Pequignot v. Solo Cup Company

Filing 105

MEMORANDUM OPINION: For the reasons stated in this Opinion, defendant's Motion to Dismiss for Lack of Jurisdiction will be DENIED. A separate order consistent with this opinion will be issued.Signed by District Judge Leonie M. Brinkema on 03/27/09. (yguy)

IN THE UNITED STATES DISTRICT COURT FOR EASTERN DISTRICT OF VIRGINIA

Alexandria Division
MATTHEW A. PEQUIGNOT,

Plaintiff,
v.

l:07cv897
COMPANY,

(LMB/TCB)

SOLO CUP

Defendant.
MEMORANDUM OPINION

Plaintiff Matthew A.

Pequignot

{"Pequignot")

has filed this In the

action for false patent marking under 35 U.S.C.

§ 292.

complaint,
("Solo")

Pequignot alleges that defendant Solo Cup Company

falsely marked several of its products with expired

patent numbers and improperly marked other products with

conditional patent markings.

Solo has filed a Motion to Dismiss arguing that Pequignot

for Lack of Subject Matter Jurisdiction,

lacks standing to bring suit under Article III of the United States Constitution.1 Alternatively, Solo argues that if

Pequignot is found to have standing to sue under § 292(b)

as a

qui tarn relator, maintenance of this action would violate the

constitutional separation of powers doctrine,

specifically the

the alleged violations - marking articles with expired patent numbers or statements that the articles "may be covered" by patents - do not constitute false marking under the statute as a matter of law. In a memorandum opinion, the Court denied that motion. See Peguianot v. Solo Cup Co., 540 F Supp 2d 649 (E D
Va. 2008) .

State a Claim Pursuant to Fed.

1 Solo' previously filed a Motion to Dismiss for Failure to
R. Civ. P. 12(b)(6),

arguing that

Take Care clause of Article II,

§ 3.

The United States has

intervened to defend the constitutionality of 35 U.S.C.

§ 292(b).

For the reasons stated in open court and in this memorandum opinion, Solo's motion will be denied.
I. Background

Solo,

a Delaware corporation with its principal place of

business in Illinois,
plates, bowls,

is a manufacturer of disposable cups,
Pequignot is a licensed patent

lids,

and utensils.

attorney.

In his Second Amended Complaint,

Pequignot alleges

that Solo has committed numerous violations of 35 U.S.C.

§ 292,

which prohibits false patent marking.

Specifically,

Pequignot

alleges that Solo has marked various products with two patents that have expired,
U.S. Patent No.

U.S.

Patent No. RE28,797,

entitled "Lid," and

4,589,569,

entitled "Lid for Drinking Cup."

Pequignot also alleges that Solo has marked several products with the phrase, "This product may be covered by one or more U.S. or

foreign pending or issued patents," when those products were

neither protected by any patent nor the subject matter of any
pending patent application.

The false marking statute provides that whoever falsely

marks a product with either a patent number,

the words "patent"

or "patent pending," or any other words or numbers implying that the product is protected by a current or pending patent when it

is not, and does so with the intent of deceiving the public,

-2-

"[s]hall be fined not more than $500 for every such offense."
U.S.C. § 292(a). It further states,

35

"Any 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."
Although Pequignot does not, and cannot,

35 U.S.C.

§ 292(b).

allege any

particularized injury to himself,

he asserts standing based on

the literal language of the statute,
of

and seeks the maximum amount

the statutory fine for each alleged violation.

In its Motion to Dismiss,

Solo asserts

that Pequignot lacks

standing to pursue this action under Article III of the United
States Constitution, and alternatively, that allowing him to

bring suit would violate the constitutional separation of powers
doctrine under Article II.2 Given the United States' interest in

enforcing the false marking statute and its stake in half of the

plaintiff's recovery should Pequignot prevail,

the Court invited
The

the United States to respond to Solo's Motion to Dismiss.

United States subsequently intervened and filed a pleading defending the constitutionality of 35 U.S.C. § 292(b). Both

parties have submitted responses to the United States' pleading,
and the United States has filed its reply.

2Solo also argues that if Pequignot is found to have standing to pursue this action as an assignee of harm suffered by the United States, he cannot maintain this action as a pro se plaintiff. As Pequignot has since retained counsel, this
argument is moot and will not be addressed.
-3-

II.

Standard of Review.

A party invoking federal jurisdiction bears establishing its
Env't. 523 U.S.

the burden of

existence.
83, 104

Steel Co.
Where,

v.

Citizens for a Better
the defendant

(1998).

as here,

has not disputed any of the facts on which jurisdiction is based, but instead contends that the Complaint fails to allege facts all facts Bain,

upon which subject matter jurisdiction would be proper, alleged in the Complaint are assumed to be true.
697 F.2d 1213, 1219 {4th Cir. III.
A. Statutory Language.

Adams v.

1982). Discussion.

The statutory provision at issue, terse. The preceding subsection,

35 U.S.C.

§

292(b),

is

35 U.S.C.

§ 292(a),

defines the

substantive false marking violations and penalty: . . . Whoever marks upon, or affixes to, or uses in advertising in connection with any unpatented article, the word "patent" or any word or number importing that the same is patented for the purpose of deceiving the
or

public;

public --

or affixes to, or uses in advertising in connection with any article, the words "patent applied for," "patent pending," or any word importing that an application for patent has been made, when no application for patent has been made, or if made, is not pending, for the purpose of deceiving the

Whoever marks upon,

offense.

Shall be fined not more than $500 for every such

-4-

35 U.S.C.
scheme at

§ 292(a).3
issue here:

Section 292(b)

then sets forth the remedial

Any person may sue for the penalty, in which event onehalf shall go to the person suing and the other to the use of the United States.

Two salient features of § 292(b)

distinguish it from the

vast majority of statutes that establish private rights of action for violations of federal law. allowing "any person" First, at least facially,, by § 292(b) confers

to sue for false marking,

standing on anyone to sue,

regardless of whether he or she has
Second, any

been personally affected by the false marking.
recovery by a private party is split,

with half going to the

person bringing suit,
B.

and half going to the United States.

Whether Pequignot Has Standing to Sue.

