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Federal Circuit Clarifies Venue in Hatch-Waxman Case

Addressing venue in the context of a Hatch-Waxman case, the US Court of Appeals for the Federal Circuit explained that sending a paragraph IV notice letter to a company in the district is insufficient to establish venue. Celgene Corp. v. Mylan Pharmaceuticals Inc., Case No. 21-1154 (Fed. Cir. Nov. 5, 2021) (Prost, J.) The Court affirmed a district court finding that venue was improper since the defendant had not committed any acts of infringement and did not have a regular and established place of business in the district.

Celgene owns patents related to a multiple-myeloma drug that it markets and sells under the brand name Pomalyst. Mylan Pharmaceuticals Inc. (MPI) submitted abbreviated new drug applications (ANDAs) to the US Food & Drug Administration in order to bring a generic version of Pomalyst to market. Celgene filed suit in New Jersey against MPI and its related companies, Mylan Inc. and Mylan N.V. While Celgene is headquartered in New Jersey, MPI is based in West Virginia, Mylan, Inc. is based in Pennsylvania and Mylan N.V. is based in the Netherlands and Pennsylvania. The district court dismissed the case for improper venue (MPI and Mylan, Inc.) and for failure to state a claim (Mylan N.V.). Celgene appealed.

Citing Valeant v. Mylan, the Federal Circuit reiterated that venue for Hatch-Waxman cases must be predicated on past acts of infringement, and “it is the submission of the ANDA, and only the submission, that constitutes an act of infringement in this context.” Celgene argued that because MPI sent a paragraph IV notice letter from West Virginia to Celgene’s headquarters in New Jersey, acts of infringement occurred in New Jersey. Celgene also argued that since the notice letter was mandatory and the ANDA had to be amended to include proof of delivery, the delivery of the letter was “sufficiently related to the ANDA submission.” The Court disagreed, explaining that venue in Hatch-Waxman cases is focused on the submission of the ANDA itself, including acts involved in the preparation of an ANDA submission. The Court noted these acts must be part of the ANDA submission and that Celgene’s “related to” standard was impermissibly broad. The Court found that since the submission of the ANDA did not take place in New Jersey, venue there was improper.

The Federal Circuit also found that neither MPI nor Mylan, Inc. had a regular and established place of business in New Jersey. Celgene argued both had a regular and established place of business based on places associated with Mylan employees as well as Mylan affiliates. In rejecting these arguments, the Court noted that the employees Celgene pointed to were working remotely from home, and that the employee’s home numbers were contained in business communications. However, the Court noted that there was no indication that the defendants owned, leased or rented the employees’ homes; participated in the selection of the homes; stored inventory there or took any other actions to suggest that they had an intention to maintain a place of [...]

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Arthrex Argument May Be Available in Round Two

The US Court of Appeals for the Federal Circuit found that a party did not waive the Patent Trial & Appeal Board’s (Board) constitutionality argument by raising it for the first time in its opening brief because the Court’s decision in Arthrex, Inc. v. Smith & Nephew, Inc. was issued after the party sought rehearing. New Vision Gaming v. SG Gaming, Inc., Case Nos. 20-1399, -1400 (Fed. Cir. May 13, 2021) (Moore, J.) (Newman, J. concurring in part, dissenting in part)

New Vision appealed two covered-business method (CBM) review final written decisions in which the Board found that all claims of the patents, as well as its proposed substitute claims, were directed to patent ineligible subject matter under 35 U.S.C. § 101. In its opening brief before the Federal Circuit, New Vision requested the Court vacate and remand the Board’s decisions in light of Arthrex. SG Gaming argued New Vision had waived its right to a challenge under Arthrex since it raised it for the first time on an appeal. The Court disagreed, finding that New Vision had not waived its ability to challenge the Board’s decision under Arthrex since Arthrex was issued after the Board’s final written decisions and after New Vision sought Board rehearing. The Court vacated the Board’s final written decisions in the CBMs and remanded for further proceedings consistent with Arthrex without reaching the merits or any other issues.

