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[Robert K S]

Cite: 2011 WL 649998 (N.D.Ohio).  In a nutshell:

"...as the False Marking Statute is criminal [as decided in Pequignot v. Solo Cup Co., 608 F.3d 1356, 1363 (Fed.Cir.2010)], the Court is bound by [Morrison v. Olson, 487 U.S. 654 (1988)] and its 'sufficient control' analysis, which provides the necessary precedent for examining a statute delegating the authority to prosecute a criminal action. ... the Court does not agree with the district court in Pequignot that the government's ability to intervene in an action is sufficiently protected by Rule 24 of the Federal Rules of Civil Procedure. The Federal Circuit has held that, under Rule 24(a)(2) of the Federal Rules of Civil Procedure, the government has a right to intervene in a False Marking qui tam action as a matter of law. Stauffer v. Brooks Brothers, Inc., 619 F.3d 1321, 1328 (Fed. Cir. 2010). The Federal Circuit, however, had previously characterized the False Marking statute as criminal. Pequignot, 608 F.3d at 1363. It is unclear how a Civil Rule can ever provide the basis for a right to intervene in a criminal proceeding. Even if it does provide the government the right to intervene, Rule 24 of the Federal Rules of Civil Procedure fails to sufficiently protect the government because it does not require that the government actually be served with a False Marking complaint or any relevant pleadings. ... Moreover, by the time the government is informed by the clerk of an action being filed, the case may have already been settled. This presents a unique problem with False Marking qui tam actions because relators are likely to be interested in a quick settlement without the delay and expense of protracted litigation. Thus, without even being notified of the qui tam action brought on its own behalf, the government may be bound by a settlement and will likely precluded from bringing its own suit under the doctrine of res judicata. ... The False Marking statute essentially represents a wholesale delegation of criminal law enforcement power to private entities with no control exercised by the Department of Justice. ... It is therefore essential that the government have control over when such cases are brought, and most importantly, how they are settled. Such decisions should be made by government attorneys who have no financial stake in the outcome of the litigation or settlement, not by private parties motivated solely by the prospect of financial gain.  For the reasons discussed, supra, the qui tam provision of the False Marking Statute, 35 U.S.C. § 292(b) is unconstitutional under the Take Care Clause of the United States Constitution, U.S. Const. Art. II, § 3."

Well, I think this is all wrong.  It's funny, I saw Polster the same day this decision was issued.  He was talking about the quality he values most highly in his clerks: the competence and guts to stand up to him and tell him when he's wrong.  I guess none of his clerks stood up to him on this decision.

[Isaac]

Well, I think this is all wrong.  It's funny, I saw Polster the same day this decision was issued.  He was talking about the quality he values most highly in his clerks: the competence and guts to stand up to him and tell him when he's wrong.  I guess none of his clerks stood up to him on this decision.

We've discussed the possibility of a ruling like this somewhere in this forum.   My personal opinion is that qui tam actions should be structured as Polster describes here, and that not involving the gov't is problematic.  Maybe even fatally problematic.

[MYK]

I'm sorry, but your posts have nothing to do with counterfeit Louis Vuitton handbags, knockoff Nikes, or medical malpractice insurance sales, so you're off-topic for this forum.

Anyway, under his logic, *all* qui tam actions are unconstitutional.  Somehow, I don't think that will fly.

ETA: since this thread has been revived, I should mention that my first paragraph was being snippy because of the insane amount of spam that had been deluging the forum that day.

[NJ Patent1]

Robert, MYK:  I agree.  But Congress did not 

[Isaac]

Robert, MYK:  I agree.  But Congress did not 

Nonsense.   Most "real" qui tam actions are based on statutes that do provide "control exercised by the Department of Justice".   None of those actions would be unConstitutional under Polster's reasoning.

[NJ Patent1]

Well, it may indeed be nonsense.  But as I read section 16 of the AIA, Congress left private parties with a single remedy for "false marking" (subject of the OP and focus of my comment):  a civil action for actual damages.  I jave no comment on other statutes authorizing "qui tam" actions.

