On October 3, 2024, in Crocs v. Effervescent, the Federal Circuit ruled that falsely advertising that a product feature is patented can constitute a violation of the Lanham Act.
All the way back in 2006, Crocs sued several competitor shoe distributors for patent infringement. This appeal arose after a long, complex set of numerous concurrent lawsuits, as well as multiple stays pending related International Trade Commission and Patent Trademark and Appeals Board inter partes review proceedings. Dawgs, one of the defendants of a Colorado lawsuit, filed a counterclaim in 2016 against Crocs alleging false advertising in violation of Section 43(a) of the Lanham Act, 15 U.S.C. §1125(a), which became the basis of the Federal Circuit appeal.
According to Dawgs, Crocs’ website engaged in a “campaign to mislead its customers” about the primary material Crocs uses to make its footwear products, known as “Croslite”. Dawgs alleged that Crocs misled consumers to believe that Crocs’ molded footwear material was unique and superior to its competitors by promoting Croslite as “patented,” “proprietary,” and “exclusive,” when in fact, it was not.
The crux of the issue before the Colorado district court – and then on appeal – was whether undeniably false statements concerning whether a product feature is patented can constitute false advertising under the Lanham Act, or whether it is legally barred by Supreme Court and Federal Circuit precedent.
The Colorado district court granted summary judgement to Crocs, finding that Dawgs failed to state a cause of action under the Lanham Act because the alleged advertising statements were directed to a “false designation of authorship” of the shoe products, and not to the shoes’ nature, characteristics or qualities, as Section 43(a) requires. The district court relied on the Supreme Court’s 2003 decision in Dastar Corp. v. Twentieth Century Fox Film Corp. and the Federal Circuit’s 2009 decision in Baden Sports, Inc. v. Molten USA, Inc.
On appeal, the Federal Circuit reversed this finding and agreed with Dawgs that the circumstances here were not akin to Dastar and Baden, since those cases involved misleading statements of ownership rather than characteristics of the goods. In Dastar, the petitioner passed off an old World War II television series in the public domain as its own product, with no reference to the original series. In Baden, the defendant was accused of deceiving consumers that it was the originator of “dual cushion technology” in its basketball products by advertising the basketballs as “innovative.” In both cases, the courts found that a claim based on false designation of authorship is not actionable under Section 43(a) of the Lanham Act, since “authorship, like licensing status, is not a nature, characteristic, or quality,” as those terms are used in the Lanham Act.
With respect to Crocs, however, the Federal Circuit explained that a “claim that a product is constructed of ‘patented’ material is not solely an expression of innovation and, hence, authorship.” Rather, Crocs’ advertisements were directed to the nature, characteristics, or qualities of Crocs’ shoes.
Moving forward, it is clear that false claims that a company possesses a patent on a product feature and advertises that product feature in a manner that causes consumers to be misled can violate the Lanham Act. This serves as a reminder to marketing directors and advertisers to take care not to mislead consumers when signaling that your product is superior to competitors.
