In the course of our extensive coverage of the spreading plague of patent false-marking suits, we opined that the courts were likely to focus on “standing” – or the lack thereof – as a means of reining in runaway trolls. Well, we were right. (Shizzle Pop, LLC v. Aviva Sports, Inc. et al. and United States of America, et al. v. WHAM-O, Inc.) (Yes, folks, a TWOFER.)
In an outstandingly well reasoned and well articulated opinion, Judge Schwab, of the U.S. District Court for the Western District of Pennsylvania, delved into the constitutional requirements for a qui tam action (Latin phrase meaning “opportunist who sues ostensibly in behalf of the government and keeps half of whatever he collects”) and held that FLFMC, LLC – the et al. in the WHAM-O case – lacked standing to sue for false marking. Citing to Supreme Court precedent, Judge Schwab noted that standing required, inter alia, that a plaintiff in a qui tam action “must show an injury-in-fact, a harm that is ‘both concrete and actual or imminent, not conjectural or hypothetical’” and also must “demonstrate a likelihood that the requested relief will substantially remedy the injury-in-fact.” He then held that “[i]n this case, there is no quantifiable, concrete injury to the United States or to FLFMC…” and “[a] violation of law alone is not enough to establish an injury-in-fact under general standing principles.” Case dismissed.
Judge Klausner, of the U.S. District Court for the Central District of California, came to much the same conclusion in the Shizzle Pop case – albeit in a much shorter opinion. “[A] plaintiff must support an alleged injury with additional factual pleadings, and such injury must be concrete and particularized, and actual or imminent … mere legal conclusions are insufficient, and a formulaic recitation of the elements will not do.” Case dismissed.
THE LESSON TO BE LEARNED: Unless the marking trolls can come up with a new and convincing theory of how false marking actually injures the public, the bringing of these actions will henceforth be limited to ones by actual competitors of the (alleged) mismarker.
Thanks Geniuses, how do you reconcile the "outstandingly well reasoned and well articulated opinion" of Judge Schwab with the fact that the Federal Circuit in Pequignot reached the merits of a case in which the plaintiff was a non-competitor? Since all federal courts, including the Supreme Court, must assure themselves that they have subject matter jurisdiction (i.e., that the plaintiff has standing) before reaching the merits, hasn't the Federal Circuit decided sub silentio that non-competitors have standing?
This decision seems to directly contradict the CAFC's recent ruling in Stauffer v. Brooks Bros., which indicates that the U.S. presumptively has standing to sue in false marking cases. As reported by the Patently-O blog, the CAFC ruled that:
"Congress has, by enacting section 292, defined an injury in fact to the United States. In other words, a violation of that statute 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, Stauffer, as the government’s assignee, also has standing to enforce section 292."