by Dennis Crouch
In a significant ruling that breathes new life into false patent marking claims, the Federal Circuit has held that falsely advertising a product as “patented” can give rise to liability under the Lanham Act’s prohibition on false advertising. In Crocs, Inc. v. Effervescent, Inc., the appellate panel reversed a Judge Brimmer (D.Colo) summary judgment ruling, thus allowing competitor Dawgs to pursue false advertising claims against Crocs for allegedly misrepresenting its “Croslite” material as patented and ‘exclusive.’ One advertisement read to the appellate panel stated: The reason the shoes are so comfortable is that they are made of a patented closed-cell resin. The resin has many positive aspects …” But, the closed-cell resin was not patented and instead was commercially available for anyone to use.
This ruling opens up a new avenue for challenging false patent marking after the America Invents Act severely curtailed such claims under the Patent Act itself. The decision also clarifies the scope of false advertising claims under the Lanham Act in light of key Supreme Court and Federal Circuit precedents such as Dastar and Baden Sports.
Professor Rebecca Tushnet is a leading commentator on Dastar and its progeny. In an earlier post, she also argued that the district court decision was “wrong” for much the same reason expressed by the appellate panel:
The patented/proprietary/exclusive language here is not the same as claiming authorship; it’s claiming uniqueness as a reason for consumers to believe that Crocs possess superior product characteristics to those of competitors’ products. To the extent that the claims lead consumers to believe that Crocs are “made of a material ‘different than any other footwear,’” a difference made credible to consumers by reference to patents and/or proprietary knowledge, that is a claim about the physical nature of specific product components, not about authorship. When the Supreme Court left 43(a)(1)(B) claims open in Dastar, this is the kind of thing that fits well.
Tushnet (September 2021). See also, my prior discussion of the case that includes links to the briefs.
Crocs v. Dawgs has a long and complex history dating back to 2006, when Crocs sued several competitors for patent infringement related to its foam clog shoes. In 2016, Dawgs (one of the defendants) filed counterclaims against Crocs alleging violations of Section 43(a) of the Lanham Act based on Crocs’ advertising of its “Croslite” material. Specifically, Dawgs alleged that Crocs falsely described Croslite as “patented,” “proprietary,” and “exclusive” when in fact Crocs did not have a patent on the material or exclusive control over its manufacture. Dawgs claimed this misled consumers about the nature and qualities of Crocs’ shoes compared to competitors’ products.
Crocs moved for summary judgment, citing the Supreme Court’s decision in Dastar Corp. v. Twentieth Century Fox Film Corp. and the Federal Circuit’s ruling in Baden Sports, Inc. v. Molten USA, Inc. The district court agreed and granted summary judgment to Crocs, finding that claims of false inventorship or authorship are not actionable under Section 43(a)(1)(B) of the Lanham Act based on those precedents. On appeal, the Federal Circuit reversed, holding that Dawgs had adequately alleged a false advertising claim by linking the false “patented” statements to misrepresentations about the nature, characteristics, and qualities of Crocs’ products.
15 U.S.C. §1125, also known as Section 43(a) of the Lanham Act, is a cornerstone of federal unfair competition law. This provision creates a federal cause of action for false advertising and trademark infringement, even in cases where the trademark is unregistered. The statute is broadly worded to encompass a wide range of deceptive practices in commerce, including traditional passing off as well as other forms of false advertising including false designations of origin, and false descriptions.
Despite its broad language, the Supreme Court provided a substantial limit on claims in its 2003 decision Dastar Corp. v. Twentieth Century Fox Film Corp., 539 U.S. 23 (2003). In Dastar, the Supreme Court addressed the scope of the “origin of goods” provision in Section 43(a)(1)(A) of the Lanham Act. The case involved a television series based on a book about World War II, where the copyright had expired. Dastar purchased tapes of the original series, edited them, and sold them as its own product without crediting the original creators. The Court held that “origin” in the Lanham Act refers only to “the producer of the tangible goods that are offered for sale, and not to the author of any idea, concept, or communication embodied in those goods.” The Court was concerned that allowing such claims would create “a species of perpetual patent and copyright” contrary to the limited terms of intellectual property protection.
Dastar emphasized that the Lanham Act is focused on preventing consumer confusion about the source of goods, not protecting the originality or creativity behind products. However, the Court noted in dicta that if a producer substantially copied a work but advertised it as “quite different” from the original, that could potentially give rise to a claim under Section 43(a)(1)(B) for misrepresentation of the “nature, characteristics [or] qualities” of the goods. This arguably left open the possibility of some false advertising claims related to authorship or origin, even as it foreclosed “reverse passing off” claims under Section 43(a)(1)(A).
