Supreme Court Decides Dewberry Group v. Dewberry Engineers

On February 25, 2025, the U.S. Supreme Court decided Dewberry Group v. Dewberry Engineers No. 23-900, holding that a provision allowing a plaintiff in a trademark lawsuit to recover the “defendant’s profits,” 15 U.S.C. § 1117(a), does not allow the plaintiff to recover the profits of a defendant’s separately incorporated affiliates.

Dewberry Engineers provides real-estate development services for commercial entities and owns a registered trademark in the word “Dewberry.” John Dewberry, who has no connection to Dewberry Engineers, owns several corporate entities that are also in the real estate business. Most of those entities own rental properties and make money from them. One of the entities, Dewberry Group, provides services to the other affiliates, including marketing their properties, and loses money doing so. In marketing the properties of the affiliates, Dewberry Group used the term “Dewberry.”

Dewberry Engineers sued Dewberry Group for infringement of its “Dewberry” trademark, but did not add John Dewberry or any of the affiliate entities as defendants. The District Court found Dewberry Group liable and awarded Dewberry Engineers $43 million dollars under a provision of the Lanham Act that enables a plaintiff to recover the “defendant’s profits” from a trademark violation. 15 U.S.C. § 1117(a). Because Dewberry Group itself recorded no profits, the District Court reached that $43 million award by totaling the profits of all of John Dewberry’s affiliate entities, even though they were not parties to the lawsuit. In its view, this reflected the “economic reality” of the operations of John Dewberry and his related entities. The Fourth Circuit affirmed.

The Supreme Court reversed, holding that 15 U.S.C. § 1117(a) does not allow a plaintiff to recover the profits of entities that are not parties to the lawsuit, even if they are affiliated with the defendant. It explained that the plain text of the provision limits recovery to “the entity named in Dewberry Engineers’ complaint” and that because the “Engineers chose not to add the Group’s property-owning affiliates as defendants,” the provision did not permit the Engineers to recover the affiliates’ profits, regardless of the economic realities. The Court also explained that its holding harmonized with the background principle of corporate separateness: “separately incorporated organizations are separate legal units with distinct legal rights and obligations.” It remanded for a new award proceeding and left open the possibility that other provisions of the Lanham Act might justify an award based on the profits of affiliate entities.

Justice Kagan delivered the opinion for a unanimous Court. Justice Sotomayor filed a concurring opinion.