The question of the proper court for a branded pharmaceutical maker to bring suit against an Abbreviated New Drug Application filer under the Hatch-Waxman Act is surprisingly unsettled seeing as the Act was enacted in 1984.  The Federal Circuit brought some measure of clarity to the question recently when it affirmed a District Court dismissal of an ANDA action on improper venue grounds, in Celgene Corp. v. Mylan Pharmaceuticals Inc.

The case arose over Celgene's multiple-myeloma drug pomalidomide (Pomalyst).  Celgene filed suit in the District of New Jersey, where none of the named defendants (Mylan Pharmaceuticals Inc. (MPI), Mylan Inc., or Mylan N.V.) have their headquarters.  These actions involved separate ANDA litigations initiated by Celgene in response to the Mylan defendants' Paragraph IV certifications (21 U.S.C. § 355(j)(2)(A)(vii)(IV)).  The first of these litigations commenced in 2017 involving four Orange Book-listed patents, the second in 2018 involving one of a separate five OB-listed patents and the third action commencing in 2020 involving yet another of the five separate OB-listed patents.  All these actions were consolidated.  Celgene also asserted the remaining three of the five separate OB-listed patents in an action commenced in 2019; it is this last case on appeal here.  The relevance of these other litigations is that the parties stipulated that the District Court's decision on Rule 12 motions in the earlier cases would be binding on them in this case.  The District Court's decision dismissing the action for improper venue was based on the Federal Circuit's holding in In re Cray, that to satisfy the venue statute (28 U.S.C. § 1400(b)) a plaintiff must show the defendant had "committed acts of infringement and has regular and established place of business" in the district.  (Celgene did not appeal on the merits the District Court's ruling that they had failed to state a claim against Mylan N.V. under Fed. R. Civ. Pro. 12(b)(6) on the basis that the ANDA had been filed only in the name of MPI, but rather argued the adequacy of its pleadings and that the District Court had abused its discretion in denying Celgene's motion for leave to amend its complaint, as discussed below.)

The Federal Circuit affirmed, in an opinion by Judge Prost joined by Judges Chen and Hughes.  The opinion recites the plaintiff's burden to show that a defendant "resides" in the district or "has committed acts of infringement and has a regular and established place of business" there.  The first option is clearly not satisfied, according to the Court ("No one argues that the defendants-appellees reside in New Jersey").  The questions then devolved into whether the defendants committed acts of infringement in the district and had a regular and established place of business in New Jersey.  The basis for Celgene's infringement action was that filing an ANDA itself constitutes an act of infringement under 35 U.S.C. § 271(e)(2) and that this was sufficient for proper venue.  The panel rejected Celgene's argument that this act has a nationwide consequence and effect and thus the effects will be "felt" in New Jersey.  Unfortunately for Celgene, venue is "predicated on past acts of infringement" under Valeant Pharms. N. Am. LLC v. Mylan Pharms. Inc., 978 F.3d 1374, 1381–82 (Fed. Cir. 2020), and thus this argument was precluded according to the Court.  (The opinion further recites that Supreme Court precedent requires venue determinations to be "specific and unambiguous" and not "given a liberal construction," citing Andra Grp., LP v. Victoria's Secret Stores, L.L.C., 6 F.4th 1283, 1287 (Fed. Cir. 2021).)  Moreover, submission of an ANDA does not occur in New Jersey, nor does the destination of the Paragraph IV letter (Celgene's New Jersey headquarters) make venue proper as an act of infringement in the district according to the opinion.  Citing Valeant, the opinion limits the act of infringement under § 271(e)(2) to be the ANDA submission itself, which does not occur in the district.  And while the Paragraph IV letter is a necessary part of the ANDA process, the panel stated that "the statute and regulations treat the infringing ANDA submission and the notice letter as different things," in part based on timing of filing the ANDA followed by sending the notice letter to the NDA holder (and not the FDA) in rejecting Celgene's argument (also noting that it is the ANDA filing that raises a cause of action not the notice letter).

Next the Court turned to the question of whether MPI and Mylan had a "regular and established place of business" in the district, concluding (as had the District Court) that they did not.  The opinion cites the Federal Circuit's Cray decision for the requirements that "(1) there must be a physical place in the district; (2) it must be a regular and established place of business; and (3) it must be the place of the defendant" and notes that the absence of any of these requirements fails to satisfy the standard.  The panel found the third requirement to be "particularly relevant," to the extent that it is not limited to places where a defendant's employee happen to be located.  Resorting once again to Cray, the opinion recites the four "non-exhaustive relevant factors, specifically"

(1) "whether the defendant owns or leases the place, or exercises other attributes of possession or control over the place"; (2) "whether the defendant conditioned employment on" "an employee's continued residence in the district" or "the storing of materials at a place in the district so that they can be distributed or sold from that place"; (3) "a defendant's representations" about that place, including advertisements; and (4) "the nature and activity of the alleged place of business of the defendant in the district in comparison with that of other places of business of the defendant in other venues."

