“Defendant’s Profits Are Defendant’s Profits,” Says US Supreme Court, but Dispute on Affiliate Liability “Far From Over”

A US Supreme Court decision holding that a defendant and non-party affiliates cannot be treated as a single entity in calculating infringement damages raises bigger questions than it answers. 

In the meantime, William Stroever, co-chair of the IP group at Cole Schotz, states that “today’s decision from the Supreme Court should create a big sigh of relief throughout the corporate world…. [because] The question of whether corporate affiliates can be liable for damages awarded in a case they were not a party to had the potential to up-end countless corporate families structured for the purpose of protecting other entities within the family. which could have set off a firestorm of panic. Today’s decision avoided that potential disaster.”

He adds that, as the court noted that the plaintiff trademark owner had not argued for piercing the corporate veil, the decision sends “a clear message to parties and attorneys alike to make every argument available to them…. Attorneys should keep all of their legal options open in order to avoid situations where a court decides a certain rule is not applicable. Luckily for the plaintiff [in this case] the Supreme Court seemed to take pity on their situation, highlighting alternative arguments that are potentially available and emphasizing the narrow ruling.” 

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