Stauffer v. Brooks Brothers, Inc., No. 2009-1428, -1430, -1453 (Fed. Cir. Aug. 31, 2010)

Plaintiff purchased bow ties manufactured by defendant and subsequently brought a qui tam action under 35 U.S.C. § 292 alleging that defendant had falsely marked its bow ties with patents that had expired in 1954 and 1955. The district court granted defendant’s motion to dismiss for lack of standing and also denied the United States’ motion to intervene. Plaintiff and the United States appealed.

Under Section 292, “whoever marks … any unpatented article” with the word “patent or any word or number importing that the same is patented, for the purpose of deceiving the public … [s]hall be fined not more than $500 for every such offense.” Moreover, the statute provides that “any person may sue for the penalty, in which event one-half shall go to the person suing and the other to the use of the United States.” (emphasis added).

The Federal Circuit noted 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.’” Thus, the court stated, “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.’” However, prior to doing this, plaintiff must assert that the United States has met the necessary requirements for standing by suffering an injury in fact causally connected to defendant’s conduct.

The Federal Circuit stated that “Congress has, by enacting section 292, defined an injury in fact to the United States.” Therefore the court held that “a violation of that statute inherently constitutes an injury to the United States. … Because the government would have standing to enforce its own law, [plaintiff], as the government’s assignee, also has standing to enforce section 292.” The Federal Circuit found that the government’s claims could be assigned to “any person,” even one that had no concrete injury.

The Federal Circuit also held that the district court erred in denying the United State’s motion to intervene. The court held that “the government has an interest in enforcement of its laws and in one–half the fine that Stauffer claims, disposing of the action would ‘as a practical matter impair or impede the [government’s] ability to protect its interest,’ and [plaintiff] may not adequately represent that interest.” Furthermore, the Federal Circuit stated that “the government would not be able to reā€‘cover a fine from [defendant] if [plaintiff] loses, as res judicata would attach to claims against [defendant] for the particular markings at issue.”

A copy of the opinion can be found here.