Venue Considerations for Hatch-Waxman and BPCIA Litigation

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In Valeant Pharmaceuticals North America LLC v. Mylan Pharmaceuticals Inc., No. 2019-2402 (Fed. Cir. Nov. 5, 2020), the Federal Circuit clarified the venue analysis of 28 U.S.C. § 1400(b), which controls venue for patent infringement cases.  Section 1400(b) provides that an action for patent infringement may be brought in the judicial district where the defendant resides (i.e., its state of incorporation), or where the defendant has committed acts of infringement and has a regular and established place of business.[1]

The Valeant case analyzes where “acts of infringement” occur in Hatch-Waxman litigation initiated based on the filing of an Abbreviated New Drug Application (“ANDA”) and before launch of the generic drug product.  The case involves issues similar to those that will arise in cases brought under the Biologics Price Competition and Innovation Act (“BPCIA”), where litigation is initiated based on the filing of an abbreviated biologics license application (“aBLA”) and before the launch of a biosimilar product.

The Valeant litigation arose from an ANDA filed by Mylan seeking approval to market a generic version of Jublia®, a medication to treat fungal infections of toenails.  Valeant filed suit against Mylan in the District of New Jersey, alleging infringement of Orange Book listed patents pursuant to the Hatch-Waxman Act.  Mylan sought dismissal for improper venue because the defendants do not have a regular and established place of business in New Jersey and the only alleged act of infringement—submission of the ANDA—did not occur in New Jersey.  The district court granted the motion and dismissed the complaint.  Valeant appealed.

The Federal Circuit characterized its issues as determining: (1) proper venue in Hatch-Waxman cases after TC Heartland, and (2) proper venue for patent cases brought against foreign entities.  Because the defendants were not incorporated in New Jersey, the court proceeded to determine “where the defendant has committed acts of infringement,” as § 1400(b) requires.

Under the Hatch-Waxman Act, submitting an ANDA for a drug claimed in a patent is an act of infringement.  The court recognized that there has been inconsistent interpretation by the district courts over whether future distribution of the generic drug is contemplated in the act of infringement.  In rejecting venue as proper in all judicial districts where a generic is likely to be distributed, the court noted the past tense requirement of the venue statute, “the defendant has committed acts of infringement,” as well as the speculative nature of future distribution allegations.  Despite the strong policy considerations argued by Valeant to take a broader approach, the statute was not ambiguous.  Venue is proper only in those districts that are sufficiently related to the ANDA submission.

The court did not elaborate on what acts would be required to be sufficiently related to the ANDA submission, but nothing suggested any acts occurred in New Jersey, so venue was not appropriate there.  Mylan sent the ANDA from its West Virginia corporate office to the FDA in Maryland.  Regardless of sending the ANDA, venue in West Virginia would have been appropriate because Mylan is incorporated there.  The court declined to determine whether the ANDA submission to the FDA in Maryland would make venue there appropriate.

On the issue of venue in cases against foreign defendants, the Federal Circuit remanded the district court’s dismissal of one defendant, Mylan Laboratories Ltd. (“MLL”).  MLL is an Indian corporation, and therefore, subject to venue in any judicial district.  Dismissal of MLL in the lower court for improper venue was incorrect, but the Federal Circuit remanded for the district court to determine whether MLL was sufficiently involved with the submission of the ANDA to overcome its 12(b)(6) motion to dismiss.

[1] See TC Heartland LLC v. Kraft Foods Grp. Brands LLC, 137 S. Ct. 1514 (2017).

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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