January 23, 2017
Case Name: Roxane Labs., Inc. v. Vanda Pharms., Inc., No. 16-0179, 2016 U.S. Dist. LEXIS 175785 (S.D. Ohio Dec. 20, 2016) (Marbley, J.)
Drug Product and Patent(s)-in-Suit: Fanapt® (iloperidone); U.S. Patents Nos. 8,652,776 (“the ’776 patent”), 8,999,638 (“the ’638 patent”), 9,072,742 (“the ’742 patent”), 9,074,254 (“the ’254 patent”), 9,074,255 (“the ’255 patent”), 9,074,256 (“the ’256 patent”), and 9,157,121 (“the ’121 patent”)
Nature of the Case and Issue(s) Presented: Vanda owns the NDA for Fanapt®, and listed nine patents as covering the drug in the Orange Book. Roxane has an ANDA for a generic version of the drug. Hatch Waxman litigation between the parties is now ongoing in Delaware, but the patents-in-suit are not at issue there; instead, the patents-in-suit in that case are two other Orange-Book-listed patents. After Roxane provided notice about the patents-at-suit to Vanda pursuant to 21 U.S.C. § 355(j)(2)(B)(ii), and Vanda failed to file suit against Roxane within the statutory 45-day window, Roxane filed for declaratory judgment action of non-infringement and invalidity related to the patents-in-suit. Vanda filed a motion to dismiss for lack of personal jurisdiction. Vanda’s principal place os business is in Washington, D.C. and it is incorporated in Delaware. The court found that it had neither general jurisdiction nor specific jurisdiction over Vanda, and dismissed the case.
Why Vanda Prevailed: The court first addressed the issue of general jurisdiction. Ohio’s standard for general jurisdiction is essentially the federal due process standard: “when an out-of-state defendant conducts continuous and systematic business in Ohio, it is ‘doing business’ in Ohio and amenable to process there, even if the cause of action did not arise from activity in Ohio.” Calling the place of incorporation and principal place of business “paradigm bases” for general jurisdiction, the court observed that neither applied to Vanda. Further, the court observed that “Vanda has no corporate presence of any kind in Ohio.” But Roxane argued that sales of Vanda’s products in Ohio established general jurisdiction. Relying on the Supreme Court’s 2014 Daimler AG v. Bauman (134 S. Ct. 746, 187 L. Ed. 2d 624 (2014)) decision, the court concluded that “basing an argument for general jurisdiction on a corporation’s large volume of sales in a particular state would allow for the ‘exorbitant’ exercise of general jurisdiction by courts in all states where that corporation had sizeable sales.” Roxane further argued that the an Ohio-based contractor’s manufacture of a Vanda product, a product not covered by the NDA related to Roxane’s ANDA, established general jurisdiction. The court rejected this argument too, stating that Roxane did not allege that the contractor is an agent or alter ego of Vanda or otherwise showed why the contractor’s contacts with Ohio should be imputed to Vanda.
The court next addressed the issue of specific jurisdiction. The court found that it did not have jurisdiction under Ohio’s long-arm statute. The section of Ohio’s long-arm statute on which Roxane relied required at least demonstrating that Vanda had the purpose of causing tortious injury. The purported tortious act was Vanda’s listing of the patents-in-suit in the Orange Book. Roxane had failed, according to the court, to plead the “purpose” element. Second, the court said that listing patents in the Orange Book is simply complying with federal law, which is not tortious.
The court also concluded that exercising specific jurisdiction would not comport with the precepts of federal due process. The court recited the International Shoe three-prong enquiry: (i) whether the defendant “purposely directed its activities at residents of the forum”; (ii) whether the lawsuit arises out of or relates to those activities; and (iii) whether the exercise of personal jurisdiction is fair and reasonable. Roxane, the court said, failed on all three prongs. The court said that the first two factors required Vanda to have taken some action related to the patents-in-suit directed specifically at Ohio and its residents. But it noted that Roxane’s argument relied on one action—listing the patents—and one omission—leaving Roxane in “limbo” by not suing on the patents-in-suit. The court then identified two problems with this argument. First, Roxane cited no cases where listing patents in the Orange Book was identified as an action purposely directed at a particular state. Second, the court observed that the Orange Book is national in scope, so a listing there is directed to firms in all states, not just those in Ohio. Having failed to establish the first two prongs of International Shoe, the court concluded that the proof of the third prong necessarily failed too.