Solo argues

that notwithstanding the apparently broad

language of § 292(b), action.

Pequignot lacks standing to pursue this

Solo first argues that the Court should adopt a
292(b) to

statutory construction that limits suits under §

competitors.

It then argues that even if § 292(b)

allows suits

by non-competitors,
the Constitution,
tarn relator.

Pequignot lacks standing under Article III of

either as a traditional plaintiff or as a oui

product as protected by a particular patent without the consent of the patentee. Because this action does not concern such a violation, this language is omitted here.
-5-

^Section 292(a)

also includes language prohibiting marking a

1.

Construction of 35 U.S.C.

§ 292(b).

Solo urges construing §

the Court to avoid the constitutional question bynarrowly. Under this narrow construction, a

292(b)

suit by a plaintiff

like Pequignot,

who is not a competitor of

the company alleged to have engaged in false patent marking,
would be barred. Solo supports this argument by citing to

several decisions that have restricted false advertising suits
under section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a), to

actions by competitors.

Solo argues that the Court should adopt

a similar limiting construction of § 292(b).
the USA Found, v. Phillips Foods, Inc..

See,

e.g., Made in
281 (4th

365 F.3d 278,

Cir.

2004)

(holding that 15 U.S.C.

§ 1125(a)

does not authorize

suits by consumers).

It is a "cardinal principle" that a court should "first
ascertain whether a construction of the statute is fairly possible by which the (constitutional) question(s) may be

avoided."

Johnson v.

Robison.

415 U.S.

361,

367

(1974) 363,

(citing 369 is not

United States v. Thirtv-Seven Photographs. (1971)). However,

402 U.S.

a restrictive construction of § 292(b)

"fairly possible," because the plain language of § 292(b)

states

that "any person may sue for the penalty," unlike the Lanham Act, which authorizes a suit for false advertising by "any person who
believes that he or she is
§ 1125(a) {emphasis added).

...

damaged bv such act."

15 U.S.C.

By its very terms,

the Lanham Act

-6-

limits

the scope of

those who may sue under

§

1125(a).

No such

limitation is present in § 292(b).
includes a clear statement
. to protect persons

Moreover,

the Lanham Act
[the Act] is . .

that

tt[t]he intent of
...

engaged in

commerce against unfair

competition."

15 U.S.C.

§

1127.

The appellate courts narrowly to competitors have in finding that

construing the Lanham Act to limit suits

specifically relied on such statutory limitations
Congress enacted § 43{a) of the Lanham Act

"without any

consideration of consumer rights of action." Found.. 365 F.3d at 280
442 F.2d 686,

Made in the USA Activities Club of
Solo has cited no

{quoting Colliaan v.
692 (2d Cir. 1971)).

New York,

corresponding language in §

292,

or any other evidence,

to it

support its argument that when Congress

enacted § 292(b),

meant to do anything other than confer a right to sue upon "any person." To the contrary, the language of § 292(b) grants a

right of action to "whomsoever it may please to sue, plaintiff have no special interest in the subject,
have sustained any actual injury." Pentlarge v.

though the

and may not
19 F.

Kirbv.

501,

503

(S.D.N.Y.

1884).4

Because a narrowing construction that

4In its opposition to the United States' brief,
recent case, Mohawk Industries, Inc. v. Interface,

Solo cites a
No.

Inc..

4:07-CV-0212-HLM, 2008 WL 5210537 (N.D. Ga. Nov. 6, 2008), for the principle that "some courts have assumed that [§ 292(b)] requires the plaintiff to have suffered a particularized injury-

in-fact."

Def.'s Opp.

to U.S.

Br.

11

(emphasis in original).
did not make such an

However,

the court

in Mohawk Industries

assumption; rather, it found that the plaintiff had suffered an injury in fact, and as a result, explicitly declined to reach the
-7-

would deviate from the plain language of the statute simply is not
has

"fairly possible,"

the Court must examine whether Pequignot

standing under Article III.

2.

Pequignot's Standing as a Traditional Plaintiff.

Under Article III, requirements

a traditional plaintiff must meet three

to establish standing to sue in federal court:

"injury in fact - a harm that is both concrete and actual or imminent,
. . .

not conjectural or hypothetical,"

"causation - a fairly

trace[able]

connection between the alleged injury in fact and "redressability -

and the alleged conduct of the defendant,"

a substantial

likelihood that the requested relief will remedy
Vermont Agency of Natural Res, v.

the alleged injury in fact."

United States ex rel.

Stevens.

529 U.S.

765,

771

(2000)

(internal

quotation marks and citations omitted). Although Pequignot has alleged that "every person in the

United States is a potential entrepreneur competitor of SOLO CUP," Compl. I 61

.

.

.

[and]

a potential

{emphasis added,

capitalization in original),

any harm to Pequignot in this regard
"conjectural or

would be the epitome of harm that is

hypothetical," rather than "concrete and actual."
Aaencv. alleges 529 U.S. at 771. Moreover,

Vermont

to the extent that Pequignot

that he has suffered an injury simply as a result of

question of whether a plaintiff without an injury in fact would have standing. See Mohawk Indus.. 2008 WL 5210537, at *3 n.4.
-8-

Solo's failure to follow federal law,

it is well-established that

"harm to

...

every citizen's interest in proper application of and seeking relief that no more

the Constitution and laws,

directly and tangibly benefits

[the plaintiff]

than it does the

public at large does not state an Article III case or
controversy." Luian v. Defenders of Wildlife. 504 U.S. 555,

573-74

(1992).

Finally,

nowhere in his opposition to Solo's

motion does Pequignot even attempt to argue that he has
personally suffered an injury in fact; rather, his opposition

focuses on § 292(b)'s oui tarn features,

which are discussed

extensively infra.5

Thus, without the special standing conferred
292 (b) , Pequignot lacks standing to or imminent injury

by the crui tarn aspects of §

sue Solo because he fails to allege any actual
to himself.

3. Pequignot's Standing as a Qui Tam Relator. Although Pequignot lacks Article III standing as a

traditional plaintiff, 292(b)

he and the United States argue that §

confers standing on him to sue on the United States'
a qui tam relator.

behalf as

i.

Qui Tam Statutes and Their History.

