Damages are thumped---most recent trademark dispute.

The district court entered summary judgment in favor of Dewberry Engineers on both claims. After a three-day bench trial to calculate damages, the district court found that profit disgorgement was appropriate. Because Dewberry Group provided its infringing services to affiliate companies under common ownership, the court found that the revenues associated with Dewberry Group’s conduct appeared on the affiliates’ balance sheets. Consequently, the court treated Dewberry Group and its affiliates as a single corporate entity for the purpose of calculating revenues and profits generated by Dewberry Group’s use of infringing marks. The district court reduced Dewberry Engineers’ requested award of $53.7 million by 20%—awarding Dewberry Engineers close to $43 million in disgorgement profits, plus attorneys’ fees.

On appeal, the United States Court of Appeals for the Fourth Circuit affirmed the district court’s judgment in all respects.[2] On the issue of including revenues of Dewberry Group’s affiliates in the disgorgement calculation, the Court ruled that, while Dewberry Group did not receive the revenues from its infringing behavior directly, it still benefited from its infringing relationship with its affiliates. It therefore ruled that the district court acted within its equitable discretion to hold Dewberry Group to account for the revenues generated in part from infringing materials used by its affiliates under common ownership. Admonishing the district court for exercising its discretion in that manner, it ruled, risked “handing potential trademark infringers the blueprint for using corporate formalities to insulate their infringement from financial consequences.”

One member of the appeals court panel, however, dissented on two issues: the district court’s grant of summary judgment on the issue of likelihood of confusion, and on the damages issue. On the damages issue, the dissenting judge said that, if the corporations affiliated with Dewberry Group participated in the infringing activity, they would be subject to Lanham Act claims themselves, and all that Dewberry Engineers had to do was to sue them, or to try to pierce the Dewberry Group’s corporate veil to eliminate the corporate separateness between it and those entities. But, the judge said, “I know of no law that allows court, in assessing the profits of a defendant, to disregard those options and simply add the revenues from non-parties to a defendant’s revenues for purposes of evaluating the defendant’s profits.”[3]

In its petition for a writ of certiorari, Dewberry Group echoed the views of the dissenting judge. It argued that the Fourth Circuit’s opinion “silently invites courts to ignore corporate separateness without regard to veil-piercing principles.” Two Notre Dame law professors filed an amicus brief in support of Dewberry Group, arguing that equity “has never authorized courts to run roughshod over foundational principles of corporate separateness based on a sense of what would be most fair in an individual case.”[4] In its opposition, Dewberry Engineers argued that the Lanham Act expressly provides that “[if] the court shall find that the amount of recovery based on profits is either inadequate or excessive the court may in its discretion enter judgment for such sum as the court shall find to be just, according to the circumstances of the case.” The Supreme Court granted Dewberry Group’s petition for a writ of certiorari on June 24, 2024.