Crocs vs. ex-CEO’s son: Shoe firm accused of monopoly as it claims stolen secrets

js joybees1478

Joybees shoes and sandals ranged in price from $19.99 to $27.99 when they launched in 2020. (BusinessDen file)

On June 14, 2018, a middle manager at Crocs nudged a thumb drive into his laptop and filled it with 2,900 of his employer’s most sensitive documents, according to the company.

That employee, the son of its former CEO, resigned from Crocs the next day.

Within two months, he was working for a competitor in Denver and within five months he was its CEO. That company, which came to be known as Joybees, makes clogs that are similar to those of Crocs, the unabashedly unfashionable Broomfield-based business.

As a result, Crocs and Joybees have been locked in a legal tussle for 20 months. It escalated last week, when both sides made fresh accusations in a Denver court.

“Joybees now uses Crocs’s trade secrets and proprietary information in the production of every single footwear article it produces for sale,” the latter shoemaker alleged.

‘Snuffed out’

In October 2021, Crocs sued Joybees and its CEO, Kellen McCarvel, for theft of trade secrets and misappropriation of proprietary information, among other claims. McCarvel, son of former Crocs CEO John McCarvel, who led the company from 2009 to 2014, was that middle manager who left in mid-2018.

KellenMcCarvel Headshot

Kellen McCarvel

Crocs claims that the younger McCarvel announced in May 2018 that he would be leaving his job as merchandise manager for Crocs’s Latin American operations, then created a folder on his work computer named “Take,” moved highly confidential files into it, and slid those files onto a thumb drive during his second-to-last day. McCarvel denies doing that.

What’s not in dispute is that McCarvel became CEO of Joybees in November 2018 and publicly launched its footwear line in early 2020. As McCarvel told reporters at the time, Joybees clogs are made from the same material as Crocs clogs. They also look nearly identical.

Crocs believes that is no coincidence. The thousands of documents in that “Take” folder gave McCarvel “a blueprint” to compete with Crocs “using the fruits and labors of the millions of dollars that Crocs invested to become the industry leader in this line of footwear,” it says.

McCarvel and Joybees say they did nothing wrong. And on July 5, they countersued Crocs, accusing it of having a monopoly over the American clogs market and using that monopoly to bully smaller competitors like Joybees, in violation of anti-monopoly laws.

Crocs has pressured retailers to stop selling Joybees shoes and at least 18 have, costing Joybees more than $1.6 million, according to the countersuit. Crocs’s aggression has driven up clogs prices and “entirely snuffed out” some competitors, Joybees said.

Jonathan Cooperman, an attorney for Crocs, told BusinessDen that those allegations “are completely without factual or legal merit.” He expects they’ll soon be thrown out.

“Crocs will continue to vigorously protect and defend its intellectual property and proprietary information against third-party theft and abuse,” said Cooperman.

Because some of Joybees’ countersuit is redacted, including two entire pages, it’s not known how much of the clogs market Crocs allegedly controls. Joybees is asking a judge to declare Crocs a monopoly and rule that Joybees’s shoes don’t infringe on Crocs’s patents.

Crocs Socks 3 Photo Credit Leeor Wild scaled

Two people model Crocs. (Courtesy Leeor Wild via Crocs)

‘Illegal means’

One day after Joybees countersued Crocs, Crocs filed a second lawsuit against Joybees.

In it, the Broomfield company claims that it has uncovered further evidence of corporate espionage by McCarvel and Joybees. Crocs accuses McCarvel of hiring former Crocs employees, convincing them to turn over confidential Crocs files, then sending those files to plants in China and Mexico, where they were used to make Joybees shoes.

“But for the theft and misappropriation of Crocs’s trade secrets and proprietary information, Joybees would not have been able to grow its brand as rapidly as it did in the 2021-2022 time period,” Crocs alleged in its July 6 lawsuit, which was filed in federal court.

“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,” it added.

Joybees and its attorneys did not respond to requests for comment about that allegation.

The company and McCarvel are represented by attorneys Jill Beathard, Jason Jackson, Shelby Morbach, Chad Nitta and Heather Tilley with the Denver office of Kutak Rock, along with Saul Rostamian from the Los Angeles law firm Sheppard Mullin Richter and Hampton.