A crui tam statute authorizes a private person,

known

it is Plaintiff's position that any injury to Plaintiff is redundant to the injury to the United States in this crui tam cause of action." PL's Opp. 4.
-9-

that he has not been injured,

5Pequignot notes that w[a]lthough Plaintiff does not concede

alternatively as a behalf of

"relator"

or

"informer,"

to bring suit on

the government and to share in the financial recovery.

The phrase oui

tarn is

short for the Latin phrase

"qui

tarn pro

domino reae auam pro se ipso in hac parte seouitur," meaning "who

pursues this action on our Lord the King's behalf as well as his
own." Vermont Agency. 529 U.S. at 768 n.l (citing William

Blackstone,

3 Commentaries on the Laws of England *

160).

Oui tarn actions have a long tradition in early AngloAmerican legal history, although their use has waned See generally id. at 774-78.6

significantly in recent years.

These actions originated in the 13th century as a common law
means for getting private claims into royal courts, which

ordinarily only entertained matters pertaining to the Crown,
at 774. During the 14th century, as the royal courts began

id.

addressing private wrongs,

these common law oui tarn actions

became less common.
statutes that

Id.

at 775.

However,

explicit oui tarn

"allowed informers

to obtain a portion of the

penalty as a bounty for their information,

even if they had not Id.

suffered an injury themselves," became more prevalent.

Given the lack of comprehensive law enforcement systems at the
time, qui tarn informers played roles that today are served by

police officers,

prosecutors,

and regulatory officials.

See J.

history of qui tarn laws in England and the United States.
opinion provides a brief summary.

6The Supreme Court in Vermont Agency provides a detailed

This

-10-

Randy Beck,

The False Claims Act and the English Eradication of

Oui Tarn Legislation,

78 N.C.

L.

Rev.

539,

566

(2000).

Notwithstanding the historical role qui tarn statutes played,
they became subject to abuse. Some citizens, lured by the

promise of a financial windfall,
Id. at 575-78

became "professional informers."

(noting that such individuals were described by "varlets," "lewde," "evil," and "viperous

contemporaries as

vermin.").

In part as a result of overzealous litigation,

many

"informer statutes" were repealed,
to limit
However,

and other statutes were passed
529 U.S. at 775-76.
enacted

their use.

Vermont Agency,
and later

the Colonies,

the United States,

several

laws

that the Supreme Court has described as qui
at 776-77.

tarn

statutes.

Id.

These included statutes providing

private persons with a right to sue and share in the "bounty"
offenses such as failure to file census returns, harboring

for

runaway seamen,

trading with Indian tribes without a license,

violating alcoholic beverage laws,
Id. at 776 n. 6.7

and receiving stolen goods.

In recent years,

the use of qui

tarn statutes

to enforce laws

has declined dramatically.

England repealed its last qui tarn

statutes in 1951.

Id.

at 776.

The Supreme Court has identified

three qui tarn statutes that remain in force in the United States:

action, but allowed for an informer to share in the recovery of suits brought by the government. Id. at 776 n.7.
-11-

7Other statutes did not provide for a private right of

35 U.S.C.

§

292,

the false patent marking statute at issue here;

25 U.S.C.

§ 201,

which authorizes a cause of action and a share

in the recovery against a person violating Indian protection
laws; U.S.C. and the most well-known and widely-used oui § 3730(b), the False Claims Act ("FCA"), tarn statute, 31

which provides a

private right of action and a share in the recovery for private
persons who pursue actions alleging that the government has been

subject to fraudulent claims.

Id.

at 768 n.

I.8

Pequignot has

identified what appears
statute, 17 U.S.C. §

to be an additional remaining gui tarn
which provides a cause of action and

1326,

share in the recovery in lawsuits involving the false marking and
advertising of vessel hull designs.
ii. Standing to Sue in a Qui Tarn Action.

Because a crui tarn statute does not require that the relator suffer an injury before he or she pursues an action, the oui tarn

U.S.C.

8Vermont Agency identified a fourth oui tam statute,
§ 81,

which provided a cause of action and a share of
has

25

recovery for contracting with Indians in an unlawful manner. Vermont Agency. 529 U.S. at 768 n.l. This statute, however,

since been repealed.

See Indian Tribal Economic Development and
Pub. L. 106-179, 114 Stat.

Contracts Encouragement Act of 2000,

46 (2000). Vermont Agency also identified two other laws, 18 U.S.C. § 962, which provides informers with forfeitures of shares of vessels privately armed against friendly nations, and 46 U.S.C. § 80103 (listed in Vermont Agency at its former location, shares of vessels taking undersea treasure from the Florida
coast. However,

46 U.S.C.

§ 723),

which provides informers with forfeitures of

by the informer, the Vermont Agency Court did not characterize those statutes as gui tam statues, a distinction that this Court
adopts.

because neither of these laws authorizes a suit

-12-

framework presents a question as standing to sue under

to whether a relator has In Vermont Agency, the

the Constitution.

Supreme Court addressed whether a oui

tarn relator under

the FCA

has Article III standing, affirmative.

and decided the question in the

The Court ruled that a relator has standing under
holding that w[t]he FCA can

the doctrine of assignment,

reasonably be regarded as
Government's damages

effecting a partial assignment of the
529 U.S. at 773, and

claim," Vermont Acrencv.

that as a result of this assignment, in fact suffices 774.

"the United States' [the relator],"

injury at

to confer standing on

id.

The Court went on to state that

"the long tradition of orui

tarn actions," .

id.,

was

"well nigh conclusive with respect to

.

.

whether oui tarn actions were cases and controversies of the and resolved by, the judicial

sort traditionally amenable to, process," id. at 777

(internal quotation marks and citations

omitted).

On the basis of this reasoning,

the Court held that a

relator under the FCA,
damages claim,

as a partial assignee of the government's

had standing to sue.

iii. Whether 35 U.S.C.
Statute.

