In Seirus Innovative Accessories, Inc. v. Cabela's Inc, Case No. 09-CV-102 H (WMC), Cabela's counterclaimed that Seirus had engaged in patent false marking. Seirus filed a motion for summary judgment on this patent false marking claim, claiming that the recently signed America Invents Act ("AIA") amended the false marking statute, 35 U.S.C. § 292, in two fundamental ways. First, only the United States is now permitted to sue for penalties under the false marking statue. And second, a person may file a civil action to recover damages under the false marking statute only if the person "suffered a competitive injury." Seirus further argued that the AIA applies both to cases that are pending or are commenced on or after the date of enactment of the AIA (September 16, 2011). Seirus, Case No. 09-CV-102 H (WMC) (Oct. 19, 2011 Order). Thus, pursuant to the AIA, Seirus contended its motion for summary judgment as to Cabela's patent false marking claim should be granted.
Section 292 as amended provides:
(a) Whoever marks upon, or affixes to, or uses in advertising in connection with any unpatented article, the word "patent" or any word or number importing that the same is patented, for the purpose of deceiving the public . . . [s]hall be fined not more than $500 for every such offense.
(b) A person who has suffered a competitive injury as a result of a violation of this section may file a civil action in a district court of the United States for recovery of damages adequate to compensate for the injury.
35 U.S.C. § 292.
Prior to its amendment Section 292 provided:
(a) Whoever marks upon, or affixes to, or uses in advertising in connection with any unpatented article the word "patent" or any word or number importing the same is patented, for the purpose of deceiving the public ... [s]hall be fined not more than $500 for every such offense.
(b) Any 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.
In response, Cabela's argued that the retroactive application of the AIA to pending false marking claims violates the U.S. Constitution's prohibition against retroactive legislation that eliminates vested property rights. Slip Op. 2:26-28. Specifically, Cabela's argued that the AIA violates both the Takings and Due Process Clauses of the U.S. Constitution, which prohibits the government from taking a vested property interest without just compensation and due process of law. Slip Op. 3:1-3.
The Court, in reaching its decision to grant Seirus' motion, first focused on whether the AIA was intended to be applied retroactively. The Court concluded that congress clearly intended for the AIA to apply retroactively because the AIA provides that "the amendments made by this subsection shall apply to all cases, without exception, that are pending on, or commenced on or after, the date of the enactment of this Act." Slip Op. 3:13-17. Thus, the Court concluded that because congress clearly intended the AIA to apply retroactively the amendment to the False Marking statute was for a legitimate purpose and therefore Cabella's due process challenge to the AIA failed. Slip Op. at 3.
Turning to Cabela's argument that the AIA violates the Takings Clause of the Constitution, the Court likewise held that Cabela's argument failed. In reaching this conclusion the Court determined that "Cabela's overlook[ed] the fact that a successful Takings Clause argument involves a taking of a 'vested property rights' 'for public use.'" Slip Op. 3:23-24. Because the Court concluded that Cabela's could not prevail on its false marking claim it denied Cabela's Taking Clause challenge to the AIA. In reaching this latter conclusion, the Court focused on the fact that Cabela's and Seirus are not competitors. Because of this, Cabela's could not show it suffered a competitive injury or that it and Seirus had a competitive relationship. Slip Op. at 6:15-27.
Interestingly, in reaching its conclusion that Cabela's could not win on the merits of its false marking claim, the Court considered this claim only in light of Section 292 as amended by the AIA. Because the Court concluded that Cabela's could not win on the merits, its Constitutional challenge failed. But Cabela's lost on the merits because of the amendments to Section 292. Under the pre-amended version of Section 292 (a qui tam statute), Cabela's was not required to prove any injury, let alone a competitive injury.