Key takeaways
- Supreme Court limits trademark damages to named defendants, excluding unnamed affiliates
- Corporate separateness upheld — affiliates' profits not subject to disgorgement without being named defendants
- Naming all relevant parties as defendants is crucial for potential profit recovery in trademark cases
On February 26, 2025, the U.S. Supreme Court issued a unanimous decision vacating a $43 million award in a trademark dispute involving Dewberry Engineers Inc. and competing real estate developer Dewberry Group Inc. The case centered on whether affiliates of Dewberry Group should be liable for trademark infringement damages despite not being named as defendants in the lawsuit. The Supreme Court remanded the case to the Fourth Circuit, ruling that federal trademark law does not authorize the disgorgement of profits from non-defendant affiliates.
The District Court previously ruled in Dewberry Engineers’ favor, holding that Dewberry Group willfully infringed the registered DEWBERRY trademark, and awarded damages in the amount of defendant’s profits. However, Dewberry Group operated at a loss for decades, solely providing services to its separately incorporated affiliates, and the affiliates reap the rental profits. Though Dewberry Group’s affiliates were not named as defendants, to reflect the economic reality of the situation and ensure Dewberry Group did not evade the consequences of its infringement, the Court treated the Group and affiliates as one entity, aggregating their profits to award $43 million to Dewberry Engineers. The Fourth Circuit affirmed, Dewberry Group appealed and the Supreme Court granted certiorari.