IP Law Daily Venue in generic drug cases not warranted in all locations of future distribution
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Thursday, November 5, 2020

Venue in generic drug cases not warranted in all locations of future distribution

By Brian Craig, J.D.

In Hatch-Waxman cases, venue is not proper in all judicial districts where a generic product is likely to be distributed.

In clarifying the rule on appropriate venue for patent infringement cases brought under the Hatch-Waxman Act involving generic drugs, the U.S. Court of Appeals for the Federal Circuit has held that infringement occurs for venue purposes only in districts where actions related to the submission of an Abbreviated New Drug Application ("ANDA") occur and not in all locations of future distribution for generic drugs. The Federal Circuit affirmed a decision by the federal district court in New Jersey dismissing claims against two U.S.-based defendants involving patent infringement claims related a medication used to treat fungal infections of toenails based on improper venue (Valeant Pharmaceuticals North America LLC v. Mylan Pharmaceuticals Inc., November 5, 2020, O'Malley, K.).

Dow Pharmaceutical Sciences, Inc. holds New Drug Application No. 203567 for the brand name drug Jublia, approved by the FDA. Jublia is a medication used to treat fungal infections (onychomycosis) of toenails. The active ingredient in Jublia is efinaconazole. There are nine patents listed in the Orange Book for Jublia. In 2018, Myland Pharmaceuticals Inc., a generic drug company, executed an ANDA seeking approval to market a generic version of Jublia. Valeant Pharmaceuticals North America LLC and Dow then filed suit against Mylan and other defendants in the federal district court in New Jersey, alleging infringement of Dow’s Orange Book patents pursuant to the Hatch-Waxman Act and requesting declaratory judgment of validity of the Orange Book patents. The next day, Valeant filed an essentially identical protective suit against Mylan in the federal district court in West Virginia. The district court in New Jersey granted Mylan’s motion to dismiss the complaint against all defendants based on improper venue. Valeant and Dow appealed to the Federal Circuit.

Venue in Hatch-Waxman cases. The Federal Circuit held that in Hatch-Waxman Act cases involving generic drugs, venue is not proper in all judicial districts where a generic product specified in an ANDA is likely to be distributed. The Hatch-Waxman Act creates a highly artificial act of infringement that consists of submitting an ANDA. In 2017, the U.S. Supreme Court dramatically changed the venue landscape in patent cases in TC Heartland LLC v. Kraft Foods Grp. Brands LLC, 137 S. Ct. 1514 (2017). The Supreme Court held that the general venue provision in 28 U.S.C. § 1391—which provides that a corporation is deemed to "reside" in any judicial district in which it is subject to personal jurisdiction—does not modify the term "resides" in 28 U.S.C. § 1400, the more specific venue statute applicable to patent cases. Specifically, the Supreme Court held that "resides" in § 1400(b) refers only to a corporation’s state of incorporation. In clarifying the Supreme Court’s decision in TC Heartland, the Federal Circuit held that venue to the ANDA submission occurs in those districts where acts occurred that would suffice to categorize those taking them as a "submitter."

Citing the plain language of the statutes and a directive from the Supreme Court that venue "is not one of those vague principles which, in the interest of some overriding policy, is to be given a liberal construction," the court determined that venue in Hatch-Waxman cases must be predicated on past acts of infringement—i.e., acts that occurred before the action alleging infringement was filed. The Federal Circuit held those acts occur only in districts where actions related to the ANDA submission occur. In the present case, the district court found that no act involved in the submitting of the ANDA occurred in New Jersey. Therefore, the New Jersey district court properly dismissed the claims against the two U.S.-based defendants based on improper venue.

Venue involving foreign defendant. The Federal Circuit held that venue against a defendant based in India is proper in New Jersey but reversed the district court’s decision because the district court failed to address the substance of a motion to dismiss. Defendant Mylan Laboratories Ltd. ("MLL") is an Indian corporation with a principal place of business in Hyderabad, India.

For purposes of a Rule 12(b)(6) motion, the court must decide whether Valeant plausibly alleged sufficient involvement on the part of MLL. In the complaint, Valeant unambiguously asserted that only MPI was involved in submitting the ANDA. But there are eight other paragraphs in the complaint asserting that "Mylan"—defined to encompass all three entities—"submitted" the ANDA and materials related to it. The district court may well find that these paragraphs are sufficient to state a claim against MLL, despite the phrasing elsewhere in the complaint. Thus, the Federal Circuit reversed the district court’s venue-based dismissal of MLL and remanded for further consideration.

This case is No. 19-2402.

Attorneys: Thomas P. Steindler (McDermott Will & Emery LLP) for Valeant Pharmaceuticals North America LLC, Valeant Pharmaceuticals Ireland Ltd. and DOW Pharmaceutical Sciences, Inc. Steffen Nathanael Johnson (Wilson Sonsini Goodrich & Rosati PC) for Mylan Pharmaceuticals Inc., Mylan Laboratories Ltd. and Mylan Inc.

Companies: Valeant Pharmaceuticals North America LLC; Valeant Pharmaceuticals Ireland Ltd.; DOW Pharmaceutical Sciences, Inc.; Mylan Pharmaceuticals Inc.; Mylan Laboratories Ltd.; Mylan Inc.

MainStory: TopStory Patent FedCirNews GCNNews

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