The U.S. Supreme Court overturned a $43 million award to a real-estate developer in the Dewberry trademark case, ruling that plaintiffs cannot recover profits from a defendant’s affiliates without suing the affiliates themselves.The decision, issued on February 26, 2025, was unanimous and based on the plain language of the Lanham Act, which specifies that only the “defendant’s profits” can be considered in trademark infringement cases.
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Key Points:
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The case involved a dispute between two entities using the “Dewberry” name for real estate services.
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The defendant, Dewberry Group, operated at a loss, but its affiliates, owned by the same person, made significant profits.
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The district court and Fourth Circuit had considered the defendant and its affiliates as a single unit, which the Supreme Court found to be incorrect.
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The Court remanded the case for further proceedings, noting that the “just sum” provision in the Lanham Act allows for adjustments in the amount of recovery if necessary.
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Justice Sotomayor wrote a concurrence urging courts to consider practical business realities in calculating damages.
Follow-up: Did the court address corporate veil?
the Supreme Court did not explicitly address the issue of piercing the corporate veil. The decision focused primarily on the plain language of the Lanham Act and the specific provision that allows recovery of “defendant’s profits” in trademark infringement cases. The Court held that plaintiffs cannot recover profits from a defendant’s affiliates unless those affiliates are also sued and found liable.
However, the Court’s decision does touch on the broader issue of corporate structure and liability. The Court emphasized that the profits must belong to the defendant, not to affiliated entities, even if those entities are closely related or owned by the same person. This suggests that the Court was cautious about expanding liability to encompass the financial activities of related entities without a direct legal basis.
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Key Points:
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The Court did not pierce the corporate veil in this case.
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The decision was based on the statutory language of the Lanham Act, which limits recovery to the “defendant’s profits.”
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The Court did not address the broader legal principles of corporate liability or the conditions under which a corporate veil might be pierced.
