Silbersher v. Allergan plc

Background

Zachary Silbersher sued under the federal False Claims Act on behalf of the United States and numerous States. He alleged that the Allergan and Adamas defendants misled the United States Patent Office into issuing invalid patents covering Namenda XR and Namzaric. According to Silbersher, the defendants used those patents to prevent generic manufacturers from entering the market, maintain monopoly prices, and submit false statements to the government that the drugs’ prices were fair and reasonable.

The operative complaint alleged fraud involving the Went Patents and U.S. Patent No. 8,039,009. Silbersher claimed that the defendants misrepresented clinical-study results, failed to disclose material information about prior art, and continued relying on allegedly misleading patent-application materials. He alleged that the resulting patent protection caused government programs, including Medicare and Medicaid, to pay inflated prices.

Procedural History

The defendants moved to dismiss under the False Claims Act’s public-disclosure bar. In an earlier order, the court found that the patent-prosecution histories disclosed the material elements of the alleged fraud but concluded that patent prosecutions were not a qualifying federal hearing. The Ninth Circuit reversed that conclusion, holding that a patent examination is a federal hearing under 31 U.S.C. § 3730(e)(4)(A)(ii). The Ninth Circuit remanded for the district court to decide whether Silbersher qualified as an original source, without deciding that issue itself.

Legal Standard

The court applied Federal Rule of Civil Procedure 12(b)(6), which permits dismissal when a complaint does not state a legally sufficient claim. At this stage, the court generally accepts factual allegations as true and views them favorably to the nonmoving party, but it does not accept unsupported legal conclusions or conclusory assertions.

Original-Source Exception

The False Claims Act’s public-disclosure bar prevents claims based on substantially the same allegations or transactions that were publicly disclosed through specified channels, unless the relator is an original source. Under the post-2010 statute, an original source must have knowledge that is independent of and materially adds to the public disclosures and must have voluntarily provided that information to the government before filing suit.

The court concluded that the patent-prosecution histories disclosed the relevant transactions because they showed both the alleged false information and the true information underlying Silbersher’s claims. The court also relied on the Ninth Circuit’s ruling that patent examinations qualify as federal hearings for purposes of the public-disclosure bar.

Silbersher identified six categories of information that he claimed made him an original source, including the alleged falsity of a declaration by Dr. Gregory T. Went, the significance of the ’553 patent, the alleged intentional nature of the defendants’ misstatements, and the role of the patents in excluding generic competitors. The court found that these categories were conclusions drawn by applying Silbersher’s specialized patent expertise to information already contained in the public patent files. They did not provide independent knowledge or materially add to the publicly disclosed allegations and transactions.

The court held that the 2010 amendments removed the requirement that an original source’s knowledge be direct, allowing knowledge obtained indirectly in some circumstances. But the amendments did not eliminate the requirement that the knowledge be independent of the public disclosures. The court interpreted the required “information” as the historical facts underlying the alleged fraud, not the specialized expertise used to recognize the significance of those facts. It also noted that decisions from the Ninth Circuit and the district court had rejected specialized expertise as sufficient to materially add to public disclosures.

Disposition

The court found that Silbersher was not an original source. His claims were therefore barred by the public-disclosure bar and had to be dismissed. The court granted the Allergan Motion and the Adamas Motion. Because the complaint could not be cured by amendment, the case was dismissed with prejudice as to both Allergan and Adamas. The court did not reach the defendants’ separate argument that Silbersher had failed to allege specific facts about the specialized expertise he claimed to have used.