Since the enactment of the Leahy-Smith America Invents Act in 2011, only a competitor or the federal government can assert a claim for false patent marking under the Patent Act. This claim requires a showing that the false patent marking was for the purpose of deceiving the public, and the remedy is limited to damages adequate to compensate for the injury.
Now, the U.S. Court of Appeals for the Federal Circuit ("Federal Circuit"), in a precedential decision, has recognized a claim under Section 43(a) of the Trademark Act (known as the Lanham Act) against a false claim that a product feature is patented, if that feature is advertised in a manner that causes consumers to be misled about the nature, characteristics, or qualities of the product. This claim can be asserted, without proving deceptive intent, by anyone (excluding consumers) claiming a proximately-caused injury to a commercial interest in reputation or sales. Damages may include the defendant's profits in addition to compensatory damages and costs.
Since 2006, Crocs, the well-known maker of a line of molded footwear, has brought various patent infringement lawsuits against competitors, one of which involved U.S.A. Dawgs (the Federal Circuit collectively called the defendants "Dawgs").
The U.S. District Court for the District of Colorado ("District Court") consolidated these cases, and Dawgs counterclaimed against Crocs alleging false advertising under Section 43(a).
Section 43(a) includes liability for the use of any "false designation of origin, false or misleading description of fact, or false or misleading representation of fact," which:
(B) in commercial advertising or promotion, misrepresents the nature, characteristics, qualities, or geographic origin of his or her or another person's goods, services, or commercial activities. 15 U.S.C. § 1125 (a)(1).
Dawgs alleged that Crocs had engaged in a campaign to mislead its customers about the characteristics of the primary material Crocs uses to make its footwear, promoted as "Croslite." According to Dawgs, the Crocs website falsely described Croslite as "patented," "proprietary," and "exclusive," which misled current and potential customers to believe that the Crocs footwear was made of a different material from any other footwear and to believe that competitors' molded footwear was made of material inferior to that of Crocs.
The District Court granted a summary judgment to Crocs dismissing this counterclaim under Section 43(a). The District Court concluded that the terms "patented," "proprietary," and "exclusive" were claims of "inventorship" directed to authorship and not to the nature, characteristics, or qualities of the Crocs products. The District Court agreed with Crocs that such a claim was legally barred by the U.S. Supreme Court's 2003 decision in Dastar Corp. v. Twentieth Century Fox Film Corp. and the 2009 Federal Circuit's decision in Baden Sports, Inc. v. Molden USA, Inc.
Dastar involved a 43(a) claim that a video embodying a World War II television series only named the video's producer as the author with no reference to the original series. The Court found that "origin" in the Lanham Act meant the producer of the tangible goods offered for sale, not the author of anything embodied in them, so this claim failed.
Baden involved a 43(a) claim that a manufacturer advertised its basketballs as "innovative," deceiving consumers into believing it originated the dual-cushion technology of its basketballs. The Court characterized this as a claim of authorship of the innovation, and held that authorship was not a "nature, characteristic, or quality" of the goods, so this claim failed.
Dawgs appealed the dismissal of its counterclaim to the Federal Circuit, which agreed that Dastar and Baden had determined that a false claim of origin, and nothing more, is a claim of authorship that does not give rise to a 43(a) action.
But the Federal Circuit, in this case, held that there is a 43(a) cause of action for falsely claiming that a product feature is patented, and advertising that feature in a manner that causes consumers to be misled about the nature, characteristics, or qualities of the product. In effect, the Court found that this is not solely an expression of innovation and, hence, authorship. Rather, the promotional statements by Crocs that a patent covers Croslite, together with further statements that Croslite has numerous tangible benefits found in all Crocs' shoe products, linked the patent claim to the characteristics of the product.
Accordingly, the Federal Circuit reversed the District Court's summary judgment dismissing this Section 43(a) counterclaim, and it remanded the case for further proceedings.
Crocs, Inc. v. Effervescent, Inc., Case No. 2022-2160 (Fed. Cir. October 3, 2024).
Authors' Note:
The Federal Circuit seems to have drawn a line between a false statement that a product is innovative (characterized as a non-actionable claim of authorship as to the product) and a false statement that a product is patented and advertised in such a way that links the patent claim to a product's tangible nature, characteristics, or qualities (characterized as an actionable claim about the product itself). It remains to be seen whether courts in other circuits (or possibly the Supreme Court) will agree with this analysis.
Also, there might be a different result in a case involving false patent marking without advertising. The Federal Circuit stated that a claim that a product is constructed of "patented" material is not solely an expression of innovation and, hence, authorship. But the Federal Circuit then went on to mention the additional advertisements in the Crocs case. Might the false patent marking in itself be deemed false advertising because it is inherently a claim about the product rather than its authorship? The answer awaits a case with different facts.
One thing remains clear—you should frequently review your labeling, advertising, and marketing materials to be sure that any patent notices, or other claims of proprietary rights, are correct. If a patent was never issued, or if patent coverage has expired, you should make an appropriate change.
You also should be sure that you have substantiation for any advertising or promotional claims of performance, features, or advantages of your products. Remember that it is the net impression of an advertising campaign, rather than the specific words of copy, which can lead to a claim for false or deceptive advertising. The advertiser is responsible for all reasonable readings of the copy, whether intended or not.
Additionally, do not use incorrect trademark registration notices, such as the symbol ®, that falsely claim that your trademarks are registered. As we previously wrote in "Fake ® Alert: Don't Risk False Advertising Charges," the National Advertising Division of the Better Business Bureau has taken action against a false trademark registration notice as a false advertising claim.
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