Amicus Curiae Brief — Dewberry Group, Inc., fka Dewberry Capital Corporation, Petitioner v. Dewberry Engineers Inc.

No. 23-900

IN THE

Supreme Court of the United States

DEWBERRY GROUP, INC., FKA DEWBERRY

CAPITAL CORPORATION,

Petitioner,

v.

DEWBERRY ENGINEERS INC.,

Respondent.

ON WRIT OF CERTIORARI TO THE UNITED STATES

COURT OF A PPEALS FOR THE FOURTH CIRCUIT

BRIEF OF AMICUS CURIAE THE

INTERNATIONAL TRADEMARK ASSOCIATION

IN SUPPORT OF NEITHER PARTY

THOMAS A. AGNELLO

MICHAEL BEST

& FRIEDRICH LLP

790 North Water Street,

Suite 2500

Milwaukee, WI 53202

JOHN W. CRITTENDEN

101 Lombard Street, #801W

San Francisco, CA 94111

MEGAN K. BANNIGAN

Counsel of Record

JARED I. K AGAN

CLARA CORREA

CHRISTOPHER ZHENG

JACOB HOCHBERGER

DEBEVOISE & PLIMPTON LLP

66 Hudson Boulevard

New York, NY 10001

(212) 909-6000

mkbannigan@debevoise.com

Counsel for Amicus Curiae

the International Trademark Association

331973

A

(800) 274-3321 • (800) 359-6859

TABLE OF CONTENTS

TABLE OF CONTENTS ............................................. i

TABLE OF AUTHORITIES ..................................... iii

INTEREST OF AMICI CURIAE ............................... 1

SUMMARY OF ARGUMENT.................................... 4

ARGUMENT .............................................................. 6

I. The text of the Lanham Act does not support the

Fourth Circuit’s disgorgement award ....................... 6

A.

The Lanham Act’s disgorgement remedy

only contemplates defendant’s profits; including

nonparties’ profits in the calculation is improper. 8

B.

The principles of equity do not permit courts

to ignore the corporate form ................................... 9

II. Plaintiffs have other means to recover damages

without implicating nonparties ............................... 12

A.

The Lanham Act’s broad remedies for

trademark holders mitigates the need to expand

profit recovery to nonparties ................................ 13

B.

Respondent’s failure to name the non-party

affiliates as defendants does not necessitate a

doctrinal change .................................................... 16

C.

Respondent could have followed established

procedures and attempted to pierce the

corporate veil......................................................... 19

i

III. Leaving the Fourth Circuit’s ruling undisturbed

would create bad public policy and would pose

significant consequences for corporate

defendants. ............................................................... 21

CONCLUSION ......................................................... 23

ii

TABLE OF AUTHORITIES

Cases

A.V. by Versace, Inc. v. Gianni Versace

S.p.A., 87 F. Supp. 2d 281 (S.D.N.Y.

2000) .....................................................................18

Abitron Austria GmbH v. Hetronic Int’l,

Inc., 600 U.S. 412 (2023) .......................................2

Already, LLC v. Nike, Inc., 568 U.S. 85

(2013) ......................................................................2

Anderson v. Abbott, 321 U.S. 349 (1944) ..................22

B&B Hardware, Inc. v. Hargis Indus.,

Inc., 575 U.S. 138 (2015) .......................................2

Bambu Sales, Inc. v. Sultana Crackers,

Inc., 683 F. Supp. 899 (E.D.N.Y.

1988) .....................................................................17

Bangor Punta Operations, Inc. v.

Bangor & Aroostook Railroad Co.,

417 U.S. 703 (1974) ........................................10, 11

Brittingham v. Jenkins, 914 F.2d 447

(4th Cir. 1990) ......................................................17

Chanel Indus. v. Pierre Marche, Inc.,

199 F. Supp. 748 (E.D. Mo. 1961) .......................15

iii

Christian Louboutin S.A. v. Yves Saint

Laurent Am. Holding, Inc., 696 F.3d

206 (2d Cir. 2012) ..................................................2

Classroomdirect.com, LLC v. Draphix,

LLC, 992 So. 2d 692 (Ala. 2008) ..........................12

Clientron Corp. v. Devon IT, Inc., 894

F.3d 568 (3d Cir. 2018) ........................................10

Computer Searching Serv. Corp. v.

Ryan, 439 F.2d 6 (2d Cir. 1971) ..........................15

Dana v. 313 Freemason, 587 S.E.2d 548

(2003) ....................................................................20

Dastar Corp. v. Twentieth Century Fox

Film Corp., 539 U.S. 23 (2003) ..............................2

Dewberry Eng’rs Inc. v. Dewberry Grp.,

Inc., 77 F.4th 265 (4th Cir. 2023) ................7, 8, 17

Dewberry Eng’rs, Inc. v. Dewberry Grp.,

Inc., No. 1:20-CV-00610, 2022 WL

1439826 (E.D. Va. Mar. 2, 2022) .....................7, 15

Dickinson v. Zurko, 527 U.S. 150 (1999) ....................2

Dole Food Co. v. Patrickson, 538 U.S.

468 (2003) .............................................................21

Donsco, Inc. v. Casper Corp., 587 F.2d

602 (3d Cir. 1978) ................................................16

Edwin K. Williams & Co., Inc. v. Edwin

K. Williams & Co.-East, 542 F.2d

1053 (9th Cir. 1976) .............................................21

iv

EPLET, LLC v. DTE Pontiac N., LLC,

984 F.3d 493 (6th Cir. 2021)................................10

Ferring B.V. v. Watson Labs., Inc.-Fla.,

764 F.3d 1382 (3d Cir. 2014) .................................2

Fla. Prepaid Postsecondary Educ.

