Don’t call a Rule 68 judgment in an infringement case an infringement judgment

If you receive a Rule 68 judgment, be careful how you crow about it.

Rule 68 of the Federal Rules of Civil Procedure is structured to motivate defendants to make settlement offers. It provides that

At least 14 days before the date set for trial, a party defending against a claim may serve on an opposing party an offer to allow judgment on specified terms, with the costs then accrued. If, within 14 days after being served, the opposing party serves written notice accepting the offer, either party may then file the offer and notice of acceptance, plus proof of service. The clerk must then enter judgment.

Part of the motivation is cost-shifting. Section 68(d) provides that “If the judgment that the offeree finally obtains is not more favorable than the unaccepted offer, the offeree must pay the costs incurred after the offer was made.”

Also, and this is the relevant part in this case, the Rule 68 offer is not to be deemed as an admission of liability.

Here, Crocs sued defendants in 2006. Fourteen days before trial sixteen years later (ouch), defendants made Rule 68 offers which were accepted. The Rule 68 offers pretty clearly indicated that they are not to be deemed to be admissions nor acknowledgements of Crocs’ rights and remedies.

Here’s the practice pointer – don’t do what plaintiff did next: Crocs issued a press release that, in part, “announced a judgment of infringement against USA Dawgs and Double Diamond Distribution as a result of both companies’ sales of imitation Crocs shoes.” Emphasis added.

The press release also refers (somewhat confusingly in my view) to other TM lawsuits it had recently brought. The full text of the press release is in the decision (link below).

Defendant Diamond Distribution then sued Crocs for defamation, false advertising, and related state torts. Crocs moved to dismiss.

The holding, at 12(b)(6);

The Court finds that the complaint plausibly establishes that the press release contains materially false statements. The press release states that Crocs obtained “a judgment of infringement against USA Dawgs and Double Diamond Distribution as a result of both companies’ sales of imitation Crocs shoes.” … The press release discusses how “[t]his judgment . . . reinforces the validity of [Crocs’] patent rights.” The Court finds that the complaint plausibly establishes that these statements are false because the statements would have a “different effect on the mind of the reader” from that which the Rule 68 offer of judgment would have produced. … The “gist” of the press release is that the Court’s judgment determined that Double Diamond sold shoes which infringed Crocs’ patents. … However, the Rule 68 offer of judgment stated that the offer of judgment “is not to be construed either as an admission that Double Diamond is liable in this action or that Crocs has suffered any damage.” … The Court’s judgment did not rule on the validity of Crocs’ patent rights or find that Double Diamond was liable for patent infringement. …As a result, the substance or gist of the press release is contrary to the Rule 68 offer of judgment and the Court’s final judgment. …Furthermore, the Court finds that Double Diamond has plausibly alleged that the false statements in the press release are material because the statements would likely cause reasonable people to think “significantly less favorably” about Double Diamond than they would if they knew the truth. … Accordingly, the Court finds that Double Diamond has plausibly established that the press release contains materially false statements, and the Court therefore denies this portion of defendant’s motion. Citations removed.

So . . . there was a judgment (and not a dismissal), and the judgment was in plaintiff’s favor. But it’s not a judgment of infringement – there were no findings or holdings as such. So don’t call it a judgment of infringement. It might be defamatory.

Prof Tushnet’s 43(b)log discusses Double Diamond v Crocs here.

Text of Double Diamond v Crocs District of Colorado decision here.