A prevailing plaintiff in a trademark infringement suit is often entitled to an award of the “defendant's profts.” 15 U. S. C. § 1117(a). In making such an award, the District Court in this case totaled the profts of the named corporate defendant with those of separately incorporated affliates not parties to the suit. We hold today that the court erred in doing so. Under the pertinent statutory provision, the court could award only profts properly ascribable to the defendant itself.
I
The trademark dispute here is between two unrelated real-estate companies with the word “Dewberry” in their names.
Dewberry Engineers provides real-estate development services for commercial entities across the country, and particularly in several southeastern States. It owns a registered trademark in the word “Dewberry.” That mark gives Dewberry Engineers certain exclusive rights to use the “Dewberry” name in offering real-estate services.
*Briefs of amici curiae urging reversal were fled for the American Intellectual Property Law Association by Lauren Keller Katzenellenbo gen and Ann M. Mueting; and for the Washington Legal Foundation by John M. Masslon II and Cory L. Andrews. Megan K. Bannigan, Jared I. Kagan, and Thomas A. Agnello fled a brief for the International Trademark Association as amicus curiae urging vacatur.
Noel J. Francisco and Jennifer L. Swize fled a brief for Intellectual Property Scholars as amici curiae urging affrmance.
Page Proof Pending Publication DEWBERRY GROUP, INC. v. DEWBERRY ENGINEERS INC.
Dewberry Group is also a commercial real-estate company operating in the southeast. Owned by developer John Dewberry, it provides services solely to other, separately incorporated companies in his portfolio (about 30 in all). Each of those affliates owns a piece of commercial property for lease, but none has employees to carry out business functions. That is instead Dewberry Group's role. It affords the affliates the services needed—fnancial, legal, operational, and marketing—to generate rental income from the properties they own. That income goes on the affliates' books; Dewberry Group receives only agreed-upon fees. And those fees are apparently set at less than market rates. According to its tax returns, the Group has operated at a loss for decades; it survives only through occasional cash infusions from John Dewberry himself. Meanwhile, the affliates—which, recall, he also owns—have racked up tens of millions of dollars in proft.
The success of John Dewberry's overall business comes in part from trademark infringement—specifically, from Dewberry Group's violation of Dewberry Engineers' trademark rights in the “Dewberry” name. (If that sentence is confusing—too darn many Dewberrys—it is also a good illustration of why trademarks exist: to prevent consumers from being confused about which company is providing a product or service.) Dewberry Engineers has sought to defend its trademark rights against Dewberry Group for nearly two decades.
In 2007, an infringement suit the Engineers brought against the Group led to a settlement limiting the latter's use of the word “Dewberry.” But a decade or so later, Dewberry Group reneged on the deal. As part of a rebranding effort, the Group resumed its use of the “Dewberry” name in the marketing and other materials it used to lease its affliates' properties.
So Dewberry Engineers sued Dewberry Group again, and won decisively. The action—brought against Dewberry Group alone—alleged trademark infringement and unfair Page Proof Pending Publication competition under the federal Lanham Act, as well as breach of contract (i. e., the settlement agreement) under state law. The District Court found Dewberry Group liable on all counts. It was especially scathing about Dewberry Group's trademark infringements. Those violations, the court held, were “intentional, willful, and in bad faith.” 2022 WL 1439826, *6 (ED Va., Mar. 2, 2022). Dewberry Group had encountered “numerous red fags alerting it to the illegality of its conduct,” yet continued to use the trademarked name. Id., at *2; see id., at *6. Those fndings of willful infringement, later affrmed by the Court of Appeals for the Fourth Circuit, are not before us. See 77 F. 4th 265, 289, 291 (2023). What remains in dispute is the District Court's award of profts to remedy the infringement. The Lanham Act provides for a prevailing plaintiff like Dewberry Engineers to recover the “defendant's profts” deriving from a trademark violation. § 1117(a). The sole named defendant here is Dewberry Group. But Dewberry Group, as noted above, reports no profts. See supra, at 324. Rather, the District Court found, the profts from the Group's illicit conduct (as from all its services) “show up exclusively on the [propertyowning affliates'] books.” 2022 WL 1439826, *9. To refect that “economic reality,” the court decided to treat Dewberry Group and its affliates “as a single corporate entity” for purposes of calculating a profts award. Id., at *10. If those companies were viewed separately, the court reasoned, the “entire Dewberry Group enterprise” would “evade the fnancial consequences of its willful, bad faith infringement.” Ibid. By contrast, considering the companies together would prevent the “unjust enrichment” that the Act was meant to target. Ibid. The court thus totaled the affliates' real-estate profts from the years Dewberry Group infringed, producing an award of nearly $43 million. See id., at *14.
