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Patent Law

: Patently Obvious

False Marking Claims: Standing

By Jason Rantanen

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By Jason Rantanen

Stauffer v. Brooks Brothers, Inc. v. United States (Fed. Cir. 2010)

Raymond Stauffer brought an action against Brooks Brothers claiming that bow ties sold by the defendant were falsely marked with patents that expired in 1954 and 1955. Stauffer is a patent attorney who purchased some of the marked bow ties. The district court granted Brooks Brothers' motion to dismiss for lack of standing, and subsequently denied the United States' motion to intervene. Stauffer and the United States appealed.

Section 292 states:

(a) . . .
Whoever marks upon, or affixes to . . . any unpatented article, the word ?patent? or any word or number importing that the same is patented, for the purpose of deceiving the public
. . .
Shall be fined not more than $500 for every such offense.
(b) Any person may sue for the penalty, in which event one-half shall go to the person suing and the other to the use of the United States.

(emphasis added). This type of language is called a "qui tam" provision, by which the government essentially asigns its rights to a private party (the qui tam "relator"). Because the relator is standing in the place of the United States, he or she must prove that the government, as opposed to the relator, satisfies the requirements for standing. Central to this case was the district court's determination that Stauffer failed to sufficiently allege that the United States suffered an injury in fact from Brooks Brothers' alleged false marking.

On appeal, the Federal Circuit concluded that the district court had erred on this point:

Congress has, by enacting section 292, defined an injury in fact to the United States. In other words, a violation of that statute inherently constitutes an injury to the United States. In passing the statute prohibiting deceptive patent mismarking, Congress determined that such conduct is harmful and should be prohibited. The parties have not cited any case in which the government has been denied standing to enforce its own law. Because the government would have standing to enforce its own law, Stauffer, as the government?s assignee, also has standing to enforce section 292.

Slip Op. at 9.

The panel rejected Brooks Brothers' reliance on Lujan v. Defenders of Wildlife, 504 U.S. 555, 560?61 (1992), which denied plaintiffs standing under a citizen-suit provision, as relating only to suits against the government itself. It also rejected the argument that Stauffer's standing depends on whether the alleged injury is proprietary or sovereign, concluding that both types of injury are sufficient to confer standing on the government, and therefore on the relator.

With respect to the Government's request to intervene, the Federal Circuit determined that the district court erred in concluding that the government lacked an interest sufficient to intervene as a matter of right under Rule 24(a)(2). The panel stated that:

Contrary to Brooks Brothers? position, the government has an interest in enforcement of its laws and in one half the fine that Stauffer claims, disposing of the action would ?as a practical matter impair or impede the [gov-ernment?s] ability to protect its interest,? and Stauffer may not adequately represent that interest....As an initial matter, Brooks Brothers does not contest the government?s assertion that Stauffer does not adequately represent the United States? interest in this case.
Furthermore, the government would not be able to recover a fine from Brooks Brothers if Stauffer loses, as res judicata would attach to claims against Brooks Brothers for the particular markings at issue....Thus, even though, as the district court noted, ?the issue of the government?s ability to bring an action pursuant to section 292? in general was not presented,[] the United States? ability to protect its interest in this particular case would be impaired by disposing of this action without the government?s intervention. We there-ore reverse the district court?s decision denying the government?s motion to intervene.

Slip Op. at 15-16 (internal citations omitted).

Note: The Federal Circuit expressly declined to address several issues, including the constitutionality of Section 292(b) (an issue that was raised by amicus Ciba Vision Corporation), whether section 292 addresses a proprietary or a sovereign injury, or both, and whether Stauffers alleged injuries to himself, or his asserted injuries to competition, give him standing. In addition, in its remand the panel explicitly instructed the district court to consider Brooks Brothers' motion to dismiss pursuant to Rule 12(b)(6), which argued that the complaint fails to allege an intent to deceive the public with sufficient specificity.

Full post as published by Patently Obvious on September 01, 2010 (boomark / email).