

NNHC’s mark by creating a website focused on women’s

11The court found, citing a district court opinion, that "high-end" damages are awarded where the conduct is "egregious" and "exceptional," and

found VCV’s conduct to be so. J.A. 2122-23 (citing Int’l Bancorp, L.L.C.

v. Societe des Bains de Mer et du Cercle des Etrangers a Monaco, 192 F.

Supp. 2d 467, 490 (E.D. Va. 2002)). 

26 NEWPORT NEWS HOLDINGS v. VIRTUAL CITY VISION
fashion was sufficiently egregious to merit the statutory damages award. 

G.

VCV challenges the district court’s entry of $10,000 in

sanctions against VCV’s attorneys under 28 U.S.C. § 1927.

We review the decision to award sanctions for abuse of discretion, Chaudhry v. Gallerizzo, 174 F.3d 394, 410 (4th Cir.

1999), and the factual findings underpinning that decision for

clear error, see Ohio River Valley Envtl. Coal., Inc. v. Green

Valley Coal Co., 511 F.3d 407, 413 (4th Cir. 2007); see also

Tenkku v. Normandy Bank, 348 F.3d 737, 743-44 (8th Cir.

2003) (reviewing for abuse of discretion an award of § 1927

sanctions and for clear error the related factual findings).

However, before reviewing the court’s decision, we must first

decide whether the issue is properly before us.

NNHC argues that VCV waived the issue because its attorneys are not listed as appellants in the notice of appeal.

Indeed, Federal Rule of Appellate Procedure 3(c)(1)(A)

requires that the notice of appeal "specify the party or parties

taking the appeal by naming each one in the caption or body

of the notice." Rule 3(c)(4) makes clear, however, that "[a]n

appeal must not be dismissed for . . . failure to name a party

whose intent to appeal is otherwise clear from the notice."

Under Rule 3(c)(4), we have held that a notice of appeal that

covers only an order for sanctions against an attorney is not

rendered invalid for failure to name the attorney as an appellant. Miltier v. Downes, 935 F.2d 660, 663 n.1 (4th Cir. 1991).

We noted that where "the only appealable judgment from the

district court is the order imposing sanctions against counsel"

and "only one party, plaintiff’s counsel, is entitled to bring the

appeal . . . [t]he circumstances . . . present no risk of ambiguity or confusion." Id.

Applying Rule 3(c)(4) to the facts before us, we find that

VCV’s notice of appeal is far from a model of clarity.

NEWPORT NEWS HOLDINGS v. VIRTUAL CITY VISION 27
Although the notice lists the Final Order as one of the orders

appealed, the Final Order contains a number of rulings, several of which were not appealed. VCV has thereby created the

"risk of ambiguity or confusion" against which we have cautioned. Id. Tellingly, VCV does not address the issue of sanctions in its Reply Brief, or argue that the deficient notice of

appeal is saved by its clear intent under Rule 3(c)(4).

In any event, even assuming that the notice of appeal was

proper, the court’s award of sanctions does not merit reversal.

Section 1927 states: "Any attorney . . . who so multiplies the

proceedings in any case unreasonably and vexatiously may be

required by the court to satisfy personally the excess costs,

expenses, and attorneys’ fees reasonably incurred because of

such conduct." 22 U.S.C. § 1947. "A district court’s decision

to impose sanctions is entitled to ‘substantial deference’"

because "[a] district court ‘is in the best position to review the

factual circumstances and render an informed judgment as [it]

is intimately involved with the case, the litigants, and the

attorneys on a daily basis.’" Blue v. U.S. Dept. of Army, 914

F.2d 525, 538 (4th Cir. 1990).

The district court found that VCV’s "Motion for Recusal

was made recklessly and in bad faith" and that VCV "more

likely than not acted in bad faith in seeking leave to file its

counterclaim." J.A. 2132. It concluded that VCV’s counsel

"engaged in a pattern of behavior to delay the resolution of

this case and . . . unreasonably and vexatiously multiplied the

proceedings." Id. at 2134. Relying on the facts we have

already outlined, and given the motions’ significant substantive weaknesses as well as their suspicious timing, we cannot

say that the district court clearly erred in its factual finding

that they were filed with the purpose of multiplying proceedings. See United States v. Wallace, 964 F.2d 1214, 1217 (D.C.

