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Dueling Declaratory Judgment Suits Result in a Dismissal and Boomerang Transfer Back to the First-filed Forum Under TC Heartland

On April 17, 2019, Judge Gilstrap of the United States District Court for the Eastern District of Texas, in Apicore v. Beloteca, No. 19-cv-00077, held that while the court could exercise personal jurisdiction over a generic drug manufacturer in connection with the patentee’s action seeking a declaratory judgment of noninfringement, venue was not appropriate in the Eastern District of Texas under the applicable patent venue statute, 28 U.S.C. § 1400(b).

Plaintiff, Apicore, owns U.S. Patent Nos. 8,969,616 and 9,353,050, which cover a highly pure isosulfan blue (“ISB”) active pharmaceutical ingredient and manufacturing methods. Co-plaintiff, Mylan, is the exclusive licensee of those patents and had previously obtained ANDA approval for an ISB drug product. Defendant, Beloteca, also submitted an ISB drug product ANDA, which was approved by FDA on January 16, 2019. Beloteca is a California corporation with a place of business in San Diego, California. While Beloteca is not registered to do business in Texas, it entered into an exclusive nationwide sales, marketing, and distribution agreement with TruPharma, LLC. TruPharma is a Delaware corporation with a principal place of business in Florida and a license to sell pharmaceuticals in Texas.

On January 17, 2019, the day after receiving FDA approval of its ANDA, Beloteca filed a declaratory judgment action in the Northern District of Illinois, seeking a declaration that its ANDA product did not infringe any claim of the asserted patents (in addition to claims of a third Apicore patent, not at issue in the Texas case). On March 4, 2019, Apicore and Mylan filed their own declaratory judgment action in the Eastern District of Texas, seeking a declaration that Beloteca’s ANDA product infringes one or more claims of the asserted patents. Shortly thereafter, on March 12, 2019, Beloteca moved to dismiss the Texas suit, arguing that the court lacked personal jurisdiction over Beloteca and that venue was inappropriate in the Eastern District of Texas. On April 8, 2019, the first-filed Northern District of Illinois suit was dismissed for lack of case or controversy under Article III, and only the Texas case remained pending.

In ruling on defendants’ Rule 12(b)(2)-(3) motions, Judge Gilstrap held that Beloteca is subject to specific personal jurisdiction in Texas even though Beloteca is incorporated and headquartered outside of the state. Applying the reasoning of Acorda Therapeutics, Inc. v. Mylan Pharmaceuticals, Inc., 817 F.3d 755 (Fed. Cir. 2016) (see our prior coverage of that case, here and here), the court held that Beloteca’s generic ISB ANDA filing and approval, along with its distribution agreement with TruPharma, demonstrated the requisite intent and capability to market, distribute, and sell its accused generic ISB product nationally, including in Texas. These contacts were sufficient to confer personal jurisdiction over Beloteca in Texas.

The court, however, went on to hold that venue is not appropriate over Beloteca under the applicable patent venue statute, 28 U.S.C. § 1400(b). In so holding, the court rejected plaintiffs’ argument that its suit was really a declaratory judgment action for future patent infringement – governed by the general venue statute, 28 U.S.C. § 1391 – not a “civil action for patent infringement” governed by § 1400(b). The court reasoned that plaintiffs were able to assert a patent infringement claim under 35 U.S.C. § 271(e), even though Beloteca was not required to file a Paragraph IV certification with its IBS ANDA because neither of the patents-in-suit were listed in the Orange Book. Thus, where plaintiffs had an actionable patent infringement claim, they “cannot avoid the requirements of § 1400(b) by wrapping its patent infringement claim inside the blanket of a declaratory judgment action.” Thus, applying § 1400(b) and TC Heartland LLC v. Kraft Foods Grp. Brands LLC, 137 S. Ct. 1514, 1519 (2017), Judge Gilstrap held that venue was improper over Beloteca in Texas, because it was neither incorporated in Texas nor were there sufficient allegations of a regular and established place of business in the Eastern District. Rather than dismiss the case outright under Rule 12(b)(3), the court granted Beloteca’s request to transfer the case to the Northern District of Illinois (where Beloteca’s prior suit for a declaratory judgment of noninfringement was dismissed, as discussed above).

While decided under a fairly exceptional fact pattern, including the drama of a race to the courthouse with dueling declaratory judgment actions over infringement in the absence of Orange Book-listed patents and Paragraph IV certifications, this case generally follows the trend and reasoning of the line of cases analyzing venue under § 1400(b) in the wake of TC Heartland. It will, however, be interesting to note how other district courts across the country apply (or distinguish) Judge Gilstrap’s additional finding – in the ANDA context – that a generic defendant’s distribution agreement with a third party licensed to sell pharmaceuticals in a forum where the defendant is neither incorporated nor located, is sufficient to confer personal jurisdiction in that forum over the generic defendant.

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About this Author

Adam Samansky, Mintz Levin Law Firm, Boston, Patent Litigation Attorney
Member

Adam’s practice focuses on intellectual property litigation. He handles patent, trademark, and trade secret matters on behalf of innovators and investors in a range of industries. His core practice includes patent and trade secret litigation involving complex technologies in the pharmaceutical, medical, high-tech, and defense industries. Adam has tried cases before multiple US District Courts, briefed and argued cases before the US Court of Appeals for the Federal Circuit, and has briefed bet-the-company issues before the US Supreme Court.

617-348-1819
Peter J. Cuomo, Mintz Levin, Patent Litigation Lawyer, Expert Discovery Attorney
Of Counsel

Peter’s practice includes a variety of civil litigation, including trademark and patent litigation, trade secret disputes, and complex commercial litigation. Peter's primary focus is in patent litigation, and he has experience in many aspects, including expert discovery, MarkmanHearings, and pretrial motion practice.

Prior to joining the firm, he practiced in the intellectual property litigation practice in the Boston office of another international law firm. Peter has also previously worked in and supervised an academic laboratory focused on researching infectious diseases.

He is a co-author of multiple scientific papers and spent time in Zambia investigating the co-infection of measles and HIV. During law school, Peter was an editor on the Boston University Journal of Science and Technology Law and a research assistant in intellectual property and the Health Law Department.

617-348-1854
Joseph D. Rutkowski, Mintz Levin, Civil Litigation Matters Lawyer, Intellectual Property Litigation Matters
Associate

Joseph’s practice focuses on a variety of civil litigation matters, including patent litigation, trade secret disputes, and complex commercial litigation. Joseph’s primary focus is intellectual property litigation, and he is experienced in many aspects, including expert discovery and pretrial motion practice.

In addition, Joseph gained valuable experience representing a homeless shelter, pro bono, as lead attorney in over a dozen housing court matters, including summary process jury trial and mediations, and he supervised junior associates on...

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