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Nothing Private About Relator’s Qui Tam Action Info – Patent

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The US Court of Appeals for the Ninth Circuit reversed a
district court’s order denying the defendants’ motion to
dismiss a qui tam action under the False Claims Act (FCA)
and remanded for further proceedings. U.S. ex rel Silbersher v.
Allergan, Inc.
, Case No. 21-15420 (9th Cir. Aug. 25, 2022)
(Gould, Bennett, Nelson, JJ)

Relator Silbersher, a patent lawyer, brought his action against
the defendants under the FCA. (31 U.S.C. § 3730(b)).
Silbersher alleged that the defendants unlawfully obtained several
patents related to two drugs used to treat Alzheimer’s disease.
He asserted that by fraudulently obtaining these patents, the
defendants prevented generic drug competitors from entering the
market. As a result, Medicare paid inflated prices for the two
drugs in violation of the FCA.

The US Department of Justice, all of the states that have
analogues to the federal qui tam provision and the
District of Columbia declined to intervene in Silbersher’s
action. Additionally, the key factual information in
Silbersher’s complaint was all disclosed publicly and much of
it could be found on the US Patent & Trademark Office’s
(PTO) website as well as on other government websites. The district
court denied the defendants’ motion to dismiss, holding that
the public disclosure bar did not apply to Silbersher’s claims.
The defendants appealed.

The Ninth Circuit reversed and remanded, noting that the
“FCA creates civil liability for ‘any person who (A)
knowingly presents, or causes to be presented, a false or
fraudulent claim for payment or approval; [or] (B) knowingly makes,
uses, or causes to be made or used, a false record or statement
material to a false or fraudulent claim.’ 31 U.S.C. §
3729(a)(1).” The FCA limits who can bring a qui tam
action and the sources of information upon which they can base
their suit. The public disclosure bar seeks to strike a balance
between encouraging suits by whistleblowers with genuinely valuable
information and discouraging plaintiffs who have no significant
information of their own to contribute. The Court, citing its 2018
case United States ex rel. Solis v. Millennium Pharms.,
reaffirmed the elements of the test for triggering the bar:

“(1) the disclosure at issue occurred through one of the
channels specified in the statute;

(2) the disclosure was public; and

(3) the relator’s action is substantially the same as the
allegation or transaction publicly disclosed.”

The Ninth Circuit determined that only the first element was at
issue in this case and that “[i]t is salient and potentially
controlling that the key factual information underlying
Silbersher’s complaint was all publicly disclosed, and
much could be found in websites maintained by the PTO and other
government agencies.” Under the public disclosure bar, a court
shall dismiss an action or claim if substantially the same
allegations or transactions as alleged were publicly disclosed (1)
in a federal criminal, civil or administrative hearing in which the
government was a party; (2) in a congressional, Government
Accountability Office, or other federal report, hearing, audit or
investigation or (3) from the news media.

The defendants argued that Silbersher’s claims are based on
information disclosure in an “other Federal hearing,” an
“other Federal report” and “from the news
media.” The Ninth Circuit determined that an ex parte
patent prosecution is an administrative proceeding that qualifies
as an “other Federal hearing” within the meaning of the
statute and that Silbersher’s claims were based on information
publicly disclosed in the PTO proceeding. Therefore, the public
disclosure bar was triggered.

The Ninth Circuit did not express any views on the
defendants’ other public disclosure bar arguments, nor did it
express any views on whether Silbersher could still bring his
action if he is an “original source” of the information
in his complaint. The Court remanded to the district court for
further proceedings.

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