Fighting the Retroactive Elimination of False Marking Claims

The Public Patent Foundation (PubPat) has continued its push against "the negative effects that over-patenting, unmerited patenting and excessive patent rights can have on society." The organization, founded by patent attorney Dan Ravicher, typically focuses on what it sees as bad patents being over-exerted. In the false marking heyday, PubPat also filed false marking suits against Cumberland (Sweet'N Low), Iovate (Xenadrine), and McNeil (Tylenol). Unlike ordinary usual public-interest lawsuits, the false marking claims had the potential earning PubPat substantial monetary returns. Under the false marking statute, 35 U.S.C. § 292, PubPat was eligible to receive half of the eventual fine paid by any adjudged false markers.

However, when Congress passed the Leahy-Smith AIA it included a provision that denies standing for any false marking complainant who cannot prove a competitive injury.  The standing provision is retroactive and many of the false marking claims have already been dismissed. 

In a new filing, PubPat has argued that the retroactive denial of standing violates the organizations Fifth Amendment due process rights.

While the claim underlying the cause of action in qui tam cases originally belongs to the United States, qui tam statutes perform a partial assignment of that claim to the qui tam plaintiff and the resulting cause of action is therefore partially the property of the qui tam plaintiff. . . . Retroactive congressional action that deprives a private party of its property violates the Due Process Clause of the Fifth Amendment if it is not “supported by a legitimate legislative purpose.” United States v. Carlton, 512 U.S. 26, 30-31 (1994). Further, the retroactive effect of legislation must separately have a legitimate legislative purpose apart from the prospective substantive changes. Id. . . . The America Invents Act . . . is completely silent as to why the substantive changes are to be applied retroactively. . . . Without being overly cynical, the only honest explanation for the America Invents Act's retroactive elimination of qui tam false marking suits is that it was the result of lobbying efforts by corporations like McNeil who wished to deliberately eliminate the rights of private parties like PUBPAT to continue to pursue pending qui tam cases for false patent marking. This targeting of those who were deliberately induced to file false marking suits is an expressly improper purpose under Carlton and any potential “public good” argument that McNeil or the United States might proffer for the retroactivity would surely be pretextual, further indicating its impropriety. . . . PUBPAT agrees, for example, that “retroactive laws are not [categorically] prohibited by the Constitution.” . . . All PUBPAT suggests is that retroactive statutes can violate the Due Process Clause and that the America Invents Act's retroactive application of substantive changes to the false marking statute in a way that does nothing but deprive PUBPAT of its property interest in order to bestow a private benefit on McNeil is an example of precisely such a violation.

File Attachment: PubPatOpp.pdf (102 KB).

 

About Dennis Crouch

Law Professor at the University of Missouri School of Law. Co-director of the Center for Intellectual Property and Entrepreneurship.

41 thoughts on “Fighting the Retroactive Elimination of False Marking Claims

  1. Sorry, Ned, in my enthusiasm to cite a case dealing with federal action and the 5th Amendment, I failed to appreciate that Marks did not address the application of this Due Process principle to the retroactive increase of punishment beyond the maximum provided by law as construed by the courts. That expression can be found in Bouie v. City of Columbia, 378 US 347, 353, applying the 14th in response to state action. Actual reliance is not at issue. Id at 355-56 n.5.

  2. MM,

    You are in no position to make any comments about not answering direct questions.

    Quite recently you stepped fully into the “Coward’s trap” and refused to answer direct questions.

    You have zero credibility on any of these patent threads. ZERO.

  3. What’s the “regular” “party line”, sockie? You refuse to answer a direct and obvious question about your own comment. Classic troll behavior. If you don’t like the name, don’t act like one.

  4. The proper term is “lemmings”.

    They swallow whatever propaganda they are given and march up that hill en masse.

    That explains why the pxtxt txxbxggxrs who march here always seem to have Gene Quinn’s buttons on their breath.

  5. Actually “Ned” you did not read my post – the Court action was not an act of passing legislation, but rather – and merely – an act of interpreting legislation passed by the correct entity.

    The court did its job. Mr. Power simply is running down the wrong issue.

    Try to actually read what is being said before you offer your disparaging remarks about not reading things.

    And please, leave the “everyone’s a troll – sockie” game to MM. You are clueless enough as it is.

  6. Troll, the problem was that your post was a complete non sequitur from the issue and holding involved in Marks. You obviously did not read the case and you obviously had no interest in discussing the issue in any serious manner with Mr. Power. Rather, as usual, you set up a straw man and knocked it down, sending the conversation seriously off track and into the swamp.

  7. It is so easy to be labeled a troll:

    1) Do not be a “regular”
    2) Disagree with the “regular” party line
    3) If you become a “regular,” but do not fall in line with 2), you are still a troll.

    Instant Troll!

  8. Thanks James.

    According to the Marks case, Marks conduct was legal under prevailing case law prior to a change in the law announced by the Supreme Court. Not only that, but Marks had relied upon the prior law such that his conduct was legal.

    I’m not so sure how that applies in this case where the conduct was illegal both before and after the Federal Circuit holding.

