They are saying imitation is the sincerest type of flattery, however Crocs doesn’t appear to agree.

The Colorado-based clog large is suing competing footwear firm Joybees and its CEO Kellen McCarvel for “an ongoing effort by McCarvel and Joybees to piggyback off of the success of the Crocs model by unfair and unlawful means,” in accordance with filings in U.S. District Courtroom.

Crocs describes Joybees as a knockoff — arguing that McCarvel stole proprietary data whereas working there and now makes use of it as the company chief of Joybees. Its lawsuit, filed final month, asks for a trial by jury over the usage of commerce secrets and techniques and confidential enterprise data by Joybees within the growth, manufacturing and advertising of its merchandise.

Crocs, headquartered in Broomfield, was began by College of Colorado grads Lyndon Hanson and George Boedbecker Jr. and their pal Scott Seamans within the early 2000s, with the corporate going public in 2006. The thirteen-holed foamy clogs are manufactured from Croslite, a sort of closed-cell resin that floats and is slip-resistant. Crocs secured unique rights to Croslite in 2004.

Amongst different footwear merchandise, Joybees additionally sells foam clogs — typically utilizing a hexagonal sample across the holes on its footwear and a “honeycomb footbed,” in accordance with its web site. Crocs argues that McCarvel and Joybees, which relies in Denver, recruited former Crocs staff to disclose confidential data and steal manufacturing specs.

“By following this scheme, Joybees was in a position to accomplish in only a few months what had taken Crocs almost a decade of analysis, growth, and expertise,” the swimsuit says.

This isn’t the primary chapter within the authorized saga between the businesses: Along with McCarvel being a former Crocs worker, his father John McCarvel was as soon as CEO of the now-booming enterprise.

Crocs beforehand accused McCarvel of utilizing a USB drive to steal round 1,900 confidential paperwork and emails earlier than he left and subsequently joined Joybees. The paperwork have been mentioned to not have something to do together with his work as a mid-level supervisor in Latin American merchandising.

In April 2021, McCarvel mentioned he had not accessed or used any of the stolen paperwork — mailing Crocs two USB drives he mentioned contained the entire data he took. Nevertheless, a Crocs investigation discovered he hadn’t returned most of the paperwork and emails, prompting the corporate to sue in October 2021.

This most up-to-date lawsuit from July 2023 provides to these claims, arguing that McCarvel and Joybees have participated in further types of theft and misappropriation of commerce secrets and techniques. Crocs’s authorized crew submitted a movement to consolidate the 2 circumstances in mid July.

“The extremely confidential and proprietary data at subject on this lawsuit considerations the specs, requirements and check and audit strategies that dictate the standard and efficiency of the shoe materials and varied different elements which are used to make Crocs footwear, in addition to requirements that producers of Crocs footwear should adhere to,” the brand new swimsuit says. “The usage of such data displays an ongoing effort by McCarvel and Joybees to piggyback off of the success of the Crocs model by unfair and unlawful means.”

Crocs can also be accusing McCarvel and Joybees of desirous to skip the event and analysis time wanted to develop an unique clog product of high quality. To take action, its lawsuit alleges that McCarvel and Joybees began selecting off former Crocs staff who had proprietary data and firm secrets and techniques — together with a former Crocs high quality engineer, director of producing and operations supervisor.

“A number of divulged entire libraries of Crocs paperwork containing Crocs’s commerce secrets and techniques and proprietary data,” the swimsuit contends. “These paperwork have been clearly and prominently labeled as extremely confidential and proprietary data belonging to Crocs, such that Defendants and their staff or brokers would have identified, and did know, that they weren’t approved to reveal or use the data contained within the Crocs paperwork.”

The footwear large claims that McCarvel and different Joybees staff inspired these individuals to illegally ignore their confidentiality obligations. The stolen information allowed Joybees to realize a bonus available in the market, the swimsuit says. This data included Crocs’s Materials Efficiency Requirements, which Joybees then shared with its personal producers and retailers.

“Joybees did little greater than substitute its identify and emblem for Crocs’s identify and emblem, and forwarded the doc to its producers,” Crocs prices. “Joybees now makes use of Crocs’s commerce secrets and techniques and proprietary data within the manufacturing of each single footwear article it produces on the market.”

