Valeant v. Mylan: Restrictions on Venue in Hatch-Waxman Litigation
For the first time since the U.S. Supreme Court’s TC Heartland decision, the U.S. Court of Appeals for the Federal Circuit addressed the issue of venue specific to Hatch-Waxman litigation, pursuant to which branded pharmaceutical companies sue generic applicants for patent infringement prior to approval of the generic applicant’s Abbreviated New Drug Application (ANDA). TC Heartland held that under 28 U.S.C. § 1400(b), a domestic corporation “resides” only in its state of incorporation for purposes of venue in patent cases. Venue is therefore proper only in the state of incorporation or in a place in which a company maintains a regular and established place of business and an act of infringement has occurred. Subsequent to TC Heartland, the Federal Circuit has further clarified the meaning of a “regular and established place of business.” See In re Cray Inc., 871 F.3d 1355 (Fed. Cir. 2017); In re Google LLC, 949 F.3d 1338 (Fed. Cir. 2020). Valeant v. Mylan presented the Federal Circuit its first opportunity to consider where an “act of infringement has occurred” in cases brought pursuant to the Hatch-Waxman Act.
Under the Hatch-Waxman Act, it is “an act of infringement to submit [an ANDA] for a drug claimed in a patent . . . if the purpose of such submission is to obtain approval . . . to engage in the commercial manufacture, use, or sale of a drug . . . claimed in a patent . . . before the expiration of such patent.” 35 U.S.C. § 271(e)(2).
The central question in Valeant was whether, in Hatch-Waxman litigation, venue must be predicated on past acts of infringement, or if future acts of infringement could be contemplated, thus extending venue to all places of future sales of the generic product. Faced with this question, the Federal Circuit held that “infringement occurs for venue purposes only in districts where actions related to the submission of an [ANDA] occur, not in all locations where future distribution of the generic products specified in the ANDA is contemplated.”
Beginning in September 2018, Valeant filed a number of Hatch-Waxman suits in the District of New Jersey against defendants, including Mylan, who sought to make generic versions of its drug Jublia®. Valeant named three entities in its complaint against Mylan: Mylan Pharmaceuticals Inc. (MPI), which is incorporated and principally based in West Virginia; Mylan Inc., which is incorporated and principally based in Pennsylvania; and Mylan Laboratories Ltd. (MLL), which is incorporated and principally based in India (collectively, Valeant referred to the Mylan entities as Mylan).
In its complaint, Valeant alleged the following connections to New Jersey: (1) Mylan markets and sells product throughout the U.S. and in New Jersey; (2) Mylan conducts business in New Jersey; (3) Mylan had previously submitted to jurisdiction in New Jersey; (4) Mylan has a place of business in New Jersey; and (5) Mylan’s generic drug, once approved, will be marketed and sold by MPI in New Jersey following FDA approval.
Mylan moved to dismiss the complaint, arguing that venue was improper under § 1400(b) for MPI and Mylan Inc. because neither entity “resides” in New Jersey, and the only act of infringement—submission of the ANDA—did not happen in New Jersey, nor did the entities have regular and established places of business in New Jersey. The district court dismissed the complaint against all Mylan entities for improper venue, noting that the two places that an act of infringement might have occurred were the place from which the ANDA was submitted (West Virginia) and the place it was received (Maryland).
On appeal, the Federal Circuit considered whether only past acts of infringement give rise to venue (i.e., submission of an ANDA), or if future acts of infringement could also serve as a hook for venue (i.e., planned or likely sales of generic drugs). The court 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. And we hold those acts occur only in districts where actions related to the ANDA submission occur.”
In reaching its decision, the Federal Circuit first turned to the language of the Hatch-Waxman statute, the plain reading of which informs that it is the submission of the ANDA that constitutes the act of infringement. The court acknowledged that, over time, infringement under the Hatch-Waxman statute has been referred to as “artificial,” but refused to accept the “artificial” characterization as necessitating a future act to constitute infringement. Instead, the court confirmed that “an ANDA submission is a real, albeit statutorily created, act of infringement.”
On appeal, Valeant argued that venue was proper in New Jersey because ANDA submission should be considered a “nationwide act of infringement based on a ‘conceptual’ aspect beyond the literal act defined in the statute.” The Federal Circuit found no textual hook in the statute for such an interpretation. Valeant further argued that limiting venue to only jurisdictions in which the ANDA was prepared or submitted could lead to legal gamesmanship by generic defendants and to increased costs for plaintiffs who may have to pursue highly similar parallel litigations in multiple jurisdictions. While sympathetic to these policy concerns, the Federal Circuit was guided by the plain language of the statute and precedent holding that venue does not answer to such policy concerns.
Because no act related to Mylan’s ANDA submission occurred in New Jersey, and neither MPI nor Mylan Inc. resides in New Jersey, those defendants were properly dismissed from the case. The Federal Circuit reversed and remanded as to the foreign defendant, MLL, because venue would have been proper against a foreign defendant in any judicial district, including in New Jersey.
Parties to Hatch-Waxman litigation now have greater, but not yet complete, certainty as to where venue will be proper. The key takeaway from Valeant is that, for purposes of venue, “acts of infringement” cannot be rooted only in future distribution and/or sales of the generic drug. While venue is guaranteed at the generic defendant’s place of incorporation, it remains to be seen how broadly courts will interpret “actions related to the ANDA submission.” Having found that no such act occurred in New Jersey, the Federal Circuit did not delve further into this question. (“We also do not define what all relevant acts involved in the preparation and submission of an ANDA might be, leaving those questions for other cases where the precise contours are presented and briefed.”) Practitioners will have to wait for future decisions to define the breadth of actions related to ANDA submission, and also whether the District of Maryland sees an increase in Hatch-Waxman cases, as the location at which the U.S. Food and Drug Administration receives ANDAs.
Following Valeant, generic defendants hold greater control over the jurisdiction in which Hatch-Waxman claims may be litigated. If filing suit in a jurisdiction other than the defendant’s place of incorporation, plaintiffs would be well advised to file a backup suit where venue is known to be proper, certainly until the court further clarifies the scope of “actions related to the ANDA submission.”
Finally, given that multiple generic defendants often file ANDAs on a single product, plaintiffs may find themselves with increased costs, litigating similar cases on parallel tracks, in multiple jurisdictions. Aware of this possibility, the Federal Circuit noted that multi-district litigation (MDL) under 28 U.S.C. § 1407, while “cumbersome,” was “at least a viable path for consolidation.”