  9. The retroactive judicial enlargement of a maximum statutory penalty for conduct that was clearly established in prior law violates Due Process. Marks v US, 430 US 188<" That would be incorrect. The judicial enlargement was not a statutory move in itself, but rather, it was merely an interpretation of the actual action that Congress itself took. Your legal argument FAILS. (here's a hint: choose a better role model than Ned Heller).

  10. What strikes me more about PubPat’s claim is that it complains of the elimination of a property right that had value solely due to a construction of the patent statute that was applied retroactively itself. The retroactive judicial enlargement of a maximum statutory penalty for conduct that was clearly established in prior law violates Due Process. Marks v US, 430 US 188. The Federal Circuit in Forest Group v Bon Tool did just that. So the AIA merely returned the false marking plaintiff to the status quo value of its claim defined by the longstanding, unambiguous construction of s292 before Forest, at least as to pre-Forest conduct. [Is McNeil listening here?] By the way, Ned, the sparse posts on this blog, such as yours, that endeavor toward attorney-worthy legal analysis of the issues, are appreciated.

  11. As if “regular commenters” means anything?

    Wasn’t Ping a “regular commenter”? – look at what was wrought there?

    No thanks MM – if I wanted vapid and self-righteous posts I would search the threads for MM, Malcolm Mooney or the ilk.

  12. One reason for this is that most programmers were little more than drones

    The proper term is “lemmings”.

    They swallow whatever propaganda they are given and march up that hill en masse.

  13. You know what’s really effective? Incessant sockpuppetry wherein one posts dozens of vapid, self-righteous banalities using ever-changing yet invariably childish pseudonyms, every day of the week, invariably directed at one or two regular commenters here.

    It’s incredibly persuasive. Just ask ping.

    LOL.

  14. None of the previous comments were by me. If there was an edit function, I’d delete my comment. After more reflection, I think it crossed a line. However, I don’t think your comments have been particularly constructive either.

    A link to Mr. Dhuey’s arguments would be helpful. I’m guessing a Google search might help with that.

    As for case cites, well, it appears that multiple district courts did indeed find it unconstitutional. link to grayonclaims.com (citation herein).

  15. Oh, I know how life and the internet work.

    Did anyone ever teach you how to present an effective position?

    My guess is no – the internet is full of those who pound away at their keyboards, totally clueless as to how to be effective.

    If you do not recognize this, then the only people you will “persuade” will be those who already do not need to be persuaded.

    Good luck with that!

  16. It strikes me they think they have a property right being taken and choose to proceed under due process, and not under ex post facto.

    At a minimum, I would think the issue should be addressed solely under ex post facto.

  17. Ron, I am not so sure about modern programmers, but I too started out writing code in machine language for real time processes (rockets). I suspect your complaint is that today’s programmers do not have a really good understanding of the hardware platforms that underlie the code. As a result, they might massive, redundant, inefficient code.

    But, at least it is produced in recored time and is cheap.

    In products and services we always have three competing attributes: cost, time and quality. We can only choose two.

  18. These are comments in a blog. People aren’t required to provide full briefs with citations to support their statements. (Do you require people to do that when orally speaking with you?) Please learn how the internet (and life) works.

  19. I hope Ravicher gets disbarred.

    We are each entitled to our dreams, but under what theory does Ravicher’s letter lead to disbarment?

    Ravicher himself admits in correspondence with Greg Aharonian that this has nothing to do with false marking,

    Except the letter says the opposite. The letter says that Tylenol marked their products with expired patent numbers and started describing the products as “patented” in an attempt to mislead consumers. It sure sounds like Ravicher’s complaint has “something” to do with false marking. The letter also suggests that Ravicher’s primary concern isn’t making money from the lawsuits but protecting consumers from Tylenol’s bad faith practices which endanger them.

    Based on the letter, at least, it would seem that there is far less “ambulance-chasing” going on here than in most of the previously filed false marking claims.

  20. in that this gave me an insight into the fact that hardware and code were usually interchangeable.

    Follow the breadcrumbs….

    I’m sorry, my responses are limited…you must ask the right questions

  21. Some investigative journalist really needs to look into PubPat, because their agenda has noting to do with the public interest.

    I believe that Intellectual Vultures has more character and merit that PubPat. In both cases their masters appear to be large business interests. PubPat’s sponsors appear to be a narrower group but they appear to be of dubious repute.

    I think that PubPat represents those who have never had an original thought and who could not invent themselves out of a wet paper bag.

    While I started as a hardware engineer I found myself in the early days of applying microprocessors to embedded real time systems in the position of having to write code.

    It turned out that I was lucky, in that this gave me an insight into the fact that hardware and code were usually interchangeable.

    Unfortunately, as people specialized in just software they lost such insight because of their limited perspective.

    One reason for this is that most programmers were little more than drones with no engineering background cranking out endless code with slight variations. They really did not know how to think like a true engineer. As software development evolved big companies focused on, even preferred this type of programmer.

    Schools focused on programming languages which forced students into narrow thought processes (Pascal).

