A Kent, Wash.-based company has snapped back at Crocs Inc. after being accused of violating Crocs’ patents for lightweight resin clogs.
Niwot-based Crocs this year filed complaints against 11 companies, including Australia Unlimited Inc., owner of Old Friend Footwear. The company sells Crocs-like shoes called NothinZ.
Crocs’ complaints in U.S. District Court and with the U.S. International Trade Commission said the 11 companies were infringing on Crocs’ four patents covering the utility and design aspects of its shoes.
Analysts deemed the lawsuit a defensive move by Crocs, which went public in February, because it was facing increased competition from knockoffs that in some cases sold for significantly less than the $30 a pair typically charged for Crocs.
Since filing the complaints in April, Crocs has settled with three of the companies. All three – Acme Ex-Im Inc. of Honolulu, Inter-Pacific Trading Corp. of Los Angeles and Shaka Holdings Inc. of Kailua-Kona, Hawaii – agreed not to infringe on Crocs patents in the future. Crocs agreed to release the companies from past liability.
But Australia Unlimited appears to be gearing up for a fight.
The company announced during the World Shoe Association trade show in Las Vegas that its formal response to Crocs’ litigation calls for a court order invalidating Crocs’ patents. The company is also seeking attorneys’ fees and damages.
The company alleges that Crocs has patented a general look and style of foam footwear that was already being sold before Crocs entered the market.
“We view Crocs’ actions as desperate attempts to eliminate us as a competitor,” said Jim Klavano, Australia Unlimited’s founder and president, in a statement issued by the company. “Crocs’ action has no legitimate basis. We plan to vigorously defend our right to sell our full line of shoes.”
The company declined to comment beyond the statement.
Crocs spokeswoman Tia Mattson said the company hadn’t been served with Australia Unlimited’s countersuit and couldn’t comment specifically on the allegations.
“We remain committed to the protection of our intellectual property and will let the ITC and the district court system handle the disposition of these matters,” she said.
Crocs stock, which debuted on the Nasdaq at $30, closed at $28.02 Tuesday.
Some analysts have been wary of the stock because of the trendy nature of the company’s product. To that end, Crocs has been aggressively rolling out new designs. Recent additions have included Mary Janes and ballet- style shoes made from the same resin material. On Tuesday, the company announced it will introduce a limited-edition line of footwear featuring Disney characters in the fall.
Additionally, analysts have warned that the planned secondary offering of 6.5 million shares owned by insiders – plus even more insider shares that may become available – could put additional downward pressure on the stock.
“If the selling pressure is really intense, it can hit the stocks pretty hard,” said Barbara Walchli, portfolio manager of the Aquila Rocky Mountain Equity fund, a mutual fund that invests only in Western companies.
Crocs will report its second- quarter earnings Thursday.
Staff writer Kristi Arellano can be reached at 303-820-1902 or karellano@denverpost.com.
