In Valeant Pharmaceuticals North America LLC v. Mylan Pharmaceuticals Inc. the Federal Circuit decided that, for the purpose of establishing venue in ANDA litigation, the place “where an act of infringement has occurred” includes only “districts where actions related to the submission of an Abbreviated New Drug Application (“ANDA”) occur, not in all locations where future distribution of the generic products specified in the ANDA is contemplated.” While the decision may have the most impact on ANDA litigation against companies like Mylan who are not incorporated in Delaware, it is a good reminder of the important role venue can play in litigation strategies.
Venue governs where a defendant can be sued. The statute governing venue for patent infringement litigation is 28 U.S.C. § 1400, which provides:
(b) Any civil action for patent infringement may be brought in the judicial district where the defendant resides, or where the defendant has committed acts of infringement and has a regular and established place of business.
In TC Heartland LLC v. Kraft Foods Grp. Brands LLC, 137 S. Ct. 1514 (2017), the Supreme Court held that the “resides” prong of § 1400(b) refers only to a corporation’s state of incorporation. Thus, as the Federal Circuit explained in Valeant, “That means that a corporation may be sued for patent infringement in only two categories of judicial districts: those in the state in which it is incorporated and those in which it has a regular and established place of business and an act of infringement has occurred.”
As noted in the Federal Circuit decision, defendant Mylan Pharmaceuticals Inc. is a West Virginia corporation with a principal place of business in Morgantown, West Virginia; defendant Mylan Inc. is a Pennsylvania corporation with a principal place of business in Canonsburg, Pennsylvania, and defendant Mylan Laboratories Ltd. (“MLL”) is an Indian corporation with a principal place of business in Hyderabad, India.
The underlying ANDA litigation was brought in the Federal District Court for the District of New Jersey, on the theory that Mylan’s “ANDA filings constitute formal acts that reliably indicate plans to engage in marketing of the proposed generic drugs … [in] New Jersey upon FDA approval.” Mylan moved to dismiss for improper venue on the basis that the alleged infringement was submission of the ANDA, which occurred in West Virginia, not New Jersey. The district court agreed with Mylan, and Valeant appealed.
The Federal Circuit opinion was authored by Judge O’Malley and joined by Judges Newman and Taranto. The Federal Circuit opinion notes that proper venue in ANDA litigation cases after the TC Heartland decision was a question of first impression. The opinion framed the issue as follows:
The question we must answer in this appeal … is 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.
The Federal Circuit noted that § 1400(b) refers to past acts of infringement, and that the Hatch-Waxman Act makes it “an act of infringement to submit [an ANDA] for a drug claimed in a patent or the use of which is claimed in a patent … if the purpose of such submission is to obtain approval under such Act to engage in the commercial manufacture, use, or sale of a drug….” From there, the court reasoned:
A plain language reading of this provision directs us to the conclusion that it is the submission of the ANDA, and only the submission, that constitutes an act of infringement in this context.
The court considered and rejected Valeant’s arguments. Addressing the future acts that would be authorized by an approved ANDA, the court stated that “[t]he result of virtually all Hatch-Waxman litigation is … that no post-submission infringement happens. …. In that ordinary circumstance (where there is no at-risk market entry of the generic), the only concrete locations that will ever be touched by a non-hypothetical past act of infringement are those connected to the submission of the ANDA itself.”
The Federal Circuit thus came to this conclusion, providing further guidance on application of the new standard:
[W]e hold that, in Hatch-Waxman cases, venue is not proper in all judicial districts where a generic product specified in an ANDA is likely to be distributed. It 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 “submitter” under § 271(e).
Later in the opinion, the Federal Circuit provides this additional guidance:
We do agree … that acts protected by the safe harbor provisions in § 271(e) are non-infringing for all purposes, including venue.
However, the court stopped short of addressing whether venue would be proper in Maryland, where the FDA is located, and “where the FDA received the ANDA.”
Based on this holding, the Federal Circuit affirmed the district court’s dismissal as to MPI and Mylan Inc. for improper venue.
The Federal Circuit came to a different conclusion as to the foreign defendant (MLL), noting that “MLL is properly subject to venue in any judicial district, including the District of New Jersey.” Thus, the court reversed the dismissal as to MLL.
The decision where to bring suit is not one plaintiffs take lightly. In addition to practical considerations, plaintiffs may try to choose a district with a reputation for being “patent friendly,” or at least “patent savvy,” while defendants may prefer to be a district perceived to provide a “home court advantage.” Defendants can waive improper venue, however, and might do so to facilitate consolidation of other proceedings, or to leverage joint defense arrangements with other defendants.