Expense Bd. v. Coll. Sav. Bank, 527

U.S. 627 (1999).......................................................2

Fourth Estate Pub. Benefit Corp. v.

Wall-Street.com, LLC, 138 S. Ct.

2707 (2018) .............................................................2

Hana Fin., Inc. v. Hana Bank, 574 U.S.

418 (2015) ...............................................................2

Iancu v. Brunetti, 588 U.S. 388 (2019) .......................2

Int'l Fin. Servs. Corp. v. Chromas

Techs. Canada, Inc., 356 F.3d 731

(7th Cir. 2004) ......................................................10

Iowa Mut. Ins. Co. v. LaPlante, 480 U.S.

9 (1987) ...................................................................9

Jack Daniel’s Properties, Inc. v. VIP

Prod. LLC, 599 U.S. 140 (2023) ............................2

K Mart Corp. v. Cartier, Inc., 486 U.S.

281 (1988) ...............................................................2

KP Permanent Make-Up, Inc. v. Lasting

Impression I, Inc., 543 U.S. 111

(2004) ......................................................................2

Liu v. SEC, 591 U.S. 71 (2020). ................................10

v

Matal v. Tam, 582 U.S. 218 (2017).............................2

Mission Prod. Holdings, Inc. v.

Tempnology, LLC, 587 U.S. 370

(2019) ......................................................................2

Moseley v. V Secret Catalogue, Inc., 537

U.S. 418 (2003).......................................................2

Nat’l Spiritual Assembly of Baha’is of

U.S. Under Hereditary

Guardianship, Inc. v. Nat’l Spiritual

Assembly of Baha’is of U.S., Inc.,

628 F.3d 837 (7th Cir. 2010)................................14

Newport News Holdings Corp. v.

Virtual City Vision, Inc., 650 F.3d

423 (4th Cir. 2011) .........................................20, 21

O’Hazza v. Exec. Credit Corp., 431

S.E.2d 318 (1993) .................................................20

Octane Fitness, LLC v. ICON Health &

Fitness, Inc., 572 U.S. 545 (2014) ..................15, 16

Passalacqua Builders, Inc. v. Resnick

Devs. S., Inc., 933 F.2d 131 (2d Cir.

1991) .....................................................................20

Peter v. Nantkwest, Inc., 589 U.S. 23

(2019) ......................................................................2

Pom Wonderful LLC v. Coca-Cola Co.,

573 U.S. 102 (2014) ................................................2

vi

Qualitex Co. v. Jacobson Prods. Co., 514

U.S. 159 (1995).......................................................2

Regal Knitwear Co. v. N.L.R.B., 324

U.S. 9 (1945).........................................................14

Romag Fasteners, Inc. v. Fossil, Inc.,

590 U.S. 212 (2020) .................................... 2, 10, 13

Sea-Roy Corp. v. Parts R Parts, Inc.,

173 F.3d 851 (4th Cir. 1999)................................20

Shammas v. Focarino, 784 F.3d 219

(4th Cir. 2015) ........................................................2

TrafFix Devices, Inc. v. Mktg. Displays,

Inc., 532 U.S. 23 (2001) .........................................2

Transparent Energy, LLC v. Premiere

Mktg., LLC, No. 3:19-cv-3022, 2021

WL 5920722 (N.D. Tex. Dec. 14,

2021) .....................................................................18

Two Pesos, Inc. v. Taco Cabana, Inc.,

505 U.S. 763 (1992) ................................................2

U.S. v. Bestfoods, 524 U.S. 51 (1998) .......................21

United States Pat. & Trademark Off. v.

Booking.com B. V., 591 U.S. 549

(2020) ......................................................................2

United States v. Van Diviner, 822 F.2d

960 (10th Cir. 1987) .............................................11

Vidal v. Elster, 602 U.S. 286 (2024) ...........................2

vii

Wal-Mart Stores, Inc. v. Samara Bros.,

529 U.S. 205 (2000) ................................................2

Walling v. James V. Reuter, Inc., 321

U.S. 671 (1944).....................................................15

Wynn Oil Co. v. Am. Way Serv. Corp.,

943 F.3d 595 (6th Cir. 1991)................................16

Statutes

15 U.S.C. § 1117(a).... 2, 3, 5, 7, 8, 9, 10, 11, 13, 15, 17

Other Authorities

1 W. Fletcher, Cyclopedia of the Law of

Private Corporations (rev. ed. 1999) ...................21

Fed. R. Civ. P. 15 .......................................................18

Fed. R. Civ. P. 19 .......................................................18

Fed. R. Civ. P. 21 .......................................................18

Fed. R. Civ. P. 65 .......................................................14

Hearings on H.R. 102, H.R. 5461, and

S. 895 Before the Subcomm. on

Trademarks of H. Comm. on Pats.,

77th Cong. (1941) ....................................... 9, 11, 12

McCarthy on Trademarks and Unfair

Competition (5th ed. 2024) ............................14, 16

S. Ct. R. 37.6 ................................................................1

viii

INTEREST OF AMICI CURIAE1

Founded in 1878, amicus curiae The International

Trademark Association (INTA) is a not-for-profit

organization dedicated to the support and

advancement of trademarks and related intellectualproperty concepts as essential elements of trade and

commerce. INTA has more than 7,200 members in

191 countries.