Cir. 1992) (describing a finding of bad faith as a factual finding reviewable for clear error). We therefore hold that the district court’s award of sanctions was not an abuse of discretion.

28 NEWPORT NEWS HOLDINGS v. VIRTUAL CITY VISION
H.

Finally, VCV argues that the district court erred in awarding it only costs but not attorney’s fees on NNHC’s abandoned copyright claim. VCV alleges entitlement to attorneys’

fees as a prevailing party under 17 U.S.C. § 505, which states

"the court may allow the recovery of full costs by or against

any party . . . . [T]he court may also award a reasonable attorney’s fee to the prevailing party as part of costs." "[I]f the district court determines, as a matter of law, that a party is not

a prevailing party, we review the district court’s determination de novo." Perry v. Bartlett, 231 F.3d 155, 163 (4th Cir.

2000).

NNHC raised the copyright infringement claim in its original complaint, but did not raise it in its amended complaint.

VCV argues that, because the district court granted leave for

NNHC to file its amended complaint, NNHC "dismissed its

copyright infringement claim, by court order." Appellants’ Br.

at 30. We disagree.

The district court correctly held that NNHC’s abandonment

of the claim did not make VCV a prevailing party on that

claim. In order for a litigant to be a prevailing party for purposes of attorneys’ fees, there must be a "judicially sanctioned

change in the legal relationship of the parties." Buckhannon

Bd. & Care Home v. W.V. Dept. of Health & Human Res.,

532 U.S. 598, 605 (2001). As the Supreme Court has noted,

"[n]o material alteration of the legal relationship between the

parties occurs until" one of the parties "becomes entitled to

enforce a judgment, consent decree, or settlement against the

[other]." Farrar v. Hobby, 506 U.S. 103, 113 (1992). Here, as

the district court noted, the disappearance of the claim did not

result from a court dismissal, but rather from NNHC’s unilateral withdrawal of the claim by failing to include it in its

amended complaint. This change did not alter the legal relationship between the parties because NNHC remained at liberty to bring the claim again at a later point. See Szabo Food

NEWPORT NEWS HOLDINGS v. VIRTUAL CITY VISION 29
Serv. v. Canteen Corp., 823 F.2d 1073, 1076-77 (7th Cir.

1987) (holding that a "dismissal . . . without prejudice . . . is

not the practical equivalent of a victory for defendant on the

merits" because "[t]he plaintiff may refile the complaint" and

"[t]he defendant remains at risk").

VCV further argues that the district court’s award to VCV

of costs related to NNHC’s copyright claim necessarily made

VCV the prevailing party. However, in awarding VCV costs,

the court specifically noted that, in its view, costs could be

awarded to a non-prevailing party. See J.A. 2112 n.1. Moreover, as mentioned above, the statute states "the court may

allow the recovery of full costs by or against any party. . . .

[T]he court may also award a reasonable attorneys’ fee to the

prevailing party as part of costs." 17 U.S.C. § 505 (emphasis

added). If the statute had intended every party who received

costs to be a prevailing party for purposes of attorneys’ fees,

the words "prevailing party" in the statute’s second sentence

would be superfluous, for everyone receiving costs would fall

into that category. Such a reading "would ignore the basic

principle of statutory interpretation instructing courts to

‘avoid a reading which renders some words altogether redundant.’" Lane v. United States, 286 F.3d 723, 731 (4th Cir.

2002) (citation omitted). Accordingly, we hold that the district

court did not err in finding that VCV was not a prevailing

party on NNHC’s claim.

III.

For the foregoing reasons, the opinion of the district court

is affirmed in all respects.

AFFIRMED

30 NEWPORT NEWS HOLDINGS v. VIRTUAL CITY VISION