MIAMI BUSINESS LITIGATION: DAMAGES FOR TRADEMARK INFRINGEMENT

Trademarks are important for every business. Business names, logos, and symbols are important for the public to be able to identify the business and can help build and maintain goodwill in the business. Businesses want to protect their trademarks from infringement, and that might include pursuing litigation against an infringer. If a business successfully prevails in trademark litigation, several remedies are available, including an injunction, and damages for actual loss or disgorgement of profits that the infringer obtained from unlawfully using the trademark. Could a business even obtain the profits of the infringer’s affiliates, and does that involve piercing the corporate veil? That is the question that the Supreme will address in Dewberry Engineers Inc., v. Dewberry Group, Inc., Case No. 23-900. The Miami business litigation attorneys of the Mavrick Law Firm represent businesses and their owners in breach of contract litigation and related claims of fraud, non-compete agreement litigation, trade secret litigation, trademark infringement litigation, employment litigation, and other legal disputes in federal and state courts and in arbitration.

This case is an appeal from a decision by the Fourth Circuit Court of Appeals in Dewberry Engineers Inc. v. Dewberry Group, Inc., 77 F.4th 265 (4th Cir. 2023). The case involved two real estate development companies litigating over the use of the term “Dewberry” in their names. The plaintiff, Dewberry Engineers Inc. owned trademarks with the Dewberry name and claimed that the defendant, Dewberry Group, Inc., was infringing on those trademarks. After filing suit, the district court granted summary judgment to the plaintiff. The court then held an evidentiary hearing regarding damages, and ultimately awarded the plaintiff about $42 million in damages. The district court based this damage award on a disgorgement of profits from the defendant. However, the defendant argued it did not have any of its own profits. The defendant only provided administrative services to its various affiliates, which had common ownership with the defendant. The defendant’s affiliates were the business entities that actually in the profit-generating activities. The affiliates also were not named defendants in the lawsuit. Nonetheless, the district court accounted for the profits of the defendant’s affiliates in awarding the $42 million judgment to the plaintiff.

On appeal before the Fourth Circuit, the defendant argued the district court erred by considering the the profits of its affiliates without making a finding of piercing the corporate veil to reach those affiliates. However, the Fourth Circuit rejected this argument and affirmed the judgment. The Fourth Circuit reasoned the district court did not need to pierce the veil because it simply “considered the revenues of entities under common ownership with Dewberry Group in calculating Dewberry Group’s true financial gain from its infringing activities that necessarily involved those affiliates.”

The defendant then petitioned for certiorari from the U.S. Supreme Court, which the Supreme Court granted. Oral argument in the case is scheduled for December 11, 2024. An issue that the Court will be considering involves the remedies provision of the Lanham Act, which is the federal law that addresses trademarks. According to the relevant provision:

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 of the case.

15 U.S.C. § 1117(a). The question is whether this provision allowing for court discretion to award “just” compensation allows a court to consider an infringer’s affiliates profits. The defendant was essentially arguing that the damages should have been zero because the defendant did not earn profits, but this evidently would have been inadequate for the plaintiff. Could the district court then account for the affiliate’s profits, without piercing the corporate veil, to create a “just award”? The Supreme Court will ultimately decide this issue. This case shows how the damages in trademark infringement cases are complex, and calculating damages can involve many factors.

The Miami business litigation lawyers of the Mavrick Law Firm also represent clients in Fort Lauderdale, Boca Raton, and Palm Beach. This article does not serve as a substitute for legal advice tailored to a particular situation.