Unique Product Solutions, Ltd. v. HY-Grade Valve, Inc.

765 F. Supp. 2d 997, 98 U.S.P.Q. 2d (BNA) 1337, 2011 U.S. Dist. LEXIS 18237, 2011 WL 649998
CourtDistrict Court, N.D. Ohio
DecidedFebruary 23, 2011
DocketCase 5:10-CV-1912
StatusPublished
Cited by6 cases

This text of 765 F. Supp. 2d 997 (Unique Product Solutions, Ltd. v. HY-Grade Valve, Inc.) is published on Counsel Stack Legal Research, covering District Court, N.D. Ohio primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Unique Product Solutions, Ltd. v. HY-Grade Valve, Inc., 765 F. Supp. 2d 997, 98 U.S.P.Q. 2d (BNA) 1337, 2011 U.S. Dist. LEXIS 18237, 2011 WL 649998 (N.D. Ohio 2011).

Opinion

MEMORANDUM OF OPINION AND ORDER

DAN AARON POLSTER, District Judge.

Before the Court is Defendant HyGrade Valve’s Motion to Dismiss Plaintiff Unique Product Solutions’ Complaint on the ground that the qui tam provision of *999 35 U.S.C. § 292(b) is unconstitutional. (Doc. #: 12.) For the reasons discussed, infra, Defendant’s Motion is GRANTED.

I.

On August 27, 2010, Plaintiff, pursuant to 35 U.S.C. § 292(b), filed the instant Complaint as a qui tam relator. (Doc. # : 1.) Plaintiff alleges that Defendant violated 35 U.S.C. § 292(a) by both marking a series of industrial valve products with United States Patent No. 4,605,041 (the “'041 Patent”), and using the '041 patent in advertising, even though the '041 patent expired on April 5, 2005. {Id.)

Defendant initially moved to dismiss Plaintiffs complaint on October 26, 2010, under Rule 12(b)(2) for lack of personal jurisdiction, Rule 12(b)(3) for improper venue, and Rule 12(b)(6) for failure to state a claim upon which relief can be granted. 1 (Doc. #: 6.) On November 15, 2010, a teleconference was held during which the Court granted Plaintiff leave to conduct limited discovery on the issue of personal jurisdiction; additionally, the Court solicited briefing on the constitutionality of the qui tam provision of 35 U.S.C. § 292(b) and ordered that the United States Department of Justice be served the order creating the briefing schedule for the constitutional challenge. 2 (Doc. # : 9.)

Pursuant to the Court’s solicitation, Defendant filed the instant Motion to Dismiss on January 13, 2011, arguing that 35 U.S.C. § 292(b) violates the Appointments and Take Care Clauses of the United States Constitution. On February 11, 2011, Plaintiff filed its response in opposition. (Doc. #: 15.)

II.

Under 35 U.S.C. § 292 (the “False Marking Statute”), 3 it is unlawful to mark *1000 a product with, or use in advertising, a patent number in connection with products that are not patented. 35 U.S.C. § 292(a). The penalty for violating the statute is a fine of “not more than $500 for every such offense.” Id. “[DJespite being punishable only with a civil fine,” “the false marking statute is a criminal one.” Pequignot v. Solo Cup Co., 608 F.3d 1356, 1363 (Fed.Cir.2010) (citing S.Rep. No. 82-1979, 1952 U.S.C.C.A.N. 2394, 2424 (1952)).

The False Marking Statute contains a qui tam provision, whereby “[a]ny person may sue for the penalty, in which event one-half shall go to the person suing and the other to the use of the United States.” 35 U.S.C. § 292(b). 4 Defendant argues that this qui tam provision violates the Appointments and Take Care Clauses of Article II of the United States Constitution by failing to give the Executive Branch sufficient control over the litigation.

“In a qui tam case, the defendant has [allegedly] committed a violation of the law that causes harm to the government, and the government shares [any] recovery with the plaintiff — an uninjured third party.” SKF USA, Inc. v. U.S. Customs and Border Protection, 556 F.3d 1337, 1379 (Fed.Cir.2009). “Qui tam actions appear to have originated [in England] around the end of the 13th century, when private individuals who had suffered injury began bringing actions in the royal courts on both their own and the Crown’s behalf.” Vermont Agency of Natural Resources v. United States ex rel. Stevens, 529 U.S. 765, 774, 120 S.Ct. 1858, 146 L.Ed.2d 836 (2000) (citation omitted). “Qui tam actions appear to have been as prevalent in America as in England, at least in the period immediately before and after the framing of the Constitution.” Id. at 776, 120 S.Ct. 1858. “Although there is no evidence that the Colonies allowed common-law qui tam actions ... they did pass several informer statutes expressly authorizing qui tam suits.” Id. “Moreover, ... the First Congress enacted a considerable number of informer statutes” and “passed one statute allowing injured parties to sue for damages on both their own and the United States’ behalf.” Id. at n. 5 (citing to Act of May 31, 1790, ch. 15, § 2, 1 Stat. 124-125).

*1001 In Vermont Agency of Natural Resources, during which the Court considered whether a qui tam relator had standing under Article III of the Constitution to bring an action under the False Claims Act (“FCA”), 31 U.S.C. §§ 3729-3733, the Supreme Court deemed the history of qui tam actions “conclusive with respect to the question ... of whether qui tam actions were ‘cases and controversies of the sort traditionally amenable to, and resolved by, the judicial process.’ ” Id. at 777-778, 120 S.Ct. 1858 (citing Steel Co. v. Citizens for a Better Environment, 523 U.S. 83, 93-102, 118 S.Ct. 1003, 140 L.Ed.2d 210 (1998)). As “the assignee of a claim has standing to assert the injury in fact suffered by the assignor” and qui tam statutes “can reasonably be regarded as effecting a partial assignment of the Government’s damages claim,” the Court found “no room for doubt that a qui tam relator” has standing under Article III to bring suit in federal court on behalf of the United States. Id. at 773, 778, 120 S.Ct. 1858.

The Supreme Court in Vermont Agency of Natural Resources explicitly declined to address whether qui tam suits violate the Appointments and/or Take Care Clauses of Article II. Id. at 778, n. 8, 120 S.Ct.

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765 F. Supp. 2d 997, 98 U.S.P.Q. 2d (BNA) 1337, 2011 U.S. Dist. LEXIS 18237, 2011 WL 649998, Counsel Stack Legal Research, https://law.counselstack.com/opinion/unique-product-solutions-ltd-v-hy-grade-valve-inc-ohnd-2011.