The Federal Circuit issued its opinion yesterday in Crocs, Inc. v. Effervescent, Inc., a Lanham Act case that we have been watching because it attracted an amicus brief. In this case, the Federal Circuit reviewed a district court’s grant of summary judgment for Crocs against Dawgs’ counterclaim alleging false advertising violations of Section 43(a) of the Lanham Act. The district court granted summary judgment in favor of Crocs based on Supreme Court and Federal Circuit precedent it interpreted as legally barring Dawgs’ counterclaim. The Federal Circuit, however, reversed and remanded the judgment in an opinion authored by Judge Reyna that was joined by Judge Cunningham and Judge Alan Albright of the Western District of Texas, who sat by designation. This is our opinion summary.
Judge Reyna began by outlining the procedural and factual background of the case:
The pertinent history of this appeal begins in 2006 when crocs sued Double Diamond Distribution, Ltd. and several other competitor shoe distributors for patent infringement. . . . In May 2016, Dawgs filed a counterclaim against Crocs alleging false advertising violations of Section 43(a) of the Lanham Act . . . . The counterclaim alleges Dawgs was damaged by Crocs’ false advertising and commercial misrepresentations. . . . According to Dawgs, Crocs’ website falsely described Croslite as ‘patented,’ ‘proprietary,’ and ‘exclusive’ (collectively, ‘patented’). . . . During discovery, Crocs moved for summary judgment on grounds that Dawgs’ counterclaim was ‘legally barred’ by the Supreme Court[] . . . and this court . . . . The district court agreed. . . . Dawgs failed as a matter of law to state a cause of action under Section 43(a) of the Lanham act. . . . The district court concluded that the terms ‘patented,’ ‘proprietary,’ and ‘exclusive’ were claims of ‘inventorship. . . .’ The district court determined that Dawgs’ claims of inventorship were directed to a claim of false designation of authorship of the shoe products and not the nature, characteristics, or qualities of Crocs’ products.
Judge Reyna began his analysis for the Federal Circuit by explaining that the panel would review the “involving interpretation of the Lanham Act de novo.” He also explained that the court would review the grant of summary judgment “de novo, applying the same standard as the district court.”
On the merits, Judge Reyna first pointed out that “Dawgs raises a single issue on appeal: whether the district court erred in granting summary judgment against Dawgs’ counterclaim for failure to state a cause of action under Section 43(a)(1)(B) of the Lanham Act.” He noted that the court would only address Section 43(a)(1)(B), and not Section 43(a)(1)(A), because “Dawgs only challenge[d] the district court’s decision on whether its counterclaim allegations sufficiently raise[d] a cause of action under Section 43(a)(1)(B).”
Second, Judge Reyna emphasized, “the key question of whether Crocs’ representation that Croslite is patented is in fact false is not in dispute.” He explained how “Crocs admit[ted] that is was never granted a patent for Croslite.”
Judge Reyna next pointed out how Dawgs argued “that when commercial misrepresentations that a product is ‘patented,’ ‘proprietary,’ and ‘exclusive’ are linked to the nature, characteristics, or qualities of the product, those misrepresentations are actionable under Section 43(a)(1)(B) of the Lanham Act.” Ultimately, Judge Reyna agreed with this argument.
Judge Reyna rejected the district court’s conclusion that “binding precedent” rendered any false claims by Crocs to be “not actionable under Section 43(a)(1)(B).” While that precedent is “based on different circumstances, the analysis used by the Supreme Court and this court in those cases is informative in this appeal,” he explained. In particular, he noted, one case “cautions that a false claim of origin, and nothing more, is a claim of authorship and does not give rise to a cause of action under Section 43(a)(1)(A) or (B).” Here, though, he found that the “false claim that a product is patented does not stand alone.” In particular, he continued, “Dawgs presents allegations and evidence that the falsity of Crocs’ promotional statements is rooted in the nature, characteristics, or qualities of Crocs’ products.” Moreover, regarding another case he explained that “[a] claim that a product is constructed of ‘patented’ material is not solely an expression of innovation and, hence, authorship.” Thus, that case was distinguishable.
As a result of Judge Reyna’s analysis, the Federal Circuit held that “Dawgs timely presented a theory under Section 43(a)(1)(B) of the Lanham Act linking Crocs’ alleged misrepresentation in commercial advertisements to the nature, characteristics, or qualities of Crocs’ shoes” and, as a result, “the district court erred in granting summary judgment on Dawgs’ Lanham Act counterclaim.” The Federal Circuit reversed the judgment and remanded the case for further proceedings.