Dewberry Ruling May Lead to More Defendants in TM Fights

Shana L. Olson, counsel in Sterne Kessler’s Trademark & Brand Protection and the Mechanical & Design Practice Groups, spoke to Law360 to discuss the U.S. Supreme Court’s opinion in Dewberry Group, Inc. v. Dewberry Engineers Inc. In a unanimous opinion, the Court found that Section 35 of the Lanham Act, which provides that a plaintiff can recover a “defendant’s profits,” only applies to profits of the defendant itself, not its unrelated corporate affiliates. As part of this ruling, the lower court’s nearly $43 million award from defendant Dewberry Group to plaintiff Dewberry Engineers was vacated, and the case was remanded for further proceedings.

The justices said they were leaving “a number of questions unaddressed” that the lower courts will have to deal with, including whether veil piercing is available in the second go-around or if the just-sum theory is viable. Justice Sonia Sotomayor suggested in a concurring opinion that the lower courts might consider reopening the record to explore the issue of accounting arrangements and their effects on calculating profits. Justice Sotomayor’s opinion dealt with “the real world concerns” about corporate separateness and why “you don’t necessarily want to incentivize keeping things separate in a case like this,” said Shana.

“I thought that the concurring opinion was pretty important because it addresses the public policy reasons why the lower courts might have reached into the affiliated entities for the award,” she added.