Dewberry Group, Inc. v. Dewberry Engineers Inc.

Dewberry Group against Dewberry Engineers, decided February 26th, 2025. A unanimous Supreme Court, in an opinion by Justice Kagan, vacated a $43 million trademark award and held that under section 1117(a) of the Lanham Act, a court awarding the defendant's profits can award only profits properly ascribable to the defendant itself — not the profits of separately incorporated affiliates that were never made parties to the suit. Here's the brief.

The dispute is between two unrelated real-estate companies sharing a name. Dewberry Engineers, the plaintiff, owns a registered trademark in the word Dewberry for real-estate services. Dewberry Group, the defendant, is owned by developer John Dewberry. It provides services — financial, legal, operational, marketing — solely to about thirty separately incorporated companies in his portfolio, each owning commercial property for lease. The rental income lands on the affiliates' books; the Group collects only agreed-upon fees, apparently set below market. By its tax returns, the Group has operated at a loss for decades, while the affiliates have earned tens of millions.

In 2007, an infringement suit ended in a settlement limiting the Group's use of the Dewberry name. A decade or so later, the Group reneged as part of a rebranding, and Dewberry Engineers sued again — naming Dewberry Group alone. The district court found the infringement intentional, willful, and in bad faith; those liability findings were not before the Supreme Court. On remedy, because the Group reported no profits, the district court treated the Group and its affiliates as a single corporate entity to reflect economic reality, totaled the affiliates' real-estate profits for the years of infringement, and awarded nearly $43 million. A divided Fourth Circuit panel affirmed over Judge Quattlebaum's dissent, and the Supreme Court granted cert.

The question presented: when a court awards the defendant's profits under section 1117(a), can it include profits earned by the defendant's separately incorporated, non-party affiliates?

The statute entitles a prevailing plaintiff, subject to the principles of equity, to recover the defendant's profits. A later sentence — the so-called just-sum provision — adds that if the court finds a recovery based on profits inadequate or excessive, it may enter judgment for such sum as it finds just. The Act does not define defendant. And behind the statute stands a bedrock principle of American corporate law: separately incorporated organizations are separate legal units, with distinct legal rights and obligations, even when they share a common owner.

The Court's reasoning proceeded in three steps.

First, text: because the Lanham Act does not define defendant, the term bears its usual legal meaning — the party against whom relief or recovery is sought. Here that party is Dewberry Group alone; the Engineers chose not to add the property-owning affiliates as defendants. The affiliates' profits are therefore not the statutorily disgorgeable defendant's profits as ordinarily understood.

Second, corporate law does not convert one into the other. The Court has often read federal statutes to incorporate common-law corporate principles — but the governing principle here is corporate separateness, and veil-piercing is its exception. Dewberry Engineers admitted it never attempted the showing veil-piercing requires.

Third, the Court rejected the Engineers' recharacterization of what happened below — that the lower courts had really applied the just-sum provision, using affiliate profits merely as evidence of the Group's true financial gain. Neither court relied on that provision, Justice Kagan wrote; there was no two-step process, only a single step that lumped the companies together, and the award was simply the sum of all the Dewberry entities' profits.

The Court was explicit about what it did not decide.

It expressed no view on whether the just-sum provision could support a profits award, on whether courts may look behind a defendant's tax or accounting records to find its true financial gain, or on whether veil-piercing remains available on remand.

Justice Sotomayor joined the opinion in full and concurred to underscore that corporate separateness does not blind courts to economic realities: below-market fees charged to affiliates, or an owner's compensating cash infusions, may bear as evidence on the defendant's own profits.

Dewberry is the Court's first construction of the phrase defendant's profits in section 1117(a), and it is deliberately narrow. It aligns Lanham Act disgorgement with the corporate-separateness line running through Bestfoods and Agency for International Development: a remedies statute naming the defendant reaches the named party, not its corporate family. And by reserving the just-sum provision, economic-reality evidence, and veil-piercing, the Court left the mechanics of profit awards against affiliated enterprises to be worked out case by case.

Dewberry Group against Dewberry Engineers, 604 U.S. 321, decided February 26th, 2025. I'm John Goodhue. Thanks for watching.