Construction Law Insights

Dewberry Eng’rs Inc. v. Dewberry Grp., Inc., 2022 U.S. Dist. LEXIS 84693 (E.D. Va. Mar. 2, 2022);

Dewberry Eng’rs Inc. v. Dewberry Grp., Inc., 2022 U.S. Dist. LEXIS 86187, 2022 WL 1439105 (E.D. Va. May 6, 2022)

On May 29, 2020, Dewberry Engineers, Inc. (“Dewberry Engineers”) sued Dewberry Group, Inc. (“Dewberry Group”) for trademark infringement, unfair competition under the Lanham Act and Virginia law, and breach of a 2007 Confidential Settlement Agreement (“CSA”) resolving a 2006-2007 litigation between the same parties where Dewberry Engineers sued Dewberry Group for infringing the same marks at issue here. The present claims relate to Defendant’s rebranding from “Dewberry Capital” to “Dewberry Group,” “Studio Dewberry,” “Dewberry Office,” and “Dewberry Living” (collectively, the “Infringing Marks”). The Court previously dismissed Dewberry Group’s counterclaim and granted summary judgment to Dewberry Engineers. The Court found the CSA unambiguous and that Dewberry Group breached the CSA by using “Dewberry” marks to promote architectural services, performing real estate development-related services using “Dewberry” mark instead of “DCC” in Virginia, rebranding Infringing Marks and using them in connection with promoting, offering, and performing real estate development services. The Court also found Dewberry Group liable for infringing the Dewberry Marks, that no reasonable jury could find that no likelihood of confusion exists between the parties, and that the infringement was intentional in view of the plain language of the CSA. Thus, the Court limited the trial to the sole issue of damages.

The Court found Dewberry Group’s infringement to have been intentional. While proof of willful, intentional, or bad-faith infringement is not a prerequisite to profits disgorgement, the infringer’s mental state is, nonetheless, a highly important consideration in awarding profits under the Lanham Act. Despite all of the evidence of knowledge of potential infringement, Dewberry Group proceeded throughout 2018 and 2019 to change Dewberry Capital Corporation to Dewberry Group, Inc. and to include the Infringing Marks on its materials.

The Court found that a profit disgorgement remedy was appropriate in this case and awarded Dewberry Engineers $42,975,725.60. The Fourth Circuit considers six equitable factors in connection with the disgorgement of profits remedy for infringement under 15 U.S.C. § 117(a): (1) whether the defendant had the intent to confuse or deceive; (2) whether sales have been diverted; (3) the adequacy of other remedies; (4) any unreasonable delay by the plaintiff in asserting his rights; (5) the public interest in making the misconduct unprofitable; and (6) whether it is a case of palming off. As discussed above, Dewberry Group’s infringement was not just intentional, but was willful and in bad faith. The Court awarded 20% of the revenues generated by the Dewberry Group entities during the infringement period, as calculated by Dewberry Engineers’ expert, because some leases pre-dated the use of the Infringing Marks. After Dewberry Engineers established Dewberry Group’s revenues during the infringing period, the burden shifted to Dewberry Group to prove (1) any costs or deductions form those revenues and (2) any revenues that had no relation to the infringement. Dewberry Group did not carry its burden of proof on deductions and non-infringement revenue.

The Court also granted Dewberry Engineers a permanent injunction. To grant a permanent injunction, a court must find that the plaintiff has: (1) suffered irreparable harm; (2) its remedies at law are inadequate; (3) the balances of the hardships favors the plaintiff; and (4) the public interest would not be disserved by the injunction. The Court found that Dewberry Engineers had satisfied these requirements.

PLDR Law Scott Kowalski 1 PLDR Law Mark Burgin 1

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