Dewberry Group, Inc. v. Dewberry Engineers Inc.
Case Overview
Dewberry Group, Inc. v. Dewberry Engineers Inc. held that when a court awards disgorgement of 'defendant's profits' under the Lanham Act for trademark infringement, the award is limited to the profits of the named defendant and does not extend to the profits of affiliated non-party entities under common ownership. The Court reversed the Fourth Circuit's award that had aggregated profits across a real estate empire controlled by the same family, finding no basis in the statute's text to pierce corporate boundaries without the ordinary showing required to disregard separate legal entities.
The Facts
Dewberry Engineers obtained a Lanham Act judgment against Dewberry Group for trademark infringement. The district court, finding that Dewberry Group itself had minimal profits, awarded disgorgement of profits from Dewberry Group's affiliated entities, all owned by the same founder. The Fourth Circuit affirmed, reasoning that the affiliates were effectively the same enterprise.
The Application
The Court applied the Lanham Act's plain text to reject aggregation of profits across legally distinct affiliates. Although Dewberry Group and its related entities shared common ownership, the statute's reference to "defendant's profits" encompasses only the named defendant's own earnings; separate legal entities retain distinct liability boundaries and cannot be collapsed for disgorgement purposes without satisfying traditional piercing-the-corporate-veil doctrine. The district court's view that the entities functioned as a unified enterprise could not override the statutory language or the principle that corporate separateness creates distinct liability shields. Accordingly, Dewberry Group's minimal profits—not the larger empire's earnings—defined the disgorgement ceiling, reversing the Fourth Circuit's inflation of the award through affiliation.
The Conclusion
**The Court reversed.** Kagan wrote for a unanimous Court. The word 'defendant' in the Lanham Act means the defendant, not a family of related companies. Courts may not bypass corporate separateness to inflate disgorgement awards unless the traditional grounds for piercing the corporate veil are satisfied.
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