Supreme Court Issues Unanimous Decision in Dewberry Group v. Dewberry Engineers

On February 26, 2025, the Supreme Court issued a unanimous decision in Dewberry Group, Inc. v. Dewberry Engineers Inc. The opinion is in line with the amicus brief filed by AIPLA on September 6, 2024. To read the opinion of the Court, please click here. 

The U.S. Supreme Court granted certiorari in Dewberry Group, Inc. v. Dewberry Engineers Inc., a trademark damages case that examines how corporate separateness principles apply to disgorgement remedies under the Lanham Act (15 U.S.C. § 1117(a)). The case arises from a $43 million disgorgement award against Dewberry Group (DG) for trademark infringement, which included profits earned by DG’s legally separate corporate affiliates. 15 U.S.C. § 1117(a) gives courts discretion to increase the amount of an award of profits to a sum that the court finds to be just, and the District Court held that the profits of these legally separate corporate affiliates should be included in the award to account for the full amount that DG profited from its infringement. The Fourth Circuit upheld the award, prompting DG to appeal to the Supreme Court.

The dispute dates to 2006, when Virginia-based Dewberry Engineers first sued Georgia-based Dewberry Group over the use of the "Dewberry" name, leading to a settlement in 2007. Tensions resurfaced in 2017 when DG rebranded and introduced sub-brands like Dewberry Living and Studio Dewberry, triggering a new lawsuit in 2020. The U.S. District Court for the Eastern District of Virginia ruled in favor of Dewberry Engineers, awarding it DG’s profits, a decision affirmed by the Fourth Circuit in 2023. DG argues that the District Court abused its discretion by including profits earned by legally separate entities in the disgorgement award under 15 U.S.C. § 1117(a). DG also warns of broader consequences if corporate distinctions are disregarded. 

Justice Kagan delivered the unanimous opinion of the Supreme Court, holding that under 15 U.S.C. § 1117(a) of the Lanham Act, “A prevailing plaintiff in a trademark infringement suit is often entitled to an award of the defendant’s profits…In making such an award, the District Court in this case totaled the profits of the named corporate defendant with those of separately incorporated affiliates not parties to the suit.” The decision concluded that the lower court erred in doing so, noting that “under the pertinent statutory provision, the court could award only profits properly ascribable to the defendant itself.” The Court emphasized that the term "defendant" refers specifically to the party against whom relief is sought—in this case, Dewberry Group. Since Dewberry Engineers did not name Dewberry Group's affiliates as defendants, their profits could not be included in the damages award.

The Court also underscored fundamental corporate law principles, affirming that separately incorporated entities are distinct legal persons whose profits cannot be attributed to another company absent a recognized exception such as veil-piercing, which was not alleged here. Furthermore, the Court rejected the argument that the "just-sum" provision of § 1117(a) justified including the affiliates' profits. The Court reasoned that the lower courts did not include any “just sum” analysis in their decisions. Rather the lower courts simply added up the full profits of all of the affiliates. The Court expressly noted that whether or how the “just sum” provision of § 1117(a) could have been used was not before it. Consequently, the Supreme Court reversed the Fourth Circuit's ruling, determining that the nearly $43 million award improperly included non-defendant profits, noting that “Dewberry Group is the sole defendant here, and under that language only its own profits are recoverable.”

Justice Sotomayor concurred fully with the Court’s opinion but wrote separately to emphasize that corporate separateness should not obscure economic realities when calculating a defendant’s profits under the Lanham Act. She pointed out that while Dewberry Group itself reported no profits, its affiliates made substantial earnings from the trademark infringement. Sotomayor warned that corporate formalities should not enable defendants to evade liability through strategic accounting maneuvers, such as shifting revenues to affiliates or receiving indirect compensation. She cited tax law precedents allowing courts to recognize anticipatory assignment schemes and argued that similar principles could guide Lanham Act profit calculations.