Federal Circuit Decision Final Word on Jurisdiction for Hatch-Waxman Act Patent Suits?

federal circuitOn June 20, 2016, the US Court of Appeals for the Federal Circuit declined to rehear en banc a panel’s decision in Acorda Therapeutics v. Mylan Pharmaceuticals from this past March.  The panel in Acorda ruled that when a generic drug manufacturer files with the FDA an Abbreviated New Drug Application (ANDA) for approval to market a generic drug, that manufacturer is subject to personal jurisdiction in any jurisdiction in which it plans to direct sales of that drug if and once FDA approves its ANDA.  Since then, three district courts in four separate decisions have applied Acorda to deny a generic manufacturer’s Federal Rule of Civil Procedure 12(b)(2) motion based, at least in large part, on the ANDA filing.  

District of Delaware

In Pfizer v. Mylan, Pfizer Inc., Wyeth LLC, Pfizer Pharmaceuticals LLC, PF Prism C.V., and Pfizer Manufacturing Holdings LLC brought an infringement action in the District of Delaware against Mylan Inc., a Pennsylvania corporation with its principal place of business in Pennsylvania.  Mylan also has two wholly owned and controlled subsidiaries:  Agila Specialties Private Ltd. (an Indian corporation with a place of business in West Virginia) and Mylan Pharmaceuticals Inc. (MPI) (a West Virginia corporation with its principal place of business in West Virginia).  MPI is registered to do business in Delaware, has a registered agent in that state, and is licensed by the Delaware Board of Pharmacy to sell and distribute pharmaceuticals there).  The plaintiffs brought suit after the defendants filed an ANDA, which allegedly infringed the plaintiffs’ patents relating to their TYGACIL brand antibacterial tigecycline injectable IV infusion.  Agila drafted a Paragraph IV Notice Letter in Atlanta, Georgia, informing the plaintiffs of defendants’ plan to market a generic version of TYGACIL, and mailed the letter to the plaintiffs in New York (Pfizer), New Jersey (Wyeth), and the Netherlands (Prism).

The defendants asked the court to dismiss the plaintiffs’ action, asserting that Delaware—and, by extension, the federal district court seated there—lacked personal jurisdiction over them.  In response, the court noted that Daimler AG v. Bauman restricted general jurisdiction over corporations to their place of incorporation and principal place of business, but it still asserted specific jurisdiction over Agila based on Acorda.  The court ruled that “the filing of an ANDA, combined with distribution channels reaching Delaware, satisfies the minimum contacts standard because it ‘confirms [the defendant’s] plan to commit real-world acts that would make it liable for infringement if it commits them without the patentees’ permission and it is wrong in its challenges to patent scope or validity.’”  Slip Opinion, at *4 (quoting Acorda, 2016 WL 1077048, at *4).  Then, relying further on Acorda, the court reasoned that Agila’s sending a Notice Letter to a Delaware corporation reinforced the court’s personal jurisdiction.  Agila, unlike the plaintiff in Acorda, was not registered to do business in Delaware, and had not appointed a registered agent there, registered with the state Board of Pharmacy, nor participated in frequent litigation.  The court nonetheless found relevant that three other ANDA cases involving TYGACIL were already underway in the District of Delaware.  It reasoned that Acorda emphasized the fact that at the time defendants filed their ANDA, Acorda was already litigating those patents’ validity in Delaware.

As to MPI, the court held that the company’s registration to do business in Delaware constituted consent to general jurisdiction in the state.  Mylan’s parent-subsidiary relationship with MPI was not, however, sufficient to subject Mylan to general jurisdiction.  And since the facts before the court were insufficient to establish that Mylan’s relationship with Agila made Mylan accountable for Agila’s Notice Letter, the court granted Mylan’s 12(b)(2) motion, but allowed for limited jurisdictional discovery of information that could show the existence and breadth of an agency relationship between Mylan and Agila.