§ 292(b)

is a Qui Tarn

Solo argues that Vermont Agency is distinguishable from the case at bar because § 292 (b) is not truly a crui tarn statute and

therefore does not effect a partial assignment of the United States' false marking claims to Pequignot. The overwhelming

-13-

evidence,

however,

supports the conclusion that § 292(b)

is a oui

tain statute,
this action.

and as such,

that Pequignot has standing to maintain

Although it engaged in a long discussion of various qui tarn actions throughout history, the Supreme Court in Vermont Agency

did not precisely articulate the criteria for a crui tarn statute.
However,
elements

scholarly literature on the subject has identified six
of a oui tarn statute:

(1) The statute defines an offense against the sovereign or proscribes conduct contrary to the interests of the public; (2) A penalty or forfeiture is imposed for violation of
the statute;

(3) The statute permits a civil or criminal enforcement action pursued by a private party; (4) The private informer need not be aggrieved and may

initiate the action in the absence of any distinct,
personal injury arising from the challenged conduct; (5) A successful informer is entitled to a private benefit consisting of part or all of the penalty
exacted from the defendant; and

(6) The outcome of the private informer's enforcement action is binding on the government.

Beck,

supra,

at 552-53

(citing Blackstone,

3 Commentaries.

at

*161-62).

Based on these factors,

§ 292 (b)

is a crui tarn statute.

It

defines a wrong to the government as the false patent marking in

violation of § 292(a).

It imposes a statutory penalty of up to

$500 per violation.
penalty,"

It provides that "any person may sue for the

regardless of whether or not such a person is

personally harmed.

Finally,

it allows the suing person to

-14-

receive half of the recovery from the suit,

with the remainder

going to the government.9
In addition, the Supreme Court and those courts that have

adjudicated cases under § 292 have explicitly termed § 292(b)
oui tarn statute. (listing § 292 (b) See Vermont Agency. as one of 529 U.S. at 768 n.l

a

the few remaining "crui tarn statutes

[that]

remain on the books");
79 (2d. Cir.

Bovd v.

Schildkraut Giftware Corp..
§ 292 "is

936 F.2d 76,

1991)

(noting that

enforceable by a crui
455 F.2d 763, 765

tarn remedy");
1972)

Brose v.

Sears,

Roebuck & Co.,

(5th Cir.

(describing an action under §

292 (b) 508

as one by a 1884)

"crui

tarn informer");

Winne v.

Snow.

19 F.

507,

(S.D.N.Y.

(describing the suit before it as

"a crui tarn

action to recover a penalty under

[the false marking statute]").

In addition,

the Senate Report issued with the statute's revision

in 1952 described the portion of the statute that provides for a
private suit as an "informer action," a term synonymous with a

aui tarn law.
2394, 2403.

S.R.

82-1979

(1952),

reprinted in 1952 U.S.C.C.A.N.

Solo has cited to no authority holding that § 292(b)

is not a aui tarn statute,

and this Court has found none.
Solo

Notwithstanding this highly persuasive authority,

the government. The parties in this action dispute whether or not a crui tarn relator's suit would have a res iudicata effect on future actions. This issue need not be decided because the absence of this element alone is insufficient to defeat the crui
tarn nature of § 292(b).

outlined by Beck,

9It is unclear whether § 292(b) meets the sixth element

the binding nature of the enforcement action on

-15-

advances a number of arguments

that §

292(b)

is not a qui tarn

statute.

First,

Solo argues

that § 292(b)

does not sufficiently

clearly assign the rights of the United States because it does not explicitly require a relator to sue "in the name of" the

United States.

However,

it is well-established that specific
u.s.

terms of art are not required for an assignment of rights,
ex rel. Kelly v. Boeing Co.. 9 F.3d 743, 748 (9th Cir.

1993).

Moreover,

although the other two remaining crui

tarn statutes

identified by the Supreme Court,

the FCA and 25 U.S.C.

§ 201,

both include language stating that a suit by a private citizen is

"in the name of the United States," many of the earlier statutes

identified by the courts and scholars as oui tarn laws did not
include such language,
292(b). See, e.g..

but instead included language similar to §
1790, ch. 29, §§ 1, 4, 1

Act of July 20,

Stat.

131,

133

(authorizing an informer suit for harboring with the recovery split "one half to the use of

runaway seamen,

the person prosecuting for the same,

the other half to the use of

the United States," without requiring that the suit be "in the
name of the United States"). Similarly, 17 U.S.C. § 1326, which

provides a crui tarn remedy for the false marking of vessel hull
designs, does not require the suit to be "in the name of the

United States."

Solo also argues that § 292 (b)

is not a crui tarn statute

because,

unlike the FCA,

the plaintiff is not paid out of the

-16-

United States'

recovery;

rather,

half of any recovery goes

directly to the relator and the other half goes to the United
States. that § This 292 (b) formalistic distinction is not a basis is not a gui tarn statute, for holding

as other past and present

statutes that the Supreme Court has identified as gui tarn have provisions similar to § 292(b). See, e.g.. 25 U.S.C. § 201

(providing "one half to the use of the informer and the other half to the use of the United States"); 2000) {requiring that 25 U.S.C. § 81 (repealed

"one-half thereof shall be paid to the

person suing for the same,
the Treasury").

and the other half shall be paid into

There is no authority supporting the argument

that to qualify as a gui tam statute, under that statute must

the recovery available and only

first go to the United States,

then to the relator.

Rather,

it is the sharing of the bounty See Blacks tone,

that is a defining feature of a crui tam statute.
3 Commentaries. at *161

("Sometimes one part is given to the

king,

to the poor,

or to some public use,

and the other part to

the informer or prosecutor;
action.")

and then the suit is called a gui tam

Solo also argues because "the U.S.

that §

292(b)

cannot be a gui tam statute

is not the only party that is able to

demonstrate a proprietary injury." Def.'s Opp. This argument is also unavailing.
must suffer some injury for a gui

to U.S. Br.

8.

Although the United States
tam action to arise, no

-17-

authority holds

that it must be the only party to suffer an

injury.

Indeed,

25 U.S.C.

§

201,

one of the oui

tarn statutes

identified in Vermont Agency,
protection of Indians;

provides a right to sue for the

this statute clearly contemplates a
In

proprietary injury to a party other than the government.

addition,

many of the historical caii tarn statutes cited in
that affected non-governmental

Vermont Agency addressed conduct

proprietary interests,

such as horse-stealing,
See Vermont Agency.

over-charging,
529 U.S. at 775,

and

receipt of stolen goods. 777 n.6.

