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Dewberry Trademark Case
Trademarks protect the identity and value of a company’s brand, which is why recent trends in intellectual property litigation are so critical for businesses. One particularly significant case that illustrates these principles is Drewberry Engineers v. Drewberry Group. This dispute not only involves a considerable sum but also addresses deeper issues of corporate identity and competitive practice in the market, making its outcome relevant to all companies concerned with brand integrity.
In the case, two commercial real estate development companies have been locked in a legal battle over substantially the same name. The parties previously had a settlement agreement over the name, which was allegedly breached by the defendant, giving rise to a new lawsuit entirely from the one originally launched back in 2006.
Court Proceedings and Legal Consequences
The Supreme Court has recently agreed to take up the case, after a lower district court granted summary judgment to Drewberry Engineers on all of its trademark infringement claims, and decided that the company was entitled to a disgorgement of profits in the amount of $43 million dollars. The Fourth Circuit Agreed.
The district court ruled that Drewberry Group intentionally violated the trademark. According to the Lanham Act, which is the set of laws that govern trademarks, the court has the authority to compel a company found guilty of infringement to forfeit its profits. This serves as a penalty and a deterrent against future violations. This decision emphasizes that intentional infringement has serious financial consequences.
Trademark Damages
When deciding on damages for trademark infringement, courts typically consider how much profit the infringing party made from the unauthorized use, what royalties would be reasonable, and the actual financial loss suffered by the trademark owner. A key component of the substantial award granted to Drewberry Engineers in this case were equitable factors, including the defendant’s conduct, and its degree of willfulness in infringing the plaintiff’s Drewberry mark.
However, in a twist of accounting, Drewberry Group had tax returns detailing that it actually made no profit from the infringing activity, and alleged that the district court violated principles of separateness by conflating it with its legally separate and non-party affiliates. Startlingly, the court did not pierce the corporate veil on these entities, they were not defendants in the case, and there were no instances of comingling proved between them.
The district court, along with the Fourth Circuit, determined that the papered lack of profits did not reflect the economic reality of the situation. They countered Drewberry Group’s arguments by stating that Drewberry Group, rather than its affiliates, was responsible for the management and operation of its properties. And that is where it stands. A $43 million disgorgement of profits of a company, where none were recorded to exist.
Supreme Court Implications
The Supreme Court will now review the lower courts’ rulings in light of the foundational principle dictating that separate companies are treated separately.
This decision could influence how businesses manage their subsidiaries and affiliates, making it a pivotal moment for corporate governance and intellectual property law. The principles at stake underscore the importance of vigilant trademark protection and the strategic management of corporate identities. If the Supreme Court upholds the Fourth Circuit’s decision, other courts will then have the ability to increase profit awards by accounting for revenues generated by an infringer’s affiliates and related entities regardless of whether those entities are parties to the lawsuit and regardless of whether the corporate veil is pierced through such things as comingling, tortious conduct, or a lack of corporate formalities.
