Boulder, CO-based shoe manufacturer Crocs, Inc. (NASDAQ:CROX) had a design patent rejected by the U.S. Patent and Trademark Office. The patent struck by the USPTO is U.S. Patent No. D517789. Issued in March 2006 and assigned to Crocs, it protected the ornamental design of footwear. The design patent illustrations attached to the ‘789 design patent showcase the well-known Crocs design featuring holes in the footwear material around the front of the foot and a strap behind to hold the footwear in place against a person’s heel.
The ‘789 design patent at issue had been part of a legal battle playing out between Crocs and Las Vegas, NV-based footwear designer and distributor USA Dawgs, Inc. in both the District of Colorado and the District of Nevada.
The Crocs’ ‘789 design patent was rejected by the USPTO as the result of an inter partes reexamination, which was originally requested on August 3, 2012 by USA Dawgs, and granted by the USPTO on November 19, 2012. Crocs has until September 11, 2017 by which to file a notice of appeal in order to appeal the Patent Examiner’s decision, so the finality of this matter is far from certain despite what you may have read elsewhere to the contrary.
In a nutshell, the Examiner rejected the ‘789 design patent under pre-AIA 35 USC 102(b) as being anticipated. The date the prior art in question was available as prior art was December 13, 2002, and Crocs did not file their design patent application that matured into the ‘789 design patent until May 28, 2004. The Examiner refused to recognize a priority claims of earlier filed applications dating back to June 23, 2003. According to the Examiner, the shoe that is the subject of the ‘789 design patent was not adequately disclosed prior to May 28, 2004, making an earlier priority date claim impossible to recognize. Of course, if on appeal Crocs were to establish entitlement to priority dating back to June 23, 2003, the examiner’s rejection using prior art dated December 13, 2002 would no longer be a good rejection and Crocs would prevail. Therefore, much seems to be riding on the priority date, as is frequently the case when the statutory bar of pre-AIA 102(b) is in play.
Despite the disappointing news regarding its intellectual property, Crocs appears willing to continue to fight both for the validity of its patent and the right to enforce the patent against infringing parties. Both Footwear News and Reuters reported that Crocs intends to appeal the recent ruling of the USPTO and the company notes that the ‘789 patent remains valid and enforceable through the appeals process. Further, an official statement from Crocs published by Footwear News indicates that the Colorado shoemaker plans to appeal the decision through to the Court of Appeals for the Federal Circuit, if necessary. Crocs’ statement notes that the Federal Circuit previously upheld the validity of both the ‘858 and ‘789 patents, overturning a ruling of invalidity previously issued by the U.S. International Trade Commission (ITC).
This inter partes reexamination decision by the Patent Examiner is but another chapter in what is becoming a long dispute between the parties. The dispute between U.S.A. Dawgs and Crocs extends at least as far back as July 2012, when Crocs named U.S.A. Dawgs as a defendant in a first amended complaint filed in the District of Colorado. That complaint identified U.S.A. Dawgs as an entity involved in the manufacture and distribution of Dawgs Clogs, a product manufactured with China which Crocs alleged infringed upon two of its patents. Those include the ‘789 design patent along with a utility patent, U.S. Patent No. 6993858, titled Breathable Footwear Pieces and assigned to Crocs in February 2006. This patent claims a footwear piece having a base section formed from a moldable foam material and a strap section formed from a moldable material and attached to the upper part of the base section with plastic connectors. The strap pivots in order to provide support to the Achilles portion of a person’s heel and the upper part of the base section generally follows the contour of a human foot.
In August, U.S.A. Dawgs filed a counterclaim as a defendant in the case which included a series of 14 affirmative defenses against the allegations made by Crocs. These defenses include invalidity of both the ‘789 and ‘858 patents under 35 U.S.C. § 102 for novelty and 35 U.S.C. § 103 for non-obviousness; inequitable conduct and fraud for Crocs’ failure to bring material prior art to the attention of the USPTO; and non-infringement of the ‘789 design patent or the ‘858 utility patent.
Despite the fact that Crocs has vowed to continue to fight for its rights under the ‘789 design patent, the recent decision of the Patent Examiner to reject the claim in the patent puts Crocs in a precarious position according to some analysts. An article published by TheStreet notes that U.S.A. Dawgs is only one of a series of defendants against which Crocs has asserted the ‘789 patent, so this decision could do major damage to Crocs’ licensing and enforcement activities if it’s not overturned. Further, TheStreet noted that Crocs recently announced its decision to shutter 160 stores over two years after posting a year-over-year revenue decline of 3.3 percent during 2017’s second quarter when compared to the same period in 2016.