September.01.2010
The Federal Circuit yesterday issued its opinion in Stauffer v. Brooks Brothers, No. 09-1428 (Fed. Cir. Aug. 31, 2010), which addresses an important issue relating to who may bring actions asserting false patent marking claims, under 35 U.S.C. § 292. Section 292 is the section of the U.S. Patent code that prohibits falsely marking a product with a U.S. patent number, and imposes a fine of up to $500 per falsely marked article. The Court held that the language in 35 USC § 292(b) that "any person may sue" for the fine confers qui tam and Article III standing upon anyone, regardless of whether they are competitors or actually injured by the defendant accused of false marking.
Ever since the Federal Circuit's decision in Forest Group in December, 2009 (See alert: New Federal Circuit Decision on False Marking), which held that each article bearing a false patent marking constituted a separate offense, plaintiffs are bringing an increasing number of false patent marking suits. These plaintiffs are typically individuals who have suffered no apparent injury from the alleged false marking. The plaintiff in Stauffer, like the plaintiff in the Pequignot decision from earlier this year (See alert: Federal Circuit Decides Important False Patent Marking Issue), is a patent attorney.
In the present case, Stauffer brought a qui tam action alleging Brooks Brothers had falsely marked its bow ties with two patents, which had long since expired (in 1954 and 1955). Brooks Brothers moved to dismiss, contending inter alia that Stauffer lacked standing to assert a Section 292 action, because he could not show that the United States, on whose behalf Stauffer was acting as a qui tam plaintiff, had suffered an actionable injury in fact. The district court granted Brooks Brothers' motion to dismiss for lack of standing.
On appeal, the Federal Circuit reversed the district court's finding of lack of standing. The Court confirmed that every plaintiff, including qui tam plaintiffs, must demonstrate Article III standing to maintain an action in Federal court. For a false marking qui tam plaintiff, standing flows from the implicit partial assignment of the United States' damages claim, pursuant to Section 292(b). Thus the plaintiff must show that the United States has suffered an injury because of the false patent marking. However, the Court held that in the false marking context, such an injury was inherent in any violation of the false marking statute. Congress, by enacting the statute, defined any violation of the statute to be an injury to the United States, sufficient to confer standing on a qui tam plaintiff. Therefore, a false marking plaintiff need not allege any injury to himself, nor to a competitor of the defendant, nor in fact to anyone. He merely must allege that the defendant's conduct violated the statute.
The Court did take note of an amicus curiae's argument that Section 292, by implicitly assigning the United States' claim to a private plaintiff without any form of oversight of that plaintiff's actions, unconstitutionally stripped the Executive of its duty to "take Care that the Laws be faithfully executed." U.S. Const. art. II, § 3. While noting the amicus raised "relevant points", the Court declined to address this issue on appeal, because it was not properly raised before the district court. This issue may be addressed by the parties and the district court on remand.