Trademark Litigation Update - October 2025

Escaping Dewberry with Vicarious Liability? Not So Fast.

In February 2025, the Supreme Court handed down Dewberry Group, Inc. v. Dewberry Engineers Inc., 604 U.S. 321 (2025) (Dewberry), reversing a $43 million award that purported to “disgorge” profits attributable to trademark infringement, under the Lanham Act.  The Dewberry opinion focused on three points.  First, the Lanham Act allows a prevailing plaintiff to “recover [the] defendant’s profits” and the defendant is understood to be “the party against whom relief or recovery is sought in an action or suit.”  Id. at 326 (citing 15 U.S.C. § 1117 and Black's Law Dictionary).  Second, the defendant Dewberry Group “reported no profits,” meaning the District Court’s award was based on the profits of the group’s affiliates, but not the Dewberry Group itself.  Id. at 325.  Third, plaintiff Dewberry Engineers “never tried to make the showing needed for [corporate] veil-piercing” before the District Court.  Id. at 327.  Taken together, the Supreme Court reasoned that Dewberry Engineers was not entitled to collect profits from Dewberry Group’s affiliates, because the affiliates were not named as defendants, and without a justification for veil piercing, the affiliates were separate corporations.  Id at 329 (Dewberry Engineers “cannot justify ignoring the distinction between a corporate defendant (i.e., Dewberry Group) and its separately incorporated affiliates”).

Trademark plaintiffs examining Dewberry may be tempted to try “pleading around” that corporate separateness by asserting claims for vicarious copyright infringement.  After all, “[o]ne  infringes vicariously by profiting from direct [trademark] infringement while declining to exercise a right to stop or limit it”  Sam Bernstein L. Firm, PLLC v. Heidari L. Grp., PC, 2025 WL 1141167, at *9 (C.D. Cal. Feb. 10, 2025) (cleaned up, quoting Perfect 10, Inc. v. Visa Intern. Serv. Ass'n, 494 F.3d 788, 802 (9th Cir. 2007)).  A plaintiff like Dewberry Engineers may thus believe it can collect profits from a defendant’s affiliates by accusing the defendant of vicarious trademark infringement.

But any attempt to escape Dewberry by pleading vicarious infringement will run headlong into two barriers.  First, unlike other forms of vicarious infringement, vicarious trademark infringement is particularly difficult to plead and prove.  E.g. Perfect 10, 494 F.3d at 806 (“The tests for secondary trademark infringement are even more difficult to satisfy than those required to find secondary copyright infringement.”).  Specifically, various trademark infringement requires a showing that “the defendant and the infringer have an apparent or actual partnership, have authority to bind one another in transactions with third parties or exercise joint ownership or control over the infringing product.”  Id. (quoting Hard Rock Cafe Licensing Corp. v. Concession Servs., Inc., 955 F.2d 1143, 1150 (7th Cir. 1992)); see also Kelly-Brown v. Winfrey, 717 F.3d 295, 314 (2d Cir. 2013).

Second, assuming that a plaintiff can clear the high-bar of pleading and proving vicarious trademark infringement, the plaintiff will face a more fundamental problem: Dewberry requires corporate “veil-piercing” (604 U.S. at 327) yet proving vicarious trademark infringement would defeat any attempt to pierce the corporate veil.  “[V]eil piercing for trademark infringement requires that the owners exercised complete domination of the corporation in respect of the allegedly infringing transaction.”  Cesari S.r.L. v. Peju Province Winery L.P., 2020 WL 1126833, at *3 (S.D.N.Y. Feb. 24, 2020) (citing HSW Enter., Inc. v. Woo Lae Oak, Inc., 2009 WL 4823920, at *5 (S.D.N.Y. Dec. 15, 2009)); see also Lauter v. Rosenblatt, 2017 WL 6205784, at *8 (C.D. Cal. Dec. 6, 2017) (On a Lanham Act claim, “[e]ven if the sole shareholder . . . dominated and controlled the corporation, that fact is insufficient by itself to” pierce the corporate veil without personal participating in the infringement).

The test for trademark veil piercing—complete domination—is thus inconsistent with vicarious trademark infringement, which requires “an apparent or actual partnership” between parties who “have authority to bind one another in transactions.”  Perfect 10, 494 F.3d at 806.  Put differently, if the parties are partners who have equal authority to bind each other, neither can be said to have exercised “complete domination” over the other.

Indeed, because vicarious trademark infringement is likened to “an apparent or actual partnership” it makes sense to apply the modern, majority rule that partnerships are distinct from their individual partners—which precludes veil piercing without something more.  E.g. Del. Code Ann. tit. 6, § 15-201 (under Delaware law, “A partnership is a separate legal entity which is an entity distinct from its partners.”); Cal. Corp. Code § 16201 (same under California law); Clonus Assocs. v. DreamWorks, LLC, 417 F. Supp. 2d 248, 255 (S.D.N.Y. 2005) (same under New York law); see also Moore v. United States, 602 U.S. 572, 593 (2024) (recognizing that, by the time the sixteenth Amendment was passed, “the courts, Congress, and state legislatures treated partnerships as separate entities”).  Attempting to escape Dewberry by pleading vicarious trademark infringement would therefore be self-defeating: proving vicarious trademark infringement would seem to preclude any attempt to pierce the corporate veil.  The better tactic, as suggested by the Supreme Court, is for the plaintiff to choose the defendant more carefully in the first instance.  If Dewberry Engineers had sued Dewberry Group’s affiliates directly, instead of targeting only their parent, Dewberry Engineers may have kept that $43 million judgment.