SCOTUS Sidesteps Key Corporate Damages Questions in Dewberry Case

On February 26, the Supreme Court of the United States (SCOTUS) unanimously nixed a $43 million trademark award granted to Dewberry Engineers Inc. by the US Court of Appeals for the Fourth Circuit after the lower court ruled that the Dewberry Group infringed Dewberry Engineer's trademark. SCOTUS found that the Fourth Circuit erred by including the profits of affiliates and not named defendants.

Dewberry Group v. Dewberry Engineers is a case involving two commercial real estate development companies with the same name. In May 2020, Dewberry Engineers sued the Dewberry Group in the Eastern District of Virginia, citing trademark infringement under the Lanham Act.

Finnegan partner Mark Sommers told World Intellectual Property Review that, “The Supreme Court’s unanimous decision…was cabined to but one issue: whether the trial court erred in treating the profits of defendant’s affiliates as ‘defendant’s profits’ within the meaning of Section 1117(a) of the Lanham Act.”

Justice Sonia Sotomayer stated in her concurring opinion that corporate separateness should not “blind courts to economic realities” when calculating a defendant’s profits. She highlighted that while Dewberry Group did not report any profits, its affiliates made substantial earnings from the trademark infringement.

 “Whatever occurs on remand, one thing is clear: the Dewberry decision is not an invitation for infringers to engage in shell games to avoid liability,” said Mark.

He added, “Justice Sotomayor’s concurring admonition was likewise clear: ‘Principles of corporate separateness do not force courts to close their eyes to practical realities in calculating a ‘defendant’s profits’.”

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