Crocs has been handed a loss in its quest to block nearly two dozen companies from engaging in what it called the unlawful importation and sale of “certain footwear products and packaging that violate registered trademarks used in connection with certain Crocs shoes.” In an initial determination issued on Monday, U.S. International Trade Commission (“ITC”) Administrative Law Judge Bryan Moore found that no infringement in violation of section 337 of the Tariff Act of 1930 had occurred in connection with the importation and sale of the allegedly infringing footwear and packaging. Moore further asserted that he found no violation under 19 U.S.C. § 1337(a)(1)(A), which prohibits the importation of articles that restrain or monopolize trade and commerce in the U.S.
Administrative Judge Moore’s determination comes on the heels of the ITC voting to institute a Section 337 investigation in July 2021, one month after Crocs lodged a complaint with the federal trade agency, in which it claimed that 21 companies – from Skechers and Loeffler Randall to Cape Robbin and Hobby Lobby – (collectively, the “respondents”) were unlawfully importing and selling “certain footwear products and packaging that violate registered trademarks used in connection with certain Crocs shoes.” These marks include the “CROCS” word mark and its clog trade dress, which consists of a “three-dimensional configuration of the outside of an upper of a shoe, the textured strip on the heal of the shoe, the decorative band along the length of the heel strap.”
In particular, Crocs has alleged that the respondents were infringing and diluting its trademarks (namely, 3,836,415; 5,149,328; and 5,273,875), and engaging in false designation of source in connection with one or more of the trademarks that it uses make and sell its iconic Classic Clog shoe, and sought a general exclusion order – or in the alternative, a limited exclusion order – and cease and desist orders from the ITC to bar the respondents from continuing to import and sell the allegedly infringing footwear. Crocs was granted no such remedies in connection with Moore’s determination, which is appealable to the Commission.
Regardless of the outcome for Crocs, proceedings before the ITC are touted as “a fast and effective alternative to conventional federal court litigation for brands seeking to protect their intellectual property rights,” K&L Gates’ Jack Brodsky, Michael Murphy and Devon Beane stated in a note. “IP owners continue to demonstrate confidence in the ITC’s fast, reliable, and accurate resolution of IP disputes,” according to Squire Patton Boggs’ Adam Hess, who noted that “many IP owners are facing more competition from infringing imported products and are looking ways to maintain and grow their position in the market.” And the ITC – which has broad powers to investigate and address unfair acts and unfair competition in the importation of articles into the U.S. – can serve as “an important tool” on this front.
The Rise (and Rampant Copying) of Crocs
The timing of Crocs filing its complaint with the ITC was notable, as it followed from a striking rise in sales for the foam clog-maker, with CEO Andrew Rees stating in late 2020 that amid a global pandemic, the company was on track to “deliver the strongest revenue in Crocs’ history.” The Broomfield, Colorado-based company went on to boast record sales in 2021, as well, reporting full-year sales of $2.31 billion, up by 66 percent from the previous year.
As Crocs asserted in its complaint, since it launched back in 2002, it “has sold nearly 800 million pairs of shoes in over 90 countries, and garnered widespread recognition of its comfort-driven, revolutionary footwear, making [it] one of the ten largest non-athletic footwear brands in the world.” Addressing the well-established presence of its footwear, Crocs pointed to collaborations with celebrities and well-known brands, and argued that the “unusual and distinctive appearance” of its clog-style shoe “is, itself, responsible for generating much of the publicity that [the company] receives.”
With striking sales and rising brand recognition in mind, and as a result of its consistent use of its trademarks over the course of two decades, including the “one-of-a-kind ornamental design characteristics that give the overall impression of a fun and distinctively quirky clog-like shoe,” Crocs claimed that its marks have become “widely recognized by the general consuming public of the U.S. as a designation of source of the footwear products that are manufactured, sold, distributed, and promoted Crocs.”
While there are “virtually infinite number of different, non-infringing footwear styles in existence today,” and the lack “any actual competitive need to use the Crocs marks in commerce,” Crocs alleged that a number of competitors have taken to “intentionally and frequently” replicating its “unique and recognizable” footwear – “not due to competitive need, but because of the significant goodwill that the Crocs marks have accumulated over the past two decades during their use by Crocs.” As a result of such widespread “intentional” infringement, which is likely to confuse consumers as to the source of the unauthorized products, Crocs argued that it was being – and would continue to be – subject to “substantial injury,” including at injury to “the goodwill and reputation for quality associated with [its trademarks].”
A Crocs spokesperson told TFL, “We are aware of the Judge’s initial determination in the ITC case. We strongly disagree with aspects of the determination and will be filing the appropriate objections with the Commission in due course. As demonstrated in connection with Crocs’ 2006 ITC case, Crocs will seek any review necessary to ensure that its rights are fully recognized. In any event, the majority of the respondents at issue have agreed to cease sales of their infringing footwear and Crocs’ will continue to aggressively protect its iconic designs against those who unfairly trade off of the goodwill of the brand.”
The case is In the Matter of Certain: Casual Footwear and Packaging Thereof, 337-TA-1270 (ITC).