Federal Circuit Finds Personal Jurisdiction Based On Plans To Market ANDA Product

22 March 2016 PharmaPatents Blog

In Acorda Therapeutics Inc. v. Mylan Pharmaceuticals Inc., the Federal Circuit held that the filing of an Abbreviated New Drug Application (ANDA) and intentions to market the product across the United States–including in the state at issue–were sufficient “personal contacts” to give rise to specific personal jurisdiction.

The Federal Circuit was addressing Mylan’s appeal of two different district court decisions denying Mylan’s motions to dismiss for lack of personal jurisdiction. One decision arose in ANDA litigation against Acorda over Ampyra®, while the other arose in ANDA litigation against AstraZeneca over Onglyza® and Kombiglyze™. Both judges found sufficient basis to exercise specific personal jurisdiction over Mylan, but disagreed as to whether Delaware could exercise general personal jurisdiction over Mylan. The Federal Circuit affirmed the rulings on specific personal jurisdiction. Judge O’Malley wrote a concurring opinion expressing her views on the general personal jurisdiction issue.

Does Delaware Have Specific Personal Jurisdiction Over Mylan?

The Federal Circuit opinion begins with a summary of the Constitutional principles of specific personal jurisdiction:

A court may exercise specific personal jurisdiction without violating the Due Process Clause when the defendant “ha[s] certain minimum contacts with [the forum] such that the maintenance of the suit does not offend ‘traditional notions of fair play and substantial justice.’” Int’l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945). The minimum-contacts requirement focuses on whether “the defendant’s suit-related conduct . . . create[s] as ubstantial connection with the forum State.” Walden v. Fiore, 134 S. Ct. 1115, 1121 (2014).

With regard to Mylan’s conduct in Delaware, the Federal Circuit noted:

Here, 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 (and, it is undisputed, elsewhere). If Mylan had already begun its deliberate marketing of these drugs in Delaware, there is no doubt that it could be sued for infringement in Delaware. Its Delaware sales would be acts committed in the State that are wrongful—if the plaintiffs here are right about infringement and validity—and would concretely injure Acorda and AstraZeneca in the State by displacing some of their Delaware sales and likely lowering the price they could charge there. …. In our view, the minimum-contacts standard is satisfied by the particular actions Mylan has already taken—its ANDA filings—for the purpose of engaging in that injury-causing and allegedly wrongful marketing conduct in Delaware.

The Federal Circuit rejected Mylan’s arguments that specific personal jurisdiction could not be based on future activity within the forum:

Mylan does not meaningfully develop an argument that a rigid past/future dividing line governs the minimum-contacts standard. Specifically, Mylan does not show that a State is forbidden to exercise its judicial power to prevent a defendant’s planned future conduct in the State, but must wait until the conduct occurs. Such a rule would run counter to the legal tradition of injunctive actions to prevent a defendant’s planned, non-speculative harmful conduct before it occurs.

The Federal Circuit distinguished a previous case involving Mylan (Zeneca Ltd. v. Mylan Pharmaceuticals, Inc., 173 F.3d 829 (Fed. Cir. 1999)) on the basis that “the only contact with the forum [raised in that case] was the act of making the ANDA filing,” not future sales. The Federal Circuit also found that there were no “other considerations [that would] render jurisdiction unreasonable. Indeed, the court noted that “[t]he burden on Mylan will be at most modest, as Mylan, a large generic manufacturer, has litigated many ANDA lawsuits in Delaware, including some that it initiated.”

The Federal Circuit concluded:

[I]t suffices for Delaware to meet the minimum-contacts requirement in the present cases that Mylan’s ANDA filings and its distribution channels establish that Mylan plans to market its proposed drugs in Delaware and the lawsuit is about patent constraints on such in-State marketing.

Does Delaware Have General Personal Jurisdiction Over Mylan?

Judge O’Malley wrote a concurring opinion that addresses the general personal jurisdiction issue, and explains why the Federal Circuit should have decided that Delaware can exercise general personal jurisdiction over Mylan.

In particular, Judge O’Malley noted that Mylan registered to do business in Delaware, and that “the Delaware Supreme Court [has] held that compliance with Delaware’s registration statute constitutes consent to general personal jurisdiction.”  Judge O’Malley addressed the Supreme Court decision that had divided the district court judges, Daimler AG v. Bauman, 134 S. Ct. 746 (2014), and explained her understanding that that case “did not overrule the line of Supreme Court authority establishing that a corporation may consent to jurisdiction over its person by choosing to comply with a state’s registration statute.”

The Venue Equity and Non-Uniformity Elimination Act of 2016

The issue of forum-shopping has gained attention in Congress, largely due to the vast number of patent cases brought in the Eastern District of Texas. Last week, Senators Flake (R-AZ), Garnder (R-CO). and Lee (R-UT) introduced the “Venue Equity and Non-Uniformity Elimination Act of 2016.” That bill would revise 28 USC § 1400(b) to read as follows:

(b) Notwithstanding subsections (b) and (c) of section 1391, any civil action for patent infringement or any action for a declaratory judgment that a patent is invalid or not infringed may be brought in the only in a judicial district—
(1) where the defendant resides has its principal place of business or is incorporated;
(2) where the defendant has committed an act of infringement of a patent in suit and has a regular and established place of business physical facility that gives rise to the act of infringement;
(3) where the defendant has agreed or consented to be sued in the instant action;
(4) where an inventor named on the patent in suit conducted research or development that led to the application for the patent in suit;
(5) where a party has a regular and established physical facility that such party controls and operates, not primarily for the purpose of creating venue, and has (A) engaged in management of significant research and development of an invention claimed in a patent in suit prior to the effective filing date of the patent; (B) manufactured a tangible product that is alleged to embody an invention claimed in a patent in suit; or (C) implemented a manufacturing process for a tangible good in which the process is alleged to embody an invention claimed in a patent in suit; or
(6) in the case of a foreign defendant that does not meet the requirements of paragraph (1) or (2), in accordance with section 1391(c)(3).

Could an ANDA suit be brought against Mylan in Delaware under this statute?

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