Supreme Court Narrows Trademark Profit Award: Dewberry

If your company is ever drawn into a trademark dispute—or you need to enforce your trademark—the dollars often turn on one remedy: the defendant’s profits. In February 2025, the US Supreme Court unanimously tightened that remedy in Dewberry Group, Inc. v. Dewberry Engineers Inc. The Court said a plaintiff can recover only the profits of the named defendant(s)—not the revenues of affiliates or related companies that weren’t actually sued. In the case before it, that meant vacating a nearly $43 million profit award that had included non-party affiliates’ earnings and sending the matter back to the trial court.

What Dewberry Means for Business Owners

Below, we explain the decision in plain language, why it matters to entrepreneurs and brand owners, what the Court didn’t decide, and how to adjust your enforcement and defense strategies right now.

The Short Version: Profits Mean the Defendant’s Profits—Full Stop

The Lanham Act (the federal trademark statute) lets a prevailing plaintiff recover “the defendant’s profits.” In Dewberry, the lower courts treated the defendant and its affiliates as one enterprise and swept in profits recorded on affiliates’ books. The Supreme Court rejected that approach. If you want an affiliate’s profits, you need to name that affiliate as a defendant (and prove liability as to that entity). Corporate separateness matters.

Settlement Leverage and Realistic Numbers

Before Dewberry, some plaintiffs used enterprise-wide profits to anchor settlement demands. After Dewberry, the profit pool shrinks unless all revenue-generating affiliates are in the case. Plaintiffs will either (a) add those entities up front, or (b) recalibrate expectations to the named defendant’s books. Defendants, for their part, gain clarity to push back on inflated disgorgement claims focused on related companies’ sales.

Corporate Structure and Record-Keeping Now Matter More

If your operating company uses a hub-and-spoke structure (brand company, IP holding company, distributors, franchisees), Dewberry raises the stakes on which entity books which revenues. Clean separateness—arm’s-length agreements, consistent invoicing, accurate ledgers—reduces the chance that opposing counsel can blur lines and argue for combined profits. Conversely, if you’re enforcing, you’ll want to identify every entity that actually earned money tied to the accused use so they can be named as defendants.

Early Investigations Must Map the Money Flow

For both sides, pre-suit diligence should now include an business entity chart and a money-trail map. Plaintiffs need to learn where the revenue sits; defendants should be ready to document that the named entity’s profits are the only ones at issue. This reshapes how quickly parties exchange financials and how mediation is framed.

A Narrower—But Cleaner—Trial Presentation

At trial, expert testimony on profits should align to the defendant’s P&L, not estimates rolled up from affiliate books. That makes cases simpler to present and, importantly, less risky for businesses that use separate subsidiaries for manufacturing, sales, or licensing.

What the Court Did Not Decide (and Why You Should Care)

Commentators flagged one open question the Court declined to resolve: whether a court could ever use the Lanham Act’s “just-sum” language (the part that lets courts adjust awards up or down “as the court shall find to be just”) to reach profits that aren’t literally on the defendant’s books—say, if the defendant diverted profits to a friendly affiliate. The Supreme Court said that issue was not before it, because the lower courts hadn’t relied on the just-sum clause. Translation: the door isn’t locked forever, but you shouldn’t count on that path without a strong record of diversion or sham accounting.

A Quick Recap of the Dewberry Group, Inc. v. Dewberry Engineers Inc. case

The district court found trademark infringement and awarded almost $43 million in profits, counting money recorded by non-party affiliates after treating the “group” as one entity. The Fourth Circuit affirmed.

The Supreme Court unanimously reversed on February 26, 2025, holding that “defendant’s profits” means what it says: profits of named defendants only. It vacated the award and remanded.

Practical Takeaways for Entrepreneurs and Brand Owners

If you’re enforcing your trademark, name all profit-earning entities. If a distributor, sister company, or JV partner is cashing in on the challenged branding, add them as defendants (if you have good-faith grounds). Don’t assume a court will pull their profits in later.

Document the link between the trademark and profits. Profit awards aren’t automatic—you still must show a causal connection between the infringement and the dollars you seek. Plan your proof: sales lift after the rebrand, marketplace reviews citing your brand, consumer surveys, or internal strategy documents tying the infringing name to revenue.