In her partial dissent, Judge Pauline Newman agreed that Arthrex applied and vacating the Board’s final written decisions was appropriate. She also argued that another threshold issue (venue) should have been resolved, rendering the remand under Arthrex unnecessary and unwarranted. Additionally, Judge Newman agreed with New Vision that since the parties agreed to a different forum for dispute resolution in their license agreement, compliance with the parties’ patent license agreement would be appropriate. Under that agreement, if “any dispute” arose, jurisdiction would be “exclusive” in the appropriate federal or state court in the state of Nevada. New Vision filed suit in the federal district court in Nevada before SG filed CBM petitions before the Board. The Board stated it “[does] not discern, nor has Patent Owner pointed to, any portions of chapter 32 or § 18 of the AIA, or authority otherwise, that explicitly provide for a contractual estoppel defense,” in its decision and proceeded to a final decision despite the forum selection agreement.

Both parties briefed the forum selection question, with New Vision citing the Federal Circuit 2019 decision in Dodocase VR v. MerchSource in which a case was removed from the Board based on an agreed choice of forum. SG countered that the Board’s rejection of choice of forum is an unreviewable “institution” decision under Thryv vs. Click-to-Call. Andrei Iancu, the Director of the US Patent and Trademark Office (USPTO), intervened in the appeal, arguing that the Board’s decision is “final and nonappealable” under 35 U.S.C. § 324(e). As to the Board’s “conduct” in declining to [...]

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Venue in Hatch-Waxman Cases Limited to District Where ANDA Is Submitted

The US Court of Appeals for the Federal Circuit found that in cases brought under the Hatch-Waxman Act, for purposes of determining venue, infringement occurs only in districts where actions related to the submission of an abbreviated new drug application (ANDA) occur, and not in all locations where future distribution of the generic products specified in the ANDA is contemplated. Valeant Pharmaceuticals North American LLC v. Mylan Pharmaceuticals Inc., Case No. 19-2402 (Fed. Cir. Nov. 5, 2020) (O’Malley, J.).

Valeant holds a new drug application for the brand name drug Jublia®, which is used to treat toenail fungal infections. In 2018, Mylan Pharmaceuticals Inc. (MPI) executed an ANDA seeking approval to market a generic version of Jublia®. MPI sent the ANDA from its West Virginia corporate office to the US Food and Drug Administration, located in White Oak, Maryland. The ANDA included a Paragraph IV certification that the Orange-Book-listed patents for Jublia® were invalid, unenforceable or would not be infringed by the ANDA product. After the ANDA was filed, Valeant filed suit in the District of New Jersey against MPI, Mylan Inc. and Mylan Laboratories Ltd. (MLL) pursuant to the Hatch-Waxman Act, alleging infringement of the Orange-Book-listed patents. Valeant also filed an essentially identical lawsuit in the Northern District of West Virginia against the same three defendants. MPI is a West Virginia corporation with a principal place of business in Morgantown, West Virginia. Mylan Inc. is a Pennsylvania corporation with a principal place of business in Canonsburg, Pennsylvania. MLL is an Indian corporation with a principal place of business in Hyderabad, India.

The Mylan entities moved to dismiss the New Jersey litigation, arguing that venue was improper under 28 USC § 1400(b) because none of the Mylan defendants reside or have a 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. In response, Valeant argued that it was unduly narrow to limit “act of infringement” to the act of submitting the ANDA, and that the court should consider the Mylan entities’ planned future acts, which included acts of infringement in New Jersey. The district court granted the Mylan entities’ motion based on improper venue, finding that the ANDA was submitted from West Virginia and thus venue was proper there. Valeant appealed.

The two issues presented on appeal were the proper venue in Hatch-Waxman cases after TC Heartland v. Kraft Foods, and the proper venue for patent cases brought against foreign entities. Starting with the first issue, the Federal Circuit explained that determining whether venue is proper under § 1400(b) in a district other than the state in which a defendant is incorporated requires determining where the defendant committed acts of infringement. 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 the submission is to obtain approval to engage in commercial activities related to the drug before [...]

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First-to-File Rule Must Be Followed Unless Compelling Circumstances Justify Exception

Vacating and remanding a district court’s decision not to transfer a case, the US Court of Appeals for the Federal Circuit granted a petition for a writ of mandamus because the district court did not consider whether the first-to-file rule favored keeping the case in the second-filed court. In re: Nitro, Case No. 20-142 (Fed. Cir. Oct. 28, 2020) (Reyna, J.).