[Robert K S]

FWIW, the meaning of NJ's post as referring to the AIA's recent de-fanging of false marking was clear to me.

Congress, apparently, has decided that false marking is only a crime on paper, and that it there should never actually be any instances where it should be enforced.

Just one of a long list of great shames in the AIA.

[petethebody]

Congress, apparently, has decided that false marking is only a crime on paper, and that it there should never actually be any instances where it should be enforced.

Just one of a long list of great shames in the AIA.

I, respectfully, dissent.  The penalties were not proportional to any harm to consumers, at least for expired patents.  Also, this law was unnecessary as there is no reason to believe that expired patent markings affect actual purchasing habits, or affect potential competitors.  The qui tam craze was just the new cybersquatting, and, similarly, passed as the previous fad. 

[petethebody]

I'm sorry, but your posts have nothing to do with counterfeit Louis Vuitton handbags, knockoff Nikes, or medical malpractice insurance sales, so you're off-topic for this forum.

Anyway, under his logic, *all* qui tam actions are unconstitutional.  Somehow, I don't think that will fly.

I believe there are only 5 qui tam laws remaining now: False Claims Act, 31 U.S.C. §3729, persons contracting with Indians in an unlawful manner 25 U.S.C. 81, violation of Indian protection law, 25 U.S.C. 201, forefeiture to informer of vessels privately armed against friendly nations, 18 U.S.C. 962, and forfeiture to informer for vessels removing undersea treaure from the Florida coast to foreign nations, 46 U.S.C. 723. 

I looked into it, and various circuits require different levels of involvement of the DOJ for the False Claims Act.  I can't recall which is which, but I know some require the DOJ to get notice of suit, some allow the DOJ to enter at any time, some require the DOJ to receive notice of settlement, some require the DOJ the opportunity to object to settlement, and some require the express approval of the DOJ to settle.  Accordingly, there is much more governmental oversight, and I'm quite sure the FCA's constitutionality has been upheld.

As for the other four, I'm not sure if anyone has brought a claim under those in the last 100 years, so I'm not sure it matters whether or not they are constitutional. 

[Isaac]

I looked into it, and various circuits require different levels of involvement of the DOJ for the False Claims Act.  I can't recall which is which, but I know some require the DOJ to get notice of suit...

In fact, for the False Claim qui tam, the requirement to notify the Government is statutory, so presumably all courts require that.  From 31 U.S.C. § 3730: http://www.law.cornell.edu/uscode/usc_sec_31_00003730----000-.html

"(b) Actions by Private Persons.—

(2) A copy of the complaint and written disclosure of substantially all material evidence and information the person possesses shall be served on the Government pursuant to Rule 4(d)(4) of the Federal Rules of Civil Procedure. The complaint shall be filed in camera, shall remain under seal for at least 60 days, and shall not be served on the defendant until the court so orders. The Government may elect to intervene and proceed with the action within 60 days after it receives both the complaint and the material evidence and information."

Other provisions of statue allow the Attorney General to take over the case if he so elects, and also require that the AG give consents to any dissmissal.  So the Gov't gets a say in any attempt to settle the case.   The Government can also elect to dismiss the action despite the objections of the private individual.

Of course the false marking statute contained exactly none of the provisions and protections spelled out in 31 U.S.C. § 3730.

[Robert K S]

There is no reason to believe that expired patent markings affect actual purchasing habits, or affect potential competitors.

If they don't affect purchasing habits, why do TV commercials note when a product is "patented!" (as synonymous for "unique", "superior", "beware cheap imitations")?

If they don't affect potential competitors, why do manufacturers put them on their products at all?

[Isaac]

There is no reason to believe that expired patent markings affect actual purchasing habits, or affect potential competitors.

If they don't affect purchasing habits, why do TV commercials note when a product is "patented!" (as synonymous for "unique", "superior", "beware cheap imitations")?

If they don't affect potential competitors, why do manufacturers put them on their products at all?

Note that Petethebody wrote specifically about expired patent markings which is what essentially all of what the glut of filings was about for the last few years. 

