Court Finds That Qui Tam Relator Who Built Case From Patent Records Is Not an Original Source

A relator who scours public patent filings to “uncover” an alleged fraud against the government cannot avoid the False Claims Act’s public disclosure bar by claiming to be an original source, the Northern District of California held this week.

A single qui tam relator has filed at least three cases against pharmaceutical manufacturers alleging that they fraudulently obtained patents through the presentation of purportedly incorrect or misleading material to the United States Patent & Trademark Office (“PTO”).  These alleged frauds on the PTO, Relator contends, led to the improper issuance of patents, which in turn excluded generic competition, led to higher drug prices, and increased amounts paid by the federal government.  The information for these complaints came from publicly available records of PTO proceedings.

As we previously reported, in August 2022, the Ninth Circuit held in one of these cases that a patent prosecution was an “other … federal hearing” within the meaning of the public disclosure bar.  See United States ex rel. Silbersher v. Allergan, Inc., 46 F.4th 991 (9th Cir. 2022).  Thus, unless Relator could show that he was an “original source” of information to the government, the public disclosure bar blocks his claim.  As relevant here, an original source is someone “who has knowledge that is independent of and materially adds to the publicly disclosed allegations or transactions, and who has voluntarily provided the information to the Government.”  31 U.S.C. § 3730(e)(4)(B).

On remand, the district court confirmed that Relator was not an original source and dismissed the case.  As an initial matter, the district court rejected Relator’s argument that he provided six categories of information not contained in the patent filings through which he detected an alleged fraud on the PTO.  It concluded that “all of them amount to conclusions [Relator] drew from analyzing the prosecution history using his specialized expertise in patent law.”  The Court accordingly maintained its prior conclusion that the patent records disclosed the transactions that Relator claimed comprised the alleged fraud, noting Relator himself had previously conceded as much.

Turning to the original source exception, the district court then determined that Relator had not shown “independent” knowledge that “materially adds” to any publicly disclosed facts.  Although Relator contended that his specialized expertise of the patent prosecution process materially added to what was disclosed in the patent file and qualified him as an original source under the 2010 Amendments to the public disclosure bar, the court disagreed.

Rather, the Court observed that while the 2010 Amendments removed the “direct” knowledge requirement, they maintained the requirement that the knowledge be “independent.”  Accordingly, the Court applied pre-2010 Amendment case law holding that “an ‘original source’ did not include a relator who ‘merely uses his … unique experience or training to conclude that the material elements in the public domain constitute a false claim.’”  Specifically, the Court reasoned that relators whose knowledge results “from applying their specialized expertise to the facts that have already been publicly disclosed” do not truly have independent knowledge.

The Court supported its conclusion by interpreting the “information” that a relator is required to provide to the government in advance of filing the complaint to refer to “historical facts relating to the alleged fraud rather than any specialized expertise the relator brought to bear in order to discern those facts,” consistent with Supreme Court precedent interpreting that same language in the pre-amendment statute.

Finally, the district court rejected Relator’s assertion that his specialized expertise in rooting out alleged fraud was “welcome[d]” by government agencies and therefore materially added to publicly known facts.  The Court concluded this was contrary to the language of the statute and that Congress did not expand the “original source” exception “so broadly as to encompass the type of knowledge that Relator brings to bear in this case.”

The district court’s opinion can be found here.


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