On July 10, 2009, the Federal Circuit is scheduled to hear oral argument in Crocs, Inc. v. ITC (2008-1596).

Crocs, Inc. (“Crocs”) filed a complaint with the ITC on March 31, 2006, and an amended complaint on April 27, 2006, against Collective Licensing International, LLC et al. alleging violation of Section 337 by the respondent’s importation and sale of certain foam footwear.  After the Commission instituted an investigation (337-TA-567) and held an evidentiary hearing, ALJ Charles E. Bullock issued an initial determination (“ID”) on April 11, 2008, in which he concluded that there was no violation of section 337 because: (1) U.S. Patent No. D517,789 (“the ‘789 patent”) was not infringed by the respondents’ shoes; (2) Crocs’ shoes did not satisfy the technical prong of the domestic industry requirement relating to the ‘789 patent; and (3) U.S. Patent No. 6,993,858 (“the ‘858 patent”) was invalid due to obviousness as proven by clear and convincing evidence.  Complainant Crocs, respondent Collective Licensing International, LLC, Effervescent Inc. and Holey Soles Holding Ltd. (collectively “CLI”), and the Commission investigative attorney (“IA”) filed petitions for review of the ID.  Respondents Gen-X Sports, Inc. (“Gen-X Sports”) and Double Diamond Distribution Ltd (“Double Diamond) subsequently filed joinders to CLI’s petition.  The Commission granted the petitions in part and upheld the ID on July 25, 2008 with modifications and clarifications set forth in a separately issued Opinion.  Crocs appealed the Commission’s decision to the Federal Circuit.

According to Crocs’ opening and reply briefs, Crocs appeals: (1) the Commission’s determination that the accused foam footwear products of the respondents do not infringe the ‘789 patent; (2) the Commission’s claim construction for the ‘789 patent, which led to the erroneous finding of non-infringement; (3) the Commission’s determination that an industry in the United States does not exist with respect to Crocs’ products that are protected by the ‘789 patent, as required by 19 U.S.C. § 1337(a)(3); and (4) the Commission’s determination that claims 1 and 2 of the ‘858 patent are invalid under 35 U.S.C. § 103 for obviousness.  Specifically, Crocs argues that: (1) the finding of non-infringement of the ‘789 patent was erroneous because the Commission’s claim construction was unnecessarily focused on particular details, and was used as a checklist approach during the infringement analysis; (2) the ‘789 patent contains dominant features that represent a synergistic interaction between many different design elements that would be immediately apparent to an ordinary observer; (3) a domestic industry exists because an ordinary observer would find substantial similarity between the overall designs of the Crocs shoes and the ‘789 patent; and (4) the ‘858 is valid because the prior art does not teach a passive restraint system, the ‘858 patent yields much more than predictable results, a nexus exists between Crocs’ commercial success and the ‘858 invention, and other evidence of secondary considerations, including copying, is present.

According to the Commission’s brief, the issues on appeal are: (1) whether the Commission’s finding that the ‘789 patent is not infringed by the accused products is in accordance with law and supported by substantial evidence; (2) whether the Commission’s finding that no domestic industry exists with respect to the ‘789 patent because of Crocs’ failure to satisfy the technical prong is in accordance with law and supported by substantial evidence; and (3) whether the Commission’s finding that the asserted claims of the ‘858 are invalid under 35 U.S.C. § 103 is in accordance with law and supported by substantial evidence.  Specifically, the Commission argues that: (1) an ordinary observer would not view the overall appearance of the ’789 patent as being substantially similar to the accused products; (2) the Commission’s decision is consistent with the Federal Circuit’s subsequent holding in Egyptian Goddess, Inc. v. Swisa, Inc., 543 F.3d 665 (Fed. Cir. (2008)); (3) the ’858 patent is obvious because the invention is a combination of familiar elements, i.e., the combination of an inelastic, non-stretchable strap with the known Aqua Clog to produce a predictable result and a shoe of uniform composition; and (4) the secondary considerations of non-obviousness are far outweighed by the overwhelming prima facie evidence of obviousness.

In CLI’s (intervenor) brief, CLI argues that: (1) the ‘789 patent claim construction was correct and did not prejudice Crocs; (2) substantial evidence supports the Commission’s finding of non-infringement; (3) Crocs failed to satisfy the technical prong of the domestic industry requirement regarding the ‘789 patent; and (4) the Commission correctly held the ‘858 patent invalid as obvious because the addition of a foam strap to the Aqua Clog was obvious and no secondary considerations overcome the strong showing of prima facie obviousness.

In Gen-X Sports’ (intervenor) brief, Gen-X Sports argues that: (1) the Commission’s claim construction is not grounds for reversal because the trial court has the discretion as to the level of detail to provide and the claim construction was properly based upon the patent drawings and the prior art; (2) the comparison of the ‘789 patent to the respondents’ shoes in the context of the prior art is the proper analysis under Egyptian Goddess; (3) the point of novelty finding was harmless error because it did not impact the finding of non-infringement; and (4) the findings of the ordinary observer test are supported by the substantial evidence.

In Double Diamond’s (intervenor) brief, Double Diamond argues that: (1) the Commission did not abuse its discretion by issuing a detailed claim construction and Crocs has not identified any prejudice; (2) the Commission applied the proper legal standard to the substantial evidence to support a finding that none of Double Diamond’s four accused shoe models infringe the ‘789 patent; (3) Crocs’ emphasis on purported “dominant” design features is improper; and (4) substantial evidence supports a finding that none of Double Diamond’s accused models infringe the ‘789 patent.

* Mark Tison is a summer associate at Oblon Spivak