Its members include trademark

owners as well as law firms and other professionals

who regularly assist brand owners in the creation,

registration, protection, and enforcement of their

trademarks. All INTA members share the goal of

promoting an understanding of the essential role that

trademarks play in fostering effective commerce, fair

competition, and informed decision-making by

consumers.

INTA (formerly known as the United States

Trademark Association) was founded in part to

encourage the enactment of federal trademark

legislation after the invalidation on constitutional

grounds of the United States’ first trademark act.

Since then, INTA has been instrumental in making

recommendations and providing assistance to

legislators in connection with major trademark

legislation. INTA has participated as amicus curiae

1 This brief was authored solely by INTA and its counsel.

No

party or counsel for a party made a monetary contribution

intended to fund the preparation or submission of this brief. No

person other than amicus curiae, its members, and its counsel

made such a monetary contribution to its preparation or

submission. See S. Ct. R. 37.6.

1

in numerous cases involving significant trademark

issues.2 INTA members are frequent participants in

licensing arrangements, and are often parties in

trademark-related litigation as both plaintiffs and

defendants.

This case presents the question of whether an

award of “defendant’s profits” under 15 U.S.C. §

1117(a) can include an order for a defendant to

disgorge the distinct profits of legally separate non2 Cases in which INTA has filed amicus briefs include: Vidal v.

Elster, 602 U.S. 286 (2024); Jack Daniel’s Properties, Inc. v. VIP

Prod. LLC, 599 U.S. 140 (2023); Abitron Austria GmbH v.

Hetronic Int’l, Inc., 600 U.S. 412 (2023); United States Pat. &

Trademark Off. v. Booking.com B. V., 591 U.S. 549 (2020);

Romag Fasteners, Inc. v. Fossil, Inc., 590 U.S. 212 (2020); Peter

v. Nantkwest, Inc., 589 U.S. 23 (2019); Iancu v. Brunetti, 588 U.S.

388 (2019); Mission Prod. Holdings, Inc. v. Tempnology, LLC,

587 U.S. 370 (2019); Fourth Estate Pub. Benefit Corp. v. WallStreet.com, LLC, 138 S. Ct. 2707 (2018); Matal v. Tam, 582 U.S.

218 (2017); Hana Fin., Inc. v. Hana Bank, 574 U.S. 418 (2015);

B&B Hardware, Inc. v. Hargis Indus., Inc., 575 U.S. 138 (2015);

Pom Wonderful LLC v. Coca-Cola Co., 573 U.S. 102 (2014);

Already, LLC v. Nike, Inc., 568 U.S. 85 (2013); KP Permanent

Make-Up, Inc. v. Lasting Impression I, Inc., 543 U.S. 111 (2004);

Dastar Corp. v. Twentieth Century Fox Film Corp., 539 U.S. 23

(2003); Moseley v. V Secret Catalogue, Inc., 537 U.S. 418 (2003);

TrafFix Devices, Inc. v. Mktg. Displays, Inc., 532 U.S. 23 (2001);

Wal-Mart Stores, Inc. v. Samara Bros., 529 U.S. 205 (2000); Fla.

Prepaid Postsecondary Educ. Expense Bd. v. Coll. Sav. Bank, 527

U.S. 627 (1999); Dickinson v. Zurko, 527 U.S. 150 (1999);

Qualitex Co. v. Jacobson Prods. Co., 514 U.S. 159 (1995); Two

Pesos, Inc. v. Taco Cabana, Inc., 505 U.S. 763 (1992); K Mart

Corp. v. Cartier, Inc., 486 U.S. 281 (1988); see also, e.g.,

Shammas v. Focarino, 784 F.3d 219 (4th Cir. 2015); Ferring B.V.

v. Watson Labs., Inc.-Fla., 764 F.3d 1382 (3d Cir. 2014);

Christian Louboutin S.A. v. Yves Saint Laurent Am. Holding,

Inc., 696 F.3d 206 (2d Cir. 2012).

2

party corporate affiliates. INTA and its members

have a particular interest in this case because the

Fourth Circuit’s decision has the potential to provide

plaintiffs with an end run around corporate forms to

obtain a recovery from distinct entities without either

naming all potential defendants or satisfying the

legal requirements for piercing the corporate veil.

Members of INTA and other trademark owners often

have to defend against bad faith Lanham Act claims,

and the Fourth Circuit’s opinion—if allowed to

stand—could allow judgments against trademark

owners who do not have an opportunity to defend

themselves.

The Fourth Circuit’s decision affirmed a

disgorgement award that included the profits of

distinct entities that were not named defendants and

without the Respondent seeking to pierce the

Petitioner’s corporate veil. The decision would permit

the proliferation of these types of disgorgement

awards. INTA respectfully submits that the Lanham

Act limits disgorgement to the profits of the

defendant and that, for a plaintiff to recover profits

from other entities, those entities must be named as

defendants or the plaintiff must pierce the

defendant’s corporate veil.

The question presented, which could have

significant ramifications, is “[w]hether an award of

the ‘defendant’s profits’ under the Lanham Act, 15

U.S.C. § 1117(a), can include an order for the

defendant to disgorge the distinct profits of legally

separate non-party corporate affiliates.”

3

Vacatur of the Fourth Circuit’s decision would

protect the corporate form, ensure clarity on corporate

liability, stem forum shopping and intrusive discovery,

and prevent a slippery slope of expansive litigation.

