The Ohio District Court in Unique Product Solutions, LTD. v. Hy-Grade Valve, Inc. has ruled that the qui tam enforcement provision of the False Marking Act was unconstitutional under the Take Care Clause of Article II of the United States Constitution. In his February 23, 2011 order see Order (pdf), Judge Dan Aaron Polster followed the prior decision in Pequinot v Solo Cup which had held that the False Marking Act was a criminal statute and he then rationalized that the Act did not provide for sufficient safeguards and actions to permit any person to bring such actions against patent holders, unsupervised by any official government entity.
I find this decision somewhat surprising. Though the appeals court has found the statute to be criminal in nature, the penalties are purely monetary and as for supervision, the case is before a court (that sounds like government supervision to me). Moreover, even though there is no requirement that the government be notified of the lawsuits, the U.S. attorney has intervened in several lawsuits. Moreover, when any settlement is reached, one half of the settlement payment is sent directly to the U.S. Attorney's office, so presumably another opportunity to intervene is presented.
Nonetheless, this ruling is the first time a defendant has successfully challenged the constitutionality of the False Marking Act. Though the Federal Circuit Court of Appeals has ruled the Act to be constitutional under other challenges, here Judge Polster found that the issue of the Take Care Clause was not previously ruled upon by the appeals court.
Jodge Polster also noted that there is a case pending before the Federal Circuit (U.S. ex rel. FLFMC, LLC v. Wham-O, Inc.) in which one question preserved for appeal is whether the False Marking statute violates the Take Care Clause, but until the appeals court rules, he was not bound by any lower court decision.
The Unique Product plaintiff may appeal, but until the Federal Circuit rules on the issue, it is unlikely that this continued plague of false marking lawsuits will stop, but the Take Care Clause may be the silver bullet sought by defendants to slay the pesky false marking trolls.
The case is: Unique Product Solution, LTD v. Hy-Grade Valve, Inc., USDC N.D. Ohio (Case #: 5:10-cv-01812-DAP)