Crocs Rock: Using the ITC to Stop Trademark Infringers

Few fashion items create more arguments than the foam sandal known by the famous Crocs® brand.

On one side, Crocs sandal lovers made these shoes the eighth most-wanted item in the world last year, with average monthly searches for Crocs hitting a total of 135,000. A-list celebrities Ariana Grande, Pharrell Williams, and Justin Bieber have been spotted wearing their favorite Crocs sandals. On the other side, certain internet wags have posted that, “The little holes are where your dignity seeps out.”

Regardless of one’s fashion perspective, there can be no argument that the fame and success of the Crocs sandal mark and design has beget the same copycats that plague successful brand owners.

Rather than engaging in a perpetual game of “whack-a-mole,” using expensive foreign investigators and seizures or multi-fora civil litigation, on June 8, Crocs Inc. filed a complaint with the U.S. International Trade Commission (ITC) accusing over 20 entities of infringement of its Crocs word mark and 3D shoe designs, which led to the ITC recently announcing an investigation of the entities.

There are some advantages for trademark owners, such as Crocs, to exploring an appeal with the ITC over the more commonly used infringement tactics.

What Is the ITC?

The ITC is a quasi-judicial federal government agency charged with the responsibility of protecting U.S. domestic entities from unfair competition—including by patent, trademark, trade dress, and copyright infringement, pursuant to Section 337 of the Tariff Act of 1930 (19 USC § 1337). Once a board of six commissioners determine that an investigation is warranted based on the review of a complaint, the proceeding is overseen by and determinations are made by administrative law judges.

While often considered a patent forum, the ITC can provide effective remedies for trademark owners as well, as confirmed by the ITC’s recent institution of an investigation initiated by Crocs.

Why Is ITC Well-Suited for Trademark and Trade Dress Protection?

Speed

The over three-year pendency of federal district court trademark litigation cannot compete with the pace of a typical ITC investigation—averaging 15 months to 18 months from the initial filing of a complaint to final resolution. Discovery is voluminous and fast-paced. Parties frequently serve hundreds of discovery requests—and the required response time is generally 10 (as opposed to 30) days.

This both puts pressure on infringers to look toward settlement and ensures that the trademark owner more quickly stops ongoing damage to its brand.

Jurisdiction

The ITC provides significant jurisdictional benefits to district court litigation. It enjoys in rem jurisdiction over all articles imported into the U.S. as compared to district court litigation where foreign suppliers of infringing goods are often not subject to U.S. jurisdiction (and/or are constantly changing names to shield their true identities).

A trademark owner can also join all infringers in a single action, avoiding piece-meal litigation. In its case, Crocs accused nearly two dozen entities, both known and unknown, from around the U.S. and the world in its complaint.

Easier Civil Procedures

The ITC offers nationwide service of process. And service of process on foreign respondents is much simpler than in district court—offering the possibility of a swift default judgment (in the form of an exclusion order) against a non-responsive party.

The ITC is also uniquely positioned to allow for depositions of foreign named respondents without going through the tedious Hague Convention in district court.

Exclusion and Cease-and-Desist Orders

Successful complainants are awarded a prospective exclusion order banning the importation of infringing products into the U.S. markets as well as a cease-and-desist order enjoining U.S. sales. This may be limited (i.e., to the entities named as respondents in the complaint) or general (i.e., against the importation of all infringing products, including those of unnamed entities).

While no monetary damages are available at the ITC, the injunctive relief it offers is likely more valuable, especially when it comes to a market flooded with imitation goods often of inferior quality which risk harm to hard-earned goodwill.

Monetary Damages Still Potentially Available

Where money damages are desired in addition to injunctive relief, district court litigation can also be pursued after an ITC proceeding.

While it is an open question as to whether an ITC finding of trademark infringement has preclusive effect in district court as part of a broader litigation strategy, an exclusion order can certainly be a significant bargaining tool for achieving a monetary settlement in subsequent negotiations.

While the ITC remains a forum most often used by patent litigants, the advantages noted can also make it particularly effective for trademark owners seeking redress against infringers.

To be clear, the speed of the proceedings requires careful advance planning from those owners, and the lack of monetary damages can make it inappropriate for all circumstances, but regardless of your fashion stance on Crocs sandals, you can take some guidance from the tactics of their owner and consider the place for an ITC action in the protection of your own important trademark portfolio.

This column does not necessarily reflect the opinion of The Bureau of National Affairs, Inc. or its owners.

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Author Information

William D. Belanger is a partner at Troutman Pepper where he chairs the firm’s Specialized Litigation Department. He represents technology and other industry clients in patent litigation (both in district court and before the ITC), licensing, and counseling on intellectual property matters.

Michael D. Hobbs Jr. is a partner at Troutman Pepper. He focuses his practice on IP and has experience in negotiating complex trademark and copyright licenses, in litigation before the Trademark Trial and Appeal Board, and with large-scale trademark clearance and registration projects.

Kimberly E. Coghill is an associate at Troutman Pepper in the firm’s Intellectual Property Department.