– In Crocs, Inc. v. Effervescent, Inc., the Federal Circuit ruled that the plaintiff established a valid claim when the defendant admitted to falsely advertising a product as patented and touting its tangible benefits.
– The claim of tangible benefits differentiated this case from previous rulings involving authorship or innovation claims.
– Companies must exercise caution when advertising products as patented or innovative and should consider revising or removing such claims after relevant patents expire.
In Crocs, Inc. v. Effervescent, Inc., the U.S. Court of Appeals for the Federal Circuit overturned a summary judgment favoring Crocs against Double Diamond Distribution, USA Dawgs Inc. and others (collectively referred to as Dawgs). Dawgs had counterclaimed that Crocs violated Section 43(a) of the Lanham Act by advertising the material used in its shoes as “patented.”
The court explained that a cause of action under Section 43(a)(1)(B) arises when a party falsely claims possession of a patent and advertises it in a way that misleads consumers about the product’s nature, characteristics, or qualities.
Crocs initially sued Dawgs for patent infringement in 2006, leading to extensive litigation. In 2017, Dawgs filed an amended counterclaim, asserting that Crocs misled consumers by claiming its product material, Croslite, was “patented,” “exclusive,” and “proprietary,” thereby causing consumers to perceive competitors’ products as inferior.
The district court initially sided with Crocs, referencing precedents from Dastar Corp. v. Twentieth Century Fox Film Corp. and Baden Sports, Inc. v. Molten USA, Inc., concluding that Dawgs’ counterclaim lacked merit.
The Federal Circuit examined Section 43(a), particularly subsection (B), which addresses misrepresentation in commercial advertising. The court noted that Crocs admitted its claim of Croslite being “patented” was false.
In its review of Dastar and Baden Sports, the court clarified that those cases did not apply to Dawgs. In Dastar, the Supreme Court found that Section 43(a) does not protect originality or creativity, leading to the dismissal of the Lanham Act claim because the defendant was the originator of the product.
In Baden Sports, the court ruled that claims of innovation did not directly relate to the “nature, characteristics, or quality” of the goods, thus not violating Section 43(a)(B).
However, the Federal Circuit differentiated Dawgs’ case by stating that the false claim about a product being patented was not isolated. Dawgs provided evidence showing that Crocs’ misleading statements impacted consumer perception regarding the quality of competitors’ products.
Consequently, the Federal Circuit reversed the lower court’s decision and remanded the case for further proceedings.
It is essential for companies to avoid false advertising claims. When claims are tied to specific benefits or features of a product, they can lead to actionable claims under Section 43(a) of the Lanham Act, regardless of whether the false claim is about being “patented,” “innovative,” or “proprietary.”
Our DC IP lawyers recommend companies keep track of patent expiration dates and consider removing or revising any claims to ensure they do not imply current patent protection once patents expire.