The question
Whether, in calculating a disgorgement of the "defendant's profits" for trademark infringement under Lanham Act Section 1117(a), a court may include the profits of the defendant's separately incorporated affiliates that were not named as defendants.
Dewberry Group, Inc. v. Dewberry Engineers Inc.
What the Court decided
The Court set aside the nearly $43 million profits award and sent the case back for recalculation. In a suit to recover the "defendant's profits" under Section 1117(a) of the Lanham Act, a court may award only profits ascribable to the named defendant itself. "Defendant" carries its ordinary legal meaning, the party against whom relief is sought, and Dewberry Engineers chose not to name Dewberry Group's affiliates. Because separately incorporated entities are distinct legal units and no veil-piercing showing was made, the affiliates' profits are not the defendant's profits.
How the justices split
UnanimousThe Court's opinion
Kagan, joined by Roberts, Thomas, Alito, Sotomayor, Gorsuch, Kavanaugh, Barrett, Jackson
The opinion for a unanimous Court held that under Section 1117(a) a court can award only profits ascribable to the named defendant. The term defendant bears its usual legal meaning, the party against whom recovery is sought, and here that is Dewberry Group alone because the Engineers did not add the affiliates as defendants. Background corporate-law principles do not merge the entities, since separately incorporated organizations are distinct legal units and no veil-piercing showing was made. The affiliates' real-estate profits therefore are not the statutorily disgorgable defendant's profits.
Concurring
Sotomayor, writing alone
Justice Sotomayor filed a concurring opinion. The syllabus names the concurrence but does not set out its reasoning.
How we know · 5 sourced claims
The Court held that under Lanham Act Section 1117(a) a court can award only profits ascribable to the defendant itself.
Source: syllabus, Held
The term defendant means the party against whom relief or recovery is sought, here Dewberry Group, and the Engineers chose not to add the Group's affiliates as defendants.
Source: syllabus, Held
Separately incorporated organizations are separate legal units with distinct legal rights and obligations, even when they share a common owner.
Source: syllabus, Held
Dewberry Engineers admits it never tried to make the showing needed for veil-piercing, so corporate formalities must be respected.
Source: syllabus, Held
Kagan delivered the opinion for a unanimous Court, and Sotomayor filed a concurring opinion.
Source: syllabus, lineup