In response to its swimsuit, Crocs claims that Joybees didn’t take away sure data from the requirements doc that mark it as being copied — together with a reference to a particular cut-off date: August 27, 2009.

This date occurred almost a decade earlier than the Denver firm was based.

“Joybees additionally uncared for to take away from its model of the Materials Efficiency Requirements doc references to Crocs’s specs for different forms of shoe supplies, resembling leather-based, for which Joybees had no want since, in contrast to Crocs, Joybees didn’t produce any shoe fashions utilizing these supplies,” the swimsuit prices.

Crocs is asking Colorado’s District Courtroom to require Joybees to cease utilizing its illegally obtained commerce secrets and techniques and reimburse it for damages associated to misplaced gross sales from when Joybees allegedly replicated its product. “In sum, your entire Joybees model is constructed on a sample of knocking off Crocs-branded footwear and stealing Crocs’s proprietary data concerning gross sales, advertising, and manufacturing strategies,” its swimsuit says.

“Like different imitators earlier than it, Joybees and McCarvel pursued their goal to capitalize on Crocs’s success with none take care of the hurt it might trigger Crocs.”

Joybees disagrees — submitting a response and counterclaims alleging Crocs violates antitrust legislation by intimidating and stifling competitors. In its response, Joybees additionally denies most of Crocs’s allegations and says its bee icon and honeycomb-like hexagons assist construct model recognition.

“In distinction to Joybees’ deal with utilizing its branding and design to create a aggressive benefit within the informal footwear market area, Crocs’s technique relies on stifling competitors, together with by asserting its mental property rights properly past any affordable interpretation and through the use of its financial energy in an effort to intimidate producers, distributors, and sellers of a wide range of footwear choices,” Joybees blasts again.

The footwear rival claims Crocs has been hinting to distributors that promote Joybees merchandise that Joybees is infringing on Crocs’s mental property. Joybees says it has by no means gained readability from Crocs about how precisely it’s violating its IP.

Again in 2021, when Crocs sought a Basic Exclusion Order forbidding entry in the USA of shoe merchandise that violate its emblems, it didn’t identify Joybees or any of its merchandise as violators. The still-growing clog company now claims Joybees infringes on its mental property with a number of merchandise.

Joybees, alternatively, says Crocs is utilizing its reputation to keep up a monopoly within the injection-modeled clog market. Injection-molded clogs are these created by injecting materials right into a mildew to rapidly mass-produce footwear.

“Crocs has engaged in exclusionary conduct together with partaking in conversations with Joybees Retailers about whether or not the retailer is concerned with promoting, re-selling, or in any other case distributing Crocs footwear merchandise,” Joybee alleges. “And, if that’s the case, informing the retailer that, as a situation to doing so the retailer should conform to stop promoting Joybees merchandise.”

In 2022, Joybees claims Crocs satisfied eighteen completely different Joybees retailers to terminate enterprise agreements in place for the shoe producer and to promote Crocs merchandise as a substitute.

“Crocs’s exclusionary conduct has disadvantaged shoppers in the USA of the advantages of competitors, together with elevated alternative, high quality, and innovation,” Joybees argues in its counterclaim, noting that its clogs value about 30 p.c lower than an ordinary pair of Crocs.

Joybees has requested the courtroom to declare that its merchandise do not violate Crocs’ emblems or patents, and discover Crocs has engaged in “monopolistic, anticompetitive and exclusionary conduct.” Crocs says it’s merely performing to guard its beneficial, non-public data.

“Crocs’ proprietary know-how, knowhow and commerce secrets and techniques are vitally necessary to the enterprise and are the product of intensive growth efforts and analysis,” says Jonathan Cooperman, a member of its authorized crew. “Crocs will proceed to vigorously defend and defend its mental property and proprietary data towards third get together theft and abuse. As well as, there are at the moment no antitrust counterclaims pending as Joybees’ assertion of any counterclaims requires the Courtroom’s permission.”

Joybees and McCarvel didn’t reply to requests for remark by means of their legal professionals.