Crocs Slams Competitor’s Claims of Corporate Sabotage as 11-Year Legal Battle Wages On

Update: Dawgs Responds to Crocs’ Latest Motion

A spokesperson for USA Dawgs sent the following email statement to Footwear News:

“We have already responded to Crocs’ [earlier] motion to dismiss, in which Crocs made the same false allegations. Crocs is well aware that their latest motion is also baseless and misstates the facts. Dawgs plans to not only file a response to Crocs’ [latest] motion for sanctions, but move to recover its own costs for Crocs’ latest attempt to abuse the legal system.”

What We Reported Earlier

Crocs Inc. is slamming competitor USA Dawgs in the latest legal action involving the longtime rivals.

In a court filing Wednesday, Crocs said its competitor’s July suit — which accused Crocs of infringing on one of its sandal styles and engaging in computer fraud and acts of corporate sabotage — is rife with lies.

Dawgs filed this lawsuit while in possession of true and undisputable facts showing that assertions in its complaint are false,” Crocs claims in the filing. “Dawgs’ filing was followed by a press campaign, purposefully subjecting innocent persons to news coverage implying that they are criminal actors engaged in corporate espionage, all in an apparent attempt to gain leverage in the currently pending patent infringement action in Colorado.”

On July 27, Dawgs sued Crocs for allegedly infringing on its Z-strap sandal style and claimed that several of its executives violated computer fraud laws to have Dawgs’ products removed from QVC-owned e-tail site Zulily.

Specifically, Dawgs said that a Crocs employee — who recently joined the brand from Zulily — gained unlawful access to a planned Dawgs sales event on the site and sent an email to Zulily requesting the removal of “Crocs knockoffs.”

Dawgs claims to have viewed the email exchanges between Seattle-based key account manager Kim Lawrie and Zulily. According to court documents, in such conversations, Lawrie stated that she was able to “get into” Dawgs’ sales event before Zulily publicly posted it. Two Crocs supervisors allegedly copied on the email exchange with Zulily were also named as defendants in the suit: Erik Rufer, wholesale channel director for U.S. e-commerce, and Kelly Gray, former director of American corporate sales.

In its Wednesday filing, Crocs tackled each claim separately and accused Dawgs of acting in “bad faith” when it filed the July suit.

Dawgs unequivocally knows that Crocs did not ‘hack’ Dawgs’ sales information on the ‘Zulily’ website,” Crocs said. “Rather, Crocs learned the day before a flash sale on Zulily that Dawgs had loaded its off-brand goods into an event in which Crocs was participating. As Dawgs knows, every vendor in a Zulily sales event has access to next-day sales information of the other participating vendors. Not only does Dawgs know this (since Dawgs is a self-proclaimed Zulily vendor), but, when Dawgs went to Zulily and began making its irresponsible allegations of ‘hacking,’ Zulily expressly confirmed directly to Dawgs that sales information is freely accessible to all vendors the day before a common sale.”

For the copyright infringement portion of the suit, Dawgs had claimed that Crocs stole its Dawgs Z Sandal following 2013 meetings between both firms to discuss ongoing litigation, as well as plans for Crocs’ possible acquisition of Dawgs.

In response to that claim, Crocs said it could not have copied the style following a 2013 meeting, as it had been producing a Z-strap sandal since 2009.

Dawgs knows — and as is confirmed in both discovery produced to Dawgs in Colorado and by Dawgs in Colorado, as well as by the internet — that Crocs has sold a Z-strap sandal since at least 2009,” Crocs claims. “Dawgs thus knows that its claim that Crocs copied an alleged ‘Z-strap’ trade dress from Dawgs is untrue.”

The legal imbroglio between the duo has stretched on for at least 11 years. In 2006, Crocs sued USA Dawgs’ Canadian affiliate Double Diamond for patent infringement on its popular clog designs. Crocs in 2012 amended that complaint and added USA Dawgs as a defendant. A lengthy list of motions and complaints — including a pending trademark infringement suit in Colorado, referenced by Crocs in its new motion — have since followed. In August 2016, Dawgs filed a 110-page complaint accusing 18 former and current Crocs employees and directors of violating antitrust laws in order to help the company gain an unfair edge in the clog footwear market.

In August 2017, Dawgs won a favorable ruling in the U.S. Patent and Trademark Office when the office issued a final rejection of Crocs’ cornerstone design patent, D517789.

In rejecting Crocs’ famous molded clog design patent as invalid, New York-based fashion lawyer Elizabeth Kurpis said that the USPTO found that a similar design was published more than one year before Crocs applied for the patent.

Over the course of Crocs and Dawg’s legal dispute, the ’789 patent had already been rejected twice before. But the third time is more significant, as a third rejection is “final and nonappealable through the USPTO,” Kurpis said.

Nevertheless, Crocs has the option to file a notice of appeal with the Patent Trial and Appeal Board within one month or 30 days — whichever is longer. From there, if Crocs is unhappy with the PTAB determination, it could appeal to the Federal Circuit court, Kurpis said. Crocs told Footwear News last month that it intended to appeal.

In its July suit, Dawgs sought financial damages as well as a permanent injunction barring Crocs from making, promoting or selling its allegedly infringing sandal.

In the motion filed this week, Crocs asked the courts to dismiss Dawgs’ action, award Crocs all of its costs and attorneys fees incurred in responding to the lawsuit, and require Dawgs to issue a full retraction and apology to the individuals named in the lawsuit.

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