CAFC bows to the inevitable

PatLit has already featured the cruel and unusual "patent marking" provisions of US patent law here and here (see also this post on patent marking policy in Taiwan). Well, earlier today the United States Court of Appeals for the Federal Circuit gave its ruling in Raymond E. Stauffer v Brooks Brothers Inc.; Retail Brand Alliance v United States here.

The decision is bad news for unsuspecting and harmless patent-markers. Brooks Brothers and its parent Retail Brand Alliance made and sold men’s bow ties. Some of the Brooks Brothers bow ties contained an “Adjustolox” mechanism made by a third party, J.M.C. Bow Company, and marked with, inter alia, U.S. Patent Nos. 2,083,106 and 2,123,620. These patents are not exactly hot stuff, having expired in 1954 and 1955 respectively. Stauffer, a patent attorney, bought some of the marked bow ties, then brought a qui tam action under 35 U.S.C. § 292 alleging that Brooks Brothers had falsely marked its bow ties as being patented. This would entitle him to half the fine in respect of each offending sale. The District Court dismissed Stauffer's action on grounds of lack of standing and an insufficiently argued claim that he was a person damaged by the bow tie sale.

Reversing this decision -- which to this English lawyer, unversed in US law, looked clearly wrong in the first place -- the Federal Circuit remanded the action for trial of the merits. On the issue of standing the appellate court had this to say:

"We also need not address whether Stauffer’s alleged injuries to himself or his asserted injuries to competition give him standing, either individually or as a member of the public. Stauffer’s standing arises from his status as “any person,” and he need not allege more for jurisdictional purposes. The district court conflated its jurisdic-tion with the merits of the case when it stated that Stauffer had failed to sufficiently allege a “purpose of deceiving the public.” ... Brooks Brothers similarly conflates jurisdiction and merits in asserting that Stauffer must show that the marking is fairly traceable to Brooks Brothers, rather than to J.M.C. Bow, the third party Adjustolox manufacturer. Neither of those points is jurisdictional in nature, nor do they fall under the standing inquiry. The standing doctrine is intended to require that the plaintiff is a proper person to bring the suit; it does not require that the plaintiff properly allege all of the elements of his claim. Thus, “standing does not depend on the merits of the plaintiff’s contention that particular conduct is illegal”; it instead requires a claim to an injury of a legally cognizable right. .... By allowing any person to sue, Congress granted individuals a legally cognizable right to half of the penalty defined in section 292(a). Thus, Stauffer has sufficiently alleged (1) an injury in fact to the United States that (2) is caused by Brooks Brothers’ alleged conduct, attaching the markings to its bow ties, and (3) is likely to be redressed, with a statutory fine, by a favorable decision ...".

Thanks, Gerry Gavigan, for the link.

Patent marking, bounty hunting?

Writing on the Intellectual Property Watch weblog, Foley & Lardner special counsel Phillip Articola ("Forest Group Decision Has Led To Great Rise In Patent Marking Lawsuits") discusses the US decision in Forest Group, Inc. v Bon Tool Company et al., ___ F.3d ___ (December 28, 2009), in which the Court of Appeals for the Federal Circuit (CAFC) made it more viable for entities to sue patent owners for products that have been improperly marked with the term “patent” or any word or number connoting that the products are patented (e.g., patent number), since those entities can obtain one-half of the statutory penalty payable for making such a false patent marking.

The legislative provision which facilitates this bounty-hunting is 35 U.S.C. § 292, which imposes a civil penalty for falsely marking a product as patented. As Mr Articola explains, under § 292(a), false marking occurs when one intentionally marks or affixes or uses in advertising in connection with any unpatented article, the word “patent” or any word or number importing the same. This section also considers false marking to be when one uses “patent pending” or “patent applied for,” for the purpose of deceiving the public, when in fact no patent application has been filed or if a patent application has been filed but is no longer pending. A $500 penal is incurred in respect of each offence and, under § 292(b), “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”. The author concludes:

"Based on the Forest Group decision, § 292 will not only lead to a rise in patent marking lawsuits, but it will also likely be the case that patent marking suits will be included more frequently as a counterclaim in patent infringement lawsuits brought by patent owners against accused infringers. Of course, if the S.515 bill [US patent reform] in its current state eventually becomes law, this will certainly affect the number of such lawsuits. ...".