In a landmark decision Wednesday, the U.S. Supreme Court vacated a nearly $47 million trademark award, ruling that affiliates of real estate firm Dewberry Group Inc. cannot be forced to pay for trademark infringement when they were never named as defendants in the case.

The justices, in a rare unanimous opinion, overturned a Fourth Circuit ruling that had affirmed the award to Dewberry Engineers Inc. The high court determined that federal trademark law does not permit courts to order disgorgement of profits from parties who were never officially sued. The decision sends the case back to the Fourth Circuit, marking a dramatic shift in the long-running legal battle.

A Name Worth Fighting Over: The 18-Year Trademark Dispute

The case stems from a bitter trademark feud dating back to 2006 between two real estate development firms—both using the surname "Dewberry." A 2007 settlement allowed Dewberry Engineers to keep its registered trademark while Dewberry Group could use the name under specific restrictions.

However, the legal war reignited in 2020 when Dewberry Engineers sued, alleging that Dewberry Group violated the agreement by launching sub-brands such as Dewberry Living, Dewberry Office, and Studio Dewberry. The lawsuit accused Dewberry Group of using these names in marketing materials distributed to its affiliates, leading to alleged brand confusion.

When the courts found that Dewberry Group itself had no money to pay the $47 million judgment, lower courts ruled that its affiliates—though not named as defendants—should be held responsible. That decision set the stage for a major Supreme Court showdown.

Supreme Court: Only Named Defendants Can Pay

Justice Elena Kagan, writing for the unanimous court, made it clear that the Lanham Act, the federal statute governing trademarks, only allows courts to order disgorgement of profits from actual defendants—not their affiliates.

"In awarding the ‘defendant’s profits’ to the prevailing plaintiff in a trademark infringement suit under the Lanham Act, §1117(a), a court can award only profits ascribable to the ‘defendant’ itself," Kagan wrote. "The engineers chose not to add the group's affiliates as defendants. Accordingly, the affiliates’ profits are not the (statutorily disgorgable) ‘defendant’s profits’ as ordinarily understood."

Corporate Protection vs. Trademark Enforcement

The ruling is a victory for Dewberry Group, which had argued that the Fourth Circuit’s decision misinterpreted the Lanham Act and disregarded well-established corporate law principles. The company claimed the lower court wrongly sidestepped legal protections that prevent courts from holding affiliates liable without proper due process.

Dewberry Engineers, on the other hand, contended that federal trademark law grants courts broad discretion in dealing with infringement cases and their complexities. The company maintained that Dewberry Group’s affiliates had directly benefited from the alleged infringement and should be held accountable.

What’s Next? The Battle Returns to the Fourth Circuit

With the Supreme Court’s ruling, the case now returns to the Fourth Circuit, where Dewberry Engineers will have to reassess its legal strategy. The decision is expected to have far-reaching implications, reinforcing the principle that courts cannot extend liability beyond named defendants in trademark disputes.

Attorneys for both parties declined to comment on the ruling.

Dewberry Group is represented by Gibson Dunn & Crutcher LLP, while Dewberry Engineers is represented by Hunton Andrews Kurth LLP.