Dawgs claims Crocs violates the Sherman Antitrust Act by eliminating competitors through bogus patent lawsuits. It sued Crocs on Wednesday.
“Crocs has monopolized, or at least attempted to monopolize, the market for EVA clog-type footwear products by first accumulating a number of patents, no matter how weak or narrow, and then asserting these patent rights far beyond the narrow scope of the actual patent claims through instituting a series of sham lawsuits in order to slowly litigate its competition out of the market,” the complaint states. “These ill-founded, bad-faith patent infringement actions, and other accompanying anticompetitive conduct, constitute violations of the antitrust laws.”
Dawgs, which makes a lower-priced alternative to Crocs, claims Crocs engaged in a “multifaceted anticompetitive scheme” to stop it from selling its products in the United States by obtaining “fraudulently procured patents” and filing “sham patent” suits against Dawgs and other competitors to win a general exclusion order stopping the importation of competing products and “threatening or actually refusing to deal with distributors or others carrying Dawgs’ footwear.”
“As a consequence of Crocs’ conduct, competition in this product market has been suppressed and virtually eliminated, and consumers in this market have suffered a loss of choice and consumers have been required to pay higher, supracompetitive prices for EVA clog-type footwear to Crocs than would otherwise be the case in a properly functioning and competitive market. The competitive market and American consumers have suffered antitrust injury by reason of Crocs’ unlawful, exclusionary and trade-restraining conduct,” according to the complaint.
Crocs entered the EVA clog-type shoes market in 2001. Dawgs claims it did so by marketing a shoe originally manufactured and distributed by Canadian company Foam Creations in 1999. Foam Creations in 2000 obtained the rights to the design from its creator, Ettore Battiston and the Italian plastics-design company L’Artigiana Stampi, the complaint states.
Despite Foam Creations’ being the first to manufacture and sell the shoes, Dawgs claims, “Since 2002, CROCS has been misleading the public and consumers by claiming that their footwear is made of an exclusive and proprietary closed-cell resin that they call ‘Croslite,’ when, in fact, ‘Croslite’ is merely the common ethyl vinyl acetate used by many footwear companies around the world.”
Crocs in 2006 fraudulently obtained two U.S. patents “after submitting diagrams and descriptions of the Original EVA Clog as designed by Battiston and manufactured since at least as early as 1999,” Dawgs says in the complaint.
“Each and every functional feature disclosed in the patent application, except the heel strap, already existed in the original EVA clog, which had been designed, manufactured and sold long prior to … Crocs ‘discovering’ the shoe in 2001.”
Dawgs claims the United States is the only nation to grant a patent to Crocs because of the “well-known existence of prior sales, the widely recognized existence of prior art and the established identity of the true and proper inventorship and origin of the shoe.”
After getting the patents, Dawgs says, Crocs sought a general exclusion order “banning the importation and sale of EVA clog products based on patents that Crocs clearly knew at the time to be invalid and unenforceable.”
Dawgs wants Crocs enjoined from violating the Sherman Antitrust Act, and from actual monopolization and attempts to monopolize the market. It also seeks damages for intentional interference with contract and with prospective economic advantage, and unfair trade.
Dawgs is represented by Brian J. Elliott.
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