United States: Federal Circuit Holds That, For Venue Purposes, Patent Infringement Occurs Only In Districts Where Actions Related To ANDA Submissions Occur

In Valeant Pharmaceuticals N.A. LLC v. Mylan Pharmaceuticals Inc. No. 2019-2402, the Federal Circuit, in a 3-0 ruling, held that in Hatch-Waxman cases brought under 35 U.S.C. § 271(e)(2)(A), "infringement occurs for venue purposes only in districts where actions related to the submission of an Abbreviated New Drug Application ('ANDA') occur, not in all locations where future distribution of the generic products specified in the ANDA is contemplated."

For patent litigation cases, the venue statute, 28 U.S.C. §1400(b), provides "[a]ny 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."

As for the first clause of §1400(b), in TC Heartland LLC v. Kraft Foods Grp. Brands LLC, 137 S. Ct. 1514 (2017), the Supreme Court held that the term "resides" in § 1400(b) refers only to a corporation's state of incorporation. According to TC Heartland, even though the general venue provision in 28 U.S.C. § 1391 provides that a corporation is deemed to reside in any judicial district in which it is subject to personal jurisdiction, §1400 is the governing venue statute specifically for patent cases. TC Heartland significantly narrowed the choices of venue for patent litigation cases. A corporation may be sued for patent infringement in only two categories of judicial districts: (1) in the corporation's state of incorporation, and (2) where it has a regular and established place of business and an act of infringement has occurred.

Under the second clause of § 1400(b), where "acts of infringement" occur in Hatch-Waxman cases was a question of first impression after TC Heartland. Mylan Pharmaceuticals Inc. (MPI) sent its ANDA with a Paragraph IV certification from its West Virginia corporate office to the FDA, located in Maryland. Plaintiffs filed an infringement complaint in the District of New Jersey against MPI, Mylan Inc. (a Pennsylvania corporation), and Mylan Laboratories Ltd. (MLL, an Indian corporation) (collectively "Mylan"). Mylan argued that venue was improper under § 1400(b) because the defendants do not reside and have no regular and established place of business in New Jersey, and the only alleged act of infringement—submission of the ANDA—did not occur in New Jersey. Valeant contended that Mylan's planned, future acts must be considered. The district court sided with Mylan, dismissed the complaint for improper venue and concluded that the two places where an act of infringement could have occurred were West Virginia and Maryland, not New Jersey.

The Federal Circuit held 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." In the appeal, both parties agreed that § 1400(b) requires a past act of infringement. Based on the plain language of the Hatch-Waxman Act, specifically 35 U.S.C. § 271(e)(2) defining the nature and scope of the act of infringement, the Federal Circuit stated the only past infringing act is the ANDA submission. Therefore, the Federal Circuit held that those past acts of infringement occurred and thus venue is proper only in districts where actions related to the ANDA submission occur, and venue is not proper in judicial districts where an ANDA product is likely to be distributed. So the Federal Circuit affirmed the district court's dismissal because venue is improper in New Jersey as to MPI and Mylan Inc. This Federal Circuit decision did not address the district court's suggestion that an act of infringement may have occurred in the District of Maryland because the issue was not challenged in the appeal. The Federal Circuit confirmed that MLL as a foreign corporation is properly subject to venue in any judicial district, including the District of New Jersey.

The Valeant holding further narrows choices of venue in Hatch-Waxman cases after TC Heartland, and may benefit domestic generic companies because of potential home court advantages. It is also noted that in In re Cray Inc., 871 F.3d 1355, 1361 (Fed. Cir. 2017), the Federal Circuit already narrowly construed the requirements of a "regular and established place of business" after TC Heartland, and held that (1) there must be "a physical, geographical location in the district from which the business of the defendant is carried out"; (2) the defendant's presence "must for a meaningful time period be stable, established"; and (3) "it must be a place of the defendant." The combination of Valeant and Cray may result in a very limited number of possible venue choices for a Hatch-Waxman case under the second clause of §1400(b). The two alternative clauses of §1400(b) may provide few but certain venue choices.

For More Information

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