1. The TV commercials are always about unexpired patents which are not the ones we are talking about.

2. Failing to put active patent numbers on products means no damages from infringement before the date you actually notify an infringer.  Manufactures must therefore mark their products to provide notice to would be would-be-copiers right up until the day the patent expires, regardless of whether there is any marketing advantage.   Taking the patent numbers off the products can mean an expensive redesign of the product moldings and packaging.  Plus the law was unclear that it was necessary to do that. 

3. Potential competitors would presumably look up the patents to see what feature they covered and look at their expiration dates.  They wouldn't be deceived by expired patent numbers on cup lids.  So the damages would be limited to the amount of time to check.

There are of course a tiny number of exceptions, like the possibly inappropriate patent markings on acetaminophine that appear to be deliberate attempts to affect purchasing power, but the Government can handle those cases.

By and large the patent marking suits were an attempted money grab by a few law firms.  Suits were filed with no attempts to identify a single injured party.  Further, because the government was not involved at any point, there was no clear mechanism to settle the law suits for less than full value in a way that prevented another party from suing again.  Yes it was a cluster, and it is understandable that Congress pulled the plug.

[Robert K S]

1. The TV commercials are always about unexpired patents which are not the ones we are talking about.

Wrong, Isaac.  I see expired-patent false marking on TV on a regular basis.  I ought to have kept a list.  Hell, I saw a TV infomercial not long ago for a (supposedly) posture-improving seat orthotic.  Look up the "patent" they shout about multiple times in their TV ad, and it's Des. 294,900 from 1988.  (You do the math on term.)  They're still false marking on their official web site.  What does our patent system mean if there are no teeth in our false marking law?  This company is exerting pressure on the marketplace from two directions--on competitors not to duplicate their product, and on consumers not to buy any other posture-improving orthotics that might be ineffective.

Taking the patent numbers off the products can mean an expensive redesign of the product moldings and packaging.  Plus the law was unclear that it was necessary to do that.

I don't think the law was so unclear after the decision in Solo Cup.  Now, the law is clear: false mark all you want.  Nobody will be coming after you.

3. Potential competitors would presumably look up the patents to see what feature they covered and look at their expiration dates.  They wouldn't be deceived by expired patent numbers on cup lids.  So the damages would be limited to the amount of time to check.

This argument doesn't make sense to me.  Should it be okay to commit perjury in court on facts that are Googlable?  Why should it be legal to advertise your product as being "patented" on an expired patent?  As a potential market entry in the very early stages of choosing my product, I might be dissuaded from even bothering to do the search, if I see a huge list of patents on the product or packaging.

This argument also unjustifiably presupposes expertise and sophistication on the part of the commercial actors.  The average manufacturing entrepreneur doesn't understand how to look up patents, identify their types and terms, incorporate PTA, etc. to arrive at terminal dates.  We're experts, that stuff's easy to us.  Five minutes, and done.  But now you're saying every entrepreneur should have to hire a patent attorney every time they enter the market.  That's not an efficient system.  An auto-policed regime, that's an efficient system.

There are of course a tiny number of exceptions, like the possibly inappropriate patent markings on acetaminophine that appear to be deliberate attempts to affect purchasing power, but the Government can handle those cases.

Yeah, right.  False marking was the one area of law where citizen enforcement made good sense, because citizens have all the tools to do the enforcement and no danger would be put upon them.  Citizens can't be expected to go after drug dealers or organized crime, but false marking was one place where we could make a better world--a better marketplace--without placing additional unnecessary burden on the taxpayer.  The government isn't going to pursue any false marking cases.  I'll wager on that.

By and large the patent marking suits were an attempted money grab by a few law firms.

What the lawyers get is irrelevant to benefit gained of the enforcement of a just and sensible law, and justified by it.  Lawyers make out well on class action settlements and judgments, but those class action settlements and judgments are the reasons why big corporations aren't so brazen as to constantly and openly pick the pockets of their consumers.

Yes it was a cluster, and it is understandable that Congress pulled the plug.

It is understandable that Congress pulled the plug when it is understood that the AIA, and every provision therein, was a gift to corporations bought and paid for by them.

[Isaac]

Wrong, Isaac.  I see expired-patent false marking on TV on a regular basis.