A divided Court of Appeals panel affrmed that award.
Reiterating the “ `economic reality' of Dewberry Group's rePage Proof Pending Publication DEWBERRY GROUP, INC. v. DEWBERRY ENGINEERS INC.
lationship with its affliates,” the majority approved the District Court's treatment of all the companies “as a single corporate entity.” 77 F. 4th, at 290 (quoting 2022 WL 1439826, *10).
That approach, the majority reasoned, properly “h[e]ld Dewberry Group to account” for its use of infringing materials to generate corporate profts. 77 F. 4th, at 293. It did not matter that the affliates, rather than the Group, “receive[d] the revenues” earned, given the links among those companies. Ibid. To hold otherwise, the majority thought, would give businesses a “blueprint for using corporate formalities to insulate their infringement from fnancial consequences.” Ibid. Judge Quattlebaum dissented. He would have held that the District Court had no authority, in calculating a defendant's profts, to “simply add the revenues [of] non-parties.” Id., at 300.
We granted certiorari, 602 U. S. 1038 (2024), and we now vacate the decision below.
II
The statutory text authorizing a profts award for trademark infringement offers no support for the approach the courts below took. Again, the section of the Lanham Act addressing remedial issues provides that a plaintiff like Dewberry Engineers is “entitled” to “recover [the] defendant's profts.” § 1117(a); see supra, at 325. The term “defendant” is not specially defned, and thus bears its usual legal meaning. A “defendant” is “the party against whom relief or recovery is sought in an action or suit.” Black's Law Dictionary 541 (3d ed. 1933). So here the defendant is the entity named in Dewberry Engineers' complaint as liable for infringing the “Dewberry” trademark. And that entity is Dewberry Group alone. See App. 1 (“The Plaintiff, Dewberry Engineers . . . fles this Complaint against the Defendant, Dewberry Group”). The Engineers chose not to add the Group's property-owning affliates as defendants. Accordingly, the affliates' profts are not the (statutorily disgorgable) “defendant's profts” as ordinarily understood.
Page Proof Pending Publication Nor do background principles of corporate law convert the one into the other. We have often read federal statutes to incorporate such principles, on the view that Congress would not have wanted to displace “bedrock” features of the common law. United States v. Bestfoods, 524 U. S. 51, 62 (1998). So if corporate law treated all affliated companies as (in the District Court's phrase) “a single corporate entity,” we might construe the term “defendant” in the same vein—as sweeping in the named defendant's affliates because they lack a distinct identity. But in fact the usual rule is the opposite. “[I]t is long settled as a matter of American corporate law that separately incorporated organizations are separate legal units with distinct legal rights and obligations.” Agency for Int'l Development v. Alliance for Open Society Int'l Inc., 591 U. S. 430, 435 (2020). And that is so even if the entities are affliated—as they are here by virtue of having a common owner. See ibid.; Dole Food Co. v. Patrickson, 538 U. S. 468, 474–475 (2003). To be sure, the “principle[ ] of corporate separateness” has exceptions: A court may in select circumstances “pierc[e] the corporate veil,” especially to prevent corporate formalities from shielding fraudulent conduct. Bestfoods, 524 U. S., at 62; Dole Food, 538 U. S., at 475. But Dewberry Engineers, as it admits, never tried to make the showing needed for veil-piercing. See Brief for Respondent 52, n. 8. So the demand to respect corporate formalities remains. And that demand fts hand-in-glove with the Lanham Act's text: Again, the “defendant's profts” are the de fendant's profts, not its plus its affliates'.