The District of Delaware again denied an ANDA defendant’s 12(b)(2) motion in Millennium Pharmaceuticals v. Pharma Science, relying on Acorda.  There, Millennium brought an infringement action against Pharmascience Labortories Inc. (PSL) and Pharmascience Inc. (PSI) after PSI notified Millennium that it filed an ANDA for approval to sell a generic version of VELCADE, a bortezomib product.  PSI, a Canadian company with its principal place of business in Montreal, sent its Paragraph IV letter to FDA in Maryland and Millennium in Massachusetts.  It is neither incorporated in Delaware, nor registered to do business there; nor does it have any employees, agents, postal box, telephone number, office, bank accounts, taxes, registered agent, or distribution channels in the state.  But under Acorda, the court held that PSI was subject to specific jurisdiction based solely on its filing the ANDA and eventual need to engage in marketing in Delaware.

As for PSL—which similarly lacked any physical or business presence in Delaware—the court found that it lacked jurisdiction over it and granted that company’s 12(b)(2) motion, because Millennium failed to proffer specific facts to support its allegation that PSL collaborated with PSI in filing the ANDA.

District of New Jersey

The District Court for the District of New Jersey applied Acorda this past April in Helsinn Healthcare v. Hospira.  In that case, Hospira and Hospira Worldwide—both Delaware corporations with principal places of business in Illinois—moved to dismiss for lack of personal jurisdiction Helsinn’s action for infringement of its patents relating to its Aloxi-brand palonosetron hydrochloride intravenous solutions.  The suit followed Hospira’s filing an ANDA with FDA and sending a Paragraph IV notice to Helsinn, Helsinn’s subsidiary distributor, another patent assignee, and their law firms in Switzerland, New Jersey, California, and Georgia, respectively.  Relying on Acorda’s rationale and ruling, the court found that it had specific jurisdiction over both companies, because at least part of Hospira’s marketing will take place in New Jersey and Worldwide would distribute drugs into the state.  Having found specific jurisdiction, The court did not need to reach the question of general jurisdiction, but noted that some circuits employ a “consent-by-registration” theory that would subject Worldwide to general jurisdiction based on its registration to do business in a state.

Eastern District of Texas          

In Allergan v. Teva, the Eastern District of Texas applied Acorda to reject an ANDA-filer’s 12(b)(2) motion.  Allergan, a Delaware corporation with its principal place of business in California, filed a patent infringement suit against:  Teva, a Delaware corporation with its principal place of business in Pennsylvania; Mylan Pharmaceuticals Inc. (MPI), a West Virginia corporation with its principal place of business also in that state; and Mylan Inc., a Pennsylvania corporation with its principal place of business there as well.  The suit followed Teva and MPI’s submitting ANDAs to market generic versions of RESTASIS, a cyclosporine ophthalmic emulsion product.  Allergan named Mylan Inc. a defendant, alleging that corporation was responsible for marketing and selling MPI’s generic drugs, and that the two companies were agents of each other.  All three defendants moved the court to dismiss Allergan’s action on the ground that they were not subject to specific jurisdiction in Texas.  The court disagreed.  It ruled that Acorda, which the Federal Circuit decided after the defendants filed their 12(b)(2) motions, governed the issue and allowed Allergan’s suits to proceed.

Teva acknowledged its intent to sell its generic product in Texas and that, under Acorda, this subjected it to the court’s jurisdiction.  The Mylan entities, on the other hand, argued that Acorda should not govern since it would be overturned on review, and that it is entirely speculative that MPI would ever sell an infringing product in Texas.  The court nonetheless asserted personal jurisdiction over both Mylan entities, finding that Allergan made a plausible showing that Mylan would sell the generic product in Texas since the ANDA’s purpose was to market the drug nationwide, and because Mylan was registered to do business in Texas, has distribution channels there, and has done substantial business in the state previously.

Conclusion

Barring a grant of certiorari by the Supreme Court, the panel decision in Acorda now governs the due-process elements of personal jurisdiction in patent cases nationwide.  The four subsequent district court decisions show that, under Acorda, filing an ANDA will subject a generic manufacturer to specific jurisdiction in any jurisdiction in which it is likely to market its drug.

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