false "patented/proprietary/exclusive" claims can be actionable despite Dastar

Crocs, Inc. v. Effervescent, Inc., No. 2022-2160 (Fed. Cir. Oct. 3, 2024)

Crocs sued competitors for patent infringement; defendant Dawgs counterclaimed for false advertising about the characteristics of the primary material Crocs uses to make its footwear products, a material it promoted as the “patented,” “proprietary,” and “exclusive” “Croslite.” Dawgs alleged that none of this was true, but that Crocs misled current and potential customers to believe that “Crocs’ molded footwear is made of a material that is different than any other footwear.” The district court, relying on the Federal Circuit’s Baden decision interpreting Dastar, tossed out the claims, reasoning that these terms were Dastar-barred claims of inventorship rather than claims about the nature of Crocs’ products. The court of appeals reversed.

Baden found that claims to have “innovative” technology were Dastar-barred. Baden had argued that Molten’s advertisements were false “precisely because Molten was not the source of the innovation,” i.e., not the author. But “authorship, like licensing status, is not a nature, characteristic, or quality, as those terms are used in Section 43(a)(1)(B) of the Lanham Act.” By contrast, “here, the false claim that a product is patented does not stand alone. Dawgs presents allegations and evidence that the falsity of Crocs’ promotional statements is rooted in the nature, characteristics, or qualities of Crocs’ products.”

Specifically, “[a] claim that a product is constructed of ‘patented’ material is not solely an expression of innovation and, hence, authorship.” In Baden, there weren’t ads “linking such claims to a product’s tangible nature, characteristics, or qualities.” But here, Dawgs alleged promotional statements by Crocs that a patent covers Croslite, paired with statements that “Croslite has numerous tangible benefits.” Thus, the claim “patented” “was used by Crocs to ascribe characteristics that go to the nature and qualities of Croslite.” This plausibly alleged that consumers would be misled about the “nature, characteristics, or qualities” of Crocs’ product.