Genentech, Inc. v. Eli Lilly & Co.

• Decision Date: 12 September 2019
• Docket Number: Case No.: 18-CV-1518 JLS (JLB)
• Court: U.S. District Court — Southern District of California
• Parties: GENENTECH, INC., a Delaware corporation, Plaintiff, v. ELI LILLY AND COMPANY, an Indiana corporation, Defendant.

GENENTECH, INC., a Delaware corporation, Plaintiff, v. ELI LILLY AND COMPANY, an Indiana corporation, Defendant.

Case No.: 18-CV-1518 JLS (JLB)

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF CALIFORNIA

September 12, 2019

ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT'S MOTION

(ECF No. 30)

Presently before the Court is Eli Lilly and Company's Motion ("Mot.," ECF No. 24) seeking to dismiss or transfer this action for improper venue under Federal Rule of Civil Procedure 12(b)(3); strike allegations in Plaintiff Genentech, Inc.'s First Amended Complaint under Federal Rule of Civil Procedure 12(f); and dismiss Plaintiff's willful infringement claim under Federal Rule of Civil Procedure 12(b)(6). Plaintiff filed a Response in Opposition to ("Opp'n," ECF No. 48) and Defendant filed a Reply in Support of ("Reply," ECF No. 50) the Motion. After reviewing the Parties' arguments and the law, the Court rules as follows.

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BACKGROUND

This case came before the Court on July 3, 2019, when Plaintiff Genentech, Inc., filed suit. First Amended Complaint ("FAC") ¶ 5, ECF No. 29. Plaintiff is a Delaware corporation with its principal place of business in San Francisco, California. Id. ¶ 1. Defendant Eli Lilly and Company is an Indiana corporation with its principal place of business in Indiana. Id. ¶ 2. Defendant has owned and operated the Lilly Biotechnology Center in San Diego, California, since 2009. Id. ¶ 9.

Plaintiff brings suit under 35 U.S.C. § 271 for Defendant's alleged infringement of U.S. Patent No. 10,011,654 (the "'654 patent"). Id. ¶¶ 3, 25-43. Plaintiff alleges that Defendant's "manufacture, use, importation, offer for sale, and/or sale of Taltz® (containing ixekizumab as its active ingredient), a prescription medicine approved by the U.S. Food and Drug Administration to treat psoriatic arthritis and moderate to severe plaque psoriasis in adults," id. ¶ 3, "constitutes an act of infringement of at least claims 1, 4, 5, and 7 of the '654 patent." Id. ¶ 26.

After Plaintiff filed suit, Defendant filed a motion to dismiss the original complaint and strike allegations therein. ECF No. 24. Before filing any response, the Parties filed a joint motion for leave to file an amended complaint, ECF No. 27, which the Court granted. ECF No. 28. Plaintiff then filed its FAC and Defendant filed the present Motion. Shortly after Defendant filed this Motion, Plaintiff filed an ex parte motion for leave to seek expedited discovery related to Defendant's contentions that venue in this district is improper. ECF No. 30. The Court granted the motion and allowed limited discovery on the issue of venue. ECF No. 39. Following the close of venue discovery, Plaintiff filed its Opposition and Defendant filed its Reply. The Court, finding this matter suitable to take under submission without oral argument, now considers the present Motion.

ANALYSIS

I. Motion to Dismiss for Improper Venue

Defendant contends that venue is improper in the Southern District of California because Plaintiff failed to allege sufficient facts to make a plausible claim that Defendantcommitted acts of infringement within the district. Mot. at 17-18. Defendant also contends that Plaintiff's allegations for venue purposes are inadequate because the alleged acts of infringement are not related to Defendant's established place of business in the District. Id. at 19-22. Defendant also contends that if the Court deems venue is improper but does not dismiss, the Court should transfer the case to the Southern District of Indiana under 28 U.S.C. § 1404(a). Id. at 25-28.

A. Sufficiency of Plaintiff's Infringement Allegations for Venue Purposes

A party may move to dismiss an action for improper venue pursuant to Federal Rule of Civil Procedure 12(b)(3). In deciding a Rule 12(b)(3) motion, a court need not accept the pleadings as true and may consider facts outside the pleadings. Murphy v. Schneider Nat'l, Inc., 362 F.3d 1133, 1137 (9th Cir. 2004). "Plaintiff bears the burden of showing that venue is proper." Kaia Foods, Inc. v. Bellafiore, 70 F. Supp. 3d 1178, 1183 (N.D. Cal. 2014) (citing Piedmont Label Co. v. Sun Garden Packing Co., 598 F.2d 491, 496 (9th Cir. 1979)).

In patent infringement actions, 28 U.S.C. § 1400(b) "is the sole and exclusive provision controlling venue in patent infringement actions." TC Heartland LLC v. Kraft Foods Grp. Brands LLC, 137 S. Ct. 1514, 1516-17 (2017) (quotations omitted). Under section 1400(b), venue is proper (1) "in the judicial district where the defendant resides, or [(2)] where the defendant has committed acts of infringement and has a regular and established place of business." 28 U.S.C. § 1400(b).

