Justices Likely to Send Trademark Case Back to Appeals Court

The US Supreme Court seemed ready to make a federal appeals court take another look at whether an Atlanta-based real estate developer profited from infringing on another business’ trademark.

During arguments Wednesday, several justices suggested they agreed with a claim by Dewberry Group Inc. that the lower court wrongly treated it and its corporate affiliates as one entity in determining it had to give up $43 million in profits as a penalty.

Justice Neil Gorsuch said something more needs to be done to attribute the affiliate’s profits to Dewberry group and “we just don’t have any evidence that the Fourth Circuit did that.”

The case stems from a long running dispute involving two companies that both claimed rights to market their real estate development services under the Dewberry name.

Dewberry Group Inc., owned by John Dewberry, is challenging a court order that forces it to pay Dewberry Engineers Inc. $43 million for violating a 2007 agreement that had settled the companies’ dueling trademark claims when it rebranded 10 years later.

The Fourth Circuit affirmed a trial court’s decision to treat Dewberry Group and its affiliates under the same owner as a single corporate entity in calculating damages because the company reported negative profits on its tax returns and the revenue generated by its services appeared on the balance sheets of its corporate affiliates.

Under a provision of the Lanham Act, courts can order companies to give up what they earned from using an unauthorized trademark. The justices agreed to decide if that provision reaches the profits of legally separate corporate affiliates.

Justice Amy Coney Barrett said the parties seem to agree it doesn’t and asked why the court shouldn’t just say that.

“It seems like that could be a very short opinion,” she said.

Dewberry Engineers argues the Lanham Act gives courts broad discretion to calculate the damages that are owed and that Dewberry Group alone was ordered to pay the $43 million not its affiliates.

“There is total agreement that you cannot include in the judgment the affiliates’ profits as the affiliate’s profits,” said Elbert Lin, a Hunton Andrews Kurth LLP partner who argued for Dewberry Engineers. “You need some other reason unless you are going to pierce the corporate veil.”

In this case, he said, the unchallenged finding of fact is that Dewberry Group created all the revenues that its affiliates passively received.

Rather than disregard corporate separateness, the Fourth Circuit understood the district court considered the revenues of entities under common ownership with Dewberry Group in calculating its true financial gain.

Barrett asked if the parties can agree at a minimum the Fourth Circuit’s opinion isn’t a model of clarity.

If the court wants to go beyond the strict question presented, she said the justices must articulate some theory to justify the Fourth Circuit’s opinion.

Barrett suggested those theories could be presented to the Fourth Circuit, which could “presumably make pretty quick work of this on remand.”

The case is Dewberry Group, Inc., v. Dewberry Engineers Inc., U.S., No. 23-900, arguments 12/11/24.