Federal Circuit Rejects Due Process Challenge to AIA on False ...

By Dennis Crouch

Ken Brooks v. Dunlap and US Government (Fed. Cir. 2012)

As expected, the Federal Circuit has rejected Brooks' argument that the Leahy-Smith AIA's retroactive elimination of his false-marking cause-of-action was unconstitutional. Brooks is a patent attorney operating out of northern California. He has no apparent relation with Dunlap other than his discovery that Dunlap's guitar string winders were (allegedly) falsely marked with patent numbers that had expired and invalidated. Under the pre-AIA law, "any person" had standing to bring suit for false marking and collect 1/2 of any resulting fine (with the US government receiving the other half). 35 U.S.C. ? 292 (2010). In response to a rash of several hundred false-marking claims, section 292 was amended to restrict private standing to only persons "who has suffered a competitive injury as a result of a [false marking] violation." 35 U.S.C. ? 292 (2012).

Brooks filed his lawsuit in September 2010 - one year before the AIA was enacted. However, the AIA includes a retroactivity clause stating that "[t]hese amendments . . . shall apply to all cases, without exception, that are pending on, or commenced on or after, the date of the enactment of this Act." Based upon that change, the district court dismissed the case for lack of standing.

On appeal, Brooks offered a due process challenge -- arguing that the Due Process Clause of the U.S. Constitution bars Congress from applying the AIA's amendments to ? 292 to pending qui tam actions. In general, there is no rule against changing the legal regime in a way that adversely affects particular parties who have conformed their actions to benefit from the prior rules. If the change constitutes a Fifth Amendment Takings then the government must provide compensation. And, the legal change would very likely be an improper ex post facto law if it criminalized past actions as felonies. Apart from these exceptions, a retroactive change in the law will be enforced so long as it passes the very low standard of rational basis review. As the Supreme Court wrote in 1984, the "burden is met simply by showing that the retroactive application of the legislation is itself justified by a rational legislative purpose." Pension Benefit Guar. Corp. v. R.A. Gray & Co., 467 U.S. 717 (1984).

In considering the Congressional record, the Federal Circuit easily found a rational basis for the retroactive nature of the law, including eliminating "the perceived abuses and inefficiencies stemming from false marking claims that were initiated before the AIA was signed into law" and avoiding "a live question about the constitutionality of the then-existing qui tam provision."

At bottom, Congress made a considered choice to modify the private cause of action in ? 292(b) and apply that modification to pending as well as future cases. Given Congress's legitimate concerns with respect to the cost and constitutionality of pending qui tam actions, we conclude that the retroactive application of amended ? 292 to pending actions was a rational means of pursuing a legitimate legislative purpose.

Dismissal affirmed.

Source: http://www.patentlyo.com/patent/2012/12/federal-circuit-rejects-due-process-challenge-to-aia-on-false-marking-retroactivity.html

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