In INTA’s experience, clarity in trademark law

benefits commerce by removing uncertainty in how

brand owners can conduct themselves in the

marketplace. Since the Lanham Act’s enactment

nearly 80 years ago, INTA has on countless occasions

advocated to that end to Congress and the courts.

SUMMARY OF ARGUMENT

The text of the Lanham Act is clear that, when a

violation of the Lanham Act is established, a plaintiff

is entitled, “subject to the principles of equity, to

recover (1) defendant’s profits . . . in assessing

profits the plaintiff shall be required to prove

defendant’s sales only; defendant must prove all

elements of cost or deduction claimed,” among

other remedies. This plain language means that only

a named defendant shall be liable. A plaintiff that

wishes to hold other entities liable or to recover their

profits is free to add them as defendants, or may

attempt to pierce the corporate veil. These avenues

for ensuring comprehensive recovery buttress the

bedrock principles of the corporate form—freedom to

attract capital, launch enterprises, and limit risk—

because a named defendant will have certainty

regarding the extent of its potential liability and will

have opportunities to defend itself against improper

overreach. In other words, guardrails already exist to

afford plaintiffs the opportunity for comprehensive

4

recovery, and those guardrails prevent—and should

continue to prevent—abuse by litigants in future

cases.

Under the Lanham Act, 15 U.S.C. § 1117(a), a

corporation is only liable to disgorge its own profits if

it is found liable for trademark infringement, and it is

subject to well-established rules for when it can be

held responsible for the acts of others. However, in

the decision below, the Fourth Circuit upended these

bedrock principles when it calculated a disgorgement

award based on the profits of a defendant’s unrelated

affiliates, even though those affiliates were not

named in the lawsuit and the plaintiff did not attempt

to pierce the corporate veil. This decision runs

contrary to the Lanham Act’s plain text, and this

Court should hold that an award of disgorgement of

profits cannot include a non-party affiliate’s revenues

and profits, absent a piercing of the corporate veil.

When the Fourth Circuit affirmed the District

Court’s reliance on the equities to calculate a

disgorgement award to Petitioner based on the profits

of non-party affiliates, it sidestepped the need to

pierce the corporate veil or join additional defendants.

The Fourth Circuit’s decision has the potential to

open the floodgates for plaintiffs to rely on thirdparties’ revenues and profits as a pretense to embark

on fishing expeditions, conduct overly burdensome

discovery, and use the threat of disgorgement as

leverage.

Allowing the Fourth Circuit’s decision to stand

would contravene the text and purpose of the Lanham

5

Act, as well as this Court’s precedent. The Fourth

Circuit’s decision unduly expands the principles of

equity beyond the limits this Court has carefully

prescribed. This Court has explained that principles

of equity do not provide limitless discretion, and any

decision grounded in that discretion must also

consider other equitable principles, including, for

example, respecting corporate separateness.

INTA urges the Court to clarify that the profits of

a defendant’s affiliates may not be considered under

the Lanham Act’s disgorgement remedy where there

has been no veil piercing and where the affiliated

entities are not parties to the lawsuit.

ARGUMENT

I.

The text of the Lanham Act does not

support the Fourth Circuit’s

disgorgement award.

The Lanham Act provides, in relevant part, that

when a party establishes a violation, that party shall

be entitled:

subject to the principles of equity, to

recover (1) defendant's profits, (2) any

damages sustained by the plaintiff, and (3)

the costs of the action . . . In assessing profits

the plaintiff shall be required to prove

defendant’s sales only; defendant must prove

all elements of cost or deduction claimed . . .

If the court shall find that the amount of the

recovery based on profits is either inadequate

6

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. Such sum in either

of the above circumstances shall constitute

compensation and not a penalty.

15 U.S.C. § 1117(a) (emphasis added).

The district court below held that a disgorgement

of $42,975,725.60 of “Petitioner’s profits” was

appropriate. Dewberry Eng’rs, Inc. v. Dewberry Grp.,

Inc., No. 1:20-CV-00610, 2022 WL 1439826, at *14

(E.D. Va. Mar. 2, 2022). Petitioner had presented

evidence from its tax returns that it generated no

profits, but the court calculated the award by taking

into account the revenues and profits of entities

affiliated with the Petitioner. Though the court had

previously acknowledged that the affiliates were

“third parties, separated by the corporate veil,” the

court found that, but for the revenue generated by the

affiliate entities, Petitioner as a single tax entity

would not exist. Id. at *9.

A divided panel of the Fourth Circuit affirmed,

holding that, because a district court’s disgorgement

award is “subject to the principles of equity,” the

district court in this instance weighed the equities of

the dispute and appropriately exercised its discretion

to hold Petitioner to account. Dewberry Eng’rs Inc. v.

Dewberry Grp., Inc., 77 F.4th 265, 293 (4th Cir. 2023).

The Fourth Circuit further held that the district court

properly exercised its equitable discretion to hold

Petitioner to account for affiliates under common

7

ownership. The court took the position that, from a

public policy perspective, this holding was necessary

to prevent trademark infringers from using corporate

formalities to insulate their infringement from

financial consequences and shirk legal accountability.

The text of the Lanham Act, however, does not

support the district court’s and Fourth Circuit’s

decision to consider non-party affiliate profits as

Petitioner’s profits for purposes of a disgorgement

award under the Lanham Act given that the affiliates

were not named as defendants and the court did not

go through the analysis to pierce the corporate veil.

A.

