Can a trademark plaintiff recover profits from an infringer’s affiliates?
In Dewberry Engineers Inc. v. Dewberry Group, Inc., Case No. 23-900 (U.S. Feb. 26, 2025), the U.S. Supreme Court unanimously ruled that profits earned by “non-party” affiliates cannot be included in calculating damages under the U.S. Trademark Act, commonly known as the Lanham Act. The Court emphasized that only a named defendant’s profits are relevant for assessing monetary remedies in trademark infringement cases.
The dispute involved a trademark conflict between two companies with overlapping names. Dewberry Engineers argued that profits from affiliated entities of Dewberry Group, which were not named parties in the lawsuit, should be considered in calculating damages. The Court rejected this approach, underscoring the principle that damages must be limited to the named infringing defendant’s gains unless exceptional circumstances apply.
Key Takeaways
This ruling reinforces the need for clear corporate separation among affiliated entities to avoid extended liability in legal disputes.
While Dewberry narrows the availability of profits for damages to those of named defendants, it also incentivizes plaintiffs to assert claims against affiliates and individual owners.
Prior to initiating litigation, trademark plaintiffs should carefully consider, as part of their pre-filing due diligence, the potential involvement of, and naming as defendants, affiliated companies whose profits may be attributable to the infringing conduct, and corporate owners, officers, or directors as contributory infringers. This strategic choice must be grounded in solid legal and evidentiary footing to withstand early challenges and ensure that joint liability theories are well-supported.