Anticipated Acts of Infringement May Establish Venue for Hatch-Waxman
Addressing venue in the context of Hatch-Waxman litigation, the US District Court for the District of Delaware held that venue is proper in Delaware if a generic drug company has permanent and continuous presence in Delaware and intends to sell the infringing product in Delaware in the future. Bristol-Myers Squibb Co. v. Mylan Pharma. Inc., Case No. 17-379-LPS (D. Del., Sept. 11, 2017) (Stark, J).
Mylan submitted an Abbreviated New Drug Application (ANDA) to the US Food and Drug Administration (FDA) seeking permission to sell a generic version of one of Bristol-Myers’ patented drug products. Bristol-Myers filed a patent infringement action under the Hatch-Waxman Act against Mylan in Delaware.
Under the Supreme Court of the United States’ 2017 decision in TC Heartland v. Kraft Foods, a domestic corporation may only be sued for patent infringement in a judicial district (1) in its state of incorporation or (2) where the domestic corporation has committed acts of infringement and has a regular and established place of business. Mylan, which is incorporated in West Virginia, moved to dismiss the lawsuit for improper venue because Mylan had not “committed acts of infringement” and did not have a “regular and established place of business” in Delaware.
The district court noted that in a Hatch-Waxman case, whether a defendant “has committed acts of infringement” under the venue statute is a matter of first impression. Under the Patent Act, “acts of infringement” are generally defined as “making, using, offering to sell, selling, or importing” a patented invention. For purposes of Hatch-Waxman litigation, the statute specifically states that making, using, offering to sell or selling a patented invention is not an act of infringement if such an activity is reasonably related to submission of an ANDA. Instead, in Hatch-Waxman litigation, the filing of the ANDA is the actionable act of infringement. Mylan argued that since its ANDA submission was prepared in West Virginia and made in Maryland, it had not committed any of the alleged acts of infringement in Delaware, and venue was thus improper.
The district court found Mylan’s interpretation of the phrase “had committed acts of infringement” unduly narrow. The court found that, in the context of Hatch-Waxman cases, future acts that the ANDA filer intends to commit upon receiving final FDA approval must be considered in evaluating whether any acts of infringement have been committed in the district. Here, the court concluded that because Mylan intended to sell the allegedly infringing drug in Delaware upon receiving FDA approval, Mylan had committed acts of infringement sufficient to establish venue.
Turning to whether Mylan maintained a “regular and established place of business” in Delaware, the district court focused on whether Mylan had a permanent and continuous presence in Delaware. The court noted that although Mylan did not own or lease any manufacturing plants or offices in Delaware, Mylan was a frequent ANDA filer, regularly appeared in Delaware courts for the purposes of attempting to get its generic drugs on the market, and distributed generic drugs in Delaware if it was successful in litigation. In the court’s view, that business reality was pertinent in assessing whether Mylan had a regular and established place of business in Delaware.
Under this rubric, the court found it could not make a factual finding as to whether Mylan had a regular and established place of business in Delaware based on the current record. It therefore denied the motion without prejudice and allowed Bristol-Myers to take discovery on how Mylan operates in Delaware, including its relationships with wholesalers, pharmacies and physicians.
Practice Note: Ten days after the district court issued its decision, the US Court of Appeals for the Federal Circuit issued its opinion in In re: Cray Inc., defining “regular and established place of business” in a judicial district to require (1) a physical place in the district that is (2) regular and established, and that is (3) of the defendant. The district court’s analysis of “regular and established place of business” in this case appears to be consistent with In re: Cray insofar as it requires a defendant to have a permanent and continuous presence in the district for venue to be proper.