Dewberry v. Dewberry: Supreme Court Clarifies Trademark Damages LandscapeMarch 5, 2025

On February 26, 2025, the U.S. Supreme Court, in Dewberry Group Inc. v. Dewberry Engineers Inc., Case No. 23-900 (U.S. Feb. 26, 2025) unanimously held that a trademark owner cannot recover the profits of an infringer’s affiliates if the affiliates were not also identified as defendants in the case.

The plaintiff in the case, Dewberry Engineers, began operating in the 1950s and later expanded its operations to include real estate development in the Southeastern United States. Dewberry Engineers owns an incontestable registration for the word DEWBERRY for use with various real estate services.  In 1989, the defendant Dewberry Group (fka Dewberry Capital) began providing real estate services like those of Dewberry Engineers through several affiliates. 

Dewberry Engineers sued Dewberry Capital for trademark infringement in 2006, a suit which was settled in 2007 whereby Dewberry Capital’s use of the word “Dewberry” was limited.  However, about a decade later, Dewberry Capital changed its name to Dewberry Group and resuming its use of the “Dewberry” name in the marketing and advertising materials it used to lease its affiliates’ properties, thereby effectively reneging on the settlement deal.  Dewberry Engineers filed a second suit against Dewberry Group in which Dewberry Group was held liable for intentional trademark infringement, unfair competition, and breach of contract.  As Dewberry Group reported no profits, the district court awarded Dewberry Engineers nearly $43 million in profits from Dewberry Group’s affiliates, treating the Dewberry Group and its affiliates “as a single corporate entity,” reasoning that to do otherwise would permit the “entire Dewberry Group enterprise” to “evade the financial consequences of its willful, bad faith infringement.” A divided panel of the Fourth Circuit affirmed.

Dewberry Group appealed. In an effort to maintain the award, Dewberry Engineers argued the lower court’s finding was permissible in light of the language in the Lanham Act’s remedies section, 15 U.S.C. § 1117(a),  stating: “If the court shall find that the amount of the recovery based on profits is either inadequate or excessive[,] the court may in its discretion enter judgment for such sum as the court shall find to be just, according to the circumstances.” Dewberry Engineers reasoned that this section permits a court, after first assessing the “defendant’s profits,” to determine that a different amount better reflects the “defendant’s true financial gain.”

In a decision authored by Justice Elena Kagan, the Supreme Court rejected Dewberry Engineers’ argument and remanded the case holding that federal trademark law did not authorize the lower courts to disgorge profits from Dewberry Group’s affiliates who were not named defendants in the case.  The Supreme Court began its analysis by noting that the statutory text authorizing a profits award for trademark infringement offers no support for the approach taken by the lower courts; it only entitles a plaintiff to “recover [the] defendant’s profits.”

The Supreme Court further rejected the lower courts’ treatment of Dewberry Group and its affiliates “as a single corporate entity,” noting that such treatment conflicted with the well-settled corporate principle that separately incorporated organizations are generally treated as separate legal entities with distinct legal rights and obligations.

The practical result of the decision is likely to be an increase in the practice of trademark plaintiffs including corporate affiliates as named defendants in future trademark infringement cases.

Christine Lebron-Dykeman is Chair of the Trademark Practice Group at McKee, Voorhees & Sease, PLC. For additional information please visit www.ipmvs.com or contact Christine directly via email at christine.lebron-dykeman@ipmvs.com.