Federal Circuit Rules in Favor of Broad Standing for False Patent Marking Claims

August 31, 2010

Earlier today, the Court of Appeals for the Federal Circuit reversed the district court's dismissal of the relator's claims in Stauffer v. Brooks Bros., Inc., No. 2009-1428. In doing so, the Federal Circuit established broad standing for private individuals seeking to pursue qui tam actions for false patent marking on behalf of the United States.

Pursuant to 35 U.S.C. § 292, a person or entity that marks an "unpatented article" as being covered by a patent can be fined up to $500 for each such offense if the false marking was done "for the purpose of deceiving the public." According to the statute, "any person" may bring suit to recover the penalty for false marking, with the U.S. government receiving half the amount recovered in such a qui tam proceeding. In the recent wave of cases filed under section 292, there has been increasing debate about the standing requirements in such cases. The Federal Circuit appears to have answered those questions in the Stauffer decision.

Because section 292 is a qui tam provision, the court began by noting that "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.'"

The court held that a relator must allege that the United States has suffered an injury in fact, but then found that "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 … Because the government would have standing to enforce its own law, Stauffer, as the government's assignee, also has standing to enforce section 292." The court concluded that "Stauffer's standing arises from his status as 'any person,' and he need not allege more for jurisdictional purposes."

There was one significant issue that the court noted but expressly declined to address. CIBA Vision Corp., one of the amicus curiae in the case, challenged the constitutionality of section 292 on the grounds that "the governot appeal, the constitutionality of section 292."

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