and Submitted November 10, 2016 Pasadena, California
from the United States District Court for the Central
District of California Marvin J. Garbis, District Judge,
Presiding by Designation D.C. No. 5:09-cv-00023-MJG-OP
R. Gross (argued), Evan C. Borges, Michael E. Lopez, and Bret
D. Hembd, Greenberg Gross LLP, Costa Mesa, California, for
A. Perry (argued) and Stephen C. Payne, Gibson Dunn &
Crutcher LLP, Washington, D.C.; M. Sean Royall, Tracey B.
Davies, and Olivia A. Adendoroff, Gibson Dunn & Crutcher
LLP, Dallas, Texas; for Defendants-Appellants/Appellees.
Before: Diarmuid F. O'Scannlain and Johnnie B. Rawlinson,
Circuit Judges, and Rosemary Marquez, [*] District Judge.
qui tam suit under the False Claims Act, the panel affirmed
the district court's dismissal of the action for lack of
subject matter jurisdiction; dismissed as moot the
defendant's appeal from the district court's denial
of its motion for summary judgment; reversed the district
court's denial of the defendant's motion for
attorneys' fees; and remanded the case to the district
plaintiff alleged that by committing fraud against the United
States Patent and Trademark Office in a patent application,
the defendant obtained an illegal monopoly over a drug and
then knowingly overcharged the United States. The panel held
that the district court lacked subject matter jurisdiction
because the complaint was based on public disclosures in the
form of allegations of fraud, as well as allegations of the
underlying facts, in a prior patent infringement suit. In
addition, the plaintiff did not show that it was the original
source of the information on which its allegations were
based. The panel held that the plaintiff did not show both
that it had direct, firsthand knowledge of the alleged fraud
and that it obtained this knowledge independently.
the denial of attorneys' fees under the fee-shifting
provision of the False Claims Act, the panel held that the
district court had authority to award attorneys' fees
after the dismissal of the action for lack of subject matter
jurisdiction. Agreeing with the Tenth Circuit, the panel held
that the fee-shifting provision provides an independent grant
of jurisdiction. In addition, the defendant was a prevailing
party. The panel concluded that the Supreme Court's
opinion in CRST Van Expedited, Inc. v. E.E.O.C., 136
S.Ct. 1642 (2016), effectively overruled the holding of
Branson v. Nott, 62 F.3d 287 (9th Cir. 1995), that a
defendant that wins because the action is dismissed for lack
of subject matter jurisdiction is never a prevailing party.
The panel remanded for resolution of the attorneys' fees
SCANNLAIN, Circuit Judge.
decide whether we have subject matter jurisdiction over a
corporate qui tam action under the False Claims Act
that accuses a competing company of committing fraud against
the United States.
saga began in the early 1990s, when Aventis Pharma S.A.,
("Aventis") a French pharmaceutical enterprise,
developed a plan to sell the drug enoxaparin in the United
States under the brand name Lovenox. Enoxaparin is a
heparin-based blood thinner that was patented in Europe in
the 1980s as European Patent 40, 144 ("EP144").
Eventually, European authorities invalidated EP144 as lacking
1991, Aventis applied to the U.S. Patent and Trademark Office
("USPTO") for a patent to cover a supposedly new
version of enoxaparin ("618
Product").Aventis filed a New Drug Application
("NDA") with the Food and Drug Administration
("FDA") a month later.
initial versions of the NDA were rejected in part as being
"obvious in view of the prior art, " including
EP144. Aventis acknowledged that EP144 was prior art, but
claimed that the 618 Product was a different drug from the
drug produced by following EP144 ("EP144 Product").
After several subsequent rejections, Aventis submitted a
revised NDA in 1993 supported by the expert declaration of
Dr. Andre Uzan, a French scientist. Dr. Uzan claimed that
data in Example 6 of the patent application, included in the
revised NDA, "clearly demonstrate[d]" that the 618
Product has a longer half-life relative to the EP144 Product,
and thus was novel.
USPTO then approved the revised application and issued Patent
Number 5, 389, 618 ("618 Patent") for the 618
Product in 1995, in large part because of Dr. Uzan's
statements regarding Example 6. However, it turned out that
Dr. Uzan's sworn declarations were incorrect. Dr. Uzan
had based his claim of a difference by comparing a 40mg dose
of the 618 Product with a 60mg dose of the EP144 Product, but
had not disclosed that different dosages were used in the
USPTO submissions. A dose-for-dose comparison would have
shown that the difference between the products was "not
statistically significant." This error went undetected
for years. Meanwhile, after the 618 Patent was issued,
Aventis listed it in the FDA's Orange Book, which invokes
the protections of the Hatch-Waxman Act. 21 U.S.C. §
355(j)(5)(B)(iii) (requiring a generic drug competitor to
certify that the patent is either not infringed or invalid).
