Dewberry Group, Inc. v. Dewberry Engineers Inc., Docket No. 23-900

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When the law turns on a fine point in how companies are structured, the outcome can shift by millions of dollars. In Dewberry Group versus Dewberry Engineers, the Supreme Court looked at whether a court can award a trademark winner the profits of sister companies that weren’t named in the case. The justices said no: you can only get the money made by the company you sued, not by its separate affiliates.

That ruling wiped away a $43 million award and sent the case back to the district court. Justice Elena Kagan wrote for the court, and the decision makes clear that each corporation stands on its own when it comes to counting up profits. The Court left open questions about how judges should handle accounting details and whether they can ever pierce the corporate veil to include affiliate earnings.

Summary of the Case

Dewberry Engineers Inc. sued Dewberry Group, Inc. for trademark infringement under federal trademark law. While Dewberry Group itself reported operating losses, its sister companies—all owned by the same person, John Dewberry—made tens of millions in rental profits. The trial court treated all these companies as "a single corporate entity" and ordered Dewberry Group to pay nearly $43 million in profits. An appeals court upheld this decision. The Supreme Court then stepped in to determine whether "defendant's profits" can include profits from companies that weren't actually sued, and whether courts can ignore the boundaries between separate companies without specific legal justification.

Opinion of the Court

Justice Kagan, writing for a unanimous Court, ruled that "defendant's profits" means exactly what it sounds like—only the profits of the company that was actually named in the lawsuit. The Court emphasized the well-established principle that separately incorporated businesses are legally distinct entities. Since Engineers only sued Dewberry Group, the trial court made a mistake by including the sister companies' earnings without proper legal grounds. The Court canceled the $43 million award and sent the case back to calculate profits attributable only to Dewberry Group itself.

Separate Opinions

Justice Sotomayor agreed with the main opinion but wrote separately to emphasize that respecting corporate boundaries doesn't mean courts must ignore economic realities. She suggested that courts can still look behind artificial arrangements between related companies when calculating the defendant's true profits, as long as they focus on the profits of the company that was actually sued.

When Corporate Boundaries Matter in Trademark Cases

The Court clarified that "defendant's profits" refers only to profits earned by the specific entity being sued. This reflects the fundamental legal principle that each corporation has its own separate identity. Courts cannot disregard these boundaries without proper legal justification. The decision outlines how courts should first calculate only the named defendant's profits, and then they may adjust that amount if it seems unfair. While the Court didn't provide a complete roadmap for how courts should handle non-arm's-length transactions between related companies, it left open several legal approaches that lower courts can use in appropriate cases to determine a defendant's true profits.