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Cloverleaf Golf Course, Inc v. Fmc Corporation

March 20, 2012

CLOVERLEAF GOLF COURSE, INC., PLAINTIFF,
v.
FMC CORPORATION, DEFENDANT.



The opinion of the court was delivered by: Herndon, Chief Judge:

ORDER

On September 16, 2011, President Barack Obama signed into law the Leahy-Smith America Invents Act. Leahy-Smith America Invents Act, Pub. L. No. 112-29 (125 Stat. 284) (Sep.16, 2011). Part of this new legislation amended 35 U.S.C. § 292, specifically limiting, among other things, who can sue for the penalty authorized by 35 U.S.C. § 292(a). Id. Prior to the amendment, any person could sue for the penalty. See 35 U.S.C. § 292(b). Now, however, "[o]nly the United States may sue for the penalty authorized by this subsection." Leahy-Smith America Invents Act, Pub. L. No. 112-29 (125 Stat. 284) (Sep.16, 2011). The new legislation also amended 35 U.S.C. § 292 by adding the following subsection: "(c) The marking of a product, in a manner described in subsection (a), with matter relating to a patent that covered that product but has expired is not a violation of this section."Id. "The amendments made by this subjection shall apply to all cases, without exception, that are pending on, or commenced on or after, the date of the enactment of this Act." Id.

Plaintiff Cloverleaf Golf Course, Inc. contends that the retroactivity of amended § 292 is unconstitutional because the retroactivity of the new § 292 is an impermissible deprivation of plaintiff's vested property right; because the retroactive application of the amended § 292 to pending cases violates the Due Process Clause because there is no legitimate legislative purpose for Congress' such retroactive application;because even if there is a legitimate legislative purpose, the amended § 292 is not furthered by a rational means for implementation; and because the retroactive application of the amended § 292 to pending cases violates the Takings Clause. Plaintiff further posits that the amended § 292 conflicts with Article I, Section 8, Clause 8 of the Constitution. The Court disagrees, addressing each argument in turn.

I. Analysis

"It is by now well established that legislative Acts adjusting the burdens and benefits of economic life come to the Court with a presumption of constitutionality, and that the burden is on one complaining of a due process violation to establish that the legislature has acted in an arbitrary and irrational way." Usery v. Turner Elkhorn Mining Co., 428 U.S. 1, 15 (1976); INS v. Chadha, 462 U.S. 919, 944 (1983); Lujan v. G & G Fire Sprinklers, Inc., 532 U.S. 189, 198 (2001). "Congress' power to effect a change in the law and to make that change controlling as to pending cases is beyond peradventure." Deck v. Peter Romein's Sons, Inc., 109 F.3d 383, 386 (7th Cir. 1997).

A. Vested Right

First, the retroactivity of the new § 292 is not an impermissible deprivation of plaintiff's vested property right because plaintiff does not have a vested property right. "A judgment that has become final through exhaustion of all appellate remedies is a property right" subject to the Takings Clause. Cent. States, Se. & Sw. Areas Pension Fund v. Lady Balt. Foods, Inc., 960 F.2d 1339, 1345 (7th Cir. 1992). "The 'vested rights' doctrine starts from the proposition that a judgment, like a deed, is (or identifies) a species of property." Tonya K. v. Bd. of Educ. of the City of Chi., 847 F.2d 1243, 1247 (7th Cir. 1988). "In civil litigation, however, no person has an absolute entitlement to the benefit of legal principles that prevailed at the time the case began, or even at the time of the bulk of the litigation." Id. The legislature may, for example, change a statute of limitations, create remedy years after the fact, although an earlier litigation would have been doomed, and may create an obligation to pay attorneys' fees for litigation that preceded the enactment of the statute. Id.

