In Dewberry Group, Inc. f; Dewberry Engineers Inc., — US — (2025), the Supreme Court made the unremarkable decision that an award of a defendant’s profits under 15 USC 1117(a), is limited to the named defendant, and not to unnamed affiliates of the defendant.

The district court had held that considering the actual defendant and its affiliates together would prevent the “unjust enrichment” that the Act was meant to target and totaled the affiliates’ profits from the years Dewberry Group infringed, resulting in An award of nearly $43 million. Reiterating the “‘economic reality’ of Dewberry Group’s relationship
with its affiliates,” the Fourth Circuit approved the treatment of all the companies “as a single
corporate entity.” holding Dewberry Group to account for its use of infringing materials to generate corporate profits.

Noting that the Lanham Act authorizes the recovery of the defendant’s profits, the Supreme Court said that in the absence of a specific definition, the word “defendant” bears its usual legal meaning: “the party against whom relief or recovery is sought in an action or suit,” i.e. the Dewberry Group. The Court observed that the plaintiff chose not to add the Group’s property-owning affiliates as defendants, and thus the affiliates’ profits are not the (statutorily
disgorgable) “defendant’s profits” as ordinarily understood.

The Supreme Court said that background corporate law principles do not change the result, for it is long settled as a matter of American corporate law that separately incorporated organizations are separate legal units with distinct legal rights and obligations — even if they are affiliated. Noting that Dewberry Engineers admitted it never tried to make the showing needed for veil-piercing, the Court said that the need to respect corporate formalities remains..

Plaintiff attempted to support the award by invoking a later sentence in Section 1117(a): “If the court shall find that the amount of the 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.” Plaintiff argued that a court can
consider “as relevant evidence” the profits of related entities— for example, to see if the defendant diverted some of its earnings to an affiliate’s books. But the Supreme Court said that this is not what was done:

The District Court did not rely on the just-sum provision, or suggest that it was departing up from Dewberry Group’s reported profits to reflect the company’s true gain. There was no two-step process for deciding on the award, but only a single step: the calculation of the “defendant’s profits.”

The Court added that that treatment, by its terms, disregards “corporate formalities”—and likewise the “principle[] of corporate separateness.”

The Supreme Court thus vacated the judgment of the Fourth Circuit, and remanded the case for further proceedings, expressly leaving open the question of the effect of the “just sum” provision when properly applied, and whether veil-piercing is an available option on remand,