Client Alert

Just 28 days after oral argument, the Federal Circuit issued a concise opinion holding that the district court erred in dismissing Stauffer’s qui tam false marking suit for lack of standing. Relying on Vermont Agency of Natural Resources v. United States, 529 U.S. 765 (2000), the court held that “a violation of [35 U.S.C. § 292] inherently constitutes an injury to the United States” and that “[b]ecause the government would have standing to enforce its own law, Stauffer, as the government’s assignee, also has standing to enforce Section 292.”

The Federal Circuit also reversed the district court’s denial of the government’s motion to intervene. The district court legally erred in denying intervention pursuant to Fed. R. Civ. P. 24(a)(2) given the government’s interest in enforcing its laws, the res judicata effect on the government’s ability to collect a fine in the event Stauffer lost the case, and the defendant’s concession that Stauffer did not adequately protect the government’s interest. Thus, under appropriate circumstances the government may participate in qui tam false marking suits.

Beyond standing and intervention, the Federal Circuit also provided some potentially valuable insights on other issues of false marking law. For example, the Stauffer decision indicates that qui tam suits will be res judicata as to the “particular markings at issue,” which suggests that different plaintiffs cannot pursue multiple lawsuits based on the same alleged false markings.

The Federal Circuit also instructed the district court on remand to assess whether Stauffer had failed to plead intent with sufficient specificity to meet the heightened pleading requirements for claims of fraud imposed by Rule 9(b). This suggests the court believes motions to dismiss for failure to satisfy Rule 9(b) have merit in appropriate false patent marking cases.

Finally, the Federal Circuit explicitly declined to consider whether Section 292 violates the “take care” clause of the U.S. Constitution, Article II, Sec. 3, leaving that constitutional question to be answered in a future case.

If you have any questions or wish to discuss how this decision will impact your company, please contact your attorney at Brinks Hofer Gilson & Lione.

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This Client Alert is intended to provide information of general interest to the public and is not intended to offer legal advice about specific situations or problems. Brinks Hofer Gilson & Lione does not intend to create an attorney-client relationship by offering this information and review of the information shall not be deemed to create such a relationship. You should consult a lawyer if you have a legal matter requiring attention. For further information, please contact a Brinks Hofer Gilson & Lione lawyer.