The amendments to § 292 of the Patent Act by the America Invents Act in 2011 eliminating the qui tam action for false marking suits survived a constitutional challenge in Brooks v. Dunlop Mfg. Inc., No. C 10-04341 CRB, 2011 WL 6140912, (N.D. Cal. Dec. 9, 2011).  

In Brooks, the false marking plaintiff unsuccessfully argued that the retroactive application of the new law eliminating its qui tam standing violated due process and amounted to an unconstitutional “taking” by the federal government. 

The district court held that because Congress had “a legitimate legislative purpose by comprehensively reducing the costs and inefficiencies associated with the ‘cottage industry’ of false marking litigation that developed after the Federal Circuit’s decision in Forest Group, Inc.” the amendments do not violate due process. Id. at *5.

As to the “takings” contention, the court held that a “takings” claim requires a vested property interest.  Since the plaintiff had not obtained a final judgment in its false marking suit, the loss of the right to proceed with the false marking lawsuit to collect a share of the penalty, if the plaintiff prevailed on the merits, was not a vested property interest.  Hence, the takings claim failed because the plaintiff did not establish that “he ever acquired a constitutionally protected property interest” in the false marking suit.  Id. at *6.  

For additional discussion on this topic see Robert A. Matthews, Jr., Annotated Patent Digest § 34:103 Parties That Can Assert a False Marking Violation.

Back in February, the N.D of Ohio held that the qui tam provision of the false marking statute violated the Constitution’s “Take Care” clause.  Unique Product Solutions, Ltd. v. Hy-Grade Valve, Inc., 2011 WL 649998, *6-*7 (N.D. Ohio Feb. 23, 2011), vacated and adhered to by, 2011 WL 924341, *2-*4 (N.D. Ohio Mar. 14, 2011).  Since then several other district courts considering the issue held that § 292(b) does not violate the “Take Care” clause.  E.g., Simonian v. Allergan, Inc., No. 10 C 02414, 2011 WL 1599292, *4-*5 (N.D. Ill. Apr.28, 2011); Luka v. Procter and Gamble Co., 2011 WL 1118689, *5-*8 (N.D. Ill. Mar. 28, 2011); Public Patent Foundation, Inc. v. GlaxoSmithKline Consumer, Healthcare, L.P., No. 09 Civ. 5881(RMB), 2011 WL 1142917, *3-*4 (S.D.N.Y. Mar. 22, 2011); Hy Cite Corp. v. Regal Ware, Inc., No. 10–cv–168–wmc, 2011 WL 1206768 (W.D. Wis. Mar. 15, 2011). 

Joining the camp of Unique Products, the E.D. of Pa, in Rogers v. Tristar Products, Inc., No. 11-1111, 2011 WL 2175716, *10-*11 (E.D. Pa. June 2, 2011), concluded that the qui tam provision of § 292(b) does indeed violate the “Take Care” clause.  Contrasting the procedural differences between the protections afforded the federal government under the False Claims Act and the absence of similar provisions in § 292(b), the court determined that § 292(b) “provides no means by which the United States may control the initiation, prosecution, or termination of litigation commenced on its behalf.”  Id. at *10.  Holding the statute unconsititutional, the E.D. Pa court explained: “despite the external protections available, the United States is not able to effectively exercise even a basic degree of control over a section 292(b) relator’s case.  The relator, by bringing the suit, is the master of the suit and-unlike in the False Claims Act context-remains as such.  Indeed, unlike the rights it enjoys in False Claims Act qui tam litigation, the United States has no ability to (1) control the litigation by seeking dismissal or settlement over objection; (2) limit discovery in any meaningful way; or (3) take primary control over the litigation.  For these reasons, the Court finds that section 292(b) fails to provide ‘the Executive Branch sufficient control … to ensure that the President is able to perform his constitutionally assigned [duty]’ to ‘take Care that the Laws be faithfully executed.’  Consequently, the Court concludes that section 292(b) violates the Take Care Clause.”  Id. at *11.

For additional discussion on this topic see Robert A. Matthews, Jr., Annotated Patent Digest § 34:103.10 “Take Care” Clause.

No Duty to Disclose Prior Art in Patent Term Extension Proceeding

Granting summary judgment and dismissing an inequitable conduct claim in Schering Corp. v. Mylan Pharmaceuticals, Inc., No. 09-6383 (JLL), 2011 WL 1885709, *3-*5 (D.N.J. May 17, 2011), the district court held that an applicant for a § 156 patent term extension has no duty to disclose to the PTO in that term extension proceeding any prior art that allegedly is material to the validity of the claims.  Instead the applicant only has a “a duty to disclose ‘material information adverse to a determination of entitlement to the extension sought, which has not been previously made of record in the patent term extension proceeding ….’ 37 C.F.R. § 1.765(a).”  Thus, “even assuming that counsel for [an applicant] knowingly fail[s] to disclose potentially invalidating prior art to the PTO in connection with the term extension proceedings for the ‘721 patent, such information [i]s not material [to] those proceedings.”  Id  The court instructed that “the relevant statute and rule simply do not require the disclosure of such material [i.e., material prior art] or the communication of any ‘knowledge’ of the legal conclusions that could be drawn therefrom.  Id.

