The United States Court of Appeals for the Federal Circuit reviewed the case of Crocs, Inc. v. International Trade Commission, specifically concerning the Commission's findings on U.S. Patents No. 6,993,858 and No. D517,789. The ITC found no violation of 19 U.S.C. 337, concluding that the '858 patent was obvious at the time of invention and that the intervenors did not infringe the '789 patent. Furthermore, the ITC determined that Crocs had not met the technical prong of the domestic industry requirement for the '789 patent.
The appellate court identified errors in the ITC's analysis, particularly in its assessment of prior art related to the '858 patent, leading to a reversal of the Commission's conclusion regarding its obviousness. Additionally, the court found mistakes in the claim construction for the '789 patent, including inaccuracies in applying the ordinary observer test for infringement and in evaluating the technical requirement of section 337. Crocs is the owner of both patents, with the '858 patent covering foam footwear comprising a foam base section, upper, sole, and foam strap, connected by connectors that ensure proper positioning.
Claim 1 of the ’858 patent describes a footwear piece with a base section made from a moldable foam material, which includes an upper and sole as a single part. It features a strap section also made from moldable material, attached to the upper at both ends, allowing for pivoting at connectors. The upper has an open rear region, and friction at the plastic connectors keeps the strap in an intermediary position, supporting the Achilles portion of the foot. The upper consists of a horizontal and vertical portion forming a tapered toe region. The sole has a bottom surface with front and rear tread patterns connected by a flat section.
Claim 2 outlines similar features, specifying that the strap pivots between contact points on the upper opening perimeter and rear perimeter. It emphasizes the contact for maintaining the strap's position and includes details about decorative raised bumps and ventilators in the upper, with ventilators extending significantly up the vertical portion. Additionally, it describes an upper strip in the vertical portion and a corresponding lower strip in the sole, along with a bottom surface with distinct tread patterns and a support base on the top surface.
The ’789 patent, titled "Footwear," issued on March 28, 2006, based on a 2004 filing, claims an ornamental design for footwear, depicted in seven figures.
Crocs of Niwot, Colorado filed a complaint and an amended complaint regarding unfair competition under 19 U.S.C. 337 due to the importation of foam footwear infringing claims of two patents and its trade dress. Initially, eleven respondents were named, with a twelfth added later. Following settlements and findings of non-infringement, five respondents remained, all involved in manufacturing and importing accused products from Asia. Crocs moved for a summary determination of infringement of its design patent, which was countered by motions from the respondents for non-infringement. The administrative law judge granted the respondents' motions, leading to a Commission review that vacated the initial determination. Upon remand, an evidentiary hearing was held, resulting in the conclusion that the respondents did not violate section 337. The judge determined that the ’789 patent was not infringed and that Crocs’s products did not meet the domestic industry requirement. Furthermore, the judge found that claims 1 and 2 of the ’858 patent were obvious based on prior art. In detailing the design patent, the judge described the footwear's characteristics, including its structure, openings, and sole design.
The administrative judge concluded that the accused products—Holey Soles, Gen-X, Collective, Effervescent, and Double Diamond—did not infringe the patents based on specific design features. The Holey Soles and Gen-X products were exempted from infringement due to their non-uniform strap thickness and lack of heel extension. The Collective and Effervescent products were similarly excused for not having round holes in the upper portion. For Double Diamond, non-infringement was determined based on various features such as the absence of uniform strap thickness, round holes, systematic hole placement, and a complete tread pattern.
On April 24, 2008, Crocs, CLI, and the Commission investigative attorney sought a review of the non-infringement findings regarding the ’789 patent and the invalidity of the ’858 patent. The Commission agreed to review these issues and, on July 25, 2008, affirmed the findings of no infringement and no domestic industry for the ’789 patent, citing insufficient spacing of ventilator holes compared to the patent design. For the ’858 patent, the Commission upheld that the main difference from prior art was the use of foam straps, which were already shown in prior art. Additionally, Crocs failed to establish a connection between its claimed shoes and their commercial success concerning non-obviousness, although the Commission noted at least one respondent copied Crocs's shoe.
Crocs has appealed the Commission's final determination, with Collective and Gen-X dismissed as intervenors. The court will review the Commission's legal findings without deference and factual findings for substantial evidence, cautioning against excessive reliance on detailed verbal descriptions in design infringement cases, as this can detract from a holistic examination of the design.
Design patents are defined primarily through drawings, necessitating that claim construction aligns with the visual representations. The case Contessa Food Prods. Inc. v. Conagra, Inc. emphasizes that illustrations convey the design more effectively than verbal descriptions, which may lack clarity without visual context. Errors can arise when detailed verbal descriptions diverge from the overall design, as seen in the analysis of the ’789 patent, where the Commission mistakenly required features that were not depicted in the drawings, such as a uniform strap width and evenly spaced holes. This misalignment distorts the infringement assessment, as it fails to consider the design as a whole, which should be evaluated using the ordinary observer test. Under this test, the focus is on whether an ordinary observer, familiar with prior art, would be misled into thinking the accused product is the same as the patented design, without examining individual features in isolation. Even minor differences become significant if the overall appearance remains deceptively similar, allowing for a finding of infringement despite the claimed design merging existing features. The ordinary observer test mandates a holistic evaluation of the patented design as claimed, reaffirming that minor discrepancies should not inhibit a finding of infringement.
The Commission misapplied the infringement analysis by focusing excessively on minor details of the patented design, leading to a flawed checklist approach. This narrow focus obscured the overall impression of the design, resulting in an inadequate comparison with the accused products. A proper assessment requires side-by-side comparisons of the ’789 patent design with the accused designs, revealing that an ordinary observer familiar with prior art would likely confuse the accused products with the patented design due to their high similarity. The interaction between the strap assembly and the base of the shoes, along with a visual theme of rounded curves and ellipses, contributes significantly to the overall effect of the design, which is present in both the claimed and accused designs. The court concludes that the accused products infringe the ’789 design due to their potential to cause market confusion.
