November 11, 2020 - Last Week in the Federal Circuit

Last Week in the Federal Circuit (November 2-6): Limits on Venue in Hatch-Waxman Cases

Last week was argument week at the Federal Circuit, which as usual meant the Court issued several Rule 36 affirmances and short non-precedential decisions. But tucked in between those was at least one case—a Hatch-Waxman case—with important ramifications going forward. Below we provide our usual weekly statistics and our case of the week—our highly subjective selection based on whatever case piqued our interest.

Precedential opinions: 2

Non-precedential opinions: 9

Rule 36: 6

Longest pending case from argument: Chevron U.S.A. Inc. v. University of Wyoming Research, No. 19-1530 (155 days)

Shortest pending case from argument (non-Rule 36): Perfectus Aluminum, Inc. v. United States, No. 19-2129 (32 days)

Case of the week: Valeant Pharmaceuticals North America LLC v. Mylan Pharmaceuticals Inc., No. 19-2402 (Nov. 5, 2020)

Panel: Judges Newman, O’Malley, and Taranto, with Judge O’Malley writing the opinion.

You should read this case if: you have a venue issue in a Hatch-Waxman case.

Since the Supreme Court’s TC Heartland decision in 2017, patent litigants and courts have grappled with venue questions that the Supreme Court left unanswered. In pharmaceutical patent suits between brand-name and generic drug companies under the Hatch-Waxman Act, one of these questions was where the relevant “acts of infringement” occur, since that location is critical under the patent venue statute:

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.

28 U.S.C. § 1400(b) (emphasis added).

In Hatch-Waxman cases, the act of infringement is statutorily defined under 35 U.S.C. § 271(e)(2)(A) as the submission of an abbreviated new drug application (“ANDA”) for a patented drug or use. When suit is filed, the generic drug has yet to be approved by the FDA or marketed in the United States, so more traditional acts of infringement (e.g., selling the infringing product) have yet to occur. Instead, a Hatch-Waxman suit seeks to resolve in advance whether the future distribution of the generic drug would infringe the asserted patent claims.

This aspect of the Hatch-Waxman statutory scheme led to the question in Valeant: for venue purposes, is the location where “acts of infringement” occured limited to where the defendant committed acts relating to the submission of the ANDA, or does it also include the locations where the defendant contemplates future distribution of the generic drug that allegedly would infringe the patent claims? Practically speaking, the “future distribution” theory would have placed few restrictions on venue (beyond the “regular and established place of business” requirement) given that pharmaceutical companies typically seek to market their drugs throughout the United States after FDA approval.

The Federal Circuit went with the more restrictive answer based on a “plain language” reading of the statutes. It held that § 1400(b)’s “has committed acts of infringement” language focuses on the location of a past act of infringement—where an act preceding the filing of suit occurred. And it held that only the submission of the ANDA constitutes an act of infringement under § 271(e)(2). Thus, other than where a defendant is incorporated, venue 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 holding significantly limits venue options for Hatch-Waxman cases.

The Federal Circuit acknowledged some of the policy concerns with this approach: generic companies could “game” the system to avoid certain jurisdictions, and brand-name companies might have to file identical suits against different generic companies in multiple districts. But the Federal Circuit found that these concerns could not override the plain language of the statutes and left it to Congress to decide whether to revise them. It remains to be seen whether generic companies actually will try to avoid certain jurisdictions by moving their operations (and possibly changing their place of incorporation as well).

Interestingly, in answering the big-picture venue question for Hatch-Waxman cases, the Federal Circuit left some more nuanced questions unanswered. It explicitly declined to say precisely what acts are sufficient to make a company a “submitter” under § 271(e), leaving future cases to “define what all relevant acts involved in the preparation and submission of an ANDA might be.” It also left open the question of whether an act of infringement occurs in the District of Maryland based on the FDA’s receipt of the ANDA there. It did not need to address these questions in Valeant because the district court found that no act involved in the submission of the ANDA occurred in the district where the suit was filed (New Jersey). The Federal Circuit did note that “acts protected by the safe harbor provisions in § 271(e) are non-infringing for all purposes, including venue.” But district courts following Valeant will have to sort out for themselves the precise contours of the acts that make one a “submitter” for venue purposes.