The Lanham Act’s disgorgement

remedy only contemplates defendant’s

profits; including nonparties’ profits in

the calculation is improper.

The unambiguous text of the Lanham Act provides

that a plaintiff is entitled to recover a disgorgement

award of “defendant’s profits.” See 15 U.S.C. §

1117(a) (emphasis added). According to this plain

text, the profits of Petitioner’s affiliates—who were

not named as defendants in the action—should not

have been considered as part of the disgorgement

award. Judge Quattlebaum dissented from the

Fourth

Circuit

majority,

observing

that

§ 1117(a) “speaks to the infringers profits,” and by

only naming Petitioner as the sole defendant,

Respondent effectively “alleges that [Petitioner,] not

third parties, was the infringer.” Dewberry Eng’rs

Inc., 77 F.4th at 300 (Quattlebaum, J., dissenting).

8

Limiting disgorgement to the defendant’s profits

not only makes logical sense, but also effectuates

congressional intent. In discussing what would later

become § 1117(a) in the House of Representatives’

Committee on Patents’ Subcommittee on Trademarks,

the drafters referred, on numerous occasions, to the

defendant itself, rather than any affiliated or nonparty entities, when considering how to properly draft

the damages clause. See, e.g., Hearings on H.R. 102,

H.R. 5461, and S. 895 Before the Subcomm. on

Trademarks of H. Comm. on Pats., 77th Cong.

204−205 (1941) (“A man recovers either the profits

that he would have made if he had sold what the

defendant did sell, that is one thing, or what the

defendant actually made.”); id. at 205 (“I think

limiting it to the amount of the defendant’s

business is fair.”) (emphasis added).

Accordingly, in the absence of any evidence in

either the statute’s text or its legislative history

supporting the position that disgorgement can extend

beyond the named defendant, a textual analysis

should compel this Court to limit disgorgement

awards accordingly. See Iowa Mut. Ins. Co. v.

LaPlante, 480 U.S. 9, 10 (1987) (when “[n]othing in

the [] statute [] or its legislative history suggests []

intent . . . the absence of any indication of such an

intent” counsels in favor of deference to the statute’s

plain language and precedent).

B.

The principles of equity do not permit

courts to ignore the corporate form.

9

Section 1117(a) of the Lanham Act provides that

disgorgement awards are “subject to the principles of

equity.”

Although courts have interpreted the

“principles of equity” broadly, see, e.g., Romag

Fasteners, Inc., 590 U.S. at 217, that broad reading

does not provide courts with limitless discretion. For

example, in Liu v. SEC, this Court explained that:

statutory references to a remedy grounded in

equity ‘must, absent other indication, be

deemed to contain the limitations upon its

availability that equity typically imposes . . .

Accordingly, Congress’ own use of the term

‘disgorgement’ in assorted statutes did not

expand the contours of that term beyond a

defendant’s net profits—a limit established by

longstanding principles of equity.

591 U.S. 71, 87 (2020). In other words, courts cannot

disregard other equitable principles, such as

respecting corporate separateness, in calculating a

disgorgement award. See EPLET, LLC v. DTE

Pontiac N., LLC, 984 F.3d 493, 499 (6th Cir. 2021);

Clientron Corp. v. Devon IT, Inc., 894 F.3d 568, 576

(3d Cir. 2018); Int’l Fin. Servs. Corp. v. Chromas

Techs. Canada, Inc., 356 F.3d 731, 737 (7th Cir. 2004)

(all finding state law presumes that the corporate

form will be respected, and piercing the corporate veil

is itself a sparingly used equitable remedy).

In balancing the equities, the corporate form is

entitled to substantial deference, and it “may [only]

be disregarded in the interests of justice where it is

used to defeat an overriding public policy.” Bangor

10

Punta Operations, Inc. v. Bangor & Aroostook

Railroad Co., 417 U.S. 703, 713 (1974). Thus,

“considerable weight is attached to the respect given

the corporate form” such that there must be “injustice

or inequity” from upholding the form to overcome the

presumption against disregarding it. United States v.

Van Diviner, 822 F.2d 960, 965 (10th Cir. 1987).

Limiting the scope of equitable discretion is

consistent with the Lanham Act’s legislative history.

In discussing a court’s discretion to adjust recovery

that is either inadequate or excessive, the drafters

stated that:

there ought to be somewhere some discretion

in the hands of the court under the

circumstances of the particular case either to

increase or to decrease the recovery; if in one

case it is excessive, it ought to be decreased,

and if, on the other hand, it is not enough, a

reasonable sum in the way of ordinary

damages ought to be awarded.

Hearings on H.R. 102, H.R. 5461, and S. 895 Before

the Subcomm. on Trademarks of H. Comm. on Pats.,

77th Cong. 205 (1941) (emphasis added).

Thus, while ensuring the Act provided for “just”

recovery, cabined by the “principles of equity,” that

“constitute[d] compensation and not a penalty,” 15

U.S.C. § 1117(a), the drafters gave “a thing that is

now inflexible[] a certain flexibility and rely on good

judgment of the court to see that the recovery was not

excessive but was at least adequate.” Hearings on

11

H.R. 102, H.R. 5461, and S. 895 Before the Subcomm.

on Trademarks of H. Comm. on Pats., 77th Cong. 206

(1941). Courts have recognized as much and used

that flexibility to increase an award, for example,

when a jury miscalculated the amount such that

recovery

would

be

inadequate.

See

Classroomdirect.com, LLC v. Draphix, LLC, 992 So.