Solo has provided no authority for the principle that a involve an injury that only affects the

oui tarn statute must
government.

Additionally,

Solo argues

that the United States'
litigation under §

lack of

ability to control a relator's

292(b)

undermines the oui tarn nature of the statute.
federal appellate courts have held that
to exert control over the litigation is
statute,

A number of

the government's ability
evidence of a crui tarn
the government with

and have noted that the FCA provides

such control. 918 (6th Cir.

See Stallev v. 2008),
Inc.

Methodist Healthcare. U.S.
1234

517 F.3d 911,

Stallev ex rel.
524 F.3d 1229,

v.

Orlando Reg'l
2008);

Healthcare Svs.,

(11th Cir.

United Seniors Ass'n.
n.8 (1st Cir. 522 2007),

Inc.

v.

Philip Morris USA.

500 F.3d 19,

25
509

Stallev v. 2007).

Catholic Health Initiatives. Solo is correct that § 292(b)

F.3d 517,

(8th Cir.

-18-

lacks the FCA's

"procedural safeguards," which include mandatory-

notice to the government of a oui tam lawsuit,

an express

provision allowing the government to intervene and take over the litigation if it wishes, and clearly defined settlement and See 31 U.S.C. § 3730.
that

dismissal rights for the government.
However, the Supreme Court

in Vermont Agency did not suggest

a lack of government control precludes a law's status as a gui

tam statute.10
tam statutes,

To the contrary, none of the other American oui
past or present, have contained procedural

safeguards akin to the FCA's.

See,

e.g.,

25 U.S.C.

§

201;

25

U.S.C.

§

81

{repealed 2000)."

Moreover,

the FCA itself

contained only minimal procedural safeguards when it was first

enacted,

with additional ones added over time.

See Beck,

supra,

at 556-65.12

In addition,

even the appellate courts that have

qui tam statute violates the Take Care Clause of Article II,
discussed infra.

"Safeguards are more relevant to the analysis of whether a
as

"typical of oui tam statutes," United Seniors, 500 F.3d at 25, failed to identify any other oui tam statutes containing
procedural safeguards.

"Although the First Circuit called procedural safeguards

it

informer, upon filing the case, to provide notice to the government and disclose all of his evidence, and to allow the government sixty days to investigate and decide whether to
-19-

to abuse by informers who prosecuted cases based on evidence the government already had, Congress amended the FCA to require an

safeguard: once the suit was filed, it could "not be withdrawn or discontinued without the consent, in writing, of the judge of the court and district attorney, first filed in the case, setting forth their reasons for such consent." Act of Mar. 2, 1863, ch. 67, § 4, 12 Stat. 696, 698 (1863). After the act became subject

12The original FCA,

enacted in 1863, contained only one

called procedural

safeguards relevant

to

the oui

tarn analysis

have not called this F.3d at 25 safeguards

factor dispositive.

See United Seniors,

500

(merely stating that "suggest[s]

the absence of procedural is meant to be

that the private plaintiff

the real party in interest"). safeguards is relevant,

Even if

the presence of procedural 292(b) is

their absence from §

insufficient to outweigh the factors
crui tarn statute.

that support

its status as a

Solo's argument
down to a theory that

that

§

292 (b)

is not a crui

tarn statute boils
of the

if a statute does not

contain all

features of

the FCA,

it cannot be a crui

tam statute.13

This

intervene and take control of the suit. See Beck, supra, at 560; Act of Dec. 23, 1943, ch. 377, 57 Stat. 608 {1943). The 1943 revisions also allowed a court to dismiss a oui tam FCA suit if the suit was based on evidence that the government already
possessed. See Beck, supra. at 560; 57 Stat. at 609. In 1986,

following several scandals in government procurement, the FCA was amended to increase the financial incentives for oui tam relators to bring suits. See Beck, supra. at 561. The 1986 amendments also allowed the government to dismiss or settle the action notwithstanding the objections of the relator, but only after the relator received a hearing.. See False Claims Amendments Act, Pub. L. 99-562, 100 Stat. 3153 (1986). The 1986 amendments also added the requirement that the relator's complaint had to be
served on the government under seal, and allowed the government to move for extensions of time in choosing whether or not to intervene. Id.

analogous to a provision of the Medicare Secondary Payer
statute, 42 U.S.C. § 1395y(b)(3)(A).

"Along these lines, Solo also argues that § 292(b) is more
The MSP statute empowers

("MSP")

Medicare to responsible establishes courts have

seek reimbursement from primary insurers who are for paying for certain health care costs, and a private right of action for damages. Four circuit held that the MSP statute is not a crui tam statute
fact may sue.

and that only plaintiffs who suffer an injury in
-20-

argument

cannot be reconciled with the numerous

statutes

-

including §

292(b)

itself -

that the Supreme Court has

labeled

oui tarn despite lacking many of the FCA's
292(b) contains many, though not all,

features.14

Section

of the FCA's salient
universal

features,

including a wrong to the government,

standing,

and a shared recovery.

Together with the overwhelming
292 (b) as a crui tain statute, 292(b)

authority explicitly describing §

these factors are more than sufficient to conclude that §

is

indeed a oui

tarn statute,

and therefore,

that Pequignot has

Article III standing,
claims,

as a partial assignee of the government's
§ 292.15

to sue Solo for violations of

See Stallev.

517

F.3d at 913,

Stallev.

524

F.3d at 1231;

United

Seniors, 500 F.3d at 26, Stallev. 509 F.3d at 519. However, the MSP statute is distinguishable from § 292(b). First, the MSP statute in no way indicates that it provides a universal right to sue but merely "establish[es] ... a private cause of action for damages." 42 U.S.C. § 1395y(b)(3)(A). The MSP statute also provides no provision for a recovery shared by the relator and the government. Finally, unlike § 292(b), the MSP statute was not described by the Supreme Court in Vermont Agency as a q-ui tarn
statute.

