On November 5, 2020, the Federal Circuit substantially narrowed the number of venues available to plaintiffs bringing patent infringement actions under the Hatch-Waxman Act. In Valeant Pharmaceuticals North America LLC v. Mylan Pharmaceuticals Inc., Case No. 2019-2402, 2020 WL 6495091 (Fed. Cir. Nov. 5, 2020), the Federal Circuit held that “acts of infringement” under 28 U.S.C. § 1400(b) occur “only in districts where actions related to the submission of the ANDA occur, not in all locations where future distribution of the generic products specified in the ANDA is contemplated.”
This decision substantially limits the number of venues where Hatch-Waxman cases may be brought.
Revisiting the question of venue
The contours of the patent venue statute were recently addressed by the Supreme Court in TC Heartland LLC v. Kraft Food Group Brands LLC, which held that (i) the general venue statute of 28 U.S.C. § 1391 does not modify (or rather enlarge) the more specific patent venue statute set out in 28 U.S.C. § 1400(b); and (ii) the term “resides” in 28 U.S.C. § 1400(b), refers only to a corporation’s state of incorporation. 137 S. Ct. 1514, 1516 (2017). The Supreme Court did not address, however, the alternative venue provision of § 1400(b), which provides for venue “where the defendant has committed acts of infringement and has a regular and established place of business.”
Since TC Heartland, district courts have faced numerous venue challenges in patent cases based on the “acts of infringement” provision. Valeant Pharmaceuticals boldly addresses “acts of infringement” in the context of a Hatch-Waxman case where the only act of infringement is an artificial one.
The Federal Circuit limits “acts of infringement” to ANDA submission
In Valeant Pharmaceuticals, defendant Mylan was sued in the district of New Jersey. Mylan, which is neither incorporated in New Jersey nor has a principal place of business in New Jersey, filed a motion to dismiss for lack of venue. The patentee argued that “acts of infringement” include both the submission of an ANDA as well as “planned future acts” related to drug distribution – ie, where the accused infringer intended to distribute the generic drug at issue. Mylan argued that “acts of infringement” excluded “future acts,” and focused instead on past or present actions.
The District Court sided with Mylan and dismissed the case for improper venue. On appeal, the Federal Circuit framed the question as follows: “whether the act of infringement identified in § 1400(b) occurs only when and where an ANDA-filer submits its ANDA to the FDA or occurs wherever future distribution of the generic is contemplated.”
After reviewing the relevant statutory text, the Federal Circuit held that ANDA-related “acts of infringement” are limited to the submission of the ANDA. The court rejected patentee’s theory that for venue purposes, infringement occurs at “all locations where future distribution of the generic products specified in the ANDA is contemplated.” The court reasoned that because § 1400(b) is written in the present tense – asking where the accused infringer “has committed” acts of infringement – the venue statute excludes future actions from the class of actions that may give rise to venue. Accordingly, venue “is proper only in those districts that are sufficiently related to the ANDA submission – in those districts where acts occurred that would suffice to categorize those taking them as a[n] [ANDA] ‘submitter’ under § 271(e).”
Valeant produces an asymmetry between the law of personal jurisdiction and the law of venue. Under the Federal Circuit’s previous decision in Acorda Therapeutics v. Mylan Pharms., personal jurisdiction can be justified by reference to future conduct: Acorda held that “planned future interactions with the state in the form of marketing activities met the constitutional minimum requirements for personal jurisdiction. Valeant Pharms., 2020 WL 6495091, at *4 (citing Acorda Therapeutics Inc. v. Mylan Pharmaceuticals Inc., 817 F.3d 755 (Fed. Cir. 2016)). Yet, under Valeant, future conduct cannot give rise to proper venue under § 1400(b). As a result, Valeant functionally limits the holding in Acorda by limiting the number of venues where suit can be brought whenever the patentee relies on the venue provision in § 1400(b) addressed to acts of infringement.
Open question: what counts as submission?
While holding that venue was proper only where the ANDA was submitted, the Federal Circuit expressly left open the question of what acts constitute “submission,” explaining that “[w]e . . . do not define what all relevant acts involved in the preparation and submission of an ANDA might be, leaving those questions for other cases where the precise contours are presented and briefed.” For example, the district court below noted that ANDA venue might be proper in the District of Maryland, where FDA is located because that is “where the FDA received the ANDA.” But since that portion of the district court’s ruling was not challenged on appeal, the Federal Circuit declined to resolve that question.
Nevertheless, the Federal Circuit identified an exception to its holding where the safe harbor provision of the Hatch-Waxman Act is invoked. Specifically, the Federal Circuit explained that “acts protected by the safe harbor provisions in § 271(e) are non-infringing for all purposes, including venue.”
What venues are left?
It is important to note that Valeant does not (and cannot) foreclose the venue option addressed by TC Heartland – the defendant’s place of incorporation. As a result, Valeant may drive additional cases to Delaware, where many potential defendants are likely to be incorporated. And while the Valeant decision (if left undisturbed) forecloses venue in jurisdictions where the defendant’s only connection is through the future distribution of the generic drug, it opens up a new potential venue in the District of Maryland. So long as patentees can establish personal jurisdiction over the defendant in Maryland, it would seem that the District of Maryland may well become the catch-all venue for Hatch-Waxman cases given FDA’s presence in the jurisdiction.
Lastly, the Federal Circuit provided one final potential option – multi-district litigation (MDL) consolidation pursuant to 28 U.S.C. § 1407. In a footnote at the end of the opinion, the Federal Circuit acknowledged that “[w]hile cumbersome for these types of cases . . . [MDL] is at least a viable path for consolidation of these cases for pretrial purposes.” It remains to be seen whether brand name companies will invoke the MDL statute as a means to resolve venue issues given the increased costs and complexities of the MDL process.
The full opinion is available here.
Learn more about the implications of this decision by contacting any of the authors or your DLA Piper relationship lawyer.