Injury Must Be “Concrete and Particularized” For Standing In False Patent Marking Action

Stauffer v. Brooks Brothers Inc., 08-cv-10369 (SDNY, May 14, 2009)

35 U.S.C. § 292 prohibits anyone from marking an “unpatented article” with words “importing that the same is patented, for the purpose of deceiving the public.” Additionally, section 292 further provides that “any person” may sue for damages, and if damages are imposed
under the statute ("not more than $500 for every such offense”), the person suing is to receive one-half and the United States is to receive the other half. Section 292 has long been treated as a qui tam provision, meaning that the statute authorizes someone to pursue an action on behalf of the government as well as himself/herself.

Naturally, this section induces some chin-scratching for opportunistic plaintiffs; one can readily envision high-volume products, erroneously marked with one or more expired/lapsed patents, serving as fodder for litigation.

In this case, Stauffer, who is a patent attorney and pro se plaintiff, sued Brooks Brothers for violation of § 292, arguing that certain elements of an adjustable necktie were labeled as being protected by patents that have long expired (the most recent one issued in 1956) and that defendants "knew or should have known that the patents had expired and that their bow ties therefore were no longer patented articles." Further, plaintiff alleged that "Brooks Brothers has 'wrongfully and illegally advertis[ed] patent monopolies that [defendants] do not possess,' thereby causing harm to the economy of the United States' because the embroidered mark, 'has the potential to, discourage or deter' potential competitors 'from commercializing a competing bow tie.'"

Brooks Brothers moved the court to dismiss the complaint pursuant to Fed. R. Civ. P. 12(b)(1). In particular, Brooks Brothers contended that Stauffer lacked standing to pursue the action because he has not alleged any injury in fact, and that dismissal pursuant to Rule 12(b)(1) is therefore appropriate.

The district court first addressed whether or not the statute limited "any person" to mean "competitors." The court concluded that it did not.

[W]hile defendants’ are indisputably correct that the vast majority of section 292 claims are brought by competitors rather than consumers, there is nothing in the text of the statute that compels such a result. Pequingnot v. Solo Cup Co., No. 07-cv-897, 2009 U.S. Dist. LEXIS 26020, at *7-8 (E.D. Va. Mar. 27, 2009) (finding the “plain language of the statute” precludes limiting “any person” to “competitors”); Pentlarge v. Kirby, 19 F. 501, 503 (S.D.N.Y. 1884) (Section 292(b) grants a cause of action to “whomsoever it may please to sue”).

On the issue of standing, the court acknowledged that any party invoking federal jurisdiction must establish (1) that it has suffered an injury in fact, (2) that is causally connected to the defendant, and (3) that is likely to be redressed by the court. Here, the court concluded that plaintiff could not show any injury:

Brooks Brothers responds that the alleged injury—which is supported by no additional factual pleadings—is insufficient to establish an injury in fact to the public and therefore, Stauffer does not have standing to bring suit on behalf of the United States. The Court agrees. An injury in fact must be “concrete and particularized” and “actual or imminent, not conjectural or hypothetical.” . . . Stauffer’s two conclusory statements set forth above but buried in a forty-page complaint are insufficient to establish anything more than the sort of “conjectural or hypothetical” harm that the Supreme Court instructs is insufficient. In particular, the complaint fails to allege with any specificity an actual injury to any individual competitor, to the market for bow ties, or to any aspect of the United States economy. That some competitor might somehow be injured at some point, or that some component of the United States economy might suffer some harm through defendants’ conduct, is purely speculative and plainly insufficient to support standing . . . Accordingly, Brooks' Brothers' motion to dismiss the complaint is granted.

Read/download a copy of the opinion here (link)

See earlier discussion from Patently-O on DC patent attorney Matthew Pequignot filing at least two Section 292 lawsuits in the Eastern District of Virginia alleging false marking. Here, the judge did not dismiss the action (link)