Federal Circuit Limits Venue for Hatch-Waxman Cases
On Thursday, November 5, the Federal Circuit Court issued a precedential opinion in Valeant Pharmaceuticals v. Mylan Pharmaceuticals, No. 19-2402 (Fed. Cir. 2020). The case is expected to have far-reaching implications for venue in Hatch-Waxman litigation because the Federal Circuit held that venue is not established by contemplating the future distribution of ANDA products in a particular judicial district. Rather, in deciding whether venue is proper, the Federal Circuit focused on where actions related to the submission of ANDAs occur. That is because the technical act of infringement in Hatch-Waxman cases is the submission of the ANDA. The Court’s ruling resolves a split among district courts and provides guidance to future litigants contemplating where to file suit and whether a venue challenge is warranted.
By way of background, the U.S. Supreme Court’s 2017 TC Heartland decision on venue in patent cases made clear that a corporation may be sued “in the state in which it is incorporated and [where] it has a regular and established place of business and an act of infringement has occurred.” But that case was not specific to the Hatch-Waxman context.
Here, Valeant filed its patent infringement lawsuit in the District of New Jersey against three Mylan entities: one with its principal place of business and state of incorporation in West Virginia, one with its principal place of business and state of incorporation in Pennsylvania, and one with its principal place of business and country of incorporation in India. Mylan challenged venue, and the district court granted Mylan’s motion to dismiss based on improper venue, concluding that the two places where infringement might have occurred were West Virginia (from which Mylan submitted its ANDA) and Maryland (where the FDA received Mylan’s ANDA).
The Federal Circuit affirmed the district court’s holding that venue was improper as to the two U.S. Mylan entities because none of those actions took place in New Jersey. The Court made clear its reasoning, “venue is not proper in all judicial districts where a generic product specified in an ANDA is likely to be distributed,” but rather 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).”
As to the Mylan entity located in India, the Federal Circuit affirmed that the district court held that venue was proper because a foreign entity is subject to venue in any judicial district. The Federal Circuit remanded to the district court for further consideration of Mylan’s motion to dismiss for failure to state a claim, in view of the level of involvement in the ANDA by the Mylan entity located in India.
For years, the Districts of Delaware and New Jersey have seen an outsized share of Hatch-Waxman cases, but the Valeant decision could alter that landscape significantly. In view of the Federal Circuit’s clear guidance, for those generic pharmaceutical companies that are not incorporated in Delaware or New Jersey and do not prepare their ANDAs in Delaware or New Jersey, the Valeant case breathes new life into potential venue challenges. It is also important to note that the Federal Circuit keyed on Mylan’s ANDA being received by FDA in Maryland. Although the Federal Circuit left unstated the universe of venue-supporting actions involved in preparing and submitting an ANDA, Valeant once again raises the possibility that the District of Maryland may see an increase in Hatch-Waxman litigation.
As for branded pharmaceutical companies, Valeant reaffirms that foreign generic pharmaceutical companies may be sued in any judicial district, including Delaware and New Jersey. Looking ahead, however, Valeant foreshadows future disputes as to the extent of involvement by the foreign generic company necessary to support a claim as to such entities.
Notably, the Federal Circuit appeared sympathetic to Valeant’s public policy argument rooted in efficiency, particularly given the frequency in which Hatch-Waxman cases involve multiple defendants. But rather than veering away from the language of the venue statute, the Federal Circuit suggested the availability of multidistrict litigation under 28 U.S.C. § 1407 for pretrial purposes as a solution to Valeant’s efficiency concerns. Valeant would seem to invite increased use of multidistrict litigation in the ANDA litigation space for multidefendant cases.