2d 692 (Ala. 2008) (re-adding defendant’s attorneys’

fees and costs to jury’s calculation of defendant’s

profits to be disgorged, finding that deducting these

amounts from plaintiff’s award did not accomplish the

Lanham Act’s mandate).

Given that the principles of equity and courts’

discretion is not unbounded, it cannot be said that the

drafters intended for courts to expand the scope of

recovery beyond the profits of a defendant to nonparty affiliates. Accordingly, absent a piercing of the

corporate veil, neither the text of the Lanham Act nor

equitable principles provide for the inclusion of thirdparty profits in the calculation of a disgorgement

award.

II.

Plaintiffs have other means to recover

damages without implicating nonparties.

As Judge Quattlebaum recognized in his dissent,

there are several ways that the district court could

have respected corporate formalities and still have

brought Petitioner’s affiliates within the reach of the

Lanham Act in this case, including:

1. Remedies including a permanent injunction

properly covering activities of non12

defendant affiliates and an attorneys’ fees

award under the Lanham Act provision

permitting a prevailing party to recover its

attorneys’ fees in exceptional circumstances,

which could include bad faith corporate

structuring;

2. Respondent could have named the affiliate

entities as co-defendants, entitling it to

directly seek disgorgement of the affiliates’

profits; and

3. Respondent could have requested that the

court pierce the corporate veil in order to

make affiliate profits available as

appropriate disgorgement.

Given these options, the “principles of equity”

simply did not require or permit the district court’s

expansive view of disgorgement.

A.

The Lanham Act’s broad remedies for

trademark holders mitigate the need to

expand profit recovery to nonparties.

“When it comes to remedies for trademark

infringement, the Lanham Act authorizes many.”

Romag Fasteners, 590 U.S. at 213. Such remedies

include

injunctive

relief,

actual

damages,

disgorgement of defendant’s ill-gotten profits, costs,

and attorneys’ fees. Id.; 15 U.S.C. § 1117(a). Under

appropriate circumstances, courts may order each of

these remedies to compensate plaintiffs and to deter

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defendants from engaging in the precise conduct at

issue in this case, including the alleged conduct by the

non-party affiliate entities.

For instance, among other remedies, injunctions

issued for trademark infringement may bind nonparties, including “when (1) the nonparty aids or

abets a party to the case who is violating the

injunction, or (2) the nonparty is in a close legal

relationship with a party to the suit.” McCarthy on

Trademarks and Unfair Competition, § 30.14 (5th ed.

2024); see Nat’l Spiritual Assembly of Baha’is of U.S.

Under Hereditary Guardianship, Inc. v. Nat’l

Spiritual Assembly of Baha’is of U.S., Inc., 628 F.3d

837 (7th Cir. 2010); see also Regal Knitwear Co. v.

N.L.R.B., 324 U.S. 9, 14 (1945) (noting “defendants

may not nullify a decree by carrying out prohibited

acts through aiders and abettors, although they were

not parties to the original proceeding”).

Rule 65(d)(2) of the Federal Rules of Civil

Procedure expressly authorizes binding “(A) the

parties; (B) the parties’ officers, agents, servants,

employees, and attorneys; and (C) other persons who

are in active concert or participation with [the parties

or their officers, agents, servants, employees, and

attorneys]” when such nonparties received actual

notice of the injunction “by personal service or

otherwise.” This may include persons or entities in

“privity” with an enjoined party, including successors

in interest, assigns, and persons “legally identified”

with an enjoined party. Nat’l Spiritual Assembly, 628

F.3d at 840−41.

14

Orders enjoining infringement also may be

enforceable against entities to whom the defendant’s

business may have been transferred, whether “as a

means of evading the judgment or for other reasons.”

Walling v. James V. Reuter, Inc., 321 U.S. 671, 674

(1944); see also Computer Searching Serv. Corp. v.

Ryan, 439 F.2d 6 (2d Cir. 1971) (copyright

infringement); Chanel Indus. v. Pierre Marche, Inc.,

199 F. Supp. 748 (E.D. Mo. 1961) (trademark

infringement).

Here, the district court permanently enjoined

Petitioner and appropriately included “any others in

active concert or participation with [Petitioner], from

continuing the unlawful infringement.” Dewberry

Eng’rs, Inc., 2022 WL 1439826, at *2 (citing Dkt. 229,

at 9). Such an injunction binds non-parties meeting

the above-referenced criteria.

Similarly, the Lanham Act’s fee-shifting provision

also may serve to compensate prevailing plaintiffs

and deter defendants from engaging in bad faith

conduct intended to insulate their profits from

disgorgement. Under the Lanham Act, courts may

award reasonable attorney fees to the prevailing

party “in exceptional cases.” 15 U.S.C. § 1117(a).

Under Octane Fitness, district courts exercise

discretion on a case-by-case basis to deem a case

“exceptional” if it “stands out from others with respect

to the substantive strength of a party’s litigating

position (considering both the governing law and the

facts of the case) or the unreasonable manner in

15

which the case was litigated.” Octane Fitness, LLC v.

ICON Health & Fitness, Inc., 572 U.S. 545, 554 (2014).

The “nonexclusive” factors considered include

“frivolousness,

motivation,

objective

unreasonableness (both in the factual and legal

components of the case) and the need in particular

circumstances to advance considerations of

compensation and deterrence.” Id. (emphasis added).

