Federal Circuit Limits Venue in Hatch Waxman Patent Litigation

The FDA Law Blog may appear to have become a little patent-heavy over the last few months, but you can thank the Federal Circuit for that.  It just can’t stop changing the landscape for Hatch-Waxman litigation.  In October, the Federal Circuit, for all intents and purposes, shut down the statutorily-authorized method-of-use patent carve-out practice by finding that skinny-labeled generics induce infringement merely by stating that they are AB-rated.  Now, the Federal Circuit has reinterpreted the venue provisions governing patent cases so that the location of the submission of an ANDA, at least for U.S. entities, determines where patent litigation can take place.  It’s impressive that, after more than 35 years, litigants still find new questions to raise about proper implementation of the Hatch-Waxman Amendments and the related patent infringement provisions set forth in 35 C.F.R. § 271(e).

In Valeant Pharmaceuticals v. Mylan Pharmaceuticals, decided in early November 2020, the Federal Circuit held that the District Court of New Jersey properly dismissed claims against two U.S.-based defendants based on improper venue.  Mylan, with a U.S.-entity based in West Virginia, submitted to FDA, based in Maryland, an ANDA referencing Valeant’s Jublia with a Paragraph IV certification in 2018, and Valeant brought a patent infringement suit against Mylan in Valeant’s home state of New Jersey.  Valeant posited that venue was appropriate in New Jersey because New Jersey “is a likely destination for Mylan’s generic” product, because Mylan does business in New Jersey, and because Mylan has previously submitted to the jurisdiction of the District Court of New Jersey.  For good measure, Valeant also filed separate infringement litigation regarding the same patents in the District Court of West Virginia.

While Mylan didn’t deny Valeant’s allegations of presumed marketing in New Jersey, Mylan moved to dismiss the New Jersey litigation, arguing that venue was improper in New Jersey because no Maryland defendant resides in New Jersey and no alleged act of infringement occurred in New Jersey.  The Federal Circuit upheld the District Court of New Jersey’s decision to grant the Motion to Dismiss based on improper venue.  Essentially, the Court found that any infringing activities in New Jersey were too speculative for venue to be proper.

Previous cases had held that “planned, future acts” were sufficient to justify specific personal jurisdiction over a defendant in ANDA-related patent infringement cases, as were planned, future interactions with a state in the form of marketing activities.  But the Supreme Court “dramatically changed the venue landscape in patent cases” in 2017 in TC Heartland LLC v. Kraft Foods Grp. Brands LLC.  That decision held that the term “resides” in the patent venue statute, 28 U.S.C. § 1400(b), refers only to a corporation’s state of incorporation, meaning that a corporation may be sued for patent infringement only in those states in which it is incorporated and those states in which it has a regular and establishment place of business and an act of infringement occurred.

Looking to TC Heartland, the Federal Circuit examined the plain language of the infringement statute in 35 U.S.C. § 271 as juxtaposed to the patent venue statute in 28 U.S.C. § 1400(b).  Both parties agreed that the venue provisions for patent cases states that an action for patent infringement may be brought “where the defendant has committed acts of infringement” and therefore, based on the present perfect tense, requires an act of infringement to have occurred in the past.  In the case of ANDA submission, where 35 U.S.C. § 271(e)(2) renders it an “act of infringement to submit” an ANDA, the Court determined that the act of infringement is the actual submission—and only the submission—of the ANDA.  The Court explained that the common claim that an ANDA submission is an “artificial” act of infringement misstates the statutory construction: “ANDA submission is a real, albeit statutorily created, act of infringement.”  The act of infringement is real, and it is the submission of the ANDA that is in the infringing act.  Thus, the Court must look to the act of submission, and where it occurred, to determine proper venue—in this case, West Virginia.  In the Court’s view, future marketing plans are not relevant to the inquiry of where “the defendant has committed acts of infringement.”

Despite the broad approach to venue that courts have previously taken in Hatch-Waxman patent infringement cases, the Court explained that there was no textual hook in the statute to declare that an ANDA submission is an act of infringement everywhere in the U.S.  As such, there is no indication that Congress wanted to adopt such a broad interpretation of venue.  And though the Court found Valeant’s policy argument persuasive, in which it argued that patent-holders would be forced to bring multiple repetitive suits in different jurisdictions, the Court found that it was not persuasive enough to overcome the statutory language.  Thus, the Federal Circuit dismissed the case because no act of infringement actually occurred in New Jersey.  A different issue, related to foreign defendants, was remanded back to the District Court.

The decision here appears to give the ANDA filer has significant control over the venue for patent litigation.  Indeed, Valeant warns of ANDA applicants “gaming” the system.  But, at the least, the Federal Circuit gave generic sponsors something to ease their pain after the potential loss of the section viii carve-out (though we’ll have to see how that ultimately plays out).