"indeed, the logical corollary to Solo's argument that § 292(b) is not a oui tarn statute is that none of the purported oui
tarn statutes the Court cited are truly crui tarn laws.

rationale under which crui tarn standing was allowed in Vermont
Aaencv should not apply to § 292(b) because § 292(b)

15In a supplemental brief,

Solo argues that the assignment
purports to

than proprietary, as in the case of the FCA, where the government suffers a concrete financial injury. Although some scholars have argued that the government can assign only proprietary, and not
purely sovereign, interests, see Myriam E. Gilles,

assign to relators a governmental interest that is only sovereign in nature - an interest arising from a violation of law - rather

Representational Standing:

U.S.

ex rel.

Stevens and the Future of

-21-

C. Whether § 292 Violates the Constitutional Separation of
Powers.

Solo next argues that allowing Pequignot to sue on behalf of the United States as a oui tarn relator violates the

constitutional separation of powers,
Clause of Article II,

specifically the "Take Care"

which requires that the President "shall
U.S. Const.

take Care that the Laws be faithfully executed." Art. II § 3. This provision, which grants

the Executive Branch

the power to enforce federal law, separation of powers,

is part of the scheme of the

in which Congress passes laws,

President enforces them, e.g., Rilev v. St.

and the judiciary interprets them. 252 F.3d 749,

See. 760

Luke's Episcopal Hospital.

(5th Cir.

2001)

(calling the Take Care Clause "a crucial bulwark

to the separation of powers").

The separation of powers can be violated in two basic ways.

One involves the "aggrandizement of one branch at the expense of
the other," Buckley v. Valeo, 424 U.S. 1, 122 (1976), such as

when Congress impermissibly retains the power to control the
removal of Executive Branch officials. See Myers v. United

States,

272 U.S.

52

(1925).

Another occurs when a law,

despite

no inter-branch aggrandizement,

"disrupts the proper balance
[one of the

between the coordinate branches" by "prevent[ing]

Public Law Litigation.

89 Cal.

L.

Rev.

315,

342-44

(2001),

the

assignment in Vermont Agency,
this distinction.

Supreme Court made no such distinction in its discussion of

and this Court declines to adopt

-22-

branches]

from accomplishing its constitutionally assigned Nixon v. Adm'r Gen. Servs.. 433 U.S. 425, 443

functions." (1977).

This second category has also been described as

"impermissibly underminfing]"

the role of one of the branches. Schor 478 U.S. 833, 856

Commodity Futures Trading Comm'n v.
(1986).

Solo argues that §

292(b)

impermissibly undermines

the

Executive Branch because it assigns government's claims

the ability to enforce the tarn relators

for false patent marking to qui

without providing the Executive Branch with the ability to control a relator's litigation. Specifically, Solo argues that

Article II is violated because the Executive Branch does not
retain "sufficient control" over a § 292 gui tarn suit. source for the "sufficient control" The

standard is Morrison v.

Olson.

487 U.S.

654

(1988),

in which the Supreme Court,

by a 7 to

1 majority,

rejected an Article II challenge to a law

establishing an independent counsel to investigate wrongdoing by

certain Executive Branch officials. constitutionality,

In upholding the statute's

the majority held that the statute.provided
... to ensure that the

the Executive with "sufficient control

President is able to perform his constitutionally assigned

duties."

Morrison.

487 U.S. at 696.

In particular,

the Morrison

Court found that the Executive Branch retained the power to

appoint the independent counsel as well as to remove him or her

-23-

for good cause,

to define the independent counsel's jurisdiction,

and to set Justice Department policies by which the independent
counsel had to abide. See id.

As in the standing analysis,

case law discussing the False
In Vermont

Claims Act is relevant to an evaluation of § 292(b).
Agency,

the Court explicitly declined to decide the question of

whether the oui tam provisions of the FCA violate Article II.
See Vermont Agency, 529 U.S. at 778 n. 8 ("[W]e express no view

on the question whether oui tam suits violate Article II,

in

particular the Appointments Clause of § 2 and the
Clause of § 3."). Two justices, however,

'take Care'

expressed their view . . .

that "[t]he historical evidence summarized by the Court

together with the evidence that private prosecutions were commonplace in the 19th century . . is also sufficient to resolve

the Article II question."
dissenting).

Id.

at 801

(Stevens and Souter,

JJ.,

A number of circuit courts,

however,

have squarely addressed

Article II challenges to the FCA.

All have affirmed the law's

constitutionality,

although based on differing rationales.

The

Fifth Circuit's holding was the most sweeping.
Stevens and Souter, the Fifth Circuit found it

Like Justices
"logically

inescapable that the same history that was conclusive on the
Article III question in [Vermont Agency1 with respect to gui tam

lawsuits initiated under the FCA is similarly conclusive with

-24-

respect to the Article II question concerning this statute."

Rilev.

252 F.3d at 752.

The court also distinguished the test, holding that it was "simply

Morrison "sufficient control" not dispositive"

of a challenge to the FCA because the FCA
than the independent counsel unlike the

presented fewer Article II problems statute, given that (1) a oui

tarn plaintiff,

independent counsel,
but only in its name,

does not actually act as the United States
and (2) a gui tarn suit is merely a civil

action,

whereas

the independent counsel in Morrison had the power
a central executive function.

to initiate criminal prosecutions, Id. at 755-56. Additionally,

the court noted that the Executive

Branch maintains control over FCA oui tarn actions because of the
law's provisions that require that the United States receive

notice of the lawsuit;

allow it to take over the case within 60

days of notification or intervene after the 60-day period upon a

showing of good cause;

dismiss or settle a case over the

objections of the relator;

and stay discovery if it learns that

the action could interfere with a government investigation or
prosecution. Id. at 753-54.

The Second,

Sixth,

and Ninth Circuits have also found that However, they rested their

the FCA does not violate Article II.

holdings more directly on the control mechanisms available to the

-25-

government,

rather than on historical

justifications.16

See U.S.

ex.

rel.

Kellv.

9.

F.3d at 755

(finding that

"the Executive

Branch exercises at least an equivalent amount of control over

oui tarn relators as it does over independent counsels");
rel. Taxpayers Against Fraud v. Gen. Elec. Co..

U.S.

ex.

41 F.3d 1032,

1041

(6th Cir.

1994)

(finding that

"the aui tarn provisions

.

