[Federal Register Volume 76, Number 140 (Thursday, July 21, 2011)]
[Notices]
[Pages 43723-43724]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-18338]


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INTERNATIONAL TRADE COMMISSION

[Investigation No. 337-TA-567]


Certain Foam Footwear; Final Commission Determination of 
Violation; Issuance of a General Exclusion Order and Cease and Desist 
Orders; and Termination of the Investigation

AGENCY: U.S. International Trade Commission.

ACTION: Notice.

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SUMMARY: Notice is hereby given that the U.S. International Trade 
Commission has terminated the above-captioned investigation with a 
finding of violation of section 337, and has issued a general exclusion 
order directed against infringing foam footwear products, and cease and 
desist orders directed against respondents Double Diamond Distribution 
Ltd. (``Double Diamond'') of Canada, Effervescent Inc. 
(``Effervescent'') of Fitchburg, Massachusetts, and Holey Soles Holding 
Ltd. (``Holey Soles'') of Canada.

FOR FURTHER INFORMATION CONTACT: Clint Gerdine, Esq., Office of the 
General Counsel, U.S. International Trade Commission, 500 E Street, 
SW., Washington, DC 20436, telephone (202) 708-5468. Copies of non-
confidential documents filed in connection with this investigation are 
or will be available for inspection during official business hours 
(8:45 a.m. to 5:15 p.m.) in the Office of the Secretary, U.S. 
International Trade Commission, 500 E Street, SW., Washington, DC 
20436, telephone (202) 205-2000. General information concerning the 
Commission may also be obtained by accessing its Internet server at 
http://www.usitc.gov. The public record for this investigation may be 
viewed on the Commission's electronic docket (EDIS) at http://edis.usitc.gov. Hearing-impaired persons are advised that information 
on this matter can be obtained by contacting the Commission's TDD 
terminal on (202) 205-1810.

SUPPLEMENTARY INFORMATION: The Commission instituted this investigation 
on May 11, 2006, based on a complaint, as amended, filed by Crocs, Inc. 
(``Crocs'') of Niwot, Colorado. 71 FR 27514-15 (May 11, 2006). The 
complaint alleged violations of section 337 of the Tariff Act of 1930, 
as amended (19 U.S.C. 1337), in the importation into the United States, 
the sale for importation, and the sale within the United States after 
importation of certain foam footwear, by reason of infringement of 
claims 1-2 of U.S. Patent No. 6,993,858 (``the '858 patent''); U.S. 
Patent No. D517,789 (``the '789 patent''); and the Crocs trade dress 
(the image and overall appearance of Crocs-brand footwear). The 
complaint further alleged that an industry in the United States exists 
as required by subsection (a)(2) of section 337, and requested that the 
Commission issue a permanent general exclusion order and permanent 
cease and desist orders. The complaint named eleven (11) respondents 
that included: (1) Collective Licensing International, LLC of 
Englewood, Colorado; (2) Double Diamond; (3) Effervescent; (4) Gen-X 
Sports, Inc. of Toronto, Ontario; (5) Holey Soles; (6) Australia 
Unlimited, Inc. of Seattle, Washington; (7) Cheng's Enterprises Inc. of 
Carlstadt, New Jersey; (8) D. Myers & Sons, Inc. of Baltimore, 
Maryland; (9) Inter-Pacific Trading Corp. of Los Angeles, California; 
(10) Pali Hawaii of Honolulu, Hawaii; and (11) Shaka Shoes of Kaliua-
Kona, Hawaii. The Commission terminated the investigation as to the 
trade dress allegation on September 11, 2006. A twelfth respondent, Old 
Dominion Footwear, Inc. of Madison Heights, Virginia, was added to the 
investigation on October 10, 2006. All but three respondents have been 
terminated from the investigation on the basis of a consent order, 
settlement agreement, or undisputed Commission determination of non-
infringement. The three remaining respondents are Double Diamond, 
Effervescent, and Holey Soles.
    On April 11, 2008, the presiding administrative law judge (``ALJ'') 
issued his final initial determination (``ID'') finding no violation of 
section 337. The ALJ found non-infringement and non-satisfaction of the 
technical prong of the domestic industry requirement with respect to 
the '789 patent, and found that the '858 patent was proven invalid as 
obvious under 35 U.S.C. 103. The ALJ's final ID made no finding on 
whether either asserted patent was unenforceable due to inequitable 
conduct. The ALJ's final ID also included his recommendation on remedy 
and bonding should the Commission find that there was a

