NEWS: 02.25.10 - San Francisco Recorder

Circuit Sides with Crocs in Patent Fight

By Zusha Elinson - RECORDER STAFF WRITER

While the colorful plastic clogs known as Crocs clearly infringe on any sense of style, the Federal Circuit U.S. Court of Appeals has ruled that the shoe company's competitors are actually infringing on the Crocs patented design.

Wednesday’s decision reversed an International Trade Commission ruling. It’s a big win for Crocs' lawyer James Otteson, who left Wilson Sonsini Goodrich & Rosati to start his own firm, Agility IP Law, after arguing the appeal.

"The [ITC] trial went just about as well as it could, but for whatever reason the judge and the commission made a mistake, and now we've been vindicated," Otteson said Wednesday.

Crocs sued 11 competing shoe makers, such as Holey Soles Holdings and Gen-X sports, in 2006 before the ITC, a fast-track venue for patent disputes. The ITC invalidated one of Crocs’ patents on "breathable footwear pieces" because it was obvious. It also ruled that none of the companies were infringing on Crocs' design patent.

The Federal Circuit reversed both findings — and sent the case back to the ITC to mete out the punishment.

The opinion, written by Judge Randall Rader, concluded that there was infringement because "the accused products embody the overall effect of the '789 design in sufficient detail and clarity to cause market confusion."

The key legal difference between the two rulings is that the Federal Circuit placed less emphasis on the actual written claims of the patent and more on the ordinary observer test. Used to determine whether a design patent is being infringed, the test boils down to whether a consumer might confuse one product for the other.

"This court has cautioned, and continues to caution, trial courts about excessive reliance on a detailed verbal description in a design infringement case," wrote Rader.

The Federal Circuit filled its ruling with side by side comparison photos of Crocs and competitors' products, to show that consumers would be confused between the various colorful, holey, plastic shoes.

"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," wrote Rader.

The decision affirmed a prior ruling, Egyptian Goddess Inc. v. Swisa Inc. , which found that the ordinary observer test should be given significant weight in design patent disputes.

The case will now go back to the ITC. The only remedy that can be won there is blocking companies from importing the infringing products.

Otteson's Wilson Sonsini team had suffered several setbacks earlier in the litigation, which lasted far longer than most ITC cases. First an ITC judge ruled on summary judgment that Crocs didn’t have a case. After getting that overturned by the commission, Wilson then lost at trial in 2007. The full commission agreed the next year.

Several of the defendants were represented by Lathrop & Gage in the ITC case. Finnegan, Henderson, Farabow, Garrett & Dunner handled the appeal for Holey Soles, Effervescent Inc. and Collective Licensing International. CLI settled before the Federal Circuit decision.

Don Burley, a Finnegan partner, said the clients were reviewing the decision and considering their options. Otteson said he has several pairs of Crocs: navy blue, black and a special edition Pirates of the Caribbean design.

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