Dewberry Engineers cannot, and so does not, contest those points; to defend the decisions below, it must set off on a different path, involving different statutory language. True enough, concede the Engineers, that a court has no authority to “disregard corporate separateness” and order disgorgement of an affliate's profts as the “defendant's” own. Id., at 2. But a court, the company says, may take account of an affliate's profts in another way. Dewberry Engineers Page Proof Pending Publication DEWBERRY GROUP, INC. v. DEWBERRY ENGINEERS INC.
here invokes a later sentence in the Act's remedies section: “If the court shall fnd that the amount of the recovery based on profts is either inadequate or excessive[,] the court may in its discretion enter judgment for such sum as the court shall fnd to be just, according to the circumstances.” § 1117(a). In the Engineers' view, that so-called just-sum provision enables a court, after frst assessing the “defendant's profts,” to determine that a different fgure better refects the “defendant's true fnancial gain.” Id., at 24. And at that “second step” of the process, the court can consider “as relevant evidence” the profts of related entities—for example, to see if the defendant diverted some of its earnings to an affliate's books. Id., at 1, 38. Finally, Dewberry Engineers contends that the courts below in fact followed that approach. In other words, those courts merely considered the affliates' profts as evidence in assessing Dewberry Group's “true fnancial gain” under the just-sum provision. Id., at 40.
But that is not a tenable take on why Dewberry Engineers got a $43 million award. The District Court did not rely on the just-sum provision, or suggest that it was departing up from Dewberry Group's reported profts to refect the company's true gain. There was no two-step process for deciding on the award, but only a single step: the calculation of the “defendant's profts.” 2022 WL 1439826, *14; see id., at *9–*10. And in making that assessment, the District Court designated whose profts should count: both Dewberry Group's and its affliates', because all those companies should be “treated as a single corporate entity.” Ibid. That treatment, by its terms, disregards “corporate formalities”—and likewise the “principle[ ] of corporate separateness.” Dole Food, 538 U. S., at 476; Bestfoods, 524 U. S., at 62. The proof, if any more were needed, is in the number the court arrived at. It was simply the sum of all the Dewberry entities' real-estate profts for the relevant years. That amount accords with the idea that Dewberry Group and its affliates Page Proof Pending Publication Page Proof Pending Publication should be regarded as one—as in toto the “defendant.” But it conficts with the Engineers' alternative understanding of what happened below. For a court adopting the Engineers' view would have had to identify which of the affliates' profts were properly attributable to Dewberry Group, as refecting the Group's own gain. And the court could not plausibly have concluded that all of them were, given (at a minimum) that the affliates owned the rent-producing properties. The only way to reach the District Court's wholesale result was to take a simpler tack: to lump together Dewberry Group and its affliates as (in the court's own words) a single entity.
So too, the Court of Appeals' decision bears no resemblance to Dewberry Engineers' description. No more than the District Court did the Fourth Circuit rely on the just- sum provision, or on any “second-step” analysis that it enables. The Court of Appeals related, in straightforward manner, the basis of the District Court's decision: The lower court, to determine profts, “treated Dewberry Group and its affliates as a single corporate entity.” 77 F. 4th, at 290. And the appellate court approved that treatment for much the same reasons the District Court gave—because of the “economic reality” of how the Dewberry companies operated and the fear that “corporate formalities” would otherwise insulate infringing conduct from any penalty. See ibid.; id., at 293; supra, at 325–326. The concern in such circumstances is not amiss. But as even the Engineers agree, it cannot justify ignoring the distinction between a corporate defendant (i. e., Dewberry Group) and its separately incorporated affliates. By treating those entities as one and the same, the courts below approved an award including non- defendants' profts—and thus went further than the Lanham Act permits.
In remanding this case for a new award proceeding, we leave a number of questions unaddressed. First, we express no view on Dewberry Engineers' understanding of the justPage Proof Pending Publication DEWBERRY GROUP, INC. v. DEWBERRY ENGINEERS INC.
sum provision. We have concluded only that the courts below did not invoke that provision to support the $43 million award. Whether (or how) they could have used the provision is not properly before us; still less is whether Dewberry Engineers may press its just-sum theory on remand given forfeiture rules. Second, we also state no view on the position of the Government respecting when courts, even without relying on the just-sum provision, can look behind a defendant's tax or accounting records to consider “the economic realities of a transaction” and identify the defendant's “true fnancial gain.” Brief for United States as Amicus Curiae 13; see id., at 18–22, 30–34; Tr. of Oral Arg. 36–41. Again, it is now up to the lower courts to decide whether to consider the Government's proposals. And third, we offer no opinion on whether, as raised during oral argument here, corporate veil-piercing is an available option on remand. See id., at 77; Brief for Respondent 52, n. 8.
All we hold today is that the courts below were wrong to treat Dewberry Group and its affliates as a single entity in calculating the “defendant's profts.” Dewberry Group is the sole defendant here, and under that language only its own profts are recoverable.
We therefore vacate the judgment of the Court of Appeals and remand the case for further proceedings consistent with this opinion.
It is so ordered.