Budget for narrower—but sturdier—remedies. Ask for an injunction, corrective measures (relabeling, search-term negation), and the defendant’s own profits. Use Dewberry to frame settlement around the real numbers.

If you’re accused of trademark infringement, clarify who sells what. Early in the case, provide clean charts and agreements that show which entity actually sells the accused goods. This supports a Dewberry-based limitation of the profit pool to the named defendant.

Keep corporate house in order. Respect corporate separateness: intercompany agreements, documented royalties, separate bank accounts, and consistent invoicing. These same habits also help on tax, licensing, and diligence.

Consider targeted joinders. In some situations, it’s strategically better to join an affiliate rather than battle over whether that entity’s profits are off limits—e.g., if the affiliate will obviously be added later and you want a global resolution. Your counsel can weigh the trade-offs.

For Everyone: Adjust Your Business Contracts

Licenses and distribution agreements. Spell out branded use, quality control (to avoid “naked licensing”), and who books sales tied to each channel. That clarity reduces later fights over “whose profits.”

Acquisition diligence. When buying a company or rolling up product lines, check that historical use and profits were recorded by the same business entity using the trademark—or that trademark assignments and licenses are papered—so remedies remain straightforward post-closing.

How Dewberry Shifts Negotiation Dynamics

Expect earlier, more precise demands—and more pushback. Plaintiffs will ask for the named defendant’s profits and justify the ask with dashboards tied to that entity’s sales. Defendants will cite Dewberry to exclude affiliated revenue unless those entities are in the case. Both sides will move faster to exchange entity-level financials. In many disputes, this will shorten the path to a realistic settlement; in others, it will front-load the fight over amending to add parties.

Common Scenarios—What Changes in Each

• Franchise or dealer networks. A franchisor is sued over a brand used system-wide. Under Dewberry, profits of independent franchisees aren’t automatically in play unless those franchisees are defendants. Expect plaintiffs to target the franchisor’s royalties or join key franchisees. Action: keep franchise agreements tight and be ready with royalty statements showing the franchisor’s actual receipts.
• House of brands. An IP-holding company licenses to operating subsidiaries. Plaintiffs must either (a) focus on the licensee’s profits, or (b) also sue the licensee or the holdco if they want both streams. Action: maintain real licenses and track royalties; don’t blur lines by “parking” revenues.
• Marketplace and fulfillment models. Fulfillment entities (3PLs) rarely book “profits” from the brand use itself. Plaintiffs seeking profits should sue the seller of record; defendants can steer the remedy discussion toward that entity’s margins.

What to Do Now (Quick, Practical Steps)

• Map your structure. Keep an up-to-date org chart showing who manufactures, who sells, and who holds the IP. If a name is used across entities, make sure licenses or distribution agreements exist and reflect reality. This helps whether you’re enforcing or defending.
• Align branding with the seller of record. Where possible, have the entity that books the revenue also be the entity that uses the mark in commerce. That alignment simplifies proof (for plaintiffs) and limits exposure (for defendants) because the profits in play match the user of the mark.
• For enforcement, draft the complaint with Dewberry in mind. Identify all entities profiting from the accused branding and include them if the facts support it. Plead the causal link between the mark and the money.
• For defense, preserve Dewberry arguments early. In meet-and-confers and pleadings, frame disgorgement as limited to the named defendant’s profits. Offer targeted financials from that entity to anchor expectations.
• Revisit settlement agreement templates. Add language acknowledging Dewberry’s limitation and clarifying whether the release covers affiliates (and under what consideration). You’ll avoid last-minute fights over who is truly buying peace.

Final Thoughts

Dewberry doesn’t rewrite trademark law; it clarifies it. Profit awards are powerful, but they’re tied to the defendant you actually sue. For business owners, that’s good news: it rewards clean corporate structure and reduces the risk of outsized awards based on affiliates’ books. For brand owners enforcing rights, the path is equally clear: do the homework up front, name the entities that really earned the money, and build a record that ties your goodwill to their profits.