Here, plaintiff does not have a vested right that the government could take in this case. Plaintiff had simply filed this qui tam suit when it had standing to do so, but the legislature has chosen to now revoke that standing. At the time the legislation had passed, plaintiff had not established a vested right in this case. Rather, plaintiff had merely filed a complaint and this case had not even proceeded past the motion to dismiss stage. Thus, plaintiff cannot establish that it had a "vested right" within the meaning of Fifth Amendment. See Paramount Health Sys., Inc. v. Wright, 138 F.3d 706, 710 (7th Cir. 1998) ("There was no final judgment here and so no taking under the 'vested rights' line of cases just cited."); In re Consol. U.S. Atmospheric Testing Litig., 820 F.2d 982, 989 (9th Cir. 1987) ("While a cause of action is considered to be a species of property, as heretofore discussed, those words do not translate into a cognizable taking claim."); N.Y. Ctr. R.R. Co. v. White, 243 U.S. 188, 198 (1917) ("No person has a vested interest in any rule of law entitling him to insist that it shall remain unchanged for his benefit."). This is the same conclusion reached by another district court who has decided this issue. See Brooks v. Dunlop Mfg. Inc., No. C 10-04341 CRB, 2011 U.S. Dist. LEXIS 141942, at *19 (N.D. Cal. Dec. 9, 2011) ("Brooks has not obtained any judgment in his favor, let alone a 'final unreviewable judgment,' and thus has no vested property interest in his cause of action."). Even if, however, plaintiff had established a "vested right" within the Fifth Amendment, the Court would still not find that plaintiff has met his burden of showing that the legislation is unconstitutional.

B. Legitimate Purpose

Second, the retroactive application of amended § 292 to pending cases does not violate the Due Process Clause because there is a legitimate legislative purpose for retroactive application. The presumption against statutory retroactivity has no force in cases like this one where the congressional intent is clear. Deck, 109 F.3d at 387; see 35 U.S.C. § 292 ("The amendments made by this subjection shall apply to all cases, without exception, that are pending on, or commenced on or after, the date of the enactment of this Act."). Because Congress explicitly intended courts to apply the amendments to § 292 retroactively, the Court's only inquiry is whether Congress' intent comports with due process. Deck, 109 F.3d at 387. The due process standard guiding this inquiry is one of rationality. Id. The Court simply asks whether retroactive application of the amendments to § 292 is rationally related to a legitimate legislative purpose. Id.

Here, the Court finds that the retroactive application of the amendments to § 292 is rationally related to a legitimate legislative purpose. The Congressional Record indicates that Congress amended § 292 in order to eliminate frivolous lawsuits that burden the courts, including the recent surge of false marking cases, and to create jobs by allowing companies to spend money on hiring workers rather than fighting off frivolous false marking suits. These are legitimate purposes. See Hughes v. Tobacco Institute Inc., 278 F.3d 417, 425 (5th Cir. 2001) (finding that a rational relationship existed between the Texas legislature's enactment and its objective to abrogate frivolous lawsuits it perceived as wasting judicial time and money). Other district courts considering the matter have concluded the same. See Public Patents Founds., Inc., v. McNeil-PPC, Inc., 09 Civ. 5471 (KBF), 2012 U.S. Dist. LEXIS 21733, at *3 (S.D. N.Y. Feb. 16, 2012) (noting that "[d]istrict courts that have considered the question agree that the enactment of the retroactivity provision furthered a legitimate legislative purpose" and finding the retroactivity provision constitutional); Seirus Innovative Accessories, Inc. v. Cabela's Inc., No. 09-CV-102 H (WMC), 2011 U.S. Dist. LEXIS 145307, at *5-6 (S.D. Cal. Oct. 19, 2011) ("The Court concludes that Congress enacted AIA for a legitimate purpose, and Congress clearly intended for AIA to apply retroactively.").

C. Rational Means

Third, amended § 292 is furthered by a rational means for implementation. Applying amended § 292 retroactively is a rational means towards eliminating frivolous lawsuits so that companies could focus on hiring workers. Plaintiff has failed to meet its burden of showing that this was an irrational means. See Deck, 109 F.3d at 387-88 ("As the party asserting a due process violation, it is Deck's burden to show that Congress acted in an arbitrary and irrational manner by directing that the 1995 amendment be applied retroactively."). "The Supreme Court has long held that legislation readjusting rights and burdens is not unlawful solely because it upsets otherwise settled expectations." Id. at 388. Again, another district court that has considered this issue has come to the same conclusion. See Brooks v. Dunlop Mfg. Inc., No. C 10-04341 CRB, 2011 U.S. Dist. LEXIS 141942, at *14 (N.D. Cal. Dec. 9, 2011) ("The Court finds that Congress, by eliminating the qui tam provision in § 292, rationally furthered a legitimate ...


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