Crocs' Long-Time Legal Rival Agrees to Pay $6 Million

One of Crocs' long-time legal rivals has agreed to pay the clog maker $6 million to bring an end to a patent infringement complaint dating back to 2006.

After years of litigation, U.S.A Dawgs finally agreed to "judgement in favor of Crocs, Inc." in a June 26 "offer of judgement." The $6 million it agreed to pay includes all interest, costs and attorneys' fees otherwise recoverable by Crocs against Dawgs from this specific action. The offer is not an admission that Dawgs is liable in this action or that Crocs suffered any damage, it added. The offer relates solely to Crocs' claims against Dawgs and "is without prejudice" to Dawgs' related claims and counterclaims.

Crocs accepted the offer on July 9, two days before a jury trial was scheduled to begin. It publicly declared victory—it published a press release stating it had secured a "long-sought after judgement of infringement"—on July 13. Double Diamond Distribution, U.S.A. Dawgs Canadian affiliate agreed to pay $55,000, it announced at the same time.

"We are fiercely protective of the Crocs brand and our iconic DNA. We have zero tolerance for infringement of our intellectual property rights or for anyone who tries to benefit off the investments that we have made in our brand," Daniel Hart, executive vice president and chief legal and risk officer at Crocs, said in a statement. "This judgment not only reinforces the validity of our patent rights, it also reinforces our unrelenting determination to take forceful steps to protect our brand equity."

Crocs originally sued U.S.A. Dawgs' Canadian affiliate, Double Diamond Distribution, in 2006 as part of a larger complaint accusing it and 10 other named entities of patent infringement, trade dress infringement and unfair competition. It amended the complaint in 2012 to add U.S.A. Dawgs as a defendant.

U.S.A. Dawgs, which eventually went bankrupt in 2018 and was bought by Optimal Investment Group the same year, has sued Crocs on multiple occasions in the decade since. It has accused the footwear brand of using faulty patents to monopolize the plastic clog market, infringing on Dawgs' Z-Strap sandal and committing computer fraud by having Dawgs' products taken off Zulily, the last of which a court ruled so frivolous it fined the business $50,000.

Dawgs also spent years challenging the validity of the design patent, U.S. Patent No. D 517,789 ("the '789 patent"), at the heart of Crocs' original suit—the company filed its complaint less than a week after receiving the patent. The United States Patent and Trademark Office sided with Dawgs, ruling the patent invalid on multiple occasions, including for a third time in 2017. The USPTO's Patent Trial and Appeal Board, however, reversed the ruling in September 2019. The patent expired six months later upon its 14th anniversary.

The end of Crocs' long-running crusade against U.S.A. Dawgs arrived just over a year after it began another sweeping legal battle. Last July, Crocs announced it had filed 21 lawsuits against companies big and small that it alleged violated its protected and registered trademarks. Defendants included Skechers, Walmart, Hobby Lobby and Loeffler Randall. The litigation arrived one week after the U.S. International Trade Commission (USITC) agreed to investigate trademark infringement claims brought by Crocs against 23 companies.

The USITC has partially terminated its investigation with respect to certain businesses, including Skechers, based on settlement agreements, consent orders and consent order stipulations. Other parties, meanwhile, have been added to the investigation.

The request for a USITC investigation roughly mirrors the strategy Crocs employed in 2006. That time, however, the USITC declared its investigation in May, a month after Crocs filed its lawsuit, rather than a week before.

Though the USITC initially ruled against Crocs in 2008—the administrative law judge declared non-infringement with respect to the '789 patent and dubbed another patent invalid as obvious—the Court of Appeals for the Federal Circuit reversed in 2010. In July 2011, the USITC issued a general exclusion order directed against "infringing foam footwear products" and cease and desist orders directed against Double Diamond Distribution, as well as Effervescent Inc. and Holey Soles Holding Ltd.