The last 12 months have not been good ones for Crocs (CROX). Shortly after having the EU invalidate one of its patent registrations in Europe, the International Trade Commission ruled in April 2008 that one of Crocs' patents was invalid -- and, in addition, it was concluded that Waldies, Holey Soles and three other footwear manufacturers were not violating another one of Crocs' design patents. (Click here to read the Aug. 8, 2008, SNEWS® story.) In March 2008, a New York-based manufacturer of polymer resins filed a patent-infringement lawsuit against Crocs alleging the company's foam shoes violate its patent. Add to that the consumers jumping onto the personal injury lawsuit bandwagon with escalator foot injuries allegedly caused by Crocs' shoes in 2008 and it's not hard to visualize a company circling the wagons and cutting expenses where possible.
In a letter that was given to SNEWS®, Sara Hoverstock, corporate counsel for Crocs, wrote that, as of Feb. 1, 2009, "Crocs will cease (IP) enforcement activity in all distributor regions." Essentially, Crocs is now leaving the payment for any patent and intellectual property rights lawsuits up to distributors. The full letter is below:
Outside of the fact that it now seems apparent Crocs can no longer afford to flex its legal muscles at will around the globe, the statement "we are now moving to a new model as a company" begs the question, what, exactly, does this new Crocs model look like?
SNEWS emailed and called Tia Mattson, public relations spokesperson for Crocs, seeking comment. She requested a copy of the letter from Hoverstock, which we subsequently forwarded.
In short order, we received the following statement by email: "As a leader in innovation and design, we will continue to produce and defend intellectual property as we deem necessary. The new model simply requires our distributors to absorb the cost of enforcement in their region. We will continue to coordinate enforcement activities and offer support to our distributors in this area going forward. Additionally, we will continue to enforce our intellectual property as necessary in regions where we sell product directly without the use of a distributor. This covers the majority of our areas of distribution around the world."