Tuesday, August 31, 2010

CAFC: "Any Person" Has Standing To Assert False Marking Claim

Stauffer v. Brooks Brothers, Inc., 2009-1428 (Fed. Cir., August 31, 2010)

Stauffer purchased bow ties manufactured by Brooks Brothers, and subsequently launched a qui tam action under 35 U.S.C. § 292 alleging that Brooks Brothers had falsely marked its bow ties, based on expired patents that were listed in the markings.

The district court dismissed Stauffer’s complaint pursuant to Rule 12(b)(1) for lack of standing and pursuant to Rule 12(b)(6) for failure to allege an intent to deceive the public with sufficient specificity to meet the heightened pleading requirements for claims of fraud.

On the standing issue, the district court ruled that all plaintiffs, including qui tam plaintiffs, must establish (1) that they have suffered an injury in fact (2) that is causally connected to the defendant, and (3) that is likely to be redressed by the court. The court further noted that the qui tam provision of section 292(b) operates as a statutory “assignment” of the rights of the United States, so Stauffer must prove that the government, rather than he, satisfies the requirements for standing, including that it has suffered an injury in fact.

The Federal Circuit reversed the district court and sided with Stauffer:

We agree with the government and Stauffer that Stauffer had standing to sue Brooks Brothers. “The question of standing to sue is a jurisdictional one, which we review de novo.” . . . Under Vermont Agency [529 U.S. 765 (2000)], a qui tam plaintiff, or relator, can establish standing based on the United States’ implicit partial assignment of its damages claim to “any person,” . . . In other words, even though a relator may suffer no injury himself, a qui tam provision operates as a statutory assignment of the United States’ rights, and “the assignee of a claim has standing to assert the injury in fact suffered by the assignor.”

Contrary to the district court’s decision . . . Stauffer’s standing as the United States’ assignee does not depend upon the alleged injury to the United States being proprietary, as opposed to sovereign. We therefore express no view as to whether section 292 addresses a proprietary or a sovereign injury of the United States, or both . . . as either one would confer standing on the government, and therefore Stauffer.

[W]e also need not address whether Stauffer’s alleged injuries to himself or his asserted injuries to competition give him standing, either individually or as a member of the public. Stauffer’s standing arises from his status as “any person,” and he need not allege more for jurisdictional purposes . . . The standing doctrine is intended to require that the plaintiff is a proper person to bring the suit; it does not require that the plaintiff properly allege all of the elements of his claim. Thus, “standing does not depend on the merits of the plaintiff’s contention that particular conduct is illegal”; it instead requires a claim to an injury of a legally cognizable right.
While the case was reversed and remanded on the issue of standing, Stafford will still have the onerous task of proving scienter under Section 292(a), which provides that "[w]hoever 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."

Read/download the opinion here (link)

2 Comentários:

Anonymous said...

An excellent discussion on the correctness of calling Section 292 suits "Qui Tam" over at Patently-O

patent litigation said...

I agree with the CAFC's ruling here, and am glad the district court decision was reversed. Although many of us would like to rid patent litigation of the scourge of false marking trolls, undermining statute and judicial precedent is not the way to do it. As this post notes, proving scienter is likely a sufficient burden that (if courts properly apply the law) the nuisance value of trolls will be limited.

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