Building on Dastar, the Federal Circuit’s 2009 decision in Baden Sports further clarified the limits of false advertising claims related to authorship under the Lanham Act. Baden Sports, Inc. v. Molten USA, Inc., 556 F.3d 1300 (Fed. Cir. 2009). In that case, basketball manufacturer Baden sued competitor Molten for advertising its basketballs as having “innovative” cushioning technology. Baden claimed this was false because Molten was not actually the innovator or originator of the technology. The Federal Circuit, applying Ninth Circuit law, held that “authorship, like licensing status, is not a nature, characteristic, or quality” of goods under Section 43(a)(1)(B). The court found that Baden’s claims were fundamentally about false attribution of authorship or inventorship, which are not actionable under either subsection of Section 43(a) after Dastar. The Baden Sports court emphasized that allowing such claims would conflict with Dastar’s holding by “reframing” authorship claims as false advertising. It held that to be actionable, false advertising claims must relate to the “characteristics of the good itself” rather than the source of ideas embodied in the product. This appeared to foreclose most claims based on false statements about patents or inventorship under the Lanham Act. However, again, the court left open the possibility that some false authorship claims could potentially be actionable if tied to misrepresentations about product characteristics.
In Crocs, the Federal Circuit has now distinguished Dastar and Baden Sports — finding a false patent marking situation not barred by those case holdings. The opinion by Judge Reyna and joined by Judges Cunningham and Albright (sitting by designation), the court drew a critical distinction between bare claims of authorship or inventorship (not actionable) and claims that link false patent statements to misrepresentations about product qualities (that are actionable). Falsely claiming patent protection can give rise to a Lanham Act violation if used to mislead consumers about the nature or qualities of the product.
During oral arguments, Crocs’ attorney Michael Berta of Arnold & Porter suggested that allowing action here would be an unprecedented expansion — arguing that that “There is no case that has found that this is actionable, what they are claiming.” However, the Federal Circuit ultimately rejected this argument, finding that false patent claims linked to product characteristics can be actionable.
The court emphasized that Dawgs alleged that Crocs used the false “patented” designation to suggest its Croslite material had unique qualities not found in competitors’ products. The court found these allegations sufficiently tied the false patent claims to statements about the “nature, characteristics, or qualities” of Crocs’ shoes to potentially violate Section 43(a)(1)(B). This approach provides a roadmap for how future plaintiffs may be able to pursue false patent marking claims under the Lanham Act by linking the false marking to specific misrepresentations about product features.
Notably, the Federal Circuit’s decision does not discuss 35 U.S.C. § 292, the false marking provision in the Patent Act itself. That provision was significantly narrowed by amendments in the 2011 America Invents Act (AIA), which eliminated qui tam actions and required plaintiffs to show competitive injury. The court has previously held that Section 292 does not preempt the Lanham Act false marking claims, provided there is an element of bad faith. Zenith Electronics Corp. v. Exzec, Inc., 182 F.3d 1340 (Fed. Cir. 1999). However, in Dastar, these claims appeared severely limited. The Crocs decision now potentially revives false marking litigation through the vehicle of the Lanham Act, at least in cases where the false patent claims are used to make broader misrepresentations about products.
The decision also has significant implications for how companies advertise their patents and innovations. Simply claiming a product or feature is “patented” or “proprietary” may now create greater legal risk if those claims are false or misleading. Companies will need to ensure legal review of claims in advertising materials to ensure that they do not go too far. At the same time, I want to recognize that Dawgs has not won this lawsuit, the appellate court simply reversed the summary judgment made on legal Dastar grounds. On remand, Dawgs will now need to put forth evidence showing that the claims actually violated Section 43 and caused compensable damages.
The International Trademark Association (INTA) filed an amicus brief cautioning in the case against an overly broad interpretation of Dastar that would categorically bar Lanham Act false advertising claims based on statements that products are “patented,” “proprietary,” or “exclusive.” INTA argues Dastar should be more narrowly construed to focus on unaccredited copying or plagiarism claims under Section 43(a)(1)(A), and does not preclude false advertising claims under Section 43(a)(1)(B) that concern misrepresentations about the “nature, characteristics, [or] qualities” of products. INTA emphasizes that the meaning of advertising terms depends on context, citing McCarthy’s treatise that “[t]he advertising context in which a message, otherwise classified as puffing, appears might transform the message into one having a definite, factual meaning.” 5 J. Thomas McCarthy, McCarthy on Trademarks and Unfair Competition § 27:106 (5th ed. 2022). In context here, INTA contends that terms like “proprietary” and “exclusive” should not be automatically deemed puffery without examining the context.
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Michael Berta of Arnold & Porter Kaye Scholer LLP argued for the plaintiff-appellee Crocs, Inc. and was joined on the brief by Sean Callagy, Isaac Ramsey, and Andrew Tutt.
Matt Berkowitz of Reichman Jorgensen Lehman & Feldberg LLP argued for the defendants-appellants Double Diamond Distribution, Ltd., U.S.A. Dawgs, Inc., and Mojave Desert Holdings, LLC, and was joined on the brief by Navid Bayar.
Jordan Feirman of Skadden and Jack Wheat of McBrayer filed the amicus curiae brief for INTA.