Locke Lord QuickStudy: Federal Circuit Clarifies Hatch-Waxman Venue Question

Locke Lord LLP
November 9, 2020

On November 5, 2020, the Federal Circuit issued a precedential opinion deciding a patent venue question concerning Hatch-Waxman cases left open after the Supreme Court’s decision in TC Heartland LLC v. Kraft Foods Grp. Brands LLC, 137 S. Ct. 1514 (2017).  In its decision affirming the district court, the Federal Circuit held 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).”  Valeant Pharm. N. Am. LLC v. Mylan Pharm., Inc., No. 2019-2402, at 18 (Fed. Cir. 2020).  The Federal Circuit reversed and remanded for further consideration the District Court’s dismissal for improper venue as to foreign-based defendant Mylan Laboratories Ltd. (“MLL”).  Id. at 20.

In the Valeant case, Valeant had sued three Mylan entities in the District of New Jersey for submission of an ANDA pertaining to the brand name drug Jublia®.  The three Mylan entities were MPI (a West Virginia corporation with a principal place of business in Morgantown, WV); Mylan Inc. (a Pennsylvania corporation with a principal place of business in Canonsburg, PA); and MLL (an Indian corporation with a principal place of business in Hyderabad, India).  Mylan moved to dismiss the Complaint as to all three entities for improper venue pursuant to Federal Rule of Civil Procedure 12(b)(3).  Mylan argued that venue was improper under 28 U.S.C.‎ § 1400(b) “because no Mylan defendant reside[d] in New Jersey, the only alleged act of infringement—submission of the ANDA—did not occur in New Jersey, and Mylan defendants [did] not have regular and established places of business in New Jersey.”  Id. at 6.  Instead, MPI had executed and submitted its ANDA to the Food and Drug Administration (“FDA”) from Morgantown, WV.  The District Court dismissed the complaint against all all three Mylan defendants, finding that venue was improper in New Jersey.  Id.  Valeant appealed the District Court’s decision.

In deciding the case, the Federal Circuit discussed the two competing views that had emerged in the district courts regarding the application of 28 U.S.C. § 1400(b) to Hatch-Waxman patent infringement litigation.  Id. at 11.  The first view was laid out in Bristol-Myers Squibb and was relied upon by Valeant to support its argument that venue was proper against Mylan.  Id.  The Bristol-Myers Squibb court “reasoned that, because the actual substance of ANDA litigation is not about the documents filed with the FDA but about whether potential future conduct would infringe a valid patent, it must be those future acts that are relevant to the venue analysis.”  Id. at 12 (citing Bristol-Myers Squibb Co. v. Mylan Pharm. Inc., No. 17-cv-379-LPS, 2017 WL 3980155, at *8 (D. ‎Del. Sept. 11, 2017)). 

The second competing view arose out of the Northern District of Texas in Galderma Labs., L.P. v. Teva Pharms. USA, Inc., 290 F. Supp. 3d 599 (N.D. Tex. 2017).  The N.D. Tex. concluded “both that § 1400(b) requires a past infringement and that the plain language of the Hatch-Waxman Act does not identify any act of infringement other than the ANDA submission.” Valeant Pharm., No. 2019-2402, at 12 (citing Galderma Labs., 290 F. Supp. 3d at607–08 (emphasis in original)).  In its reasoning, the Galderma Labs. court stated that “because the potential future acts that the Hatch-Waxman act anticipates are speculative—many actions never happen precisely because of the litigation—they cannot control the venue of the action.”  Id.  The Galderma Labs. court ultimately held that “only the locations where the ANDA materials were prepared and from which it was submitted are relevant to the venue analysis.”  Id. at 12-13 (citing Galderma Labs., 290 F. Supp. 3d at608-09). 

As to the two U.S. Mylan entities, the Federal Circuit agreed with the lowercourt’s decision and the reasoning of Galderma Labs. holding that “venue in Hatch-Waxman cases must be predicated on past acts of infringement—i.e., acts that occurred before the action alleging infringement was filed.”  Id. at 13.  Further, it held “those acts occur only in districts where actions related to the ANDA submission occur.”  Id.  In reaching its conclusion, the Federal Court looked to the plain language of the venue statutes.  First, in § 1400(b), the Federal Circuit pointed to the language “has committed acts of infringement” in the statute and stated the language “counsels that the acts accused of infringement must have already occurred.”  Id.  Second, turning to the Hatch-Waxman Act, the court noted that 35 U.S.C. § 271(e)(2) 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.”  Id. at 14.  The Federal Circuit concluded that “[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.”  Id.

As to the non-U.S. defendant MLL, the Federal Circuit, while noting that ‎the lower court did not directly address why it dismissed the suit against MLL, held that “MLL is properly subject to venue in any judicial district, including the District of New Jersey.”  Id. at 19.  However, the Federal Circuit remanded for further consideration of MLL’s motion to dismiss under Rule 12(b)(6) for determination of “whether MLL’s involvement in the submission of the ANDA is sufficient for it to be considered a ‘submitter,’ and thus, amenable to suit.”  Id. at 20.

Venue issues in patent cases have been raised frequently since the 2017 Supreme Court decision TC Heartland.  Federal courts are continuing to clear up issues left unresolved by that decision, as the Federal Circuit did in this case—namely that “acts of infringement” under § 1400(b) for claims brought pursuant to the Hatch-Waxman Act occur “for venue purposes only in districts where actions related to the submission of an [ANDA] occur, not in locations where future distribution of the generic products specified in the ANDA is contemplated.”  Valeant Pharm., No. 2019-2402, at 3.  However, venue issues relating to ANDA filings still remain unresolved after this opinion.  See Id. at 19 n. 8.  For example, the Federal Circuit did not decide whether infringement occurred where the FDA received the ANDA, nor did the Federal Circuit define the precise contours of what constitutes sufficient involvement in preparation and submission of an ANDA to find venue proper in a district. ‎ Id.  Locke Lord will continue to monitor important patent venue decisions and provide timely insight and ‎analysis.‎