Elimination of false marking actions does not violate the Due Process Clause of the U.S. Constitution
Scott Daniels | January 3, 2013
Brooks v. Dunlop Manufacturing
December 3, 2012
Panel: Newman, Prost, Moore. Opinion by Prost.
Lawyer Brooks sued Dunlop under 35 U.S.C. § 292 for falsely marking a guitar string winder with the number of a patent that had both expired and been found invalid. During the pendency of the law suit, Congress passed the America Invents Act (AIA) that, inter alia, eliminated false marking actions, except under very limited circumstances.
The trial judge therefore dismissed Brooks’ case, despite Brooks’ argument that the AIA’s elimination of false marking cases violated the Due Process Clause of the U.S. Constitution. On appeal, the CAFC agreed with the trial judge and therefore affirmed his dismissal of the case.
Points of Law
The Due Process Clause of the Fifth Amendment to the Constitution states that a person may “be deprived of life, liberty, or property, without due process of law” (emphasis added). No person has a vested interest in any rule of law, entitling him to insist that it remain unchanged for his benefit.
A law does not constitute an offer by the U.S. Government to enter into a contract with members of the public, unless there is a clear indication that Congress intended to create a contract.
When a new law is clearly intended to have retroactive effect, an appellate court must apply that law to cases that are still on appeal, even though the trial court’s judgment issued before the enactment of the law.
Retroactive laws do not violate the Due Process Clause if the retroactive application of the law is supported by “a legitimate legislative purpose furthered by rational means.” In other words, there is no Due Process violation if retroactive application of the law is justified by a rational legislative purpose.
Before enactment of the AIA, § 292(a) made it a violation of law for an entity to mark incorrectly its products with a patent number, for instance, to mark with the number of a patent that has expired; a violator shall be fined up to $500 for every violation (it has never been determined whether “every violation” means each instance or each product). Section 292(b) created a qui tam action against violators of § 292(a), allowing any member of the public to sue a violator of § 292(a) for the “up to $500” fine; that member of the public would take 50% of the fine, with the other 50% going to the U.S. Government.
The AIA changed § 292(a), so that (1) a violation requires that the violator intended to deceive the public, (2) qui tam actions by members of the public are eliminated so that only the U.S. Government may sue for violation of § 292(a), and (3) a member of the public may sue a violator of § 292(a), but only if that member of the public “has suffered a competitive injury as a result of [the] violation,” for instance, a competitor of the violator, who has lost sales because of the violation.
Brooks’ qui tam action against Dunlop for violation was still pending before the trial judge when the AIA changes to § 292 were enacted. Brooks argued to the trial judge that the “old” § 292 created a contract between himself and the U.S. Government. The elimination of qui tam actions by the AIA was a repudiation by the U.S. Government of its obligations under that contract – this repudiation deprived Brooks of his property in violation of the Due Process Clause of the Constitution. Accordingly, Brooks argued, the AIA changes to § 292 violated the Constitution and therefore could not block his qui tam action against Dunlop.
When the trial judge disagreed with Brooks and dismissed his case, Brooks appealed and repeated his Due Process argument at the CAFC.
The CAFC agreed with the trial judge. The CAFC first noted retroactive laws (like the AIA changes to § 292) not violate the Due Process Clause if the retroactive application of the law is supported by “a legitimate legislative purpose furthered by rational means.”
The CAFC then found that elimination of false marking qui tam actions by the AIA had “a legitimate legislative purpose,” i.e., to stop the “surge of vexatious litigation and [the] risk of grossly disproportionate penalties for false marking,” to end the “abuses and inefficiencies stemming from false marking claims” under the old § 292. The CAFC also that the AIA had “a legitimate legislative purpose” because qui tam actions under the old § 292 might themselves be unconstitutional. Given this possible weakness of the old § 292, it was a legitimate legislative purpose. Further, elimination of qui tam actions, including pending actions, was a rational way of achieving the legitimate legislative purpose.
The CAFC also found that the old § 292 did not create a contract between Brooks and the U.S. Government – a law creates such contracts only where Congress clearly states an intention to do so. Here, there was nothing in the old § 292, its legislative history, or the historical practice under that statute indicating a Congressional intent to create a contract. Accordingly, Brooks had no “vested right” in his qui tam action; without a vested right, there was no “deprivation” of property, regardless of whether there was due process.