445 F.Supp.3d 393
N.D. Cal.2020Background
- This is a qui tam False Claims Act (FCA) suit by relator Zachary Silbersher alleging defendants obtained U.S. Patent No. 8,865,688 by withholding prior art during prosecution and thereby caused government payors to reimburse supracompetitive Apriso prices.
- The ’688 patent (owned by Dr. Falk) claimed a once‑daily, morning, without‑food regimen for a granulated mesalamine formulation; key prior art included two Salix press releases and academic studies (Brunner, Marakhouski, Davis).
- GeneriCo petitioned for inter partes review (IPR); the PTAB held claims 1 and 16 obvious in May 2017 and the Federal Circuit later affirmed.
- Silbersher (lead counsel for GeneriCo in the IPR/Federal Circuit) bases the FCA theory on alleged inequitable conduct in patent prosecution and alleges resulting false claims when government programs reimbursed Apriso.
- The United States declined to intervene. The district court dismissed the federal FCA claim under the FCA’s public disclosure bar, declined supplemental jurisdiction over state claims, and terminated the discovery stay as moot; limited leave to amend was granted.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the CFAC pleads an actionable FCA false claim | Silbersher: patent procured by willful withholding → inflated prices → false claims submitted to Medicare/Medicaid | Defendants: the factual predicate (prior art, obviousness, alleged misconduct) was publicly disclosed; suit is parasitic | Court dismissed FCA claim under the public disclosure bar (did not reach other defenses) |
| Whether PTAB proceedings or press coverage qualify as a "public disclosure" under 31 U.S.C. § 3730(e)(4)(A) | Silbersher: 2010 amendments narrow the bar; PTAB is not an enumerated forum | Defendants: PTAB is a federal adjudicative hearing (fits §3730(e)(4)(A)(ii)); Law360 article is news media (iii) | Court held PTAB disclosures and the Law360 article are public disclosures that trigger the bar |
| Whether Silbersher is an "original source" | Silbersher: he provided the Marakhouski/Brunner studies to the PTAB and thus is an original source | Defendants: his disclosures were made as paid counsel/part of his job, not voluntary; allegations are conclusory | Court held relator did not plausibly allege original‑source status; counsel’s IPR work was not a voluntary pre‑filing disclosure |
| Remedy / supplemental claims and procedural relief | Silbersher sought to proceed on federal and state claims; opposed dismissal | Defendants sought dismissal and a discovery stay | Court dismissed federal FCA claim, declined supplemental jurisdiction over state claims, terminated stay, and granted limited leave to amend by June 15, 2020 |
Key Cases Cited
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (plausibility standard for complaints)
- Ashcroft v. Iqbal, 556 U.S. 662 (pleading standard; conclusory allegations insufficient)
- Graham Cty. Soil & Water Conservation Dist. v. United States ex rel. Wilson, 559 U.S. 280 (history and purpose of the FCA public disclosure bar)
- Schindler Elevator Corp. v. United States ex rel. Kirk, 563 U.S. 401 (statutory‑interpretation principles)
- Amphastar Pharm. Inc. v. Aventis Pharma SA, 856 F.3d 696 (9th Cir. 2017) (dismissing similar patent‑based FCA claim under public disclosure bar)
- Prather v. AT&T, Inc., 847 F.3d 1097 (9th Cir. 2017) (public disclosure is a defense after 2010 amendments)
- United States ex rel. Mateski v. Raytheon Co., 816 F.3d 565 (9th Cir. 2016) (elements for applying disclosure bar)
- United States ex rel. Fine v. Chevron, U.S.A., Inc., 72 F.3d 740 (9th Cir. 1995) (pre‑filing disclosures made as part of job do not qualify as voluntary original disclosures)
- A-1 Ambulance Serv., Inc. v. California, 202 F.3d 1238 (9th Cir. 2000) (recognizing that legal analysis of public materials does not create originality)
- United States ex rel. Bennett v. Biotronik, Inc., 876 F.3d 1011 (9th Cir. 2017) (discussing overlap between government‑action and public‑disclosure bars)