NEWS: 02.25.10 - San Francisco Daily Journal

Big Win for Crocs in Patent Infringement Case: Remedy Could Include a Rare General Exclusion Order for Imports of Similar Shoes

By Craig Anderson, Daily Journal Staff Writer

SAN JOSE – In a sweeping triumph for Crocs, Inc. and it's lawyers at Palo Alto based Wilson Sonsini Goodrich & Rosati, the U.S. Court of Appeals for the Federal Circuit on Wednesday found that defendants infringed on patents for the company's signature foam clots.

The federal appeals court overturned an earlier ruling by the U.S. International Trade Commission, saying that the ITC got bogged down in the specifics when deciding that shoes closely resembling the now-famous Crocs footwear did not infringe the Colorado-based company's patents.

The ITC ruling was reversed and sent back to the commission for a remedy that might include an unusual general exclusion order barring the import of any Crocs-like footwear into the United States.

"It really is a total victory," said Jim Otteson, who argued for Crocs while a partner at Wilson Sonsini before leaving to start his own firm in San Jose last month. Wilson Sonsini acquired Colorado-based Crocs as a client because several of its executives, including General Counsel Erik Rebich, came from another firm client, Flextronics International LTD,. Otteson said

The Crocs dispute is a design patent case, based on patents issued in 2006. The company sued a number of competitors, accusing them of copying the design of the foam clog, which features ventilator holes on the top of the shoe and a strap in the back. The ITC can order the customs service to block the import of products shipped to U.S. ports form overseas under Section 227 of the U.S. Tariff Act if they are found to infringe. While all three name defendants in the Crocs case are based in North America, inkling two in Canada, they manufactured shoes in Asia.

An ITC administrative judge ruled against Crocs in 2008, concluding that the defendants' shoes did not infringe because of minor differences in the straps or the shape of the holes on part of the shoes. The commission, reviewing the judge's work, added that the difference between the shoes would have been obvious to an ordinary observer. But Circuit Judge Randall Raders said the commission "place undue emphasis on particular details of its written description of the patented design." Instead of focusing on the small differences between Crocs' shoes and its competitors, Rader said the ITC should have been looking at the overall similarities. Rader emphasized the point by displaying the Crocs' and competitors shoes side by side in illustration that that take up three pages of the 26-page ruling.

Crocs Inc. v. International Trade Commission, 2008-1596. "These side-by-side comparisons of the '789 patent design and the accused products suggest that an ordinary observer, familiar with the prior art designs, would be deceived into believing the accused products are the same as the patented design," Rader wrote. "In one comparison after another, the shoes appear nearly identical," the judge added. "If the claimed design and the accused designs were arrayed in matching colors and mixed up randomly, this court is not confident that an ordinary observer could properly restore them to their original order without very careful and prolonged effort."

Otteson said the test for Crocs and the lookalike shoes was the "ordinary consumer test," which has become the Federal Circuit's rule in design patent cases. Greenberg, Doll & McDonald, an Ohio-based firm, represented defendant Double Diamond Distribution LTD. Donald Dunner, a Washington, D.C.-based partner with Finnegan. Henderson, Farabow, Garret & Dunner represented the two other defendants, Holey Soles Holdings LTD. And Effervescent Inc.

Otteson said most of the respondents in the original case have come up with a "design around" to avoid infringement. The ITC must now determine whether to issue a general exclusion order, which he said was a rare remedy under Section 337 that would not be limited to specific companies but to the import of any shoe with the Crocs design.

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