    When I hired engineers and programmers I looked for those who could think and I expected both to be able to structure without such being forced by the language they were working in. I wanted people who could think outside the box. I was willing to let them make and learn from correcting mistakes so that they became independent problem solving employees.

    Today, most programmers are a sorry lot who are only suitable for working for companies like Oracle.

    The reason that big companies are almost always late to the invention party is that they stamp out independent thought.

    Ronald J. Riley,

    President – http://www.PIAUSA.org – RJR at PIAUSA.org

    Other Affiliations:
    Executive Director – http://www.InventorEd.org – RJR at InvEd.org
    Senior Fellow – http://www.PatentPolicy.org
    President – Alliance for American Innovation
    Caretaker of Intellectual Property Creators on behalf of deceased founder Paul Heckel
    Washington, DC
    Direct (202) 318-1595 – 9 am to 9 pm EST.

  22. One man’s “persuasive” is another man’s I don’t give a rip.

    If you are going to make a claim as to constitutionality, you better support it with more than just “I think that’s persuasive.”

  23. Ravicher himself admits in correspondence with Greg Aharonian that this has nothing to do with false marking, but about using the old statute to settle a perceived score with McNeil:

    “I agree with you that some (perhaps many) cases have little harm, but I would never say there’s no harm when a company makes intentionally false statements, as it erodes trust….

    “[T]alking about our case specifically, Tylenol has had many safety issues…. Covert attempts to recall packages, lying to investigators, coverups, etc. So, since they couldn’t expressly say Tylenol was ‘safe’, they started using the phrase ‘patented’ to trick people into thinking their product is safe, because that implies the government approved. *** Had they only continued to mark expired patents on their products, I wouldn’t have sued them.”

    I hope McNeil submits this in response to his motion. And I hope Ravicher gets disbarred.

  24. @DF: Those things seem to me to be separate questions, though of course if the original statute was unconstitutional then there’s no need to reach the retroactivity question.

    @BS: I think DF’s just saying that Dhuey’s arguments are persuasive, not that they bind the Federal Circuit.

  25. The rubber appears to meet the road at pages 5-6. The discussion of Carlton seems to say that Congress is allowed to pass at least some retroactive statutes. It’s unclear what the dividing line is between constitutional retroactive statutes and unconstitutional retroactive statutes.

    PubPat appears to argue that the line depends on Congress’s purpose for the retroactivity and argues that Congress had no legitimate purpose here. I don’t know if that’s right or wrong as a statement of the law, but it seems odd to judge the constitutionality of a statute by trying to read Congress’s collective mind. The Supreme Court more often uses rational basis review in situations like this, particularly economic legislation.

  26. Congress took away our ability to file these nuisance lawsuits, the patent-world equivalent of ambulance chasing!

    Yes. Of course, ambulance chasing remains a vastly more admirable enterprise than the Crxp Patent Holding Companies / Skimmers-R-Us extortion fund entities, e.g., Anti-Intellectual Ventures etc.

  27. While we are “being fair” about it, let’s get rid of the “rights” involved with patent marking? No more presumption of notice. Let’s not allow damages to be recovered by the patentee in any action for infringement, except on proof that the infringer was notified of the infringement and continued to infringe thereafter, in which event damages may be recovered only for infringement occurring after such notice.

    Why give benefit without any duty to police one’s marks?

    All who see the evils of patent marking claims – all of you ready to forego the benefits?

    Why now, the silence…?

  28. the assumption that the false marking statute as worded prior to the AIA was constitutional. As Andrew Dhuey and others showed, it wasn’t.

    Do you have a link for this? A case cite? As far as I know, the words of Andrew Dhuey do not have the force of law that such a statement requires.

  29. Hey PubPat: just because some large companies are in favor of a piece of legislation doesn’t mean it’s a bad piece of legislation. Notwithstanding Congress’ predilection for screwing things up, Congress did the right thing by enacting this particular provision. As far as I know, not ONE false marking suit resulted in a judgment in favor of the plaintiff. Most settled for a few thousand bucks – because it was a heck of a lot cheaper to settle than to fight. Among the false marking defendants were the Boys Scouts of America, accused of marking custom-made belt buckles with an expired patent number. Puh-leez. And do you think for a minute that anyone trying to copy one of McNeil’s drugs was going to be affected by an expired patent number on a bottle of Tylenol? C’mon, generic drug companies are experts in the patent game, they look at the patent situation regardless of what’s on the the drug label.

    When all is said and done, PubPat’s whining is the same gripe as that of other false-making plaintiffs: It’s not fair! Congress took away our ability to file these nuisance lawsuits, the patent-world equivalent of ambulance chasing! Dagnabit, the right to file nuisance lawsuits is as American as apple pie! The amendment must be unconstitutional!

  30. Creative – a cause of action as a property right. That will make for a few law review articles. But PubPat’s argument suffers from the same fallacy as the argument that the elimination of false marking standing violates the takings clause: the assumption that the false marking statute as worded prior to the AIA was constitutional. As Andrew Dhuey and others showed, it wasn’t.

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