Additionally, for a patent-based section 337 action to proceed, a domestic industry related to the patented articles must exist or be in development, as mandated by 19 U.S.C. 1337(a)(2, 2006). The technical prong of this requirement assesses whether the domestic industry produces articles covered by the patent claims, paralleling the infringement analysis. The complainant must demonstrate that its products embody the patented design, using the ordinary observer test to compare its shoe products to the ’789 patent design.
The court emphasizes the effectiveness of a side-by-side comparison between the drawings of the ’789 patent design and the Crocs Beach shoe to determine design infringement. The Crocs Cayman and Kids Cayman shoes are considered nearly identical to the Crocs Beach shoe, which serves as the basis for comparison. An ordinary observer familiar with prior art would perceive both designs as similar, particularly noting the convergence of major design lines at the strap attachment and the presence of rounded curves throughout. Consequently, Crocs’s shoes infringe upon the ’789 design, fulfilling the technical prong of the domestic industry requirement.
Regarding obviousness, the court outlines a legal framework based on factual inquiries: the scope of prior art, the skill level in the field, differences between prior art and the claimed invention, and any objective evidence of non-obviousness. The court reviews the Commission’s legal conclusions without deference and assesses factual findings for substantial evidence. The Commission identified two prior art references, the Aqua Clog and the Aguerre ’249 patent, to assert the obviousness of the ’858 patent. However, the ’858 patent is characterized as more than a mere combination of prior elements; it features a foam strap riveted to a foam base, a combination discouraged by prior art due to foam’s tendency to stretch and deform, which could lead to discomfort and ineffectiveness in securing footwear.
Prior art indicated that suitable materials for straps required elasticity to accommodate foot movement, while foam was not deemed appropriate. Despite warnings against using non-elastic foam for straps, the ’858 patent incorporated foam without any adjustable mechanism, directly riveted to the footwear base—a deviation from established practices. The Aguerre ’249 patent, which employed flexible materials for straps, further underscored the novelty of the ’858 patent’s approach.
Crocs’s expert testified that artisans understood foam shoe components connected by stitching or riveting were prone to tearing. The Commission, referencing In re Gurley, incorrectly minimized this evidence, asserting that foam straps were known in the art. However, prior art demonstrated foam was unsuitable for shoe straps due to its tearing propensity. The Commission's conclusion that a person of ordinary skill would utilize foam for attaching a foam base was flawed, as it disregarded the unsuitability established by prior references. Furthermore, the Commission claimed that using foam for straps was a logical modification to create uniformity in composition, which is incorrect given foam's known deficiencies. The combination of foam straps with a foam base was not obvious at the time of the ’858 patent's invention, as it yielded unexpected results. The '858 patent describes a "passive restraint system" requiring the strap to contact the base, generating sufficient friction to maintain its position, thereby supporting the Achilles portion of the foot. This system allows the strap to remain in place without constant pressure from the foot, providing a more comfortable fit compared to prior art that used elastic or adjustable straps. The inventor, Scott Seamans, emphasized that the unique frictional forces between the foam components ensure the strap supports the shoe without pushing the foot forward, facilitating a loose anatomical fit.
The administrative judge identified key differences between the ‘858 patent and the Aguerre ’249 patent, noting that the latter's strap, made of non-foam material and designed to be adjustable and elastic, does not provide passive restraint for the Achilles portion of the foot. In contrast, the ‘858 patent features a firm foam strap that creates friction through contact, allowing for a stable, passive restraint. The Aguerre patent does not incorporate foam, which precludes foam-to-foam friction necessary for maintaining proper restraint. Furthermore, Aguerre's design emphasizes that friction is a problem rather than a benefit, suggesting alternatives like nylon washers to minimize friction, thereby teaching away from the passive restraint system of the ‘858 patent.
The judge concluded that the claimed feature of the ‘858 patent was not obvious at the time of invention, as prior art provided no suggestion for its inclusion and, in fact, indicated that such a system would be impractical. The discussion of secondary considerations highlights their significance in assessing non-obviousness, emphasizing that evidence of commercial success or unexpected results can be more reliable than abstract reasoning regarding the obviousness of inventions. Judicial precedents underscore the importance of examining the circumstances surrounding an invention to accurately evaluate its originality and the potential pitfalls of hindsight in assessing its non-obviousness.
The Commission determined that three models of Crocs shoes—Beach, Cayman, and Kids Cayman—practiced claims 1 and 2 of the ’858 patent and achieved significant commercial success. A prima facie case of nexus is established when a patentee demonstrates both commercial success and that the successful product is the patented invention. In this case, Crocs established a prima facie nexus due to the Commission's finding of substantial evidence supporting that their shoes practiced the ’858 patent and that they were commercially successful. The burden then shifted to the challengers to provide rebuttal evidence, which they failed to do.
The court noted that while market forces unrelated to the patent's inventiveness could affect commercial success, no convincing evidence was presented to attribute Crocs' success to those forces. Consequently, Crocs can use its commercial success to support its claims of non-obviousness. The court also highlighted the administrative judge's findings of substantial industry praise and evidence of copying, which further supported non-obviousness.
The court acknowledged that prior art taught away from the claimed invention and identified reasons that would deter an ordinary artisan from making the inventive combination at the time. As a result, the court reversed the Commission's decision that the ’858 patent was obvious and remanded the case for a determination of infringement and appropriate remedies, while also reversing the Commission's findings regarding the ’789 patent. Each party is to bear its own costs.
