Hatch-Waxman Venue: The New Narrow?

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The issue of venue—where geographically a case can be brought—and jurisdiction are a pair of principles to determine in which forum a case can properly be brought. Jurisdiction in personam concerns whether a particular party can be sued in a forum. A party’s personal ties to a forum can be sufficient under either general or (case-)specific jurisdiction. Venue is viewed as a big deal because a particular forum can be considered friendly or hostile to one of the parties (think “home-court advantage”), and critically influential on the case outcome.

Generic-drug patent challenges under the Hatch-Waxman Act carry a special wrinkle relevant to venue and jurisdiction in personam. “Hatch-Waxman litigation is premised on an artificial act of infringement: filing an Abbreviated New Drug Application (ANDA) with the Food and Drug Administration (FDA). Thus, Hatch-Waxman litigation generally arises before a generic company has received FDA approval to market its product, so specific jurisdiction cannot be based on actual sales—a typical jurisdictional tie in patent cases.” See Robins Kaplan blog Nov. 2, 2016 Kelsey Thorkelson, Hatch-Waxman Venue Update: Will SCOTUS Limit Where Brands Can Sue Generics?

As it turned out, SCOTUS did not limit the ruling in the Federal Circuit’s Acorda Therapeutics v. Mylan Pharma, (Fed. Cir. 2016). Thus, under Acorda specific jurisidiction—typically more narrow than general jurisdiction, which in Daimler AG v. Bauman (a non-patent case) SCOTUS had limited to a corporation’s principal place of business—exists in any state where the generic drug company intends to market its drug upon FDA approval.

Now comes a decision from the Northern District of Texas, which relies on statutory construction of the patent venue provision to arguably “reverse” the effect of the Federal Circuit’s Acorda decision. Galderma Laboratories, LP et al v. Actavis Laboratories UT, Inc. et al, 3-17-cv-01076 (TXND November 17, 2017, Order) (Lynn, USDJ) (redacted version).[attached] The Galderma court did address the Acorda case, but dismissed its ruling as not dispositive in a venue challenge: “Acorda is a personal jurisdiction decision, not a venue decision.” Galderma, slip op. at 10.

The District Court granted the generic-drug-company’s defendant’s 12(b)(3) motion to dismiss the plaintiffs’ Hatch-Waxman—because the defendant did not file its ANDA in the district. The court noted, “Venue in a patent infringement action is governed by a special patent venue statute, which provides that a patent infringement case may be brought in the judicial district where (1) the defendant resides, or (2) where the defendant has committed acts of infringement and has a regular and established place of business. 28 U.S.C. §1400(b). The Supreme Court recently clarified that, for purposes of the patent venue statute, a domestic corporation “resides” only in its state of incorporation. TC Heartland LLC v. Kraft Foods Grp. Brands LLC, 137 S. Ct. 1514,1519 (2017). Because Teva USA is a Delaware corporation, venue is proper in this district only if Teva USA (a) has committed acts of infringement in this district and (b) has a regular and established place of business in this district. 28 U.S.C. §1400(b).” Galderma, slip op. at 11.

The court noted that the patent-venue statute places venue where an infringement defendant “has committed acts of infringement.” Id. at 9 (emphasis added). The court noted that, “In the Hatch-Waxman Act context, because the generic drug is not yet being marketed, the only act of infringement that actually has occurred is the filing of the ANDA.” Id. To consider future intended sales as infringements within the contemplated forum, the court found, “is inconsistent with the plain language of the statute, which does not identify any artificial act of infringement other than the ANDA submission.” Id. at 9–10.

The Court found that “the plain language of the patent venue statute provides that venue is proper ‘where the defendant has committed acts of infringement.’ In the Hatch-Waxman Act context, because the generic drug is not yet being marketed, the only act of infringement that actually has occurred is the filing of the ANDA. . . . The commencement of a lawsuit effectuates the purpose of the Hatch-Waxman Act; it is not necessary to recognize additional speculative acts of infringement to give the statute effect. . . . This Court declines to find that an act of infringement occurs wherever an ANDA filer intends to market the accused product.Id. at 11 (emphasis added). The court cited various cases placing venue at the location of ANDA preparation and submission. Id. at 11–12. The court found no support for various arguments by the plaintiffs, including the safe harbor’s exemption as making ANDA submission not an act of infringement, or that the receipt of defendant’s patent certification by plaintiffs in Texas, changed the outcome of the venue analysis. Id. at 12–13. Finally, the court considered but rejected plaintiffs’ reliance on the “regular place of business” alternative grounds for venue: the defendant’s separately incorporated sales force did not create a regular place of business for the named defendants. Id. at 13–21. Lastly, however, even after all the contrary analysis the court did leave open the strong possibility of a motion to transfer to Delaware, in the interests of justice. Id. at 21–22.

The upshot? The Galderma case relies on discrete applications of venue and jurisdiction, which—in this case—can seem to reverse the effect of the Federal Circuit’s expansive specific-jurisdiction ruling in Acorda, and provide defendants with a tool for picking venue by choosing preparation/submission site. But, as the case also shows, transfer motions lie within a plaintiff’s toolbox as well. Counsel in Hatch-Waxman cases should be mindful going in how the interests of their client can best be served by venue selection—including keeping a close watch on how other courts treat the issue.

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