Crocs lawsuit claims competitor Joybees built business on stolen trade secrets

BROOMFIELD — Crocs Inc. (Nasdaq: CROX) last week filed a lawsuit against Joybees LLC that alleges that the Denver-based casual-shoe competitor and its CEO, a former Crocs employee, have built the business over the last three years on the back of stolen trade secrets. 

The lawsuit, filed in U.S. District Court in Denver, claims that Joybees is a “knockoff brand,” and that CEO Kellen McCarvel was a former merchandising manager who in 2018 “joined Joybees just months after he left a mid-level management position at Crocs with a tranche of several thousand documents containing Crocs’s highly confidential and proprietary business information, as well as the contents of an entire Crocs email account that McCarvel has never returned to Crocs.”

Among the allegedly stolen documents were “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,” Crocs claims.

Regarding Crocs’ performance standards document, which the company “has developed based on years of experience and customer feedback,” Crocs’ lawsuit claims that “Joybees did little more than replace its name and logo for Crocs’ name and logo, and forwarded the document to its manufacturers. Joybees did so to secure and meet the requirements of lucrative and high-volume distribution agreements with several large U.S. retailers.”

Crocs attorneys said that “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.” 

Furthermore, the lawsuit claims, “using trade secrets stolen from Crocs, Joybees developed a guide to nearly every aspect of the manufacturing process that it could share with its manufacturers for quality- control purposes and use in the satisfaction of potential auditing requirements from any major retail partner. On information and belief, Joybees now uses Crocs’s trade secrets and proprietary information in the production of every single footwear article it produces for sale.”

Neither party to the lawsuit provided BizWest with immediate comment Monday on the lawsuit.

Crocs filed an earlier legal action against Joybees and its leadership in 2021 that specifically related to the alleged pilfering of trade secrets. Joybees and its CEO have filed countersuits and denied wrongdoing in court documents. That case is making its way through the courts with discovery and potential trial on the horizon. 

“This lawsuit concerns additional forms of theft and misappropriation separate and apart from McCarvel’s original theft. It focuses on the solicitation, disclosure, receipt, and use of Crocs’s trade secrets that were stolen by other means at other times,” Crocs’ new lawsuit claims. “Namely, 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.”

By using this proprietary information, Joybees hopes “to piggyback off of the success of the Crocs brand by unfair and illegal means,” the complaint said. “… McCarvel also sought to skip the years-long research and development process needed to independently develop high-quality material specifications and quality standards for Joybees.”

Crocs is demanding that a judge stop Joybees from using the Broomfield company’s allegedly stolen information and is seeking unspecified monetary compensation. 

The case is Crocs Inc. v. Joybees LLC, Kellen McCarvel, case number 1:23-cv-01719-NRN, filed July 6 in U.S. District Court in Denver.