In Stauffer decision, Federal Circuit finds that qui tam relator has standing to pursue false marking claims under Patent Act
The Court of Appeals for the Federal Circuit today issued its opinion in Stauffer v. Brooks Brothers, Inc. (No. 2009-1428, - 1430, -1453, August 31, 2010). As another in a series of decisions regarding false marking under the patent statute, the Federal Circuit clarified what constitutes standing for purposes of qui tam relators pursuing claims brought pursuant to 35 U.S.C. § 292(b).
Standing is derived from a relator’s position as “any person” under the statute
In reaffirming the traditional notion for qui tam actions, the Federal Circuit stated that, “Stauffer’s standing arises from his status as ‘any person,’ and he need not allege more for jurisdictional purposes.” Stauffer, at p. 13. The district court had dismissed the action under Fed. R. Civ. P. 12(b)(1), saying that Stauffer, a patent attorney, failed to make allegations in his pleadings sufficient to establish standing upon which to base his complaint. Relying upon Federal Election Comm. v. Akins, 524 U.S. 11, 24 (1998), the district court held that an abstract harm would not sufficiently constitute an injury, and that Stauffer had not adequately alleged an actual injury-in-fact.
On appeal, the Federal Circuit held that the district court had conflated the merits of the case with the jurisdictional issue of standing. Relying upon the three prongs of (1) injury, (2) a causal connection between the injury and the defendant, and (3) redressability outlined by the Supreme Court in Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-561 (1992), the Federal Circuit held that Stauffer’s allegations met the requisite test for standing. Stauffer, at p. 13. In addressing the lack of actual injury argument, the Federal Circuit relied upon Vermont Agency of Natural Res. v. United States ex rel. Stevens, 529 U.S. 756 (2000), to hold that a violation of the law was an inherent injury to the United States, and that the decision by Congress to assign that injury to “any person” effectively establishes Stauffer’s standing as a qui tam relator. This assignability was distinct from the Akins decision, where the plaintiff was suing on behalf of himself on the grounds that a law was being violated. In the qui tam context, the relator is acting on behalf of the United States and therefore the sovereign injury is not an abstract harm, but an actual injury conducive to redress. The Court noted a long history of informer statutes in which Congress has conferred standing upon individual plaintiffs in order to help both the proprietary and sovereign interests of the United States be preserved. Stauffer, at p. 11.
The Federal Circuit also rejected Brooks Brother’s argument and the lower court’s reliance upon Vermont Agency as limiting assignability in a qui tam context to situations in which the injury to the United States is proprietary in nature. While the Court said it took no position on whether § 292 addresses a proprietary or sovereign injury, it went on to say that for purposes of this decision, the distinction was irrelevant. In Vermont Agency, the Supreme Court found both sovereign and proprietary injury “to be sufficient to confer standing on the government and therefore the relator,” leading the Federal Circuit to determine the same to be true in Stauffer.
Constitutionality pursuant to Article II, Section 3 not addressed
The Federal Circuit also noted another challenge to the false marking statute raised in amicus briefs, regarding whether the qui tam provision in § 292 violates Article II, Section 3. Briefs filed by Ciba Vision Corporation argued that the qui tam provision was an unconstitutional delegation of the duty of the executive branch to “take Care that the Laws be faithfully executed.” Although the Federal Circuit stated that Ciba’s brief raised “relevant points,” it declined to consider that argument further because it was not addressed by the parties or the district court.