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Crocs Loses Cornerstone Battle in US Patent Office

Crocs Inc. suffered a blow in its patent battle against U.S.A. Dawgs, Inc. The U.S. Patent and Trademark Office ruled today that Croc’s Cornerstone patent – used in its famous clog shoe – is invalid.

The Patent Office has been reexamining the validity of that patent, U.S. Patent No. D 517,789 (“the ‘789 patent”) since 2012 based on a challenge by Dawgs, a family-owned footwear company based in Las Vegas. Crocs previously used the ‘789’ patent in conjunction with a separate utility patent(“the ‘858 patent”), to gain an exclusion order that prevents the importation of strapped clogs into the U.S. by any competitor, including Dawgs.

In rejecting the ‘789 patent as unpatentable for the second time, the Patent Office again found that the single claim of the patent was anticipated by Crocs’ own webpage that listed the same product for sale more than one year before the application for patent.

“This is clearly the correct outcome,” said Steven Mann, Dawgs’ CEO. “In the reexamination proceeding, the Patent Office is evaluating relevant publications, including Crocs’ own website, and agrees with us that the ‘789 patent, which Crocs has repeatedly asserted in litigation, is not entitled to patent protection.”

Invalidity proceedings in the U.S. District Court of Colorado are also pending for the ‘858 patent. In that case, Crocs sued Dawgs in 2006 for infringement of both patents. Dawgs asserts Crocs knew all the time that the patents were invalid and unenforceable. Dawgs has filed claims against Crocs for anti-trust violations including monopolization, patent invalidity, unenforceability, non-infringement, deceptive trade practices, and intentional interference with business advantage.

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Among the key issues raised in Dawgs’ counterclaims is whether evidence, including prior offers for sale of clogs in the U.S. as well as earlier patents and publications, shows that Scott Seamans, one of the original founders of Crocs and the only named inventor on the ‘789 and ‘858 patents, did not invent the clog claimed in the patents. The Patent Office was not made aware of this evidence prior to issuing the patents.

Dawgs also asserts that Crocs, its founders, and its executives deceived the Patent Office by not disclosing material information, were aware that both patents should never have issued, and that Crocs’ lawsuits against Dawgs and others are improper. Dawgs further claims that Crocs improperly benefited by misleading multiple federal agencies, such as the ITC and the Patent Office, and seeks damages including profits lost due to Crocs’ conduct.

“Crocs is a billion-dollar company and brought the weight of a decade of expensive patent litigation in multiple forums against our small family-owned company in an apparent attempt to eliminate Dawgs as a competitor,” commented Mann. “As explained in Dawgs’ court filings, Crocs’ actions have resulted in inflated prices for American consumers due to the monopoly Crocs created and maintained. We are hopeful that our anti-trust claims will get to trial expeditiously so that the full story can be brought forward.”