The opinion recognizes that no party has argued that either MPI or Mylan Inc. have a physical presence in New Jersey.  Rather, Celgene relied on New Jersey as being the situs of "places associated with Mylan employees" or "places associated with Mylan affiliates."  For the former, the Court noted the distinction between an employee "owning or leasing" a place of business and a defendant doing so, stating that the former does not support proper venue (it also being significant to the extent the opinion mentions it that "MPI and Mylan Inc. have tens of thousands of employees.  Seventeen live in New Jersey.").  Defendants rebutted this Celgene argument by noting that none of these employees were required by MPI or Mylan Inc. to live in New Jersey, nor did the companies pay for these homes nor store materials there or provide support staff there.  Nor said the Court was there any evidence that MPI or Mylan identified these residences as places of their business (and the evidence that they in fact may be is "too speculative" to establish the residences as places where MPI or Mylan business is conducted).  Nor did job postings "asking that candidates live in New Jersey or 'within reasonable driving distance'" suffice according to the panel.  In these regards the Court saw a clear parallel with the factual predicate in Cray, the opinion drawing those similarities expressly.  The panel also rejected Celgene's assertion that a "now-defunct" related corporate entity, Mylan Laboratories Inc., had once had a physical presence in New Jersey, agreeing with the District Court that Celgene had not established that "a subsidiary's presence isn't imputed to a parent for venue unless the parties 'disregarded the corporate form in their dealings with their respective subsidiaries and affiliates,'" which Celgene had not shown was the case here.  Nor was Celgene's assertion that venue should be proper on a corporate "alter ego" theory that would justify piercing the corporate veil any more persuasive before the Federal Circuit than it had been before the District Court.

Having dispensed with the venue question, the Court next addressed an issue of sufficiency of the pleadings in the District Court's dismissal of Celgene's complaint against Mylan N.V. On the Rule 12(b)(6) question, the panel found persuasive, in reviewing the decision de novo, that MPI and not Mylan N.V. had signed the ANDA and that MPI had not acted as Mylan N.V.'s corporate alter ego (as had the District Court).  In coming to this conclusion, the Court relied heavily on the procedural principles underlying the Supreme Court's decisions in Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009), and Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007), regarding Celgene's failure to establish either ground for Mylan N.V.'s liability based on assertion of insufficient facts.  The opinion summarizes Celgene's asserted litany of possible liability-inducing facts as being "too conclusory" and "[j]ust not enough."  The Court expressly rejected Celgene's attempt to analogize the situation in this case with that in In re Rosuvastatin Calcium Pat. Litig., 703 F.3d 511 (Fed. Cir. 2012), where, according to the opinion, "the entity that signed the ANDA sought to escape liability because it claimed that it was only filing the ANDA as the agent of a Canadian company" (emphasis on opinion).  In this case all that Celgene had asserted was "unadorned suspicion" of defendants "working in concert" for an ANDA where only MPI submitted the ANDA in question.

On the leave-to-amend question, the Court held the District Court had not abused its discretion on the facts before them.  In addition, the opinion states that Celgene had not complied with the District Court's local rules (based on a deadline for filing amendments to the complaint).  Celgene unsuccessfully argued that the District Court applied the wrong deadline based on a difference in such deadlines in other related cases as set forth above.  Unfortunately for Celgene, however, the parties had stipulated that resolution of Rule 12 motions in this case would be governed by the decision in the earlier case, and the Federal Circuit applied this stipulation to the question before it under Rule 15.  And further, the opinion notes that Celgene had not made this argument before the District Court, further dooming its efforts before the Federal Circuit.

The Court's precedential decision establishes the principle that a notice letter under Paragraph IV cannot form the basis for establishing venue and reinforces the primacy of the principles enunciated in Cray in patent venue cases, here as applied in ANDA cases.  For those reasons alone the decision is a significant advance in certainty regarding the requirements for establishing venue.

Celgene Corp. v. Mylan Pharmaceuticals Inc. (Fed. Cir. 2021)
Panel: Circuit Judges Prost, Chen, and Hughes
Opinion by Circuit Judge Prost