Applying these factors, a non-prevailing defendant’s

intentional, bad-faith corporate structure as an

attempt to evade liability or insulate profits could be

considered an unreasonable tactic meriting an

attorney fee award for compensatory and deterrent

purposes. 3

Here, the district court awarded

$3,762,088.25 in attorneys’ fees and $153,592.09 in

costs (Dist. Ct. Dkt. 311).

B.

Respondent’s failure to name the nonparty affiliates as defendants does not

necessitate a doctrinal change.

A plaintiff in Respondent’s position can seek

disgorgement of all infringers’ profits by suing every

infringing entity or individual.4 The Fourth Circuit’s

3 A court cannot, however, award attorneys’ fees to a prevailing

plaintiff as a substitute for unascertainable or unrecoverable

damages or profits. See Wynn Oil Co. v. Am. Way Serv. Corp.,

943 F.3d 595, 607 (6th Cir. 1991).

4 An officer who is the “central figure” of a corporation may be

held jointly and severally liable for trademark infringement

when the officer personally participates in infringing activities

or specifically orders employees to take part. McCarthy § 25.24;

Donsco, Inc. v. Casper Corp., 587 F.2d 602, 606 (3d Cir. 1978)

16

opinion indicated that Petitioner essentially conceded

that the nonparty affiliates infringed Respondent’s

trademark. Dewberry Eng’rs Inc., 77 F.4th at 290

(“According to Dewberry Group . . . it produces

infringing branding for its affiliates, who in turn

generate profits using that branding on their lease,

loan, and other promotional materials”). Accordingly,

Respondent could have named those affiliates as codefendants and sought disgorgement of their profits

under § 1117(a).

In circumstances where a plaintiff justifiably does

not learn of infringement by a defendant’s nonparty

affiliates until after filing suit, plaintiff may amend

its complaint upon learning of such infringement.

Rule 15 of the Federal Rules of Civil Procedure

contemplates such a scenario by establishing a liberal

amendment policy, requiring that courts “should

freely give leave [to amend] when justice so requires,”

including “during and after trial,” and allowing a

party to move “at any time, even after judgment – to

(“This liability is distinct from the liability resulting from the

‘piercing of the corporate veil’”). Managing employees can also

be personally liable if they are the “principal architect” or driving

force behind the corporation and its infringement.

See

Brittingham v. Jenkins, 914 F.2d 447, 458 (4th Cir. 1990)

(holding officer who was “principal architect” of the infringement

personally liable); Bambu Sales, Inc. v. Sultana Crackers, Inc.,

683 F. Supp. 899, 913 (E.D.N.Y. 1988) (personal liability for

trademark infringement established if officer is a “moving,

active conscious force behind the defendant corporation’s

infringement”).

17

amend the pleadings to conform them to the evidence

and to raise an unpleased issue.” Fed. R. Civ. P. 15.

The court in A.V. by Versace, Inc. v. Gianni Versace

S.p.A., 87 F. Supp. 2d 281 (S.D.N.Y. 2000) recognized

this, holding that granting leave to amend a

trademark infringement complaint to add additional

corporate defendants would not unduly prejudice

defendants when no trial date had yet been set,

discovery had not been completed, the claims against

the additional defendants did not raise factual claims

unrelated to events in the original complaint, and the

parties “vigorously dispute[d] the legitimacy of A.V.’s

corporate formalities” such that the court was unsure

whether a basis would exist for “piercing the

corporate veil.” Id. at 299.

The federal rules governing joinder provide

further guidance in this scenario. Fed. R. Civ. P. 19

requires that a person “must be joined as a party if . . .

in that person’s absence, the court cannot accord

complete relief among existing parties” and Fed. R.

Civ. P. 21 allows a court, either through motion or sua

sponte, to “at any time, on just terms, add or drop a

party.” See also Transparent Energy, LLC v. Premiere

Mktg., LLC, No. 3:19-cv-3022, 2021 WL 5920722, at

*2−3 (N.D. Tex. Dec. 14, 2021) (granting motion to join

additional parties in trademark infringement case

after documents produced during discovery revealed

that proposed defendants controlled and directed

defendant’s infringing activities). If full relief would

require a disgorgement of an affiliate’s profits, it is

necessary to join that affiliate as a co-defendant.

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C.

Respondent could have followed

established procedures and attempted

to pierce the corporate veil.

A parent corporation and its subsidiaries

generally are treated as separate legal entities, such

that only the parent corporation’s assets and not

those of its subsidiaries are available for purposes of

a profits disgorgement award under the Lanham Act.

To reach the assets of the subsidiaries, a plaintiff can

try to pierce the corporate veil.

Although

requirements differ by state, piercing generally

requires a plaintiff to demonstrate that the subsidiary

is either the parent company’s alter ego or agent.

Under the alter ego theory, a plaintiff generally

must prove that the (1) parent company dominated

and controlled the subsidiary to such extent that the

subsidiary primarily conducted business for the

parent and ceased to exist as a separate legal entity,

and (2) an injustice or wrong to the plaintiff likely will

result in absent piercing.

