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Federal Circuit Narrows Proper Venue For Hatch-Waxman Cases

Client Update / Nov 08, 2020

On November 5, 2020, the Federal Circuit held, in Valeant Pharmaceuticals North America LLC v. Mylan Pharmaceuticals Inc., that “in Hatch-Waxman cases venue is not proper in all judicial districts where a generic product specified in an ANDA [Abbreviated New Drug Application] 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).”  This decision limits the venue for Hatch-Waxman infringement cases to, in addition to districts where the defendant is incorporated, those districts involved in the submission of the ANDA to the FDA.  Proper venue does not include districts of anticipated future sales or distribution of a generic product.

The basis for this decision is the plain reading of the unambiguous language of 28 U.S.C. § 1400(b): “Any civil action for patent infringement may be brought in the judicial district where the defendant resides, or where the defendant has committed acts of infringement and has a regular and established place of business.”   In TC Heartland LLC v. Kraft Foods Grp. Brands, 137 S. Ct. 1514 (2017), the Supreme Court held that, under 28 U.S.C. § 1400(b), venue for a patent infringement case is proper only in those judicial districts where the putative infringing corporation is incorporated and those where the putative infringer has a regular and established place of business and an infringing act has occurred.  Hatch-Waxman infringement suits are unique because, under the Hatch-Waxman Act, the mere submission of an ANDA to obtain FDA approval for the commercial manufacture, use, or sale of a drug claimed in a patent or use of a drug claimed in a patent is an act of infringement.  35 U.S.C. § 271(e)(2).  Thus, for Hatch-Waxman cases, venue is proper in districts associated with the filing of the ANDA.  Moreover, ANDA submission is the only act of infringement identified in the statute.  While the litigation that ensues addresses the alleged infringement based upon future manufacture, use and sale of the generic product that is the subject of the ANDA, those potentially infringing acts have not occurred.  Until now, districts courts were split on whether potential future infringing acts should be considered in the venue analysis. The Federal Circuit clarified that in determining proper venue a court should not consider “locations where future distribution of the generic products specified in the ANDA is contemplated” because those are not locations where an infringing act has occurred under § 271(e).

In Valeant v. Mylan, Mylan Pharmaceuticals Inc. (“MPI”) sent its ANDA application from its principal place of business in West Virginia, where it is incorporated, to the FDA.  Therefore, venue would have been proper in West Virginia.  However, Valeant filed suit against MPI and co-defendants Mylan Inc. and Mylan Laboratories, Ltd. in the District of New Jersey.  Valeant maintained that the District of New Jersey is a proper venue, in part because MPI’s ANDA indicates plans to market and sell its generic drug in New Jersey upon FDA approval, and that the act of infringement must be interpreted to include future conduct anticipated by the ANDA because those acts are the subject of the litigation.  However, the Federal Circuit explained that the content of the litigation does not turn future acts into past acts of infringement.  In addition, contrary to Valeant’s argument that ANDA submission is an “artificial” act that stands in for “planned future conduct [that[ define[s] what is really infringing,” the Federal Circuit found that, although ANDA submission is a “statutorily created act of infringement,” it is a real act of infringement.  Moreover, the Federal Circuit found no basis in Valeant’s argument that ANDA submission encompasses a “conceptual” nationwide act of infringement.

In affirming the district court’s grant of defendants’ motion to dismiss, the Federal Circuit relied on the plain unambiguous statutory language of 28 U.S.C. § 1400(b) and 35 U.S.C. § 271(e).  The question on appeal was whether, under 28 U.S.C. § 1400(b), places of anticipated acts of infringement establish venue, i.e. whether anticipated future distribution or sale of the generic drug identified in the ANDA would infringe a valid patent claim and, therefore, establish venue.  The Federal Circuit found that “[a] plain language reading of [35 U.S.C. § 271(e)] 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,” notwithstanding Valeant’s arguments to read § 271(e) more broadly.  The Federal Circuit further found that, under 28 U.S.C. § 1400(b), in order to determine whether venue is proper in a district other than defendant’s state of incorporation, a court must determine, inter alia, “where the defendant has committed acts of infringement.”  The phrase “has committed,” in the plain language of 28 U.S.C. § 1400(b), requires an act of infringement that has already occurred.  As anticipated acts of infringement have not occurred, the location of such acts do not inform proper venue.

Because Mylan Laboratories Ltd. (“MLL”) is an Indian corporation, and the district court dismissed the case against it on venue grounds, the Federal Circuit reversed this district court holding and remanded to determine whether the case against MLL should be dismissed because MLL was not involved in submission of the ANDA.  Because MLL is a foreign corporation, venue is proper in any judicial district.

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