The U.S. Court of Appeals for the Federal Circuit reversed a district court ruling in a §292 false marking suit, finding that the plaintiff had standing to sue and that the federal government had a right of intervention. Raymond E. Stauffer v. Brooks Brothers Inc., Case Nos. 09-1428, -1430 and -1453 (Fed. Cir., Aug. 31, 2010) (Lourie, J.).
Stauffer, a patent attorney, purchased a bow tie made by Brooks Brothers and soon after, acting pro se, filed a qui tam action alleging that Brooks Brothers had falsely marked its bow ties with expired patent numbers. The district court dismissed the complaint, finding both lack of standing and failure to allege intent to deceive the public with sufficient specificity. In terms of standing, the district court explained that §292 operates as a statutory assignment of rights by the government; an aspect of standing requires that the government have suffered an injury in fact.
After the district court dismissed Stauffer’s complaint, the government sought to intervene, seeking to protect the constitutionality of §292 (which allows “any person” to sue for damages, so long as the damage award is apportioned between the qui tam claimant and the government). The district court rejected that request, insisting that “[t]he government has no basis to intervene as of right and makes an insufficient showing to warrant permissive intervention.” Stauffer appealed.
Reversing the district court, the Federal Circuit found since the government had standing to enforce §292; Stauffer, as the government’s statutory assignee, also had standing regardless of whether he (personally) suffered injury.
In terms of injury-in-fact, the Federal Circuit explained that under §292, standing does not depend on whether the alleged injury to the United States was proprietary or sovereign, as either would do, and relied on the test set forth in Vermont Agency, which requires a plaintiff to show that it has suffered an injury that is both “concrete and particularized” and “actual or imminent, not conjectural or hypothetical”; that there is a causal connection between the injury and the alleged misconduct; and that the injury will likely be redressed by a favorable decision.
The Federal Circuit also reversed the district court’s denial of the government’s motion to intervene, noting that the government’s interest are not necessarily adequately represented by Stauffer and that, should Stauffer lose, the government would be estopped from suing Brooks Brothers on the same cause. “Even though, as the district court noted, ‘the issue of the government’s ability to bring an action pursuant to §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.”
The case was remanded back to the district court.
Practice Note: On remand, the district court will now consider the merits of Brooks Brothers’ motion to dismiss for failure to state a claim on the basis that the complaint did not allege, with sufficient specificity, the statutorily required intent to deceive (scienter).