On March 29, 2011, ALJ Charles E. Bullock issued the public version of the Initial Determination (“ID”) (dated February 9, 2011) in connection with the remand proceeding in Certain Foam Footwear (Inv. No. 337-TA-567).  ALJ Bullock determined that Respondents had not shown by clear and convincing evidence that U.S. Patent Nos. 6,993,858 (the ‘858 patent) and D517,789 (the ‘789 patent) are unenforceable due to inequitable conduct.

By way of background, Complainant Crocs, Inc. (“Crocs”) filed a complaint with the ITC naming eleven respondents, alleging violations of Section 337 by infringement of the ‘858 patent, the ‘789 patent and the Crocs trade dress.  All respondents except Double Diamond Distribution Ltd. and Effervescent, Inc. (collectively, “Respondents”) have been terminated from the investigation on the basis of a consent order, settlement agreement, or an undisputed Commission determination of non-infringement.  On April 11, 2008, ALJ Bullock issued an initial determination finding no violation of Section 337 by reason of invalidity of the ‘858 patent and non-infringement/non-satisfaction of the technical prong of the domestic industry requirement concerning the ‘789 patent.  ALJ Bullock made no findings regarding the enforceability of the ‘858 and ‘789 patents.  On July 25, 2008, the ITC affirmed ALJ Bullock’s initial determination with certain modifications and clarifications.  Crocs appealed the ITC decision and on February 24, 2010, the Federal Circuit overturned the ITC’s findings regarding invalidity of the ‘858 patent and non-infringement/non-satisfaction of the technical prong of the domestic industry requirement concerning the ‘789 patent, remanding the investigation for a determination of infringement and any appropriate remedies.  See our February 24, 2010 post for more information.  ALJ Bullock determined in a notice dated August 26, 2010, that “the issue of enforceability was tried before the undersigned and fully briefed by the parties in their post-trial submissions…[and thus] the remand proceedings will proceed on the evidence already of record.”

In the ID, ALJ Bullock referred to his April 11, 2008 initial findings, which were made final by the Commission and determined that Respondents’ shoes infringed the ‘858 patent.  ALJ Bullock therefore determined that the only issue on remand is the enforceability of the ‘858 and ‘789 patents.

According to the ID, Respondents’ unenforceability argument focused primarily on the alleged inaccurate or incomplete disclosure of a prior art shoe design called the “Aqua Clog,” which, except for missing a strap, purportedly is “identical to the shoe claimed in the ‘858 patent.”  Although Respondents conceded that a webpage photograph of an Aqua Clog was submitted during prosecution of the ‘858 patent, this submission was allegedly of poor quality and omitted or misrepresented the following facts: (1) the shoes pictured on the webpage printout are identical to the base of the shoe claimed in the ‘789 and ‘858 patents; (2) the inventor named on the ‘858 patent had not invented the shoes pictured on the webpage; (3) the third party that had manufactured the Aqua Clog had been selling the shoes pictured on the webpage in the U.S. for more than a year prior to the filing of the application that matured into the ‘858 patent; (4) Crocs was still attempting to acquire certain rights in the Aqua Clog in September 2004, long after the June 23, 2003 filing date of the application that matured into the ‘858 patent; and (5) Crocs submitted the Aqua Clog webpage printout with an August 4, 2003 date (apparently the retrieval date of the image), rather than following MPEP § 707.05(e)(IV)(B) that requires a date of publication to be provided in addition to the date of retrieval (the latter to be enclosed in square brackets) - all of which misleadingly suggested to the examiner that the Aqua Clog was on sale after the June 23, 2003 application filing date, and therefore was not prior art.

In addition to the Aqua Clog reference itself, Respondents pointed to the non-disclosure by Crocs of a Statement of Claim relating to a Canadian copyright and trademark action (i.e., brought in Canada under Canadian law), relating to the Aqua Clog, which identified the alleged inventor of the Aqua Clog, its creation date, and a sales date for the Aqua Clog as early as April 2001, and that Crocs simply added a strap to the existing Aqua Clog.  Respondents particularly noted that the attorney for Crocs submitted the Statement of Claim in two co-pending Crocs applications, but not the application corresponding to the ‘858 patent.

