Qui tam suits against for-profit colleges is a post from Overlawyered - Chronicling the high cost of our legal system

Recognizing an opportunity to make quick and easy money, private attorneys have been suing companies under the False Marking Statute, 35 U.S.C. § 292. This law allows any person to sue to enforce a federal criminal statute that prohibits anyone from labeling an unpatented product with a patent number or to advertise a product with a patent number that is not actually patented. The penalty for violating this law is $500 per offense, which has been interpreted to mean each and every product falsely marked. For instance, if a business is charged with falsely marking 100,000 products, it could be liable for $50,000,000. Private attorneys suing under this statute seek massive amounts in damages and then try to settle with the defendant for a fraction of that cost (still a large amount of money). Companies often settle even if the case against them has little merit because they do not want to risk such a massive amount in damages. The longtime toy manufacturer Wham-O, however, successfully defended such a lawsuit in court, provoking the plaintiffs’ lawyers to appeal to the Federal Circuit (the only appellate court below the Supreme Court that can hear patent cases). Cato, along with our senior fellow Walter Olson — who has studied these patent marking cases — filed an amicus brief supporting Wham-O on constitutional grounds. We argue that the False Marking Statute fails to give the executive branch, through the attorney general, control over the enforcement actions brought at its behest. By allowing any person to sue and then receive half of the damages, the law abrogates the executive power to enforce the law and places it in the exclusive hands of the private attorney. In the 1988 case of Morrison v. Olson, the Supreme Court upheld the independent counsel statute because it gave the Attorney General “sufficient control” over the independent counsel’s hiring, firing, and the scope of their investigation. Other courts have held that for a private person to prosecute what is called a “qui tam” action under the False Claims Act — essentially stepping into the shoes of the government — the government must maintain “sufficient control” over the litigation. The False Marking Statute does not provide sufficient control, or any control, and therefore violates Article II’s “Take Care Clause,” the font of the executive branch’s enforcement duties. Ultimately, the separation of powers, the foundation for the governmental structure created by the Framers, ensures that laws are enforced by someone accountable to the people, the Executive. The False Marking Statute divests the president of this authority, so the Federal Circuit should strike it down as violating the Constitution’s separation-of-powers structure.

My colleague Ilya Shapiro has more on the case at Cato at Liberty. Incidentally, a federal judge in Ohio just ruled in a separate case that the statute is, indeed, unconstitutional; you can read about that at Volokh Conspiracy, Point of Law, the WSJ Law Blog, and WLF Legal Pulse. Earlier on false marking suits here.

An unconstitutional patent false-marking statute is a post from Overlawyered - Chronicling the high cost of our legal system

“New Financial Regulations Will Make Whistleblowing Lucrative” is a post from Overlawyered - Chronicling the high cost of our legal system

Dodd-Frank whistleblower provisions is a post from Overlawyered - Chronicling the high cost of our legal system

Bonus: Amy Kolz at American Lawyer (“Serial whistle-blower Joseph Piacentile makes millions helping the government uncover fraud. That’s how the False Claims Act is supposed to work. Or is it?”). And David Walk at Drug and Device Law assails as “dumb,” credulous, and based upon a biased sample a New England Journal of Medicine feature on whistleblowing in the pharmaceutical industry:

The New England Journal of Medicine bills itself as “the world’s most influential medical journal,” and it unquestionably publishes groundbreaking articles about medicine. But all too often in recent years the NEJM has strayed from what it knows — medicine – into what it doesn’t – law and public policy, particularly tort policy. No longer content with editorials encouraging litigation against anyone but doctors, the NEJM now publishes public policy advocacy pieces dressed up as scientific studies, with the implicit suggestion that those studies should get the benefit of the NEJM’s good name in public policy debates.

Informants rejoice is a post from Overlawyered - Chronicling the high cost of our legal system

Three years ago, the I.R.S. began offering bigger rewards — 15 percent to 30 percent of whatever money the government recovered — in a move that has turbocharged the agency’s whistle-blower program. …

Among the lawyers, hedge funds and investors who may provide the financing for class-action lawsuits and whistle-blower cases against government contractors, the reinvigorated I.R.S. program has attracted attention.

[N.Y. Times]

Lucrative world of IRS informant bounties is a post from Overlawyered - Chronicling the high cost of our legal system

• Iowa federal judge hits EEOC with $4.5 million attorney fee award over “sue first, ask questions later” litigation strategy;
• Jim Copland continues his weeklong blogging of Trial Lawyers Inc.: K Street with posts on the plaintiff’s bar’s Washington, D.C. presence (with discussion of CPSIA, employment litigation, qui tam, and arbitration, among other topics); state lobbying; and public relations, including legal academics, the media, and consumer groups;
• Hmm: House committee conveniently subpoenas Toyota defense documents that plaintiffs had been seeking to unseal (and more on Toyota);
• Obama administration plans crackdown to make more employers reclassify independent contractors as employees;
• Trial bar stirs pot in Florida politics;
• Feds swoop down on 2003 settlement to demand that parties reimburse Medicare as provided by retroactive law.

New at Point of Law is a post from Overlawyered - Chronicling the high cost of our legal system

Open season for “false marking” bounty-hunters? is a post from Overlawyered - Chronicling the high cost of our legal system

“How Litigators Tried to Sneak a Pet Earmark into Health Reform” is a post from Overlawyered - Chronicling the high cost of our legal system

Medicare Secondary Payer expansion, cont’d is a post from Overlawyered - Chronicling the high cost of our legal system