One of Australia’s largest clothing retailers is facing a multimillion-dollar lawsuit over claims it has been selling illegal imitations of Crocs to shoppers.
Crocs Inc, the eponymous company behind the infamous foam clogs, is suing Mosaic Brands – owner of Noni-B and Rivers – over claims it broke consumer laws by selling shoes “substantially identical” to Crocs.
US-based Crocs Inc licenses its global trademarks over its shoes to Crocs Australia, which has been operating locally since 2005 and has its own online shop.
It is alleged Mosaic infringed Crocs Inc trademarks by knowingly selling knock-off shoes through its Rivers stores and e-commerce website.
But Mosaic has hit back, telling The New Daily it will contest the case.
“We believe this claim is without merit and we will be defending it,” a spokesperson for the retailer said in a statement on Thursday.
Crocs legal offensive
Trademark Lawyer Nicole Murdoch said Mosaic will likely argue Crocs’ trademarks are invalid because shoppers have started viewing the clogs as descriptive of a type of shoe rather than just a brand name.
This is a crucial distinction known as trademark dilution and it sets the stage for a court to consider whether Crocs are now generic in Australia.
Ms Murdoch said this could leave Crocs’ local trademark unenforceable.
“Sometimes companies become victims of their own success,” she said.
“They’re so famous that people start to associate the actual function and product time with the name of the product.”
This is clearly something Colorado-based Crocs Inc is worried about.
The company is currently undertaking a global legal offensive to protect its brand, suing retail giants like Walmart and Hobby Lobby in the US recently over claims “fake” Crocs are being sold around the world.
In a statement last month, Crocs executive Daniel Hart said “forceful steps” are being taken to protect the company’s intellectual property.
“It is essential that we protect Crocs’ iconic DNA, and we will not tolerate the infringement of our rights or those who try to free ride,” he said.
A battle between Crocs and Rivers
In the latest case, Crocs Inc wants Mosaic Brands to pay damages and an additional fine over alleged breaches of Australian consumer law, according to Federal Court filings seen by The New Daily on Thursday.
Lawyers for Crocs Inc claimed the business has lost profits and suffered damage to its intellectual property as a result of Rivers’ foam clogs.
They claimed Mosaic sold shoes with reference to the “classic Crocs shape” and advertised them on popular websites such as news.com.au.
“The respondent [Mosaic] has described the infringing goods as having a ‘classic clog design’ knowing the applicants [Crocs Inc] call the classic croc footwear ‘classic clog’,” lawyers claimed in the NSW Federal Court.
This breached two trademarks granted to Crocs in 2017, lawyers said.
Crocs Inc said it warned Mosaic to stop selling the clogs before suing.
But Mosaic continues to sell the allegedly illegal shoes and uses a Rivers logo on the heel strap, referring to them as “Rivers Clogs”.
In a second claim in the lawsuit, Crocs Inc alleges Mosaic used the term “crocs” to describe the shoes in its stores and online, breaching a 2003 trademark.
Lawyers for the US company also lodged a third claim, saying Mosaic has sold the Rivers clogs alongside its “genuine” Crocs clogs.
“The infringing goods have been advertised, promoted and offered for sale, sold side by side with genuine Classic Crocs footwear and other genuine goods,” lawyers for Crocs Inc alleged in court documents.
They claimed this was a breach of consumer law because consumers thought Rivers’ shoes were all genuine Crocs when some were not.
“The respondent [Mosaic] has engaged in conduct that is misleading or deceptive or is likely to mislead or deceive,” the lawyers alleged.
Ms Murdoch, principal at Eaglegate Lawyers, said Mosaic will also likely contest the idea that its clogs meet the bar for trademark infringement.
“The shoes look quite similar to the Crocs trademark. The debate will be whether they are deceptively similar or substantially identical,” she said.
Mosaic operates more than 1000 retail stores and sells more than $600 million of clothing, accessories and shoes each year in Australia.
Crocs has more than 400 stores worldwide and booked $US1.38 billion ($1.9 billion) in sales during 2020, including through hundreds of Australian retailers.
The case is just the latest legal stoush for Mosaic Brands, which was fined $630,000 earlier this year after the Federal Court concluded it sold dodgy face masks and hand sanitiser during the pandemic.