The Colorado-based clog giant is suing competing footwear company Joybees and its CEO, Kellen McCarvel, for “an ongoing effort by McCarvel and Joybees to piggyback off of the success of the Crocs brand by unfair and illegal means," according to filings in U.S. District Court.
Crocs describes Joybees as a knockoff — arguing that McCarvel stole proprietary information while working there and now uses it as the corporate leader of Joybees. The lawsuit, filed last month, asks for a trial by jury over the use of trade secrets and confidential business information by Joybees in the development, manufacture and marketing of its products.
Crocs, headquartered in Broomfield, was started by University of Colorado grads Lyndon Hanson and George Boedecker Jr. and their friend Scott Seamans in the early 2000s, with the company going public in 2006. The thirteen-holed foamy clogs are made of Croslite, a type of closed-cell resin that floats and is slip-resistant. Crocs secured exclusive rights to Croslite in 2004.
Among other footwear products, Joybees also sells foam clogs — often using a hexagonal pattern around the holes on its shoes and a "honeycomb footbed," according to its website. Crocs argues that McCarvel and Joybees, which is based in Denver, recruited former Crocs employees to reveal confidential information and steal manufacturing specifications.
“By following this scheme, Joybees was able to accomplish in just a few months what had taken Crocs nearly a decade of research, development, and experience,” the suit says.
This isn’t the first chapter in the legal saga between the companies: In addition to McCarvel being a former Crocs employee, his father, John McCarvel, was once CEO of the now-booming business.
Crocs previously accused Kellen McCarvel of using a USB drive to steal around 1,900 confidential documents and emails before he left and subsequently joined Joybees. The documents were said to not have anything to do with his work as a mid-level manager in Latin American merchandising.
In April 2021, McCarvel said he had not accessed or used any of the stolen documents — mailing Crocs two USB drives he said contained all of the information he took. However, a Crocs investigation found he hadn’t returned many of the documents and emails, prompting the company to sue in October 2021.
This most recent lawsuit from July 2023 adds to those claims, arguing that McCarvel and Joybees have participated in additional forms of theft and misappropriation of trade secrets. The Crocs legal team submitted a motion to consolidate the two cases in mid-July.
“The highly confidential and proprietary information at issue in this lawsuit concerns the specifications, standards and test and audit methods that dictate the quality and performance of the shoe material and various other components that are used to make Crocs footwear, as well as standards that manufacturers of Crocs footwear must adhere to,” the new suit says. “The use of such information reflects an ongoing effort by McCarvel and Joybees to piggyback off of the success of the Crocs brand by unfair and illegal means.”
Crocs is also accusing McCarvel and Joybees of wanting to skip the development-and-research time needed to create an original clog product of quality. To do so, the lawsuit alleges, McCarvel and Joybees started picking off former Crocs employees who had proprietary knowledge and company secrets — including a former Crocs quality engineer, director of manufacturing and operations manager.
“Several divulged whole libraries of Crocs documents containing Crocs’s trade secrets and proprietary information,” the suit contends. “These documents were clearly and prominently labeled as highly confidential and proprietary information belonging to Crocs, such that Defendants and their employees or agents would have known, and did know, that they were not authorized to disclose or use the information contained in the Crocs documents.”
The footwear giant claims that McCarvel and other Joybees employees encouraged these people to illegally ignore their confidentiality obligations. The stolen info allowed Joybees to gain an advantage in the market, the suit says. This knowledge included Crocs’ Material Performance Standards, which Joybees then shared with its own manufacturers and retailers.
“Joybees did little more than replace its name and logo for Crocs’s name and logo, and forwarded the document to its manufacturers,” Crocs charges. “Joybees now uses Crocs’s trade secrets and proprietary information in the production of every single footwear article it produces for sale.”
Crocs (right) is accusing Joybees (left) of stealing its trade secrets.
joybees.com (left), crocs.com (right)
This date occurred nearly a decade before the Denver company was founded.
“Joybees also neglected to remove from its version of the Material Performance Standards document references to Crocs’s specifications for other types of shoe materials, such as leather, for which Joybees had no need since, unlike Crocs, Joybees did not produce any shoe models using those materials,” the suit charges.
Crocs is asking Colorado's District Court to require Joybees to stop using its illegally obtained trade secrets and reimburse it for damages related to lost sales after Joybees allegedly replicated its product. “In sum, the entire Joybees brand is built on a pattern of knocking off Crocs-branded footwear and stealing Crocs’s proprietary information regarding sales, marketing, and manufacturing methods,” the suit says.
“Like other imitators before it, Joybees and McCarvel pursued their objective to capitalize on Crocs’s success without any care for the harm it would cause Crocs.”
Joybees disagrees — filing a response and counterclaims alleging that Crocs violates antitrust law by intimidating and stifling competition. In its response, Joybees also denies most of the company's allegations and says its bee icon and honeycomb-like hexagons help build brand recognition.
“In contrast to Joybees’ focus on using its branding and design to create a competitive advantage in the casual footwear market space, Crocs’s strategy is based on stifling competition, including by asserting its intellectual property rights well beyond any reasonable interpretation and by using its economic power in order to intimidate manufacturers, distributors, and sellers of a variety of footwear offerings,” Joybees blasts back.
The footwear rival claims Crocs has been hinting to distributors that sell Joybees products that Joybees is infringing on Crocs' intellectual property. Joybees says it has never gained clarity from Crocs about how exactly it is violating its IP.
Back in 2021, when Crocs sought a General Exclusion Order forbidding entry in the United States of shoe products that violate its trademarks, it didn’t name Joybees or any of its products as violators. The still-growing clog corporation now claims Joybees infringes on its intellectual property with several products.
Joybees, on the other hand, says Crocs is using its popularity to maintain a monopoly in the injection-molded clog market. Injection-molded clogs are those created by injecting material into a mold to quickly mass-produce shoes.
“Crocs has engaged in exclusionary conduct including engaging in conversations with Joybees Retailers about whether the retailer is interested in selling, re-selling, or otherwise distributing Crocs footwear products," Joybee alleges. "And, if so, informing the retailer that, as a condition to doing so, the retailer must agree to cease selling Joybees products."
In 2022, Joybees claims, Crocs convinced eighteen different Joybees retailers to terminate business agreements in place for the shoe manufacturer and to sell Crocs products instead.
“Crocs’s exclusionary conduct has deprived consumers in the United States of the benefits of competition, including increased choice, quality, and innovation,” Joybees argues in its counterclaim, noting that its clogs cost about 30 percent less than a standard pair of Crocs.
Joybees has asked the court to declare that its products don't violate Crocs trademarks or patents, and to find Crocs has engaged in “monopolistic, anticompetitive and exclusionary conduct.” Crocs says it is merely acting to protect its valuable, private information.
"Crocs’ proprietary technology, knowhow and trade secrets are vitally important to the business and are the product of extensive development efforts and research," says Jonathan Cooperman, a member of the Crocs legal team. "Crocs will continue to vigorously protect and defend its intellectual property and proprietary information against third party theft and abuse. In addition, there are currently no antitrust counterclaims pending, as Joybees' assertion of any counterclaims requires the Court's permission."
Joybees and McCarvel did not respond to requests for comment through their lawyers.
