Federal Circuit Ruling in Crocs v. Effervescent Defines False Patent Claims as Deceptive Advertising Under the Lanham Act

Federal Circuit Ruling in Crocs v. Effervescent Defines False Patent Claims as Deceptive Advertising Under the Lanham Act

On October 3, 2024, the U.S. Court of Appeals for the Federal Circuit (CAFC) ruled in Crocs, Inc. v. Effervescent, Inc., No. 22-2160 (Fed. Cir. 2024) establishing that false claims of patent ownership in advertisements could lead to deceptive advertising claims under the Lanham Act. This decision signifies a potential shift in how advertisers present their products, particularly regarding patent claims, as they may now face increased scrutiny and legal consequences for misleading representations.

In this case, Crocs sued several shoe distributors, including Dawgs, for patent infringement. Dawgs countered with a claim alleging that Crocs falsely advertised its Croslite material as “patented,” “proprietary,” and “exclusive,” leading consumers to believe that Crocs shoes were made from a uniquely superior material compared to competitors’ products. The district court had initially granted summary judgment in favor of Crocs, ruling that the terms used were merely claims of inventorship and did not misrepresent the nature or characteristics of Crocs’ products, which is necessary to violate Section 43(a)(1)(B) of the Lanham Act.

Section 43(a)(1)(B) of the Lanham Act addresses misleading representations about the nature, characteristics, qualities, or geographic origin of goods or services. The CAFC’s ruling hinges on the interpretation of this section, which has been addressed in landmark cases such as 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). In Dastar, the Supreme Court clarified that Section 43(a)(1) protects against misleading consumers about the origin of goods but does not extend to misleading claims about the original author or creator.

The CAFC disagreed with the District Court conclusion that falsely claimed to have patented something is akin. CAFC analyses the evidence that Crocs false patent claims was intertwined with promotional material touting Croslite‘s tangible benefits. This advertising, the CAFC concluded, deceptively suggested that Croslite possessed unique attributes that made Crocs’ footwear superior to other brands.

The Crocs, Inc. v. Effervescent, Inc. decision by the U.S. Court of Appeals for the Federal Circuit establishes that falsely claiming patent ownership in advertisements can lead to deceptive advertising claims under the Lanham Act. This ruling diverged from the district court’s earlier judgment, as the CAFC determined that Crocs’ false patent claims regarding its Croslite material were not mere assertions of inventorship. Instead, these claims were misleading as they falsely suggested that Croslite offered unique and superior qualities, thereby creating an unfair advantage over competitors.

The CAFC’s decision underscores the importance of transparency in advertising, particularly when it comes to promotional claims of patented or proprietary technologies. Advertisers must now be more careful in how they market their products, especially if patent claims are involved, to avoid potential legal liability under Section 43(a) of the Lanham Act. This ruling could have a broad impact, requiring heightened scrutiny over the accuracy of patent-related marketing claims in various industries.