In addition to Cooperman, Crocs is represented by Adrienne Boyd, Isaac Ramsey, Suneeta Hazra and Sean Callagy from Arnold & Porter, an international law firm, along with Brianna Santolli and Anne-Marie Mitchell with the firm Kelley Drye & Warren.

js joybees1478

Joybees shoes and sandals ranged in price from $19.99 to $27.99 when they launched in 2020. (BusinessDen file)

On June 14, 2018, a middle manager at Crocs nudged a thumb drive into his laptop and filled it with 2,900 of his employer’s most sensitive documents, according to the company.

That employee, the son of its former CEO, resigned from Crocs the next day.

Within two months, he was working for a competitor in Denver and within five months he was its CEO. That company, which came to be known as Joybees, makes clogs that are similar to those of Crocs, the unabashedly unfashionable Broomfield-based business.

As a result, Crocs and Joybees have been locked in a legal tussle for 20 months. It escalated last week, when both sides made fresh accusations in a Denver court.

“Joybees now uses Crocs’s trade secrets and proprietary information in the production of every single footwear article it produces for sale,” the latter shoemaker alleged.

‘Snuffed out’

In October 2021, Crocs sued Joybees and its CEO, Kellen McCarvel, for theft of trade secrets and misappropriation of proprietary information, among other claims. McCarvel, son of former Crocs CEO John McCarvel, who led the company from 2009 to 2014, was that middle manager who left in mid-2018.

KellenMcCarvel Headshot

Kellen McCarvel

Crocs claims that the younger McCarvel announced in May 2018 that he would be leaving his job as merchandise manager for Crocs’s Latin American operations, then created a folder on his work computer named “Take,” moved highly confidential files into it, and slid those files onto a thumb drive during his second-to-last day. McCarvel denies doing that.

What’s not in dispute is that McCarvel became CEO of Joybees in November 2018 and publicly launched its footwear line in early 2020. As McCarvel told reporters at the time, Joybees clogs are made from the same material as Crocs clogs. They also look nearly identical.

Crocs believes that is no coincidence. The thousands of documents in that “Take” folder gave McCarvel “a blueprint” to compete with Crocs “using the fruits and labors of the millions of dollars that Crocs invested to become the industry leader in this line of footwear,” it says.

McCarvel and Joybees say they did nothing wrong. And on July 5, they countersued Crocs, accusing it of having a monopoly over the American clogs market and using that monopoly to bully smaller competitors like Joybees, in violation of anti-monopoly laws.

Crocs has pressured retailers to stop selling Joybees shoes and at least 18 have, costing Joybees more than $1.6 million, according to the countersuit. Crocs’s aggression has driven up clogs prices and “entirely snuffed out” some competitors, Joybees said.

Jonathan Cooperman, an attorney for Crocs, told BusinessDen that those allegations “are completely without factual or legal merit.” He expects they’ll soon be thrown out.

“Crocs will continue to vigorously protect and defend its intellectual property and proprietary information against third-party theft and abuse,” said Cooperman.

Because some of Joybees’ countersuit is redacted, including two entire pages, it’s not known how much of the clogs market Crocs allegedly controls. Joybees is asking a judge to declare Crocs a monopoly and rule that Joybees’s shoes don’t infringe on Crocs’s patents.

Crocs Socks 3 Photo Credit Leeor Wild scaled

Two people model Crocs. (Courtesy Leeor Wild via Crocs)

‘Illegal means’

One day after Joybees countersued Crocs, Crocs filed a second lawsuit against Joybees.

In it, the Broomfield company claims that it has uncovered further evidence of corporate espionage by McCarvel and Joybees. Crocs accuses McCarvel of hiring former Crocs employees, convincing them to turn over confidential Crocs files, then sending those files to plants in China and Mexico, where they were used to make Joybees shoes.

“But for the theft and misappropriation of Crocs’s trade secrets and proprietary information, Joybees would not have been able to grow its brand as rapidly as it did in the 2021-2022 time period,” Crocs alleged in its July 6 lawsuit, which was filed in federal court.

“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,” it added.

Joybees and its attorneys did not respond to requests for comment about that allegation.

The company and McCarvel are represented by attorneys Jill Beathard, Jason Jackson, Shelby Morbach, Chad Nitta and Heather Tilley with the Denver office of Kutak Rock, along with Saul Rostamian from the Los Angeles law firm Sheppard Mullin Richter and Hampton.

In addition to Cooperman, Crocs is represented by Adrienne Boyd, Isaac Ramsey, Suneeta Hazra and Sean Callagy from Arnold & Porter, an international law firm, along with Brianna Santolli and Anne-Marie Mitchell with the firm Kelley Drye & Warren.

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