Federal trademark law and doctrines of corporate identity – SCOTUSblog

In a long-running trademark dispute between two corporations advertising real-estate growth companies, and each utilizing the identify Dewberry, a trial court docket held that Dewberry Group entities infringed the “Dewberry” marks of Dewberry Engineers. The issue is that when the time got here for assessing damages, the court docket ordered Dewberry Group to pay as damages $43 million in income earned by a number of associates that weren’t events to the litigation, reasoning that every one of them have been, as a sensible matter, a “single company entity.” When the court docket of appeals accepted that line of reasoning, the Supreme Court docket agreed to evaluate the matter.

The fundamental downside earlier than the court docket on Wednesday is that there’s a Supreme Court docket case fairly carefully on level – United States v. Bestfoods – through which the justices rejected the federal government’s argument that the Complete Environmental Response, Compensation, and Legal responsibility Act was such an vital statute that it ought to create an exception to conventional state-law doctrines that require a excessive (certainly, all however insuperable) bar for actions in search of to disregard company identities and, within the widespread phrase, “pierce the company veil.” Because the court docket defined there, Congress should converse “immediately” to the purpose if it needs to create a particular, much less rigorous doctrine on one thing so historically left to state legislation. (These have been the times earlier than Elon Musk’s tiff with a Delaware decide raised the prospect of the federalization of company legislation.)

The infringers emphasize the language of the Lanham Act, which requires disgorgement of the “defendant’s income,” language that naturally suggests a prudent plaintiff ought to sue – and thus make “defendant[s]” – all of the entities from which it hopes to get well damages. As a result of the entire damages awarded right here have been income earned by different entities (none of which have been a “defendant”), the infringers argue that none of these income correctly may be disgorged.

Presumably as a result of Bestfoods is so plainly on level, the trademark holders, Dewberry Engineers, make no critical effort to defend the reasoning of the decrease courts. Reasonably, they level to a unique Lanham Act provision giving the court docket the authority to evaluate damages in a “simply” quantity if a purely compensatory award towards the “defendant” can be insufficient. Right here, the trademark holders contend, a lot of the income correctly must be attributed to Dewberry Group, maybe as a result of shady accounting improperly allotted all of the income to the associates, maybe as a result of the opposite entities are shams. The plain downside – as Dewberry Group factors out – is that none of this was argued beneath and so there isn’t any factual document to assist it.

My guess is that many of the argument will contain probing by the justices of the extent to which any of the doable causes for attributing the associates’ income to Dewberry Group has any assist within the document because the case involves the court docket, in addition to loads of hand wringing about how dangerous it could be for the justices to achieve out and tackle all these questions within the first occasion. In the long run, although, the alternatives will actually be between reversing the choice out of hand or vacating it to let the decrease courts contemplate among the new arguments.