Unique Product Solutions, Ltd. v. HY-Grade Valve, Inc.
765 F. Supp. 2d 997
N.D. Ohio2011Background
- Plaintiff Unique Product Solutions filed a qui tam action under 35 U.S.C. § 292(b) alleging false marking of products with a patent that had expired.
- Defendant Hy-Grade Valve moved to dismiss arguing the § 292(b) qui tam provision is unconstitutional under the Appointments and Take Care Clauses of the Constitution.
- The court previously allowed limited discovery on personal jurisdiction and requested briefing on the constitutionality issue with DOJ notified for potential intervention.
- The court analyzes Morrison v. Olson’s “sufficient control” standard to determine whether the government retains adequate control over litigation involving the United States as the real party in interest.
- The court concludes the False Marking statute’s qui tam provision is unconstitutional under the Take Care Clause and dismisses the complaint with prejudice.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether § 292(b) qui tam violates Take Care Clause | Unique Product argues Morrison does not apply or that history supports qui tam. | Hy-Grade contends qui tam lacks executive control, violating Take Care. | Unconstitutional Take Care Clause; dismissed with prejudice. |
| Whether Morrison sufficient control analysis applies to False Marking qui tam | Plaintiff asserts Morrison not controlling for this statute. | Hy-Grade relies on Morrison to require executive control over litigation. | Morrison controls; government lacks sufficient control. |
| Whether government intervention/Rule 24 suffices to cure constitutional defect | Government intervention could remedy control concerns. | Intervention rights in Rule 24 do not supply Take Care Clause safeguards here. | Rule 24 inadequate; no cure for constitutional defect. |
Key Cases Cited
- Vermont Agency of Natural Resources v. United States ex rel. Stevens, 529 U.S. 765 (2000) (qui tam standing and government role in enforcement)
- Morrison v. Olson, 487 U.S. 654 (1988) (developed 'sufficient control' test under Take Care Clause)
- SKF USA, Inc. v. U.S. Customs and Border Protection, 556 F.3d 1337 (Fed.Cir.2009) (discusses qui tam actions in context of government Stark)
- Pequignot v. Solo Cup Co., 608 F.3d 1356 (Fed.Cir.2010) (holds false marking statute is criminal; discusses government intervention)
- United States ex rel. Taxpayers Against Fraud v. General Electric Co., 41 F.3d 1032 (6th Cir.1994) (applies Morrison to FCA qui tam; supports executive control)
- Forest Group, Inc. v. Bon Tool Co., 590 F.3d 1295 (Fed.Cir.2009) (discusses penalties and qui tam dynamics under false marking context)
- Riley v. St. Luke's Episcopal Hospital, 252 F.3d 749 (5th Cir.2001) (quasi-framework contrasting Morrison approach)
- Auffmordt v. Hedden, 137 U.S. 310 (1890) (Appointments Clause historical framing)
- Steel Co. v. Citizens for a Better Environment, 523 U.S. 83 (1998) (general separation of powers context relevant to standing)
- Stauffer v. Brooks Brothers, Inc., 619 F.3d 1321 (Fed.Cir.2010) (rule on government intervention in criminal contexts)