Docket 23-900
Dewberry Group, Inc. v. Dewberry Engineers Inc.
DecidedFeb 26, 2025
9-0decision
Source: CourtListener.
Court limits trademark profits awards to named defendant's own earnings, not affiliated companies'
Impact4/10
What it does
The Court held that a profits award under the Lanham Act's trademark remedy is limited to the profits of the named defendant only — not those of related or affiliated companies that were not sued. Courts may not treat a corporate defendant and its separately incorporated affiliates as a single entity to inflate a profits award, because corporate law treats separately incorporated companies as distinct legal persons. The case was sent back to the lower courts to calculate a new award using the correct legal framework.
Who benefits
Companies that are named defendants in trademark infringement lawsuits and have separately incorporated affiliated businesses, whose affiliates' profits cannot automatically be included in a damages award against them.
Who is affected
Trademark owners who win infringement lawsuits against defendants that report little or no profits on their own books but whose affiliated companies earn significant revenues connected to the infringing activity.
Practical impact
Trademark plaintiffs who sue a corporate defendant that routes its revenues through affiliated companies cannot automatically collect those affiliates' profits as part of a disgorgement award — they must either name the affiliates as defendants, successfully argue for veil-piercing, or pursue other legal theories on remand. On remand, the lower courts may still explore whether Dewberry Group's below-market fee arrangements with its affiliates, or cash infusions from the common owner, can be used to calculate the Group's own true financial gain without treating the companies as one. The $43 million award was vacated and must be recalculated.
Majority — Kagan
Joined by: Roberts, Thomas, Alito, Sotomayor, Gorsuch, Kavanaugh, Barrett, Jackson
The Court reasoned that the word "defendant" in the Lanham Act carries its ordinary legal meaning — the party actually named and sued in the case — and therefore only that party's own profits can be awarded to a prevailing plaintiff. Because Dewberry Engineers chose to sue only Dewberry Group and not its property-owning affiliates, the affiliates' profits simply were not the "defendant's profits" the statute authorizes. The Court further explained that background principles of corporate law reinforce this reading: separately incorporated companies are distinct legal entities even when they share a common owner, and the plaintiff never attempted to "pierce the corporate veil" (a legal doctrine allowing courts to disregard corporate separateness to prevent fraud) to reach the affiliates. The Court rejected the argument that the lower courts had actually used a separate "just-sum" provision of the Lanham Act — which lets courts adjust an award that seems inadequate or excessive — because neither court below invoked that provision; they simply lumped all the companies together as one entity. The ruling was unanimous, and the case was returned to the lower courts to determine the proper award using the correct approach.
Constitutional question
When a court awards a prevailing plaintiff the "defendant's profits" under the Lanham Act's trademark infringement remedy, may it include the profits of separately incorporated companies that were affiliated with the defendant but were not named as defendants in the lawsuit?