Given Congress' legitimate concerns with respect to the cost and constitutionality of pending qui tam actions, we conclude that the retroactive application of amended § 292 to pending actions was a rational means of pursuing a legitimate legislative purpose.
On December 13, 2012, in Brooks v. Dunlop Mfg. Inc., the U.S. Court of Appeals for the Federal Circuit (Newman, Prost,* Moore) affirmed the district court's dismissal of Brooks' false marking claim and rejecting his argument that the application of amendments to 35 U.S.C. § 292 effectuated by the Leahy-Smith America Invents Act ("AIA") to pending actions was unconstitutional. The Federal Circuit stated:
Section 292(a) makes it unlawful for any person to engage in specified acts of false patent marking, such as affixing to a product a mark that falsely asserts that the item is patented, with the intent to deceive the public. Any person who engages in false patent marking prohibited by § 292(a) "[s]hall be fined not more than $500 for every such offense." Prior to 2011, 35 U.S.C. § 292(b) provided that "[a]ny person may sue for the penalty, in which event one-half shall go to the person suing and the other to the use of the United States." More particularly, § 292(b) authorized private parties (relators) to bring a qui tam or informer's suit for violations of § 292(a).
On September 16, 2011, the President signed into law the AIA, which amends § 292 in several respects. Specifically, Section 16 of the AIA eliminates the qui tam provision of § 292(b) and amends § 292(a) to provide that "[o]nly the United States may sue for the penalty authorized by this subsection." In lieu of the qui tam provision, the AIA amends § 292(b) to authorize actions for damages by any person "who has suffered a competitive injury as a result of a violation" of § 292(a). Moreover, the AIA narrows the scope of liability by providing that marking products with expired patents is not a violation. And of particular relevance here, the AIA expressly provides that "[t]hese amendments . . . shall apply to all cases, without exception, that are pending on, or commenced on or after, the date of the enactment of this Act." . . .
"No person has a vested interest in any rule of law, entitling him to insist that it shall remain unchanged for his benefit." Nevertheless, retroactive legislation, like the false marking provisions of the AIA at issue here, "must meet the test of due process." Provided that the retroactive application of a statute is supported by a legitimate legislative purpose furthered by rational means, judgments about the wisdom of such legislation remain within the exclusive province of the legislative and executive branches." This "'burden is met simply by showing that the retroactive application of the legislation is itself justified by a rational legislative purpose.'"
According to Mr. Brooks, Congress's retroactive elimination of the qui tam provision of § 292(b) is arbitrary and irrational because it is tantamount to sanctioning Dunlop's public deception and indemnifying its violation of § 292. Mr. Brooks, however, overlooks that the AIA replaced qui tam actions under § 292(b) with a compensatory cause of action for any person who has suffered a competitive injury as a result of a false marking violation. Moreover, the United States may sue for the penalty authorized by § 292(a). Accordingly, we reject the argument that the AIA's amendments to § 292 somehow sanction public deception. We therefore turn to Mr. Brooks's more general argument that the retroactive elimination of the qui tam provision of § 292 is not justified by a rational legislative purpose.
As an initial matter, we cannot say that it was irrational for Congress to conclude that the costs associated with qui tam actions under § 292(b) exceeded their benefits, and to respond by replacing such actions with a compensatory cause of action for private parties suffering competitive injury. Indeed, the legislative history of the AIA suggests that this is what many members of Congress had in mind. Commentators expressed similar concern that the qui tam action, combined with the statutory penalty, had created a surge of vexatious litigation and posed a risk of grossly disproportionate penalties for false marking. It follows that, by making the elimination of the qui tam provision of § 292(b) retroactive, Congress "was in significant part attempting to reduce the litigation expenditures in the large number of complaints filed, but not yet subject to a final judgment." In fact, the legislative history suggests that Congress was particularly concerned with the perceived abuses and inefficiencies stemming from false marking claims that were initiated before the AIA was signed into law.
But there is more. At the time that Congress acted, there was a live question about the constitutionality of the then-existing qui tam provision. This too appears to have been a concern when Congress eliminated the qui tam provision from § 292(b). Indeed, it was rational for Congress to pass legislation eliminating a potential constitutional issue and sparing the courts, private parties, and the United States the litigation burdens and risks associated with such issues. At bottom, Congress made a considered choice to modify the private cause of action in § 292(b) and apply that modification to pending as well as future cases. Given Congress's legitimate concerns with respect to the cost and constitutionality of pending qui tam actions, we conclude that the retroactive application of amended § 292 to pending actions was a rational means of pursuing a legitimate legislative purpose.
Mr. Brooks primarily contends that by filing a lawsuit against Dunlop, he entered into a binding contract with the United States. Although he does not articulate what exactly this contract was for or what was promised to him, Mr. Brooks asserts that the qui tam provision of former § 292(b) was essentially an offer to enter into a unilateral contract -- an offer which Mr. Brooks accepted when he filed suit. Then, according to Mr. Brooks, Congress violated the Due Process Clause when it retroactively eliminated the qui tam provision from § 292(b) and repudiated its contract with Mr. Brooks. . . . Because Mr. Brooks cannot point to "some clear indication that the legislature intend[ed] to bind itself contractually," Mr. Brooks cannot overcome the presumption that the pre-AIA version of § 292 was "not intended to create private contractual or vested rights." Without a contract, Mr. Brooks's due process argument fails in every particular.