Friday, November 5, 2010

"Any person" may pursue a patent false marking claim on behalf of the government.

SDJP Patent Group, LLC sued Macho Products, Inc. for allegedly falsely marking some of its martial arts products. As you may know by now, false marking litigation has become a cottage industry for plaintiffs allowing the recovery of up to $500 for each offense of falsely marking a product as patented with an intent to deceive.

Macho asked the court to stay the proceedings until after the Federal Circuit rendered its Stauffer decision, addressing who can bring a false marking suit. The court said no.

Macho then sought dismissal, arguing that SDJP has no standing because there has been no injury. The Stauffer decision was dispositive:
Defendant's primary defense that the United Slates did not suffer an "injury in fact" is erroneous, in light of the Stauffer decision. Therefore, Defendant's motion to dismiss is DENIED for the following reasons.

Section 292 (b) is a qui tam provision authorizing "any person"' to pursue an action on the government's behalf. A qui tam provision is a statutory assignment of the United States' rights, and the assignee of a claim has standing if the United States has suffered an injury in fact, even if the assignee has suffered no injury himself. Vt. Agency of Natural Res. v. United States ex rel. Stevens, 529 U.S. 765, 773 (2000). According to the Federal Circuit a violation of section 292 inherently constitutes an injury to the United States:
In passing the statute prohibiting deceptive patent mismarking. Congress determined that such conduct is harmful and should be prohibited. The parties have not cited any case in which the government has been denied standing to enforce its own law. Because the government would have standing to enforce its own law, [the plaintiff], as the government's assignee, also has standing to enforce section 292.
Stauffer, 2010 U.S. App. LEXIS 18144. at *11-12. Macho asserts that Plaintiff has been unable to allege any specific injury to Plaintiff or to the United States. However, Defendant violated section 292, which is sufficient to show an "injury in fact" to the United Slates. Consequently, Plaintiff has sufficiently alleged (1) an injury in fact to the United States that (2) is caused by Macho's alleged conduct, marking its equipment with expired patent numbers, and (3) is likely to be redressed, with a statutory fine, by a favorable decision. Plaintiff's standing arises solely from his status as "any person," under section 292 (b) and he need not allege more for jurisdictional purposes.
Macho's next argument was that it didn't intend to deceive anyone. But as I argued in an earlier post, that's not going to work for dismissal. That's a fact question. You can't get out of these suits by saying "I didn't intend to deceive anyone." You've got to prove it.
Further, Defendant's assertion that there was no intent to deceive the public is a matter of fact. A trial judge may resolve factual disputes when subject matter jurisdiction turns on the resolution of contested facts. Arbaugh. 546 U.S. at 514. However, if the contested facts are also central to the cause of action then jurisdiction will be found and the trier of fact will resolve the contested facts. Here, the contested "intent to deceive the public" is an element of the cause of action (False Marking) and a matter for a jury to decide.
Motion to dismiss denied.

SDJP Patent Group, LLC v. Macho Products, Inc., Case No 8:10-cv-01232, slip op. (M.D. Fla. Nov. 2, 2010) (J. Kovachevich)

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