Consumer Law

falsely advertising “proprietary” and “exclusive” material isn’t actionable under Dastar

falsely advertising “proprietary” and “exclusive” material isn’t actionable under Dastar

Crocs, Inc. v. Effervescent, Inc., 2021 WL 4170997, No.
06-cv-00605-PAB-KMT, No. 16-cv-02004-PAB-KMT (D. Colo. Sept. 14, 2021)

Dawgs alleged that Crocs falsely marketed its shoes in
violation of the Lanham Act by advertising Croslite, the foam material that
Crocs shoes are made from, as “patented,” “proprietary,” and “exclusive.” Dawgs
stated that it “received numerous inquiries from its customers and potential
customers regarding Dawgs’[s] foam material in comparison with Croslite” and
that these inquiries “have consistently revealed a concern that Croslite is
superior because it is held out as patented, exclusive[,] or proprietary such
that[,] in the mind of the customer, Crocs is perceived to have invented a
superior [ethyl vinyl acetate (“EVA”)] material that no other manufacturer can
match.” Crocs admits that its advertisements have “linked” such terms as
“patented,” “proprietary,” and “exclusive” to features, characteristics, and
qualities of the product material, and that Crocs’s goal in its Croslite
messaging was to imply that its products have “superior characteristics,
qualities, and features.” This allegedly misled “the public and consumers by
claiming that Crocs 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.”

Nonetheless, the court found that Dastar barred the
§43(a)(1)(B) claims as well as the §43(a)(1)(A) claims. I think this is
wrong—the patented/proprietary/exclusive language here is not the same as
claiming authorship; it’s claiming uniqueness as a reason for consumers to
believe that Crocs possess superior product characteristics to those of
competitors’ products. To the extent that the claims lead consumers to believe
that Crocs are “made of a material ‘different than any other footwear,’” a
difference made credible to consumers by references to patents and/or
proprietary knowledge, that is a claim about the physical nature of specific
product components, not about authorship. When the Supreme Court left
§43(a)(1)(B) claims open in Dastar, this is the kind of thing that fits
well.

But the court here disagreed, relying on the Federal
Circuit’s Baden Sports decision.  “Baden,
a basketball manufacturer, argued that Molten had engaged in false advertising
when Molten claimed that its basketballs were ‘innovative,’ ‘exclusive,’ and ‘proprietary’
when its ‘innovative’ layer of padding beneath the cover was invented by Baden,
not Molten.” The Federal Circuit held that §43(a)(1)(B) did not bar the
statements because “[n]o physical or functional attributes of the basketballs
[were] implied by Molten’s advertisements.” The terms “innovative,”
“exclusive,” and “proprietary” involved a “false designation of authorship,”
but “authorship, like licensing status, is not a nature, characteristic, or
quality” under the Lanham Act.

Comment: Baden’s claim was different than Dawgs’ claim here:
Baden claimed it was falsely losing credit, which really does sound like Dastar.
Dawgs’ claim is that Crocs falsely claimed to have a unique material, which it
does not in fact use. It’s not about credit or source of the idea at all.
“Proprietary” may or may not imply inventorship, but even if that implication
is non-actionable, if “proprietary” implies “made of different materials than
other competitors,” none of the concerns behind Dastar are implicated
and many of the concerns of false advertising law are.

I would have accepted Dawgs’ argument that Dastar
doesn’t apply because “Crocs has falsely advertised Croslite as patented,
proprietary, and exclusive in order to create a false impression regarding
specific qualities and characteristics of its shoe material, including that its
shoes are superior to competitors’, that they are soft, comfortable, lightweight,
odor-resistant, and non-marking, which goes to the nature, characteristics, or
qualities of the products.” However, the court didn’t find that argument made
in the claim or counterclaim, which merely alleged “that Croslite is merely a variation
of ethyl vinyl acetate used by many footwear companies around the world and
that, by Crocs claiming to have invented Croslite, Crocs has implied that
Dawgs’s footwear is inferior.” Dawgs only mentioned lightweightness, etc.
later. In a footnote, the court also found that “unauthenticated screenshots
from online reviews of Crocs shoes” provided to show actual confusion weren’t
admissible for summary judgment purposes.

But the court here found Baden persuasive. “Falsely
claiming to have ‘patented’ something is akin to claiming to have ‘invented’
it, and to plagiarizing or reverse passing off, which Dastar held not to
be covered by the Lanham Act’s false advertising prohibition.” [I think this
highlights the logic flaw: this isn’t reverse passing off! There’s nothing
entailed here about Crocs falsely claiming credit for something someone else
did, as there was in Baden where the allegations did at least resemble
reverse passing off.]

The Sixth Circuit has likewise held that “a
misrepresentation about the source of the ideas embodied in a tangible object
… is not a misrepresentation about the nature, characteristics, or qualities
of the object.” The court here thus reasoned that, “even assuming that Crocs
misrepresented the source of the ethyl vinyl acetate as a proprietary and
exclusive foam, Croslite, … that is not enough for a Lanham Act false
advertising claim under § 1125(a)(1)(B).”

Neither “exclusive” nor “proprietary” is a statement about
the nature, characteristics, or qualities of the product. Moreover, the
allegations that these statements claimed superiority didn’t help because “a
claim of superiority is puffery, which is not actionable under the Lanham Act.”
[Sleight of hand here: the nature of the claim is generalized to a superiority
claim, and “superior” is puffery. But the claim itself was of uniqueness, which
is a reason that the shoes might be superior, and is not vague or unmeasurable
in the same way.]

Source link

Leave a Reply

Your email address will not be published. Required fields are marked *