Federal Circuit Reverses Ruling that Qui Tam Relator did not have Standing Under the False Patent Marking Statute

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On August 31, 2010, the United States Court of Appeals for the Federal Circuit issued a decision in a qui tam action under the "False Marking" statute (35 U.S.C. § 292). In Stauffer v. Brooks Bros, Inc., 2009-1428, -1430, -1453 (Fed. Cir. August 31, 2010), the Federal Circuit reversed the decision of the United States District Court for the Southern District of New York, which dismissed Stauffer's false marking qui tam action for lack of standing, and denied the government's motion to intervene. Stauffer v. Brooks Bros., Inc., 615 F.Supp. 2d 248 (S.D.N.Y. 2009); Stauffer v. Brooks Bros., Inc., No. 08-cv-10369, 2009 U.S. Dist. Lexis 51166 (S.D.N.Y. June 15, 2009).

Background

Brooks Brothers, Inc. manufactures and sells men's bow ties. Some of Brooks Brothers' bow ties are marked with patent numbers which expired in the 1950s. Stauffer purchased some of the marked bow ties, and brought a qui tam action under 35 U.S.C. § 292 alleging that Brooks Brothers had falsely marked its bow ties. A penalty of up to $500 applies to each individual article that is wrongly marked.

Brooks Brothers moved to dismiss Stauffer's complaint pursuant to Federal Rule of Civil Procedure 12(b)(1) for lack of standing, and 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. The district court granted Brooks Brothers' motion pursuant to Rule 12(b)(1), concluding that Stauffer lacked standing. After the court's decision regarding Stauffer's standing, the government moved to intervene. The court denied the motion.

Stauffer's Standing

The Federal Circuit held that Stauffer, as the government's assignee, has standing to enforce Section 292. The court explained that Congress has, by enacting Section 292, defined an injury in fact to the United States--violation of that statute inherently constitutes an injury to the United States.

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