.

.

do not contradict the constitutional principle of separation of
powers [because] . . . [t]hey have been crafted with particular

care to maintain the primacy of the Executive Branch in

prosecuting false-claims actions");

U.S.

ex rel.

Kreindler v.

United Techs..
the oui

985 F.2d 1148,

1155

(2d.

Cir.

1993)

(holding that

tarn provisions

"do not usurp the executive litigating
the executive branch

function because the statute gives

substantial control over the litigation").

Finally,

the Tenth Circuit took a fact-specific approach to
and held that "at least where

an Article II challenge to the FCA,
the government intervenes,

the gui tarn provisions of the FCA do

not violate the separation of powers by transgression of the Take
Care Clause." U.S. ex. rel. Stone v. Rockwell Int'l Corp.. 282

F.3d 787,

806

(10th Cir.

2002).

In Stone,

the government

initially declined to intervene in the oui tarn action,

but later

"These three decisions all predated Vermont Agency, in which the Court announced that the long history of crui tarn laws was "well nigh conclusive" on the issue of Article III standing, and in which two justices held that this history was similarly
conclusive on the Article II question.
-26-

did so.

Given that the government intervened and was "a full and

active participant in the litigation as it jointly prosecuted, the
case," the court was "unconvinced . . . that the presence of a

qui tam relator ... so hindered the Government's prosecutorial
discretion as to deprive the Government of its ability to perform its constitutionally assigned responsibilities."
Solo argues that § 292(b)

Id.

at 806.

cannot be constitutional because,

unlike the FCA,

§ 292(b)

fails to provide the Executive Branch

with sufficient control over the litigation.
292(b)

Unlike the FCA,

§

does not require that the government receive notice of the

litigation.

Moreover,

§ 292(b)

does not provide the government

with the ability to "take over" the litigation from the relator,
or to settle or dismiss it over the relator's objection.

Nonetheless, this case,

this Court finds that as applied to the facts of does not violate Article II.

§ 292(b)

First, Circuit,

like Justices Souter and Stevens and the Fifth

the Court finds the long history of oui tarn statutes,

including many passed by the First Congress soon after the

signing of the Constitution,

see,

e.g.,

1 Stat.

131,

133, highly

persuasive as to their constitutionality.

Oui tarn statutes were
It is

part of a long-accepted practice dating back centuries.

unlikely that the framers would have written a Constitution that
outlawed this practice, and then immediately passed several qui

tarn laws that unconstitutionally encroached on Executive Branch

-27-

power before the ink on the Constitution was even dry.

Of

course,

passage by the First Congress

is not dispositive as to

the constitutionality of a law.
(1 Cranch)
Act of

See Marburv v.

Madison.

5.

U.S.

137

(1803)

{striking down provisions
80). However, legislation

of the Judiciary
"passed by the

1789,

1 Stat.

First Congress assembled under the Constitution,
members had taken part in framing that instrument
contemporaneous and weighty evidence of its

many of whose
... is

true meaning."

Wisconsin v.

Pelican Ins.

Co..

127 U.S.

265,

297

(1888),
M.E.

overruled in part on other grounds bv Milwaukee County v.

White Co. ,

296 U.S.

268

(1935).

The long history of crui tarn

actions strongly supports a finding of their constitutionality.
Second, it is not necessary for § 292(b) to meet the

demanding standard applied by the Supreme Court in Morrison to
withstand an Article II challenge,
292(b)

given that the intrusion of §
See

into Executive Branch power is minor in comparison.

Rilev. . .

252 F.3d at 755

(holding that

"the Morrison control test as it

.

is simply not dispositive of

[a challenge to the FCA],

involves an entirely different lawsuit and requires entirely
different control mechanisms.").
292(b) pursues a civil action,

A crui tarn relator under §
Because

not a criminal one.17

17There is, concededly, some confusion as to whether § 292 is criminal or. civil. The Federal Circuit has described § 292 as "supplfying] a civil fine," Clontech Labs.. Inc. v. Invitroaen
Corp..

entertaining actions by private parties under § 292(b)
-28-

406 F.3d 1347,

1352

(Fed.

Cir.

2005),

and other courts

have

civil actions do not wcut[]

to the heart of the Executive's

constitutional duty to take care that the laws are faithfully
executed," the Executive Branch need not wield the
same

level

of
See

control over civil

litigation as over criminal prosecutions

Rilev.

252 F.3d at 755.

This principle is particularly
where private parties

compelling in the area of patent law,

routinely litigate matters concerning the validity,
enforceability, and infringement of patents. Quite si nply,

enforcement of the substantive provisions of § 292 is ::iot the
type of executive function whose delegation to an auth jrity not

controlled by the Executive Branch would presumptively raise

serious Article II questions.

Moreover,

the actual

power

wielded

by a relator under § 292(b) pales in comparison to thaj::
to the independent prosecutor in Morrison.

granted

The i independent
to

counsel was given "full power and independent authority

exercise all investigative and prosecutorial functions and powers
of the Department of Justice."
stark contrast,

Morrison.

487 U.S.

at 662.

In

a oui tarn relator under § 292(b)

can medntain

stated that it is not a criminal statute. See Filmon I rocess Corp. v. Spell-Right Corp., 404 F.2d 1351, 1355 (D.C. C ir. 1968); Sippit Cups. Inc. v. Michael's Creations. Inc.. 180 F. Supp. 58, 61 (E.D.N.Y. 1960). In contrast, the Second Circuit hds stated Bovd. 936 F. 2d at 79. This Court understands § 292(a) as defining a criminal offense, with § 292(b), the gui tan portion of the statute, providing a civil remedy. This mterpr etat ion is consistent with a 1952 Senate Report stating that the statute is "an ordinary criminal action as well as an informer action." S.R. 82-1979 (1952), reprinted in 1952 U.S.C.C.A.N. 2394, 2403.
-29-

that patent mismarking under § 292 is a "criminal offerjse

only one type of suit - an action for false patent marking - and
must do so at his own expense. the government Finally, § 292(b) does not bar

from initiating its own action,

crimina 1 or civil,
§ 292(a).

to enforce the substantive false marking provisions of By comparison, in Morrison, once a matter was

referred to an

independent counsel,

the Attorney General and Justice Department

were required to suspend all investigations and
regarding that matter.
reasons,

proceedings

See id.

at 662-63.

