November 8, 2024

The question of whether a cause of action may exist under Section 43 of the Lanham Act if a party falsely claims in advertising statements that it possesses a patent on a particular product feature was recently addressed in Crocs, Inc. v. Effervescent, Inc., 119 F.4th 1 (Fed. Cir. 2024).

 

Certain defendants (collectively, “Dawgs”) brought a counterclaim under § 43(a)(1)(B) of the Lanham Act predicated on alleged advertising statements Crocs made, including on its website, about Croslite—the primary material used to make Crocs’ footwear products. Id. at 2-3.  Dawgs alleged that Crocs falsely described Croslite as “patented,” “proprietary,” and “exclusive.”  Dawgs also alleged that by promoting Croslite as “patented,” Crocs misled current and potential customers to believe that “Crocs’ molded footwear is made of a material that is different than any other footwear.” Id.  Dawgs further alleged that Crocs’ statements deceived consumers into believing that its competitors’ molded footwear products are “made of inferior material compared to Crocs’ molded footwear.” Id.  Dawgs contended it was damaged by Crocs’ false advertisements and commercial misrepresentations. Id.

 

Crocs moved for summary judgment on Dawgs’ counterclaim, seeking to have it dismissed for failure to state a cause of action. Id.  The district court determined that the terms “patented,” “proprietary,” and “exclusive” were claims of “inventorship.” Id. at 3.  It applied Dastar Corp. v. Twentieth Century Fox Film Corp., 539 U.S. 23 (2003), and Baden Sports, Inc. v. Molten USA, Inc., 556 F.3d 1300 (Fed. Cir. 2009)—decisions that Crocs relied on—and concluded that Dawgs’ “inventorship” claims were directed to false designation of authorship of the shoe products, not the nature, characteristics, or qualities of Crocs’ products. Id.  In view of Dastar and Baden, the district court held that Dawgs failed as a matter of law to state a cause of action under § 43(a) and entered summary judgment for Crocs. Id.  Dawgs’ motion for reconsideration was denied and an appeal followed. Id.

 

The Federal Circuit observed that § 43(a)(1)(B) of the Lanham Act creates a cause of action for a person damaged by false or misleading commercial advertising or promotions that mislead consumers about the nature, characteristics, or qualities of goods or services. Id. at 4.  It was undisputed that Crocs was never granted a patent for Croslite and that its representation that it patented Croslite was thus false. Id.  The Court disagreed with the district court’s reading and application of Dastar and Baden, though it found the analyses in each decision informative. Id. at 5-6.  The Court determined that Dawgs presented allegations and evidence “that the falsity of Crocs’ promotional statements is rooted in the nature, characteristics, or qualities of Crocs’ products.” Id.  It explained that, in contrast to Crocs’ and the district court’s positions, “[a] claim that a product is constructed of ‘patented’ material is not solely an expression of innovation and, hence, authorship.” Id.  The Court particularly cited the webpage printouts Dawgs submitted to show promotional statements by Crocs that a patent covers Croslite and noted those promotional materials further include statements that Croslite has numerous tangible benefits found in all of Crocs’ shoe products. Id. 

 

The Court ultimately agreed that the allegations about Crocs’ advertising statements were directed to the nature, characteristics, or qualities of Crocs’ shoes. Id. (citing specific allegations Dawgs made).  It held that “a cause of action arises from Section 43(a)(1)(B) where a party falsely claims that it possesses a patent on a product feature and advertises that product feature in a manner that causes consumers to be misled about the nature, characteristics, or qualities of its product.” Id. at 6-7.  The Court then held that the district court erred in entering summary judgment for Crocs as Dawgs timely presented a theory under § 43(a)(1)(B) linking Crocs’ alleged misrepresentations in commercial advertisements to the nature, characteristics, or qualities of Crocs’ shoes, reversed the judgment, and remanded for further proceedings. Id.