Galderma Labs., L.P. v. Teva Pharm. USA, Inc.

• Decision Date: 17 November 2017
• Docket Number: Civil Action No. 3:17–cv–01076–M
• Parties: GALDERMA LABORATORIES, L.P., Galderma S.A., and Nestlé Skin Health S.A., Plaintiffs, v. TEVA PHARMACEUTICALS USA, INC. and Teva Pharmaceuticals Industries Ltd., Defendants.
• Court: U.S. District Court — Northern District of Texas

290 F.Supp.3d 599

GALDERMA LABORATORIES, L.P., Galderma S.A., and Nestlé Skin Health S.A., Plaintiffs,

v.TEVA PHARMACEUTICALS USA, INC. and Teva Pharmaceuticals Industries Ltd., Defendants.

Civil Action No. 3:17–cv–01076–M

United States District Court, N.D. Texas, Dallas Division.

Signed November 17, 2017

Jamil N. Alibhai, Daniel E. Venglarik, Jordan Christine Strauss, Kelly P. Chen, Michael C. Wilson, Munck Wilson Mandala LLP, Dallas, TX, for Plaintiffs.

Leora Ben–Ami, Thomas F. Fleming, Kirkland and Ellis LLP, New York, NY, Scott W. Breedlove, E. Leon Carter, Carter Scholer Arnett Hamada & Mockler PLLC, Dallas, TX, for Defendants.

MEMORANDUM OPINION AND ORDER

BARBARA M.G. LYNN, CHIEF JUDGE

Before the Court are (1) a Rule 12(b)(3) motion to dismiss for improper venue [ECF #21], filed by Defendant Teva Pharmaceuticals USA, Inc. ("Teva USA") [ECF #21]; and (2) a Rule 12(b)(6) motion to dismiss for failure to state a claim [ECF #25], filed by Defendant Teva Pharmaceutical Industries Ltd. ("Teva Israel"). For the following reasons, both Motions are GRANTED.

Background

Plaintiffs Galderma Laboratories, L.P., Galderma S.A., and Nestlé Skin Health S.A. bring this civil action under the Drug Price Competition and Patent Term Restoration Act of 1984 (the "Hatch–Waxman Act"), asserting infringement of U.S. Patent Nos. 8,815,816 (the "'816 Patent") ; 9,089,587 (the "'587 Patent") ; 9,233,117 (the "'117 Patent") ; 9,233,118 (the "'118 Patent") ; and U.S. Patent Nos. 8,362,069 (the "'069 Patent"). The patents-in-suit relate to compositions, methods, and regimens for the treatment of rosacea

, using ivermectin, an anti-parasitic medication used to treat infections caused by roundworms, threadworms, and other parasites.

The patents-in-suit are listed in the FDA's Approved Drug Products with Therapeutic Equivalence Evaluations (the "Orange Book") as covering Soolantra® (ivermectin

) Cream 1% ("Soolantra®"), a topical prescription drug that contains ivermectin for the treatment of inflammatory lesions of rosacea. Plaintiff Galderma Laboratories, L.P. is the owner and exclusive beneficial holder of the rights to market Soolantra® under the FDA approval of New Drug Application ("NDA") No. 206255, approved December 19, 2014. When a party files an NDA, the FDA requires the applicant to submit certain information regarding any patent that claims the drug, or a method of using the drug, that is the subject of the NDA. See 21 C.F.R. § 314.53. Upon approval of the NDA, the FDA lists the drug in the Orange Book, along with all official and proprietary names of the drug; and, when the NDA holder submits patent information for the drug in accordance with 21 C.F.R. § 314.53, the patent information is also included in the Orange Book.

A generic drug manufacturer may obtain FDA approval of a generic drug through the Abbreviated New Drug Application ("ANDA") process, if the generic drug is a bioequivalent of a drug previously granted NDA approval. The ANDA process permits a generic drug manufacturer to bypass the costly clinical trials and lengthy delays associated with the NDA process. As part of the ANDA process, the applicant must make a patent certification with respect to each patent that claims the listed drug or a use of such drug for which the applicant is seeking approval. See 21 C.F.R. § 314.94(a)(12)(i)(A). Specifically, with respect to each patent, the ANDA applicant must certify that:

(1) the NDA holder submitted no patent to the FDA; or

(2) any patent submitted has expired; or

(3) the date the applicable patent expires; or

(4) that the patent is invalid, unenforceable, or will not be infringed by the manufacture, use, or sale of the drug product for which the abbreviated application is submitted.

See 21 C.F.R. § 314.94(a)(12)(i)(A) ; 21 U.S.C. § 355(j)(2)(A)(vii)(I)-(IV). If the ANDA applicant certifies that a patent is invalid, unenforceable, or will not be infringed (a "paragraph IV certification"), it must notify the NDA holder of its assertion. 21 C.F.R. § 314.95. The NDA holder then has 45 days to file suit against the ANDA applicant for patent infringement. 35 U.S.C. § 271(e)(2)(A).

Generally, patent infringement occurs when an infringer makes, uses, offers for sale, sells, or imports an invention into the United States. Under Section 271(e)(2)(A) of the Hatch–Waxman Act, however, the submission of an ANDA application with a paragraph IV certification constitutes an artificial act of infringement, which can form the basis of a claim for injunctive relief to prevent the approval, sale, or use of the generic drug until after the NDA holder's patent expires. Caraco Pharm. Labs., Ltd. v. Novo Nordisk A/S , 566 U.S. 399, 404–405, 132 S.Ct. 1670, 182 L.Ed.2d 678 (2012) ("The patent statute treats [the filing of a paragraph IV certification] as itself an act of infringement, which gives the brand an immediate right to sue."). An NDA holder's timely-filed lawsuit automatically stays the ANDA process for a period of thirty months. See 21 C.F.R. § 314.107(b)(3)(i)(A). If the NDA holder fails to bring suit within 45 days, the ANDA applicant may file a declaratory judgment action to adjudicate its paragraph IV challenge. See 21 C.F.R. § 355(j)(5)(C)(i)(II).