For all of the above
the enforcement of

the Court concludes,

as applied to that

proper use of patent markings, that the Executive Branch executed"

the constitutional mandate the laws be faithfully

"take care that

can be satisfied with a significantly lesser degree of

control

than the Supreme Court required in Morrison.

In addition,
292(b) itself,

despite the lack of control mechanisjns in §
the ability to

the Executive Branch is not without

assert its interests

in a §

292(b)

oui tarn action.

Th 3 clerks of
:he United

federal courts are required to notify the Director of
States Patent and Trademark Office of any patent

suits within one

month of

their filing.

See 35 U.S.C.

§

290.

The Unit <>d States
see Fed.

may intervene in a oui tarn action, R. Civ. P. 24(a)(2),

either as of right,

or with a court's permission,

see Fed R.
oui
cannot

Civ.

P.

24(b).

If the United States intervenes and
to voluntarily dismiss the case, it

tarn
do so
See

relator attempts

without a court order if the United States does not

consent.

-30-

Fed.

R.

Civ.

P.

41(a)(1)(A)(ii)

(allowing dismissal wi thout a
sign

court order only if

"all parties who have appeared"

a

stipulation of dismissal).

Finally,

the United States may apply

for a protective order if the relator's action interfe res with a
government investigation or prosecution. See Fed. R.
--iv. P,

26(c).

Although these mechanisms concededly do not ri se to the
:he FCA's
§

same level of government control provided by the FCA,

strict safeguards are not required because,
292(b)
power.

as discuss sd supra.

represents a minimal

intrusion onto Executive B anch

Finally,

it is preferable that constitutional cha lenges be
See U.S. v. Raines. 362 U.S.
7, 22
an

adjudicated as applied.
(1960) (cautioning that

B[t]he delicate power of pronouncing

Act of Congress unconstitutional is not to be exercised with
reference to hypothetical cases");
541 U.S. 509, 531 (2004)

see also Tennessee

.

Lane.
was

(holding that because a statute

constitutional as applied to the "class of cases"
the matter before it, the Court ttneed[ed to]

impl: cated by

go no further

Although Solo has raised concerns regarding separation- of-powers

issues that might arise if the government desired to Id tigate
292(b) action in a different manner than the oui tarn relator,,
pose

a

§

the

Court need not decide whether such a fact pattern would

constitutional problems,

because that is not the case here,
"a ful1 and

Although the United States has not intervened as

-31-

active participant in the litigation," Stone,

282 F.3d at 806,
§ 292(b)
and

it

has intervened to defend the constitutionality of Pequignot's ability to sue Solo.

That the Executive Bjranch,

the

very entity Solo alleges has been "impermissibly undermined," has intervened and expressed no objection to the manner in which
Pequignot has prosecuted his suit - and has actually supported

Pequignot's action in all respects -

is additional

perjsuasive

evidence that separation-of-powers principles have not been
violated here.
facts, Court,

It is unnecessary to decide whether,

o.i

different

Article II might be violated.

On the record before the

there is no constitutional violation.18
IV. Conelusion.

It is
as one of

likely an accident of history that
only a few remaining gui

§

292(b)

survives

tarn statutes

in Ame rican law,

given that the overwhelming majority of these statutes have been
repealed. Unlike false claims against the government,
misuse of

a patent marking does not involve a proprietary injury to the

United States that must be vindicated through the actions of private prosecutors; rather, the injury to the United States is
real the

only to its sovereignty.

To the extent that there is it is to competitors o

injury caused by false marking,

constitutional issues might arise if, as Solo hypothesd zes, multiple relators brought multiple § 292(b) actions for the same
underlying violations.

"Likewise,

it is unnecessary to decide whether

-32-

entity abusing patent markings.

Congress could easily provide

such competitors with a private right of action withou t enacting

a aui tarn statute.19

The only practical impact of the gui tam
appears to be its potential to benefit
who have

provisions of § 292(b) individuals,

such as the plaintiff in the case at bar,

chosen to research expired or invalid patent markings
lawsuits in the hope of financial gain.

and to

file

To the extent that Solo,

and other potential defeidants in §

292(b)

actions,

believe that the law is unwise,

they a

·e

not

without recourse to seek its revision.
and oui tarn actions in general,

The history of the FCA,
that when th sse actions

indicates

have been subject to abuse by profit-seekers with litt e public

motivation,

legislatures,
Indeed,

both in the United States and England,

have reacted.

in the aftermath of a Supreme Court U.S. ex rel. Ma
cus v.

decision broadly interpreting the FCA,

Hess. 317 U.S. 537 (1943), Congress swiftly revised th|>
limit crui tam actions substantially.
However, any arguments against §

FCA

to

See Beck,

supra.

at 556-61.
concerns

292(b)

based on policy

are

"addressed to the wrong forum."

Id.

at

547.

As

tike Fourth

Circuit stated regarding the FCA,

[P]erhaps Congress should have taken note of the

by competitors or others who could allege an injury to themselves as a result of the false marking. See, e.g.. Mohawk Indus 2008 WL
5210537, at *3.

throughout its long history appear to have been brought

"Indeed,

the vast majority of actions brought

und< ;r

§

292

-33-

possibility that [defendants] would be harassed fcy vexatious oui tarn suits in federal courts. Perhaps it

did, but decided that the benefits of the gui tan scheme outweighed its defects. In any event, we have no inclination or power to delve into the wisdom of the
balance Congress struck . . . Congress has let loose a posse of ad hoc deputies . . . [Defendants] may pjrefer the dignity of being chased only by the regular troops; if so, they must seek relief from Congress.

U.S.
961

ex rel.
F.2d 46,

Milam v.
49

Univ.

of Tex.

M.D.

Anderson Cancer Ctr..

(4th Cir.

1992).

For the above reasons,
will be denied, by an Order

the defendant's Motion to [Dismiss
to be issued with this opinion.

Entered this

dL '

day of March,

2009.

Alexandria,

Virginia

Leonle M. Brinkema United States District Judge

-34-