Pharmaceuticals, Inc., ("Amphastar") a U.S.-based
generic pharmaceutical firm founded in 1999 by Yong Feng
Zhang, decided that enoxaparin would be a good prospect for a
generic product, believing it might be possible to develop a
generic version by utilizing information from EP144.
Development work began in 2000 and included experiments
performed from 2000 to 2003 ("Pre-Litigation
Experiments"). The exact nature of the Pre-Litigation
Experiments is disputed, but they led to Amphastar's
being able to manufacture a generic enoxaparin. Amphastar
then submitted an Abbreviated New Drug Application
("ANDA") to the FDA on March 4, 2003.
responded to Amphastar's ANDA by bringing suit five
months later, alleging that Amphastar and Teva
Pharmaceuticals were infringing on the 618 Patent. Amphastar
filed its Amended Answer and Counterclaim and made no mention
of the Example 6 error or the Pre-Litigation Experiments.
discovery was underway, Amphastar filed a motion to amend its
Answer and Counterclaim, stating, "based on facts
recently developed in this litigation, Amphastar has added
new affirmative defenses and several antitrust claims to its
answer and counterclaims." Amphastar's additions
included an affirmative defense alleging inequitable conduct
by Aventis in obtaining the 618 Patent. After Aventis filed a
motion to strike the amendments, Amphastar responded by
asserting: "As to the unenforceability of the '618
patent based on inequitable conduct, all of the facts and
evidence upon which this affirmative defense is based are in
the possession and control of Aventis." Amphastar did
not mention the Pre-Litigation Experiments when it listed the
evidence on which it based its inequitable conduct defense.
Amphastar also alleged antitrust violations.
eventually prevailed in its patent infringement litigation
battle with Aventis. By the end of the litigation the Federal
Circuit had affirmed the district court's conclusions
that: (1) Aventis made material nondisclosures and false
representations to the USPTO regarding the 618 Patent
application and (2) Aventis intended to deceive the USPTO.
Amphastar was thus able to produce generic enoxaparin without
fear of infringement-the 618 Patent was "found to be
unenforceable on the ground of inequitable conduct."
However, Amphastar's antitrust counterclaim was
then brought this qui tam action against
Aventis. Amphastar duly sent the statutorily
required letter to the United States Department of Justice,
notifying it of its intent to bring this action. Amphastar
then filed its sealed complaint on January 7, 2009, alleging
that by committing fraud against the USPTO, Aventis obtained
an illegal monopoly over enoxaparin and then knowingly
overcharged the United States. By committing such fraud,
Amphastar further alleged, Aventis knew the patent was
invalid and thus knowingly defrauded the United States. The
complaint was unsealed and the case proceeded in October
2011, after the government declined to join the litigation.
November 14, 2012, the district court ruled that
Amphastar's complaint was based on public disclosures,
and therefore Amphastar had to show it was the "original
source . . . of the information on which the allegations are
based." § 3730(e)(4). Thereafter, Aventis filed a
motion for summary judgment contending Amphastar had failed
to meet the original source exception to the jurisdictional
bar. To be an original source of information underlying the
complaint, Amphastar needed to meet the pre-suit disclosure
and "direct and independent knowledge"
first argued that Amphastar had failed to disclose enough
information in its pre-suit disclosure letter. The district
court denied Aventis's summary judgment motion on this
issue in a May 2014 ruling, but certified its ruling for
interlocutory appeal, which Aventis brought in No. 14-56382.
district court then proceeded to the "direct and
independent knowledge" issue. It held a four-day
evidentiary hearing to determine if Amphastar had direct and
independent knowledge of any of the information underlying
its allegations. The district court made various factual
findings: Amphastar had no knowledge of Example 6 being false
before the Aventis I litigation began; Zhang
(Amphastar's CEO) was not a credible witness; Amphastar
had engaged in inconsistent actions regarding whether it had
known of the Example 6 error before the Aventis I
litigation, and such inconsistent actions undermined its
argument. The district court also concluded that Amphastar
did not produce enoxaparin by following EP144 in its
Pre-Litigation Experiments, but copied key information from
Patent 618. For all these reasons the district court held
that Amphastar had neither direct nor independent knowledge
of any of the elements of fraud supposedly committed by
Aventis. The district court then dismissed the case for lack
of jurisdiction. Aventis moved for attorneys' fees, which
motion was denied.
timely appealed the dismissal of its qui tam suit.
Aventis timely cross-appealed the ...