New False Marking Statute Not Unconstitutional

When Congress passed the America Invents Act last year, it changed the false marking statute.  Previously, the statute provided for qui tam actions, meaning that anyone could sue for false marking and receive half of any damage award from the court.  This created a spate of false marking cases where lawyers and others were filing and requesting large amounts of damages.

The America Invents Act amended the statute to be more in line with most other causes of action.  The new statute required the plaintiff to show actual injury or harm in order to bring suit for false marking.  In effect, competitors (or maybe deceived consumers) would be the only parties with standing to bring such suits.  The controversial aspect of the law is that the change was made retroactively, meaning that many of the suits that were pending in various courts when the law was enacted suddenly required dismissal due to lack of standing by the plaintiff.  Brooks v. Dunlop Mfg. was one such case.

The plaintiff sued Dunlop in September 2010 under the previous version of the false marking statute.  Once the America Invents Act was enacted in September 2011, the defendants moved to dismiss the case due to lack of standing by the plaintiff.  After hearing arguments on whether the retroactive nature of the change of the law violates the Due Process Clause or the Takings Clause of the Constitution, the district court dismissed the case last December.

On appeal, the Federal Circuit held that Congress had a rational basis for changing the law on a retroactive basis.  In the legislative history of this section of the law, Congress made it clear that it was concerned with perceived abuses and inefficiencies from litigation under the old version of t he law.  Congress was also concerned with the constitutionality of the earlier version of the law that did not require actual injury to the plaintiff to bring suit.

The court also rejected Brooks’s argument that the filing of a qui tam action under the old law created a binding contract with the United States that Congress could not repudiate by changing the law.

This case should bring to an end a great deal of false marking cases.

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