Factors considered by courts include whether the

corporation is adequately capitalized; whether there

is overlap in ownership, officers, directors, and

personnel; whether the entities share a common office

space, address, and telephone number; the amount of

business discretion displayed by the allegedly

dominated corporation; whether the alleged

dominator engages in arm’s length dealings with the

alleged dominated corporation; whether the

corporation is treated as an independent profit center;

whether others pay or guarantee the corporation’s

19

debts; whether the corporation had property used by

the alleged dominator as if it were its own; and

whether the corporate entity is used “to evade a

personal obligation, to perpetrate fraud or a crime, to

commit an injustice, or to gain an unfair advantage.”5

Dana v. 313 Freemason, 587 S.E.2d 548, 553−54 (2003)

(citing O’Hazza v. Exec. Credit Corp., 431 S.E.2d 318,

321 (1993)); Passalacqua Builders, Inc. v. Resnick

Devs. S., Inc., 933 F.2d 131, 139 (2d Cir. 1991). Under

the agency theory, a plaintiff generally must prove

that the parent company authorized the subsidiary to

act on its behalf and the subsidiary agreed to act as

the parent’s agent, and the parent exercised total

control over the subsidiary.

The corporate veil has been pierced in Lanham

Act cases when evidence showed that a defendant

fraudulently conveyed assets to a wholly owned

subsidiary “in order to prevent [plaintiff] from

recovering the debt owed by [defendant],” when

defendant controlled or dominated the subsidiaries,

funds of the companies were commingled, the

companies routinely paid each other’s debts, the

companies shared offices, personnel, and telephone

numbers, the parent corporation made key company

decisions, representations to the public suggested a

single entity, or there was a unity of interest and

ownership between the individual and entity at issue.

Sea-Roy Corp. v. Parts R Parts, Inc., 173 F.3d 851, at

*4 (4th Cir. 1999) (unpublished); see Newport News

5 The District Court here applied Virginia law per the terms of

the prior settlement agreement between the parties.

20

Holdings Corp. v. Virtual City Vision, Inc., 650 F.3d

423, 434 (4th Cir. 2011); Edwin K. Williams & Co.,

Inc. v. Edwin K. Williams & Co.-East, 542 F.2d 1053,

1063−64 (9th Cir. 1976).

III.

Leaving the Fourth Circuit’s ruling

undisturbed would create bad public

policy and would pose significant

consequences for corporate defendants.

Public policy interests strongly weigh against

allowing courts to include the profits of a defendant’s

affiliates in a profits award where there has been no

veil piercing and where the affiliated entities are not

parties to the lawsuit. To allow the Fourth Circuit’s

ruling to stand would undermine the bedrock rule of

corporate separateness. As this Court acknowledged

in U.S. v. Bestfoods, 524 U.S. 51, 61 (1998), “it is a

general principle of corporate law deeply ‘ingrained in

our economic and legal systems’ that a parent

corporation . . . is not liable for the acts of its

subsidiaries.” This is because “[t]he properties of two

corporations are distinct, though the same

shareholders own or control both.” Dole Food Co. v.

Patrickson, 538 U.S. 468, 475 (2003) (quoting 1 W.

Fletcher, Cyclopedia of the Law of Private

Corporations § 31 (rev. ed. 1999)).

To allow the property of separate corporate

affiliates—let alone those not named as defendants in

the instant action—to be included as part of a

separate affiliate’s disgorgement remedy contravenes

the purpose of corporate insulation from liability.

21

Corporations have long attracted capital and

launched enterprises based on liability protections

guaranteed by the corporate form. See Anderson v.

Abbott, 321 U.S. 349, 362 (1944) (“Limited liability is

the rule not the exception; and on that assumption

large undertakings are rested, vast enterprises are

launched, and huge sums of capital attracted”).

Without such assurances, corporations would be

harmed by the lack of clarity on the extent of their

liability and would be subject to risks based on the

acts of affiliates over which they lack control and

access to information.

Further, a rule that permits non-parties’ profits to

be considered as part of a disgorgement remedy under

the Lanham Act risks an unnecessary and unduly

burdensome expansion of the scope of discovery in U.S.

litigation, which is already sufficiently broad.

For example, there is a risk that the Fourth

Circuit’s opinion could be exploited to suggest an

automatic or expected basis to drag third parties into

litigation under the guise of requiring information

about those third parties’ profits and revenues when

the real goal is to create litigation leverage or go on

unwarranted fishing expeditions. It could also create

the risk of needlessly ensnaring entities outside of the

corporate

family

tree,

including

related

licensee/licensors, joint owners, joint ventures, or

other related parties.

While in any particular case there may be

legitimate reasons for discovery related to thirdparties, those reasons are fact-dependent and must be

22

assessed individually; any categorical rule that thirdparty profits may be disgorged creates a slippery slope

that could expand the scope, duration, and expense of

litigation.

CONCLUSION

Because the decision under review misinterprets

the Lanham Act and may cause disorder in trademark

disputes, the Court should clarify that the remedy of

disgorgement is subject to longstanding guardrails

such as piercing the corporate veil or bringing and

proving additional claims against the third parties.

The Court should make clear that the Lanham Act

does not support a disgorgement award based on nonparties’ revenues and profits absent piercing the

corporate veil.

Respectfully submitted,

Megan K. Bannigan

Counsel of Record

Jared I. Kagan

Clara Correa

Christopher Zheng

Jacob Hochberger

DEBEVOISE & PLIMPTON LLP

66 Hudson Boulevard

New York, NY 10001

(212) 909-6000

mkbannigan@debevoise.com

23

Thomas A. Agnello

MICHAEL BEST & FRIEDRICH

LLP

790 N Water Street, Suite 2500

Milwaukee, WI 53202

John Crittenden

101 Lombard Street, #801W

San Francisco, CA 94111

COUNSEL FOR AMICUS CURIAE

THE INTERNATIONAL TRADEMARK

ASSOCIATION

September 6, 2024

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