False-Marking Suits Head for a Showdown

Mary Alice Robbins / law.com / 08-03-2010; A decision by the U.S. Court of Appeals for the Federal Circuit in a case set for argument Aug. 3 could put the brakes on suits that accuse companies of falsely marking their products as covered by patents. Federal judges in Texas are seeing a substantial number of such cases filed in their courts.At issue in Stauffer v. Brooks Brothers Inc., et al. is whether a pro se attorney lacked standing to sue Brooks Brothers because he failed to show that the alleged false marking of the clothier’s adjustable bow ties as covered by a patent caused injury to a competitor, to the U.S. economy or to the public. In May 2009, the U.S. District Court for the Southern District of New York granted the defendants’ motion to dismiss the suit, concluding that attorney Raymond Stauffer lacked standing to pursue monetary penalties on the government’s behalf.

Under 35 U.S.C. §292, “any person” may sue anyone who falsely marks an unpatented article as patented for up to $500 per offense. The law creates a qui tam cause of action, with the monetary penalty to be split 50-50 between the person suing and the government.

False-marking suits have surged in the courts since the Federal Circuit’s December 2009 ruling in The Forest Group Inc. v. Bon Tool Co., in which the court held that the $500 penalty applies to each falsely marked product.

The possibility that the Federal Circuit could issue a ruling in Brooks Brothers that would make it tougher for plaintiffs to prevent dismissal of their suits has some Texas attorneys keeping a close watch on the case.

Ken Good, a shareholder in Kent, Good, Anderson & Bush in Tyler, says the Federal Circuit could hold that a plaintiff has to be the defendants’ competitor and “that will be severe damage to the cause of action ...

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