[[Page 43724]]

violation. On July 25, 2008, after review, the Commission affirmed the 
ALJ's final ID with certain modifications and clarifications, and 
terminated the investigation with a finding of no violation of section 
337. The Commission took no position regarding the issue of 
enforceability of the '858 and '789 patents. On February 24, 2010, the 
U.S. Court of Appeals for the Federal Circuit (``Federal Circuit'') 
issued its judgment overturning the Commission's findings regarding 
invalidity of the '858 patent, and non-infringement/lack of domestic 
industry concerning the '789 patent. See Crocs, Inc. v. United States 
Int'l Trade Comm'n, 598 F.3d 1294, 1311 (Fed. Cir. 2010). The Federal 
Circuit also specifically ``remand[ed] the investigation for a 
determination of infringement of the '858 patent and any appropriate 
remedies.'' Id. On July 6, 2010, the Commission remanded the 
investigation to the ALJ to decide the remaining issue of 
enforceability of the patents.
    On February 9, 2011, the ALJ issued his remand ID finding that the 
asserted patents were not unenforceable. On February 25, 2011, 
respondents Effervescent and Double Diamond filed both a joint petition 
for review of the remand ID and a motion for leave to file the petition 
two (2) days late. On March 4, 2011, the Commission issued an order 
declining to grant the motion, but without prejudice to respondents 
refiling their motion stating good cause for the enlargement of time. 
On March 16, 2011, respondents Effervescent and Double Diamond filed a 
joint motion for an enlargement of the time for filing petitions for 
review of the remand ID. On March 18, 2011, the Commission issued an 
order granting the motion for an enlargement of time and making 
responses due on March 28, 2011. On March 28, 2011, Crocs and the 
Commission investigative attorney (``IA'') each filed a brief in 
response to respondents' petition for review.
    On April 25, 2011, the Commission issued notice of its 
determination not to review the ALJ's remand ID and requested written 
submissions on the issues of remedy, the public interest, and bonding 
from the parties and interested non-parties. See 76 FR 24052-53 (April 
29, 2011). The Commission's notice also included its determination to 
reaffirm the ALJ's previous ruling that claims 1 and 2 of the '858 
patent are infringed by Effervescent's accused products, and that claim 
2 of the '858 patent is infringed by Double Diamond's accused products. 
See 73 FR 35710-11 (June 24, 2008); Remand ID at 2 (February 9, 2011) 
(citing Final ID at 121 (April 11, 2008)); Comm'n Op. at 3-4, n. 1 
(July 25, 2008). These actions, along with the Federal Circuit's 
decision, resulted in a finding of a violation of section 337 with 
respect to both asserted patents by Double Diamond and Effervescent. 
Holey Soles was found in violation with respect to the '789 patent 
based on the Federal Circuit's reversal of non-infringement and lack of 
domestic industry as to this patent. See Crocs, 598 F.3d at 1311.
    On May 6 and 13, 2011, respectively, complainant Crocs and the IA 
filed briefs and reply briefs on remedy, the public interest, and 
bonding. Also, on May 6 and 13, 2011, respectively, respondent 
Effervescent filed a brief and reply brief on these issues. Respondent 
Double Diamond filed a reply brief on May 13, 2011.
    The Commission has made its determination on the issues of remedy, 
the public interest, and bonding. The Commission has determined that 
the appropriate form of relief is both: (1) A general exclusion order 
prohibiting the unlicensed entry of foam footwear that infringe one or 
more of (i) claims 1-2 of the '858 patent, and (ii) the claimed design 
of the '789 patent; and (2) cease and desist orders prohibiting Double 
Diamond, Effervescent, and Holey Soles from conducting any of the 
following activities in the United States: Importing, selling, 
marketing, advertising, distributing, offering for sale, transferring 
(except for exportation), and soliciting U.S. agents or distributors 
for, foam footwear that infringe one or more of (i) claims 1 or 2 of 
the '858 patent, and (ii) the claimed design of the '789 patent.
    The Commission further determined that the public interest factors 
enumerated in section 337(d)(1) (19 U.S.C. 1337(d)(1)) do not preclude 
issuance of the general exclusion order or the cease and desist orders. 
Finally, the Commission determined to set a bond of $0.00 for Double 
Diamond's covered products, a bond of $0.01 per pair of shoes for Holey 
Soles' covered products, a bond of $0.05 per pair of shoes for 
Effervescent's covered products, and a bond of 100% of the entered 
value (for all other covered products) to permit temporary importation 
during the period of Presidential review (19 U.S.C. 1337(j)). The 
Commission's orders and opinion were delivered to the President and to 
the United States Trade Representative on the day of their issuance.
    The Commission has terminated this investigation. The authority for 
the Commission's determination is contained in section 337 of the 
Tariff Act of 1930, as amended (19 U.S.C. 1337), and in section 210.50 
of the Commission's Rules of Practice and Procedure (19 CFR 210.50).

    Issued: July 15, 2011.

    By order of the Commission.
James R. Holbein,
Secretary to the Commission.
[FR Doc. 2011-18338 Filed 7-20-11; 8:45 am]
BILLING CODE 7020-02-P