A long-running trademark case between two real estate companies over the mark DEWBERRY reached the U.S. Supreme Court, which ruled that the lower court improperly awarded profits from non-party companies. The decision clarified that only a named defendant’s profits – not those of its affiliates – can be recovered in a trademark infringement case.

The lawsuit and the lower court’s decision

Plaintiff Dewberry Engineers sued defendant Dewberry Group for trademark infringement under the Lanham Act, as well as for breach of contract. Plaintiff owns the mark DEWBERRY and had previously reached a settlement with defendant that limited how defendant could use the mark. However, defendant allegedly breached the agreement leading to a new dispute and the present litigation.

The district court ruled in plaintiff’s favor, finding that defendant intentionally and willfully infringed the trademark. Because defendant had operated at a loss, there was not much against which to collect a judgment. So, in calculating damages (of approximately $43 Million), the district court included profits from 30 companies affiliated with defendant – which were separately incorporated but owned by the same person.

The Court of Appeals upheld the award

Defendant sought review with the Fourth Circuit. On appeal, the Fourth Circuit upheld the damages award. The appellate court reasoned that because the affiliates’ profits were the “economic reality” of defendant’s operations, it was appropriate to treat all of the companies as a single entity when calculating the award. A dissenting judge disagreed, arguing that courts cannot simply add the revenues of non-parties when awarding a plaintiff the defendant’s profits.

The Supreme Court reverses

The Supreme Court vacated the lower court’s decision, ruling that the Lanham Act only allows a plaintiff to recover the named defendant’s profits – not those of its affiliates. Justice Kagan, writing for the Court, explained that the law does not override traditional corporate law principles, which treat affiliated companies as separate legal entities. The Court emphasized that the Lanham Act explicitly allows for recovery of the defendant’s profits, not anyone else’s. And corporate law does not automatically merge affiliated companies into one legal entity.

The high Court noted that the lower courts failed to follow the correct legal process for disregarding corporate separateness. For example, it did not conduct an analysis to see whether it would be appropriate to “pierce the corporate veil” of affiliates.

What happens next?

The case now returns to the lower courts, where plaintiff may seek a new damages award, but only based on defendant’s own profits. The Supreme Court left open the possibility of alternative legal arguments, including whether plaintiff could have made a stronger case for veil-piercing.

Three reasons why this case matters:

  • Clarifies trademark damages – The ruling reinforces that a plaintiff can only recover the named defendant’s profits, not those of other related companies.
  • Protects corporate separateness – The decision upholds fundamental corporate law principles, preventing courts from automatically lumping together affiliated businesses.
  • Limits expansive remedies – Companies facing trademark lawsuits now have a stronger defense against attempts to recover profits from separate but related entities

Dewberry Group, Inc. v. Dewberry Engineers Inc., 604 U.S. ____ (February 26, 2025).