Filing an ANDA May Expose Generic Manufacturers to Nationwide Personal Jurisdiction in Patent Infringement Suits

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On March 18, 2016, the Federal Circuit affirmed the District of Delaware’s ruling in two companion cases that West Virginia-based defendant Mylan Pharmaceuticals is subject to specific personal jurisdiction in Delaware. Acorda Therapeutics Inc. v. Mylan Pharm. Inc., 2015-1456 (Fed. Cir. Mar. 18, 2016); AstraZeneca AB v. Mylan Pharm. Inc., 2015-1460 (Fed. Cir. Mar. 18, 2016). The decision from the Federal Circuit, which may have profound implications for generic manufacturers, broadly holds that by filing an Approved New Drug Application (ANDA), Mylan “seeks approval to sell its generic drugs throughout the United States, including Delaware” and is therefore subject to specific jurisdiction in Delaware. Id. at 15.

The first of the two parallel district court cases, brought by Acorda Therapeutics Inc. and Alkermes Pharma Ireland Limited, concerns the drug Ampyra®, which is indicated for improving walking in patients with Multiple Sclerosis. Id. at 3. The second of the district court cases was brought by AstraZeneca AB and concerns type II diabetes drugs Onglyza® and Kombiglyze®. Id. at 4. Mylan filed ANDAs seeking approval to market generic versions of Ampyra, Onglyza, and Kombiglyze, along with Paragraph IV certifications that the plaintiffs’ Orange Book-listed patents for the three branded drugs are invalid and not infringed. Id. at 3-4.

On appeal to the Federal Circuit, the parties did not dispute that Mylan would be subject to personal jurisdiction in Delaware under Delaware’s long-arm statute as long as Delaware’s exercise of personal jurisdiction is consistent with the Due Process clause of the Fourteenth Amendment. Id. at 7. The opinion for the court, penned by Judge Taranto and joined by Judge Newman, emphasized that “Mylan has taken the costly, significant step of applying to the FDA for approval to engage in future activities–including the marketing of its generic drugs–that will be purposefully directed at Delaware.” Id. at 8. The court did not cite evidence of Mylan’s plans to market the disputed drugs in Delaware, instead concluding that “Mylan’s ANDA filings constitute formal acts that reliably indicate plans to engage in marketing of the proposed generic drugs.” Id. at 9. The court was also persuaded by the more generalized aspects of Mylan’s business infrastructure: namely, Mylan develops drugs for a nationwide market; it is registered to do business in Delaware; it appointed an agent to accept service of process in Delaware; and it has a network of independent wholesalers and distributors targeting Delaware for marketing purposes. Id. at 15.

In support of its holding, the court emphasized that the Hatch-Waxman Act, which governs the ANDA approval process, recognizes a close connection between filing an ANDA and concrete plans to enter the market. Id. at 9. The court further justified its holding by likening the remedy sought by branded drug manufacturers in ANDA litigation to an injunction, where the harm is threatened rather than actual. Id.

Judge O’Malley filed a concurring opinion criticizing the majority for failing to reach the question of general jurisdiction, an issue raised by the parties and decided by the district court. Id. at 2. Judge O’Malley hoped to avoid the complex legal analysis employed by the majority in favor of the “more straightforward” general jurisdiction analysis. Id. at 4. She reasoned that the Supreme Court’s recent decision in Daimler AG v. Bauman, 134 S. Ct. 746 (2014) did not overrule the line of Supreme Court authority establishing that compliance with a state statute requiring appointment of an in-state agent for service of process in order to conduct business in that state is a valid form of consent to general personal jurisdiction. Id. at 6-7. Judge O’Malley concluded that Mylan expressly consented to general jurisdiction by virtue of complying with Delaware’s statute, which “falls squarely” within the type of statute contemplated by the Supreme Court. Id. at 12.

As for specific jurisdiction, Judge O’Malley expressed discomfort with the majority’s reliance on Mylan’s expressions of future intent, instead preferring to focus on the future effects of the conduct Mylan aimed at Delaware. Id. at 15. In particular, Judge O’Malley found the Paragraph IV certifications filed by Mylan to be “calculated” acts “directed to cause harm” to Acorda and AstraZeneca, both of which are Delaware corporations. Id. at 16.

The Federal Circuit’s broad holding affords plaintiffs wide latitude in selecting a forum and may lead to more cases being litigated in Delaware and New Jersey, where the courts are particularly experienced with ANDA litigation. The holding may also dampen the filing of “protective suits” by innovator drug companies in response to Paragraph IV certifications. In ANDA litigation, plaintiffs commonly file protective suits in multiple jurisdictions to ensure that at least one active case was submitted within 45 days of the ANDA notification – thereby triggering the automatic 30-month postponement of FDA approval to market the generic drug – in the event that the case in the desired forum is dismissed on jurisdictional grounds. Although the decision is likely to be viewed negatively by large generic manufacturers that would prefer to have greater control over the choice of forum, the decision at least offers the benefit of avoiding protracted jurisdictional fights.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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