On September 16, 2011, the “America Invents Act” (AIA) was enacted. Among many other sweeping changes to U.S. patent law, the AIA drastically revised the patent False Marking statue, 35 U.S.C. § 292.
As revised, only the U.S. government may file suit for the penalties set forth in the statute. All others may sue only if they have suffered a “competitive injury” as a result of a violation of the statute; in such instance, the aggrieved party is entitled not to a statutory penalty, but to “damages adequate to compensate for the injury.” Notably, these changes are effective immediately, and retroactively.
In a recent case, a court has now ruled on the constitutionality of the retroactive “standing” provisions.” Seirus Innov. Access. v. Cabela’s, Inc., 3-09-cv-00102 (S.D. Cal. 2011). In this decision issued Oct. 20, 2011, Judge Marilyn Huff of the Southern District of California ruled that Cabela’s challenge to the constitutionality of revised 35 U.S.C. § 292 must fail, finding no violation of the Due Process Clause or the Takings Clause. The Court noted that a valid “Takings Clause” challenge must involve the taking of “vested property rights” “for public use.” Id.at 3, citing Landgraf v. USI Film Prods., 511 U.S. 244 (1994). Because there was no showing of a “public use” associated with Cabela’s claim that the AIA destroyed its false marking case, there was no violation of the Takings Clause.
Likewise, a statute will not fall to a Due Process challenge where Congress “enacted a retroactive statute for a legitimate purpose, and retroactively applying the statute [is] a rational means to accomplish Congress’ purpose.” Seirus, at 3, citing United States v. Ubaldo-Figueroa, 347 F.3d 718, 727 (9th Cir. 2003). The Court summarily found the statute to pass constitutional muster under this standard. Seirus, at 3.
The Court went on to find that Cabela’s proved no competitive injury, or even that it is in a competitive relationship with Seirus; indeed, it admitted it was not. Id. at 7. The Court therefore granted Serius’ motion for summary judgment on Cabela’s false marking claim.
Although many false marking cases had settled prior to enactment of the AIA, others were in a holding pattern, and given the “pot of gold” provided by the pre-AIA version of the false marking statute, other cases challenging the retroactivity of the false marking portions of the AIA (and appellate review thereof) are surely to come.