650 F.3d 423 (4th Cir. 2011), 09-1947, Newport News Holdings Corp. v. Virtual City Vision, Inc.

Docket Nº:09-1947.
Citation:650 F.3d 423
Opinion Judge:DUNCAN, Circuit Judge:
Party Name:NEWPORT NEWS HOLDINGS CORPORATION, Plaintiff-Appellee, v. VIRTUAL CITY VISION, INCORPORATED, d/b/a VCV Inc.; Van James Bond Tran, Defendants-Appellants.
Attorney:Geoffrey M. Bohn, Bohn & Kouretas, PLC, Arlington, Virginia, for Appellants. Lisa A. Ferrari, Cohen, Pontani, Lieberman & Pavane, New York, New York, for Appellee. Robert A. Battey, Bohn & Kouretas, PLC, Arlington, Virginia; Shawn R. Farmer, Muskin & Cusick LLC, Lansdale, Pennsylvania, for Appell...
Judge Panel:Before WILKINSON, MOTZ, and DUNCAN, Circuit Judges. Affirmed by published opinion. Judge DUNCAN wrote the opinion, in which Judge WILKINSON and Judge MOTZ joined.
Case Date:April 18, 2011
Court:United States Courts of Appeals, Court of Appeals for the Fourth Circuit
 
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650 F.3d 423 (4th Cir. 2011)

NEWPORT NEWS HOLDINGS CORPORATION, Plaintiff-Appellee,

v.

VIRTUAL CITY VISION, INCORPORATED, d/b/a VCV Inc.; Van James Bond Tran, Defendants-Appellants.

No. 09-1947.

United States Court of Appeals, Fourth Circuit.

April 18, 2011

Argued: Jan. 27, 2011.

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[Copyrighted Material Omitted]

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[Copyrighted Material Omitted]

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[Copyrighted Material Omitted]

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[Copyrighted Material Omitted]

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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.

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Before WILKINSON, MOTZ, and DUNCAN, Circuit Judges.

Affirmed by published opinion. Judge DUNCAN wrote the opinion, in which Judge WILKINSON and Judge MOTZ joined.

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 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

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newportnews.com 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

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

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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 enrichment. 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 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

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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...

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