A federal district court has now held that the false marking statute, 35 USC §292, is unconstitutional for violating the “Take Care” clause of the Constitution. The U.S. District Court for the Northern District of Ohio granted the defendant’s motion to dismiss, finding that the false marking statute is essentially a criminal statute lacking sufficient control to enable the president of the United States to “take Care that the Laws be faithfully executed.” Unique Product Solutions, Ltd. v. Hy-Grade Valve, Inc., Case No. 5:10-cv-1912 (N.D. Ohio, Feb. 23, 2011) (Polster, J.)
Plaintiff Unique Product Solutions, as a qui tam relator, filed a complaint against Hy-Grade for falsely marking a series of industrial valve products with an expired patent. The district court solicited briefing on the constitutionality of the false marking statute and ordered that the Department of Justice be notified of the constitutional challenge in order to allow it an opportunity to intervene or respond. Despite being notified, the Department of Justice did not file a response.
In determining whether the false marking statute is unconstitutional, the court first noted that the false marking statute is a criminal statute, relying in part on the Federal Circuit’s pronouncement in Solo Cup that liability under the false marking statute requires a mental state of purposeful deceit, rather than simply knowledge that a marking is false. Thus applying the Morrison “sufficient control” analysis, the district court concluded that 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.”
Specifically, the court reasoned that any private entity that believes someone is using an expired or invalid patent can file a criminal lawsuit in the name of the United States without getting approval from or even notifying the Department of Justice; the case can be litigated without any control or oversight by the Department of Justice; the government has no statutory right to intervene nor does it have a right to limit the participation of the relator; the government does not have the right to stay discovery which may interfere with the government’s criminal or civil investigations; the government may not dismiss the action; and the relator may settle the case and bind the government without any involvement or approval by the Department of Justice. The court further observed that government prosecutors are granted power not given to private parties and with that power comes the responsibility to use it to benefit the public welfare, rather than some private interest. Accordingly, the court granted defendant Hy-Grade’s motion to dismiss on the ground that §292 is unconstitutional and dismissed plaintiff Unique’s complaint with prejudice.
Subsequently, the Department of Justice filed a motion to intervene and a motion for reconsideration. The Department of Justice argued that the false marking statute is a civil statute, rather than criminal, and that the court erroneously applied the Morrison “sufficient control” analysis because a qui tam relator is not an inferior officer of the government, but rather, is an assignee of a revocable interest of the United States. In a supplemental ruling responding, the court stated that regardless of whether the statute is deemed civil, the court’s prior analysis would not change, as the U.S. Court of Appeals for the Sixth Circuit has applied the Morrison “sufficient control” analysis to a civil statute. Regarding the application of Morrison, the court noted that the Federal Circuit has not rejected the application of Morrison to §292 and since the 6th Circuit has applied Morrison to other qui tam statutes, consistency requires the Morrison analysis to apply to §292 as well. Accordingly, the court reaffirmed its earlier ruling that §292 is unconstitutional.
Practice Note: Although the Federal Circuit has not yet weighed in on the constitutionality of the false marking statute, it is only a matter of time before it does so in United States ex rel. FLFM, LLC v. Wham-O, Inc.