Paws vs. Irwin IP LLP
Crocs, Inc. v. Effervescent, Inc., No. 1:06-cv-00605 (Fed. Cir. October 3, 2024)
On October 3, 2024, the Federal Circuit held that a party may be liable for false advertising violations under Section 43(a)(1)(B) of the Lanham Act when it “falsely claims that it possesses a patent on a product feature” and advertises that product feature in a manner that misleads consumers about “the nature, characteristics, or qualities of its product.”
Crocs, Inc. (“Crocs”) is a large, well-known footwear and clothing company that mainly designs, manufactures, and markets foam footwear. Crocs, Inc. (“Crocs”) is a large, well-known footwear and clothing company that designs, manufactures, and markets foam footwear. The case was repeatedly stayed due to Section 331, inter-parties review, and bankruptcy proceedings. In 2016, Dawgs brought a counterclaim for false advertising violations against Crocs under the Lanham Act. Dawgs filed a counterclaim in 2017 claiming that Crocs had engaged in a “campaign” to mislead customers about the characteristics of Crocs’ primary material, “Croslite,” deceiving customers into believing “Croslite” is a patented, one-of-a kind material.
The district judge granted summary judgment to Crocs, concluding in light of Dastar Corp. Cir. Dawgs failed to state any cause of action in accordance with Section 43(a). The district court found that there was no cause for action because Crocs used terms like “patented,” “proprietary,” or “exclusive” to refer to Crocs’ “invention” of its product, rather than the nature, quality, and characteristics of their products. The Federal Circuit reversed district court’s decision, reasoning that this case was distinct from Dastar and Baden. The Federal Circuit noted Crocs admitted it did not have patent protection for “Croslite,” but rejected the district court reasoning that Crocs made false claims about the inventorship and originality of “Croslite.” It also rejected the district courts reasoning that Crocs misled its consumers by falsely claiming that “Croslite,” the primary material used in Crocs, had tangible benefits. The Federal Circuit agreed that Crocs’ promotional materials “deceive consumers, and potential consumers, into believing that other molded shoes are inferior to Crocs molded footwear.” This case is important to both consumers and competitors as it strengthens the consumer protections and prevents false and misleading advertising claims and unfair competition. Due to the Lanham Act’s various damages, it is important that companies review their marketing materials and promotional materials in order to ensure they do not falsely advertise a patent on a particular product feature.