In this case, Plaintiff asserts venue under the second prong only; thus, the Court must determine if Defendant "committed acts of infringement" and maintains a "regular and established place of business" within this district. There is no dispute that Defendant has a "regular and established place of business." Defendant concedes that the Lilly Biotechnology Center located in San Diego, California, meets this requirement. See Mot. at 12; ECF No. 42-3 at 16; ECF No. 43 at 9. The only question is whether Plaintiff has adequately alleged acts of infringements to satisfy venue. The Court concludes it has.

/// To support venue, allegations that a defendant committed acts of direct infringement, induced infringement, or contributed to infringement are sufficient. Seven Networks, LLC v. Google LLC, 315 F. Supp. 3d 933, 942 (E.D. Texas 2018). While a defendant may contest the allegations, the Court need not delve into the merits of infringement when considering whether venue is proper. Id. (citing In re Cordis Corp., 769 F.2d 733, 736-37 (Fed. Cir. 1985) ("The issue of infringement is not reached on the merits in considering venue requirements.") (quotations and alterations omitted)).

Here, Defendant contends that Plaintiff's "pleadings are legally insufficient to carry its § 1400(b) burden." Mot. at 18-19. Defendant contends that Plaintiff's allegations are merely "boilerplate statements" that "offer no more than formulaic recitations and naked assertions" that fail to meet the required pleading standards. Id. at 18 (quotations and alterations omitted). Plaintiff contends the allegations in its FAC plausibly show that Defendant "has promoted, marketed, offered to sell, and sold Taltz in this District, and that it has ongoing clinical trials involving Taltz in this District," all of which, for the purposes for venue, "are sufficient to establish that Defendant committed acts of infringement in this District." Opp'n at 7.

In its FAC, Plaintiff alleges Defendant "has purposefully directed infringing activities in this district, including promoting and marketing the use of, offering for sale, and selling Taltz in this district, thereby directly infringing the '654 Patent and inducing infringement by physicians and patients to use Taltz in this district." FAC ¶ 8. Plaintiff follows these general allegations with factual examples of Defendant's alleged actions that, according to Plaintiff, support its contention that Defendant "committed acts of infringement" in the District. See id. ¶¶ 9-15. The Court finds Plaintiff's allegations provide "sufficient factual support for its contention that venue is proper in this District." IPS Group, Inc. v. CivicSmart, Inc., No. 17-cv-632-CAB (MDD), 2017 WL 4810099, at *1 (S.D. Cal. Oct. 25, 2017). Plaintiff need not prove infringement at this stage of the case. The allegations and the factual support provided in the FAC more than meet the standard for venue purposes.

B. Nexus Requirement

Defendant next argues Plaintiff's allegations of infringement for venue purposes are deficient because Plaintiff fails to allege the required "nexus between [the] alleged 'acts of infringement' and the 'established place of business.'" Mot. at 19. According to Defendant, it is not enough that Plaintiff alleges both elements; instead, Plaintiff must allege acts of infringement that are related to the established place of business. Id. Defendant supports its contention by pointing to the underlying policy of the patent venue statute, see id. at 19-20, examining the provision's legislative history, see id., and pointing to case law that purportedly supports its reading of the statute, id. at 21-22. In response, Plaintiff argues that section 1400(b) requires no nexus between the act of infringement and the regular and established place of business and that the "great weight of authority that has addressed this issue" supports its position. Opp'n at 8.

Although Defendant takes a deep dive into the legislative history and policy behind the statute, there is no need to address those topics to decide the issue. As noted above, section 1400(b) states that venue is proper when where the defendant has "committed acts of infringement and has a regular and established place of business." 28 U.S.C. § 1400(b). The plain language of the statute does not require a nexus between the two requirements and the Court declines to read one into it. See Bates v. United States, 522 U.S. 23, 29 (1997) (courts should "ordinarily resist reading words or elements into a statute that do not appear on its face"); see also Tesoro Haw. Corp. v. United States, 405 F.3d 1339, 1347 (Fed. Cir. 2005) ("[I]t is the duty of the courts to enforce [the statute] according to its obvious terms and not to insert words and phrases so as to incorporate therein a new and distinct provision.").

Defendant argues that at least two district courts have adopted its reading of the statute and held that there must be some relationship between the requirements. See, e.g., Scaramucci v. FMC Corp., 258 F. Supp. 598, 602 (W.D. Okla. 1966); Jeffrey Galion, Inc. v. Joy Mfg. Co., 323 F. Supp. 261, 266-67 (N.D. W. Va. 1971). The vast the majority of courts that have addressed the issue, however, have declined to read into the statute anynexus requirement. See, e.g., Seven Networks, 315...