Crocs, Inc. v. Effervescent, Inc

Authored by: Jeremy J. Gustrowsky

In a recent decision, the Federal Circuit clarified that companies can be held liable under the Lanham Act for falsely advertising their products as “patented” when those claims mislead consumers about the nature or quality of the product. The case, Crocs, Inc. v. Effervescent, Inc., centered on Crocs’ promotion of its footwear material “Croslite” as “patented,” “proprietary,” and “exclusive,” even though no patent had ever been granted for Croslite.

Crocs originally sued several competitors, including Double Diamond Distribution and U.S.A. Dawgs, for patent infringement. In response, Dawgs counterclaimed, arguing that Crocs’ advertising was false and misleading under Section 43(a)(1)(B) of the Lanham Act (15 U.S.C. § 1125(a)(1)(B)). Dawgs alleged that Crocs’ claims about Croslite led consumers to believe Crocs’ shoes were made from a unique, superior material, unfairly harming competitors. The district court initially sided with Crocs, finding that such claims were merely about inventorship or authorship, not the actual qualities of the product, and thus not actionable under the Lanham Act.

On appeal, however, the Federal Circuit reversed. The court explained that if a company falsely claims a product is patented and uses that claim to suggest its product is different or better than competitors’, this can mislead consumers about the product’s qualities—precisely what the Lanham Act is designed to prevent. The court distinguished this situation from previous cases about authorship or innovation, noting that Crocs’ advertising went beyond just claiming inventorship and directly implied unique product characteristics.

This decision sends a clear message: companies must be truthful in advertising, especially when touting patents or exclusivity. Falsely claiming a product is patented, when used to imply superior qualities, can expose a company to liability for false advertising under federal law.