77 F.4th 265
4th Cir.2023Background
- Two separate real-estate businesses used the name "Dewberry": Dewberry Engineers (federally-registered trademark owner, engineering/architecture services nationwide) and Dewberry Group (John Dewberry’s Atlanta real-estate development business and affiliates).
- The parties settled earlier litigation in a confidential settlement agreement (CSA, 2007) that: preserved Dewberry Engineers’ federal registrations; limited Dewberry Group’s use of "Dewberry" (required use of DCC in VA/MD/DC; restricted use in architecture/engineering; required continued use of an existing column logo and forbade berry-type logos); and waived challenges to Dewberry Engineers’ registrations.
- In 2017–2018 Dewberry Group rebranded (changed to "Dewberry Group," adopted sub-brands like "Studio Dewberry," and a circular "D" logo) and filed federal trademark applications; USPTO refused some registrations for likelihood of confusion. Dewberry Engineers objected; Dewberry Group continued use and filed additional applications.
- Dewberry Engineers sued (Lanham Act and contract breach). The district court granted summary judgment for Dewberry Engineers on breach and infringement, held likelihood of confusion, entered a permanent injunction, and after bench trial ordered disgorgement of profits (~$42.98M) and attorneys’ fees as an "exceptional" Lanham Act case.
- The Fourth Circuit affirmed summary judgment, injunction, disgorgement, and fee award; Judge Quattlebaum concurred in part and dissented in part (would have sent likelihood-of-confusion to a jury and vacated the profits award because the court included revenues of non-party affiliates).
Issues
| Issue | Plaintiff's Argument (Dewberry Engineers) | Defendant's Argument (Dewberry Group) | Held |
|---|---|---|---|
| Breach of the CSA | Dewberry Group violated express CSA terms (use of Dewberry for architectural/engineering services, changed logo, used Dewberry in VA without DCC). | CSA ambiguous as to "where feasible" and scope; some services were in-house/not architectural; parol evidence shows intent limited to public-facing names. | Court: CSA unambiguous; breaches of ¶¶ B.2, B.3, B.6, B.10 established; summary judgment for Dewberry Engineers affirmed. |
| Priority / prior-user defense to trademark claim | Dewberry Engineers: mark is incontestable; CSA waived challenges to registrations. | Dewberry Group: prior common-law use predates Dewberry Engineers, so registration should not be dispositive. | Court: Dewberry Group waived any challenge to validity/prior-use by agreeing in CSA not to challenge registrations; incontestability stands. |
| Trademark infringement — likelihood of confusion | Marks identical in dominant term ("Dewberry"), services related/overlap, evidence of actual confusion, intent inferred from CSA breach and USPTO refusals. | Marks differ in connotation (surname vs. fruit), customers are sophisticated, services and advertising differ, factual disputes exist so issue for jury. | Court: On summary judgment, no genuine dispute—majority finds six factors favor confusion (strength, similarity, related services, overlapping advertising, intent, actual confusion); affirms infringement. (Dissent would send to jury.) |
| Remedies — injunction, disgorgement of profits, attorneys’ fees | Injunction consistent with CSA; disgorgement proper under §1117(a) considering Synergistic factors (intent, public interest, reputational harm); include affiliated-entity revenues because economic reality shows single enterprise; exceptional case supports fees. | Injunction overly broad, disgorgement unlawful where revenues derive from separate non-party affiliates (no direct defendant profits), award speculative and ignored costs; fees unwarranted. | Court: Injunction limited to CSA scope and acceptable; disgorgement appropriate under equitable principles and Synergistic factors, court may consider revenues of commonly-owned affiliates reflecting economic reality; fee award upheld as "exceptional" under Verisign standards. (Dissent would vacate disgorgement as including non-party revenues.) |
Key Cases Cited
- Synergistic Int’l, LLC v. Korman, 470 F.3d 162 (4th Cir. 2006) (enumerates equitable factors for disgorgement under §1117(a)).
- CareFirst of Md., Inc. v. First Care, P.C., 434 F.3d 263 (4th Cir. 2006) (elements and multi-factor likelihood-of-confusion analysis in the Fourth Circuit).
- B & B Hardware, Inc. v. Hargis Indus., Inc., 575 U.S. 138 (2015) (priority of prior use governs trademark rights; federal registration confers benefits but subject to defenses).
- Park ’N Fly, Inc. v. Dollar Park & Fly, Inc., 469 U.S. 189 (1985) (effect of incontestable federal registration as conclusive evidence of validity, subject to statutory defenses).
- Pizzeria Uno Corp. v. Temple, 747 F.2d 1522 (4th Cir. 1984) (weight to dominant term in mark-similarity analysis).
- RXD Media, LLC v. IP Application Dev. LLC, 986 F.3d 361 (4th Cir. 2021) (survey evidence may establish actual confusion at summary judgment).
- Verisign, Inc. v. XYZ.COM LLC, 891 F.3d 481 (4th Cir. 2018) (standards for awarding attorneys’ fees in exceptional Lanham Act cases).
- American Rice, Inc. v. Producers Rice Mill, Inc., 518 F.3d 321 (5th Cir. 2008) (tax treatment or downstream flow-through of profits does not shield them from Lanham Act disgorgement).
- Lone Star Steakhouse & Saloon, Inc. v. Alpha of Virginia, Inc., 43 F.3d 922 (4th Cir. 1995) (injunction is preferred remedy in trademark cases).
- Louis Vuitton Malletier S.A. v. Haute Diggity Dog, LLC, 507 F.3d 252 (4th Cir. 2007) (actual confusion is persuasive evidence in infringement analysis).