For additional materials on duty to disclose applicable to PTO proceedings see generally Annotated Patent Digest § 27:8 PTO Regulations Applicable to Specific PTO Proceedings.

First-to-File Rule Barred Second False Marking Suit

Granting a Rule 12(b)(6) dismissal with prejudice, the district court in Champion Labs., Inc. v. Parker-Hannifin Corp., No. 1:10-CV-02371-OWW-DLB, 2011 WL 1883832, *4-*9 (E.D. Cal. May 17, 2011), held that as the government is the real plaintiff in a false marking suit, the first-to-file rule applies to bar a second suit brought for the same acts of alleged false patent marking by a different relator.  Thus, “[t]he qui tam statute provides for a single claim for false marking, not multiple claims for multiple penalties.”  Id. at *6 (emphasis in original)

For additional materials regarding multiple false marking suits see generally Annotated Patent Digest § 34:103.50 Different Suits by Different Plaintiffs on Same Alleged Acts of False Marking.

Computer Method Claim Held Invalid on Rule 12(b)(6)

Addressing a § 101 invalidity challenge on a Rule 12(b)(6) motion to dismiss, the district court in Glory Licensing LLC v. Toys “R” Us, Inc., No. 09-4252 (FSH), 2011 WL 1870591, *2-*4 (D.N.J. May 16, 2011), held invalid a claim reciting:

A method of processing information on a first computer system comprising at least one computer, which comprises:

a. receiving a file by transmission from another computer system external to said first computer system and automatically displaying said file on a computer display as a template;

b. automatically selecting and extracting information from said file according to content instructions; 

c. providing utilities capable of automatically routing the extracted information as input information to an unrestricted diversity of application programs according to customizable transmission format instructions tailored to enable correct processing of the input information by any application program that requires said input information;

d. transmitting said input information to each application program requiring said input information; and

e. automatically processing said input information by said each application program.”

The court concluded that the claim did not claim a machine as “[t]he case law is clear that simply the use of a programmed computer is not sufficient to satisfy the machine or apparatus prong of the test.”  Additionally, the court found the claim did not address any transformation since “the relevant claims in the Glory Patents address a ‘mere transfer’ of data from an electronic or hard copy document to an application program.  Glory cannot claim that the data itself is transformed or even changes at all.”   

For additional materials regarding § 101 challenges and computer/business methods see generally Annotated Patent Digest § 20:14 Mathematical Algorithms/Computer Programs; § 20:15—Cases Finding Invention With Mathematical Algorithm Had Patentable Statutory Subject Matter; § 20:16 —Cases Finding Invention With Mathematical Algorithm Lacked Patentable Statutory Subject Matter; § 20:18.100 Post-Bilski Cases Finding Claimed Business Method was Not Patentable Subject Matter.

Work-Product Immunity for Patent Holding Co.

After an in camera review, Judge Ward holds that documents a patent-holding company shared with potential investors, under a non-disclosure agreement, to secure funding for litigating and licensing an acquired patent were protected under work-product immunity.  The court explaining: “Some documents reveal Inpro’s overall litigation and licensing strategy and others provide information—such as balance sheets including licensing and litigation revenues—that show the implementation of that strategy.  All of the documents were prepared, however, with the intention of coordinating potential investors to aid in future possible litigation.  The Court holds that these documents are protected by the work product protection.”   Mondis Technology, Ltd. v. LG Elecs., Inc., Nos. 2:07-CV-565-TJW-CE, 2:08-CV-478-TJW, 2011 WL 1714304, *2-*3 (E.D. Tex. May 4, 2011).  For additional discussion and case authority on this topic see Annotated Patent Digest § 42:41.50 Patentee and Financiers of the Litigation; and § 42:161 Prepared in Anticipation of Litigation.

Refusing to Read into Claim a Requirement of FDA Approval

Court rejects contention that a claim to drug composition that was useful to treat an aliment had to meet FDA standards for approval.  The court concluded that because “FDA approval is irrelevant to proceedings before the Patent and Trademark Office” it would not read into the claims the suggested requirement of FDA approval to find that the treatment was useful.  Allergan, Inc. v. Sandoz Inc., 2011 WL 1599049, *8-*10 (E.D. Tex. Apr. 27, 2011).  For additional discussion and case authority on this topic see Annotated Patent Digest § 4:192 “Treat” and § 1:8 Patent Rights do Not Trump State or Federal Regulatory Prohibitions.

False Marking Relator has a Right to a Jury Trial

Ruling that because a qui tam action under § 292(b) seeks a legal remedy, in view of the monetary penalty, a Seventh Amendment right to a jury trial applies.  U.S. ex rel. Hallstrom v. Aqua Flora, Inc., No. CIV S-10-1459 KJM-EFB, 2011 WL 1668984, *2-*3 (E.D. Cal. May 3, 2011). For additional discussion and case authority on right to jury trials see Annotated Patent Digest § 39:135 Supreme Court Cases Addressing Right to Jury Trial.