Solely named defendants’ earnings may be awarded in trademark swimsuit, justices rule

OPINION ANALYSIS

The court docket’s determination in Dewberry was one among two opinions launched on Wednesday. (Katie Barlow)

The difficulty in Dewberry Group v. Dewberry Engineers is whether or not a federal court docket calculating the defendant’s earnings in a trademark infringement lawsuit can embody all of the earnings of associated entities in the identical company group. Justice Elena Kagan’s succinct opinion for a unanimous court docket squarely rejected the decrease court docket’s method, ruling that earnings solely of the named defendant may be awarded.

Kagan famous that the statute on which the decrease courts relied factors to the “defendant’s earnings,” and that in frequent parlance “defendant” refers to “the get together in opposition to whom reduction … is sought in an motion.” As a result of Dewberry Engineers, which introduced the swimsuit, “selected to not add the associates” – which turned a revenue –  as defendants in its lawsuit, she reasoned, their “earnings usually are not the (statutorily disgorgable) ‘defendant’s earnings.’” She emphasised that the justices “have typically learn federal statutes to include” state-law ideas that respect company identification, and that below these guidelines “[i]t is lengthy settled … that individually included organizations are separate authorized models with distinct authorized rights and duties.”

Certainly, Kagan famous, the plaintiff “can not, and so doesn’t, contest these factors.” Reasonably, Dewberry Engineers  presents quite a lot of different new arguments for why it may need been capable of receive a bigger damages award. For instance, “if the defendant diverted a few of its earnings to an affiliate’s books,” a court docket would possibly conclude that an award restricted to the defendant’s earnings is, within the phrases of the statute, “insufficient,” and thus “enter judgment for such sum because the court docket shall discover to be simply.” The issue, although, Kagan defined, is that this “is just not a tenable tackle” the selections under, which by no means thought-about that portion of the statute.

For a similar motive, although the USA means that courts in a case like this one would possibly “pierce” the company veil to break down all of the entities into one, Kagan had little interest in pursuing that method, which additionally was not introduced to the courts under. Kagan emphasised repeatedly that the court docket’s holding was slim, because the justices left it “as much as the decrease courts to resolve” whether or not the plaintiff and the federal government might argue these new theories when the case returns to the decrease court docket. “All we maintain at present,” Kagan burdened, “is that the courts under have been incorrect to deal with Dewberry Group and its associates as a single entity in calculating the ‘defendant’s earnings.” Dewberry Group is the only defendant right here, and below that language solely its personal earnings are recoverable.”

This opinion is way extra prone to discover a place as a quick excerpt in casebooks on firms than in supplies on trademark legislation, because the slim path wanted for reversal of the decrease court docket’s determination right here says little or nothing in the least novel or attention-grabbing about trademark legislation itself.