Summary
The Supreme Court held that under the Lanham Act, a court may only award profits ascribable to the named defendant in a trademark infringement suit, not the profits of separately incorporated affiliates. The Court vacated the Fourth Circuit's affirmation of a $43 million profits award that treated the defendant and its affiliates as a single corporate entity. The case was remanded for further proceedings consistent with this opinion.
Topics
Practice areas
Questions Presented
- Whether a court may include the profits of separately incorporated affiliates of a corporate defendant when awarding "defendant's profits" under Lanham Act §1117(a).
- Whether the Lanham Act's "just‑sum" provision permits a court to consider affiliate profits in calculating a defendant's disgorgement award.
Holdings
- A court may award only profits properly ascribable to the named defendant itself; affiliates' profits are not the "defendant's profits" within the ordinary meaning of the term.
- The Court declined to decide the scope of the "just‑sum" provision and vacated the lower courts' award, remanding for a new proceeding consistent with the holding that only the defendant's own profits may be disgorged.
Key quotations
“We hold today that the court erred in doing so. Under the pertinent statutory provision, the court could award only profits properly ascribable to the defendant itself.” (at 5)
“All we hold today is that the courts below were wrong to treat Dewberry Group and its affiliates as a single entity in calculating the “defendant’s profits.”” (at 7)
Factual background
Dewberry Engineers owns a trademark on the name "Dewberry" and sued Dewberry Group, a real‑estate development company owned by John Dewberry, for trademark infringement. Dewberry Group provides services to dozens of separately incorporated affiliates that own the properties; the affiliates generate profits while Dewberry Group receives only fee payments and has reported losses for years.
Procedural history
The district court awarded nearly $43 million in defendant's profits by treating Dewberry Group and its affiliates as a single corporate entity. The Fourth Circuit affirmed. The Supreme Court granted certiorari to resolve whether affiliates' profits may be included under Lanham Act §1117(a).
Remand instructions
Remand for a new award proceeding calculating defendant's profits without including affiliates' profits, consistent with the holding that only the named defendant's own profits are recoverable under Lanham Act §1117(a).