According to the ID, Crocs, supported by the Office of Unfair Trade Investigations (“OUII”), opposed Respondents arguments and countered that the Aqua Clog was clearly disclosed to the Patent Office in an IDS received by the Patent Office on October 3, 2003, and that the Examiner had initialed each entry of the IDS, including the entry corresponding to the webpage printout for the Aqua Clog.  Additionally, the Examiner’s first rejection noted that “the prior art made of record and not relied upon is considered pertinent to applicant’s disclosure,” and that the art not relied on depicted “breathable footwear analogous to applicant’s instant invention,” which implicitly referred to the Aqua Clog.  Crocs also argued that the Aqua Clog webpage printout indicated that the shoe had been on sale prior to the date of submission.  Crocs also noted that the identity of the manufacturer or designer of the Aqua Clog, as well as the fact that Crocs was acquiring rights to the Aqua Clog did not affect the prior art status of the Aqua Clog.  Finally, with respect to submitting the Aqua Clog with an August 2003 date, Crocs argued it is not improper to provide the date an Internet reference is printed, particularly since the reference is equally available to the examiner.  Further, during the prosecution of the ‘858 patent, the MPEP reference relied upon by Respondents applied only to examiners - not applicants.

With respect to the Canadian Statement of Claim, Crocs (again supported by OUII) countered that the statement was not material, asserting no legal authority supports the notion that foreign copyright or trademark actions constitute “related litigation” under MPEP § 2001.06(c).  Crocs asserted that at most, the statement disclosed that the Aqua Clog was prior art - which was merely cumulative of the information already disclosed and considered by the Examiner during the ‘858 patent’s prosecution.

With respect to intent, Respondents relied primarily upon the ‘858 patent’s named inventor’s admission that the Aqua Clog “is something the PTO would want to know about in assessing the claimed inventions of the ‘858 and ‘789 patents.”  According to Respondents, this, combined with Crocs’ efforts to acquire the manufacturer of the Aqua Clog subsequent to the filing of the application leading to the ‘858 patent, and Crocs’ alleged lack of explanation for its “pattern of non-disclosure” were sufficient to fairly infer deceptive intent.  Crocs, supported by OUII, countered that Respondents attempted to convert the clear disclosure by Crocs of the Aqua Clog into a non-disclosure.  Similarly, no intent to deceive could be gleaned from the non-disclosure of the Statement of Claim, since nothing other than the cumulative nature of the Aqua Clog as prior art was disclosed therein.

After considering the evidence ALJ Bullock determined that Respondents’ allegations of inequitable conduct were not supported by clear and convincing evidence.  With respect to the Aqua Clog, ALJ Bullock determined that Crocs did disclose this reference to the PTO, and that contrary to Respondents’ allegations that the Examiner could not appreciate the disclosure, the evidence indicates that the Examiner did consider the Aqua Clog disclosure prior to allowing the ‘858 and ‘789 patents.  ALJ Bullock further determined that the Canadian Statement of Claims was not material, noting that it relates to copyrights and trademarks, rather than patents, and involves Canadian, rather than U.S. law.  As to intent, ALJ Bullock determined “there is no evidence to suggest that any person involved in the prosecution of the ‘858 patent intended to deceive the PTO.”

Respondents asserted that Crocs’ inequitable conduct with respect to the ‘858 patent rendered the ‘789 patent unenforceable “by way of infectious unenforceability,” since a number of elements claimed in the ‘858 are common to the claims of the ‘789 patent.   ALJ Bullock agreed with Crocs and OUII, and determined that since Respondents’ arguments failed with respect to the ‘858 patent, they likewise failed for the ‘789 patent.  Accordingly, ALJ Bullock concluded that both the ‘858 patent and the ‘789 patents are enforceable.