In 2018, Cameron International filed a suit against Nitro in the Southern District of Texas alleging that Nitro’s fracturing-fluid delivery systems infringed three of Cameron’s patents. In February 2020, Cameron filed a second suit against Nitro in the Western District of Texas, alleging that the same accused products infringed two of Cameron’s other related patents. Relying on the first-to-file rule, which generally dictates that the court in which an action is first filed is the appropriate court to determine whether subsequently filed cases involving substantially similar issues should proceed, Nitro moved the Western District of Texas to decline jurisdiction or transfer the action to the Southern District of Texas.

The district court rejected the application of the first-to-file rule, but not because the two cases lacked substantial overlap. Instead, the district court relied on US Court of Appeals for the Fifth Circuit precedent stating that even where there is such overlap, the court still must determine whether there are “sufficiently ‘compelling circumstances’ to avoid the rule’s application.” The district court determined that it was appropriate to use a balance of the traditional transfer factors to make that determination, concluding that when a balance of transfer factors “does not weigh in favor of transfer[,] . . . compelling circumstances exist in order to avoid application of the first-to-file rule.” Applying this standard, the district court denied Nitro’s motion. The district court found that although two of the factors (relative ease of access to sources of proof, and local interest in having localized interests decided at home) favored transfer, the administrative difficulties flowing from court congestion, co-pending suits against another defendant involving the same patents, and the district court’s ability to more quickly schedule a trial weighed against transfer. Nitro filed for mandamus.

Proceeding from the district court’s premise that transfer pursuant to the first-to-file rule would be proper absent the existence of compelling circumstances, and that a balance of the transfer factors can support such an exception, the Federal Circuit explained that consideration of Nitro’s petition turned on the correctness of the district court’s application of those factors. The Court explained that the district court had it backwards by concluding that the first-to-file rule is only applicable when the balance of factors favors the first-filed court. Instead, the proper inquiry is that unless the balance of transfer factors favors keeping the case in the second-filed court, there are no compelling circumstances to keep the case in the second-filed court.

The Federal Circuit found that the district court did not resolve the critical issue of whether a balance of the factors favored the second-filed court. The Federal Circuit explained that although [...]

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Overcoming Heavy Burden Required to Succeed on Venue-Related Writ of Mandamus

Addressing a venue challenge, the US Court of Appeals for the Federal Circuit denied a petition for a writ of mandamus because the challenger did not demonstrate it had no adequate alternative means to obtain desired relief since meaningful review could occur after final judgment was entered. In re. Google, Case No. 20-144 (Fed. Cir. Sept. 18, 2020) (Reyna, J.).

Personalized Media Communications (PMC) sued Google in the Eastern District of Texas for infringement of six patents related to adaptive video streaming. PMC initially asserted venue was proper based on the presence of several Google Global Cache (GGC) servers at facilities owned by internet service providers (ISPs) located within the district. Google moved to dismiss for improper venue. While Google’s motion was pending, the Federal Circuit issued its decision in In re. Google, rejecting a venue argument asserted by a different plaintiff against Google that was also premised on the presence of GGC servers, and finding that a regular and established place of business requires the regular physical presence of an employee or other agent of the defendant conducting the defendant’s business at the alleged place of business.

After the Federal Circuit’s decision, PMC asserted a different venue theory based on Google’s agreements with Communications Test Design (CTDI) to warehouse, refurbish, repair and ship hardware products, such as Google’s cellphones and speakers, from a CTDI facility located in the Eastern District of Texas. The district court agreed with PMC and denied Google’s motion, finding that CTDI was acting as Google’s agent and was conducting Google’s business from its facility. Google filed a petition for a writ of mandamus seeking to vacate the district court’s order.

The Federal Circuit denied Google’s petition. The Court explained that a party seeking a writ bears the heavy burden of demonstrating that it has no adequate alternative means to obtain the desired relief and that the right to issuance of the writ is clear and indisputable. Without providing an explanation, the Court found that although Google raised viable arguments based on the law of agency and the Court’s precedent, it was not satisfied that Google’s right to a writ was clear and indisputable. The Court concluded that Google can obtain meaningful review of the district court’s venue ruling after final judgment in the case.

Practice Note: The Federal Circuit was also concerned that the district court did not move more quickly to resolve Google’s venue challenge. Significant work in the case had already been done, and the trial date is currently set for November 2020. If the venue is later found to be improper, the case will be transferred and a new trial will occur.




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