I can accept that. 

Of course it isn't false marking anymore, now is it?   I don't see a problem with marking a product with expired, but applicable patent numbers.   I don't think suits for expired patents were successful anyway.   It isn't clear that marking expired patent numbers was ever illegal.

3. Potential competitors would presumably look up the patents to see what feature they covered and look at their expiration dates.  They wouldn't be deceived by expired patent numbers on cup lids.  So the damages would be limited to the amount of time to check.

This argument doesn't make sense to me.  Should it be okay to commit perjury in court on facts that are Googlable?  Why should it be legal to advertise your product as being "patented" on an expired patent?  As a potential market entry in the very early stages of choosing my product, I might be dissuaded from even bothering to do the search, if I see a huge list of patents on the product or packaging.

If a competitor actually is injured, he can still sue.   The DOJ can still sue.   What has been eliminated is the possibility that Joe Random public or Jake's Law Office can collect some free money when he has not been injured.  I don't find that change a hugely compelling loss.

The 'dissuaded from bothering to search' argument is pretty silly.  If you see a product with a patent number on it, you have no idea what portion of the product is covered by the patent.   It might well be some trivial feature that you can omit without affecting marketability.  As a matter of course, a copier interested in making money would have to take the trivially easy step of looking at the patent (No searching is required when you have the patent number.).  A potential competitor that won't look isn't serious about making money.

Further, if the law is that using an expired patent number is not illegal, then advertising the number  is not perjury.

This argument also unjustifiably presupposes expertise and sophistication on the part of the commercial actors.  The average manufacturing entrepreneur doesn't understand how to look up patents, identify their types and terms, incorporate PTA, etc. to arrive at terminal dates.

I'd be happy to do that task for them for an extremely reasonable fee.   In fact, you don't even need a registration number to do this kind of work.   I could certainly teach a paralegal to do it in short order.

What the lawyers get is irrelevant to benefit gained of the enforcement of a just and sensible law

The law wasn't sensible because it did not include the proper safeguards against abuse that other qui tam actions have.   Fix that and I'd just chalk things up to you and the previous Congress feeling different about the issue than do I.   

I don't believe a single person was harmed by the Solo cups marking issue, yet people were expecting to reap millions of dollars from Solo.  That's not justice.  That's a windfall.

[Robert K S]

What has been eliminated is the possibility that Joe Random public or Jake's Law Office can collect some free money when he has not been injured.

Yeah, but that was the best part of the law.  Not because it got a few lucky law firms a bit richer (did it, actually?), but because it would have resulted, in fairly short order, I believe, in a sustainable legal equilibrium resulting from better consciousness of the law and basic fairness.  As a patent professional, I want "patented" to mean something, and something very special.  To allow it to be policed by anyone, as the CAFC was persuaded in Bon Tool, is a powerful tool in tamping down acts of false marking that so "deter innovation" and "scientific research" and "stifle competition in the marketplace."  Empowering the public as the watchdog and to incentivize such vigilance with reward that comes from elsewhere than the taxpayer is, I think, the most efficient way to handle a problem that is, however important, seen as piddling to a justice system with bigger fish to fry.

No searching is required when you have the patent number.

Please.  You think many people outside of the patent profession know how to look up a patent, find the right date out of several on the cover page, and compute whether the patent is likely to still be in force?--or if it is, to go to the claims section, and read and properly interpret claims to determine if the patent coverage in fact covers anything important about the product?  You say "[a] potential competitor that won't look isn't serious about making money."  I see a potential competitor that can afford to look already has money, and I'm not too worried about him.  I'm worried about the upstart market entrant who can't stay in business beyond the first year because he was bogged down with $50,000 in legal bills during the most fragile stage of start-up.

I could certainly teach a paralegal to do it in short order.

You don't think a paralegal offering freedom-to-operate opinions constitutes practicing law without a license?

The law wasn't sensible because it did not include the proper safeguards against abuse

Now, the "safeguards" against "abuse" virtually repealed false marking.  Baby with bathwater?  We shall see if "patented" will mean anything in the coming generation.  Once, I had been hopeful.