U.S.A. Dawgs, Inc., a family-owned footwear company, has filed a 110-page, six-count complaint against 18 individuals associated with Crocs, Inc., including Crocs’ founders, current and former directors and officers.
The new lawsuit alleges that they were involved in fraudulently obtaining and enforcing Crocs’ cornerstone patents, using them to unlawfully eliminate any real competition and enabling Crocs to set, fix and charge supra competitive prices for clog footwear that resulted in American consumers overpaying more than $1 billion. The complaint states that these individuals were personally unjustly enriched by more than $350 million, collectively.
Dawgs also recently expanded its related case against Crocs and one of its founders, Scott Seamans, to include broad antitrust, Lanham Act false advertising and business tort claims, in addition to its request that the cornerstone Crocs patents be declared invalid and unenforceable. In 2006, Crocs used the patents it fraudulently obtained to secure large bank loans and to raise over $100 million in an initial public offering. Crocs then sued many competitors and retailers.
Key issues in both cases include whether evidence, including the specific allegations in Dawgs’ new complaint and the 35 documents attached to it, proves that Crocs and Seamans defrauded the U.S. Patent Office by falsely claiming that Seamans was the true and sole inventor of the patents. Another critical issue is whether Crocs failed to disclose its own prior art and sales.
Steven Mann, Dawgs CEO, said “we are going to prove to the jury that Crocs invented nothing and their officers’ and directors’ entire business strategy was knowingly based on fraudulent patents that never should have issued and the sham litigation that followed.” Dawgs’ position has already been bolstered by the U.S. Patent Office, which earlier this year rejected Crocs’ design patent as invalid for the second time in a Dawgs initiated reexamination proceeding.