In this lawsuit, Plaintiffs allege that Teva USA submitted ANDA No. 210019 to the FDA seeking, approval to engage in the commercial manufacture, use, and sale of a generic ivermectin cream 1% prior to the expiration of the patents-in-suit. Plaintiffs seek declaratory relief that Defendants have and will infringe the patents-in-suit by filing the ANDA and by making or selling their accused generic creams. Plaintiffs also seek an order that the effective date of any FDA approval of the ANDA shall not be earlier than the expiration of the patents-in-suit, and other injunctive relief. Defendants generally contend the claims of the patents-in-suit are invalid, unenforceable, and/or will not be infringed by the commercial manufacture, use, offer for sale, sale, or importation of their accused generic ivermectin creams.

Teva USA has filed a motion to dismiss under Rule 12(b)(3) [ECF #21], arguing venue is not proper in this district under the patent venue statute, because Teva USA (1) is incorporated in Delaware, (2) has not committed any acts of infringement in the Northern District of Texas, and (3) does not maintain a regular and established place of business in this district.¹ Teva Israel has filed a Rule 12(b)(6) motion to dismiss on the ground that Plaintiffs' First Amended Complaint ("FAC"), which is the live pleading in this action, fails to plead sufficient facts to state a plausible case that Teva Israel is responsible for the alleged infringement, because the only alleged act of infringement is the submission of the ANDA, and Teva Israel had no role in submitting the ANDA.

With respect to Teva USA's Rule 12(b)(3) motion, the Federal Circuit issued a precedential opinion on the patent venue statute, In re Cray, Inc., 871 F.3d 1355 (Fed. Cir. 2017), after the venue motion was fully-briefed. Because the Cray holding clarifies the venue analysis, which is particularly fact-specific, the Court allowed Plaintiffs to conduct limited venue-related discovery. Both parties filed additional evidence on the venue issue, and the Court held oral argument on Defendants' motions on November 6, 2017. The issues have been fully briefed and argued, and the motions are ripe for determination.

Rule 12(b)(3) Motion to Dismiss for Improper Venue

Legal Standards

Teva USA brings its motion to dismiss for improper venue under Fed. R. Civ. P. 12(b)(3). Courts are divided on which party bears the burden of proof on a motion to dismiss for improper venue. The Fifth Circuit has not ruled on which party bears the burden on a Rule 12(b)(3) motion. However, most district courts within this circuit have imposed the burden of proving that venue is proper on the plaintiff once a defendant has objected to the plaintiff's chosen forum. See, e.g., Broadway Nat'l Bank v. Plano Encryption Techns., LLC , 173 F.Supp.3d 469, 473 & n.2 (W.D. Tex. 2016) ; Graham v. Dyncorp Intern., Inc. , 973 F.Supp.2d 698, 700 (S.D. Tex. 2013) ; Asevedo v. NBC Universal Media, LLC , 921 F.Supp.2d 573, 589 (E.D. La 2013) ; Praetorian Specialty Ins. Co. v. Auguillard Const. Co., Inc. , 829 F.Supp.2d 456, 470 (W.D. La. 2010) ; EnviroGLAS Products, Inc. v. EnviroGLAS Products, LLC , 705 F.Supp.2d 560, 566 (N.D. Tex. 2010) ; ATEN Intern. Co. Ltd. v. Emine Techn. Co., Ltd. , 261 F.R.D. 112, 120 (E.D. Tex. 2009). This Court, in particular, has consistently held that the plaintiff bears the burden of sustaining venue in the district in which the suit was brought. See Nuttall v. Juarez , 984 F.Supp.2d 637, 642 & n.3 (N.D. Tex. 2013) (Lynn, J.); Emelike v. L–3 Communications Corp. , 2013 WL 1890289, at *1 (N.D. Tex. May 7, 2013) (Lynn, J.); Tracfone Wireless, Inc. v. Stone , 2008 WL 648942, at *3 (N.D. Tex. Feb. 26, 2008) (Lynn, J.); Nayani v. Horseshoe Entm't , 2007 WL 1062561, at *2 (N.D. Tex. Apr. 10, 2007) (Lynn, J.).

In ruling on Teva USA's Rule 12(b)(3) motion, the Court initially accepts as true all of the well-pleaded allegations in the FAC and resolves any factual conflicts in Plaintiffs' favor. Nuttall, 984 F.Supp.2d at 642 (citing Braspetro Oil Servs. Co. v. Modec (USA), Inc. , 240 Fed.Appx. 612, 615 (5th Cir. 2007) ). However, the Court may consider evidence in the record beyond the facts alleged in the FAC and its attachments, including affidavits or evidence submitted by Teva USA in support of its motion to dismiss, or by Plaintiffs in response to the motion.

Ginter ex rel. Ballard v. Belcher, Prendergast & Laporte , 536 F.3d 439, 449 (5th Cir. 2008). Where the defendant submits affidavits or evidence controverting specific facts alleged in the complaint, the Court is no longer required to accept those controverted facts as true; rather, the Court may make factual findings in the context of a Rule 12(b)(3) venue challenge based upon an evidentiary...