9th Circuit Revives False Claims Act Action for Fraud on the Patent Office

by Dennis Crouch

The U.S. Court of Appeals for the Ninth Circuit recently issued a pair of decisions in the qui tam case Silbersher v. Valeant Pharmaceuticals concerning the False Claims Act’s (FCA) public disclosure bar.  The case sets significant precedent in linking FCA claims to patent prosecution and fraud upon the patent office.  The case can be contrasted with Silbersher v. Allergan, Inc., 21-15420, — F.4th — (9th Cir. Aug. 25, 2022) [21-15420], that Silbersher lost.


The False Claims Act (FCA) allows private citizens, known as “relators,” to file qui tam suits on behalf of the government against those who have submitted false or fraudulent claims to the Federal Government. A relator who successfully prosecutes an FCA action is entitled to receive a percentage of any recovery. This bounty system is meant to encourage whistleblowers to come forward with information about fraud against the government. However, the FCA also contains a “public disclosure bar” to prevent opportunistic litigation by relators who do not contribute any original information. The public disclosure bar mandates dismissal of qui tam suits where the allegations are substantially the same as information already publicly disclosed through certain channels enumerated in the statute. The public disclosure bar applies to block FCA claims when: (1) the disclosure occurred via a specified channel, (2) the disclosure was public, and (3) the relator’s allegations are substantially the same as what was disclosed.  31 U.S.C. § 3730(e)(4)(A). If the bar is triggered, courts must dismiss the FCA claim unless the relator qualifies as an “original source” of the information.

In this case, the relator, Zachary Silbersher, brought an FCA lawsuit alleging that Valeant Pharmaceuticals and Dr. Falk Pharma fraudulently obtained patents covering their Apriso drug.  According to Silbersher, Valeant intentionally withheld material prior art references showing that Apriso’s delayed-release formulation was obvious. Valeant then allegedly used the fraudulently obtained patents to charge Medicare/Medicaid inflated prices for Apriso.

Silbersher is a patent attorney and represented GeneriCo in an inter partes review (IPR) proceedings that invalidated one of Valeant’s patents related to Apriso.  In the course of that investigation, Silbersher found that Valeant (allegedly) took inconsistent positions in prosecuting related patents several years apart regarding whether Apriso’s effectiveness without food would have been obvious.

The district court dismissed the suit under the FCA’s public disclosure bar discussed above. The court held that the inter partes review (IPR) proceedings invalidating one of Valeant’s Apriso patents qualified as a public disclosure and contained substantially the same allegations as Silbersher’s complaint.  Thus, because the fraud was already subject of public disclosure, it could not serve as the basis for a False Claims Act Claim.

Ninth Circuit’s Analysis

On appeal, the Ninth Circuit reversed, holding that the IPR proceedings did not qualify as a public disclosure under § 3730(e)(4)(A).  The provision spells out the types of public disclosures that bar FCA claims:

[Barring disclosures may be found in] … (i) in a Federal criminal, civil, or administrative hearing in which the Government or its agent is a party; (ii) in a congressional, Government Accountability Office, or other Federal report, hearing, audit, or investigation; or (iii) from the news media …

Id.  The appellate panel explained that IPRs are primarily adversarial and adjudicatory rather than investigative. With the government not a party to the IPR, the proceeding did not qualify under channel (i) as a “hearing in which the Government … is a party.” Nor did it qualify under channel (ii) as an “other Federal … hearing” since IPRs are not focused on fact-finding or obtaining information, but rather serve as an adversarial proceeding.

While the patent prosecution histories qualified as public disclosures under channel (ii), the Ninth Circuit held they did not disclose substantially the same allegations or transactions as Silbersher’s complaint. Critically, neither the prosecution histories nor any other single qualifying document revealed Valeant’s allegedly inconsistent positions taken before the PTO. According to the Ninth Circuit, publicly disclosing a “fraudulent transaction” requires revealing both the alleged misrepresentation and the true facts, which was absent here.

Key Takeaways

The decisions provide a roadmap for litigators to structure FCA claims based on “fraudulent transactions” arising from allegations of inequitable conduct or inconsistent representations before the PTO. Carefully piecing together the elements of fraud from various public sources may avoid triggering the public disclosure bar. For defendants, these cases highlight the importance of the pleadings and demonstrating that the “essential elements” of alleged fraud have already been publicly disclosed.  A prosecution history that explains any inconsistencies with parallel proceedings would also avoid the potential problem.

4 thoughts on “9th Circuit Revives False Claims Act Action for Fraud on the Patent Office

    1. 1.1

      The descriptive of “primarily adversarial and adjudicatory” does not mean that an investigation is not present.


      …since IPRs are not focused on fact-finding or obtaining information, but rather serve as an adversarial proceeding.

      Does not logically follow.

      The fact that something is adversarial and that the Federal body is serving in an adjuratory role does not mean that fact-finding or obtaining information is foreclosed.

      The Federal body is obtaining information from both sides in the adversarial process.

      And it is still the Federal body that is deciding (even though no true Examiners are involved) on claim amendments that may (or may not) become personal property of a (re)granted patent.

      I do wonder how Paul, as chief advocate of the IPR system, feels about this quandary.

    2. 1.3

      Arguably, it is. If I recall correctly, the government gets 70-85% of the recovery. But, that remaining 15-30% can still be good money.

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