Valeant Pharmaceuticals North America LLC v. Mylan Pharmaceuticals Inc., 110520 FEDFED, 2019-2402

Docket Nº:2019-2402
Opinion Judge:O'MALLEY, CIRCUIT JUDGE
Party Name:VALEANT PHARMACEUTICALS NORTH AMERICA LLC, VALEANT PHARMACEUTICALS IRELAND LTD., DOW PHARMACEUTICAL SCIENCES, INC., KAKEN PHARMACEUTICAL CO., LTD., Plaintiffs-Appellants v. MYLAN PHARMACEUTICALS INC., MYLAN LABORATORIES LTD., MYLAN INC., Defendants-Appellees
Attorney:Thomas P. Steindler, McDermott, Will & Emery LLP, Washington, DC, argued for all plaintiffs-appellants. Plaintiffs-appellants Valeant Pharmaceuticals North America LLC, Valeant Pharmaceuticals Ireland Ltd., Dow Pharmaceutical Sciences, Inc. also represented by Ian Barnett Brooks, Christopher Mich...
Judge Panel:Before Newman, O'Malley, and Taranto, Circuit Judges.
Case Date:November 05, 2020
Court:United States Courts of Appeals, Court of Appeals for the Federal Circuit

VALEANT PHARMACEUTICALS NORTH AMERICA LLC, VALEANT PHARMACEUTICALS IRELAND LTD., DOW PHARMACEUTICAL SCIENCES, INC., KAKEN PHARMACEUTICAL CO., LTD., Plaintiffs-Appellants

v.

MYLAN PHARMACEUTICALS INC., MYLAN LABORATORIES LTD., MYLAN INC., Defendants-Appellees

No. 2019-2402

United States Court of Appeals, Federal Circuit

November 5, 2020

Appeal from the United States District Court for the District of New Jersey in No. 3:18-cv-14305-PGS-LHG, Senior Judge Peter G. Sheridan.

Thomas P. Steindler, McDermott, Will & Emery LLP, Washington, DC, argued for all plaintiffs-appellants. Plaintiffs-appellants Valeant Pharmaceuticals North America LLC, Valeant Pharmaceuticals Ireland Ltd., Dow Pharmaceutical Sciences, Inc. also represented by Ian Barnett Brooks, Christopher Michael Bruno, Paul Michael Schoenhard; Charles H. Chevalier, Gibbons P.C., Newark, NJ.

John D. Livingstone, Finnegan, Henderson, Farabow, Garrett & Dunner, LLP, Atlanta, GA, for plaintiff-appellant Kaken Pharmaceutical Co., Ltd. Also represented by Cora Renae Holt, Washington, DC; Charles H. Chevalier, Gibbons P.C., Newark, NJ.

Steffen Nathanael Johnson, Wilson Sonsini Goodrich & Rosati, Washington, DC, argued for defendants-appellees. Also represented by Adam William Burrowbridge; Wendy L. Devine, Kristina M. Hanson, Tung On Kong, San Francisco, CA.

Before Newman, O'Malley, and Taranto, Circuit Judges.

O'MALLEY, CIRCUIT JUDGE

In 2017, the Supreme Court dramatically changed the venue landscape in patent cases. See TC Heartland LLC v. Kraft Foods Grp. Brands LLC, 137 S.Ct. 1514 (2017). It held that the general venue provision in 28 U.S.C. § 1391- which provides that a corporation is deemed to "reside" in any judicial district in which it is subject to personal jurisdiction-does not modify the term "resides" in 28 U.S.C. § 1400, the more specific venue statute applicable to patent cases. Specifically, it held that "resides" in § 1400(b) refers only to a corporation's state of incorporation. That means that a corporation may be sued for patent infringement in only two categories of judicial districts: those in the state in which it is incorporated and those in which it has a regular and established place of business and an act of infringement has occurred. TC Heartland raised more questions than it answered; we and district courts around the country have been working through those questions since 2017. Today we tackle one more.

Today we answer the question of where "acts of infringement" under § 1400(b) occur with respect to infringement claims brought pursuant to the Hatch-Wax-man Act.1 We conclude that, in cases brought under 35 U.S.C. § 271(e)(2)(A), infringement occurs for venue purposes only in districts where actions related to the submission of an Abbreviated New Drug Application ("ANDA") occur, not in all locations where future distribution of the generic products specified in the ANDA is contemplated.

Given this conclusion, we affirm the district court's order dismissing the claims against the two U.S.-based defendants pursuant to Rule 12(b)(3) of the Federal Rules of Civil Procedure for improper venue. See Valeant Pharms. N. Am. LLC v. Zydus Pharms. (USA) Inc., No. 18-cv-13635-PGS-LHG, 2019 WL 4179832 (D.N.J. Aug. 14, 2019). For the reasons explained below, however, we vacate and remand the portion of the court's order dismissing the action against the foreign defendant-as to which venue was unquestionably proper-pursuant to Rule 12(b)(6), because the court failed to address the substance of that motion.

I. Background

Because this appeal is primarily a venue dispute, the locations of the parties' places of incorporation are important. Less significantly, Valeant Pharmaceuticals North America LLC, Valeant Pharmaceuticals Ireland Ltd., Dow Pharmaceutical Sciences, Inc. ("Dow"), and Ka-ken Pharmaceuticals Co., Ltd. (collectively "Valeant" or "plaintiffs") reside in a range of locations, including Japan, Ireland, and Delaware. On the defendants' side, Mylan Pharmaceuticals Inc. ("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; and Mylan Laboratories Ltd. ("MLL") is an Indian corporation with a principal place of business in Hyderabad, India.

The parties are all players in the pharmaceutical industry. Dow holds New Drug Application No. 203567 for the brand name drug Jublia®, approved by the United States Food and Drug Administration ("FDA") on June 6, 2014. Jublia® is a medication used to treat fungal infections (onychomycosis) of toenails. The active ingredient in Jublia® is efinaconazole. There are nine patents listed in the Orange Book for Jublia®.

In June 2018, MPI, a generic drug company, executed an ANDA seeking approval to market a generic version of Jublia®. MPI sent the ANDA from its West Virginia corporate office to the FDA, located in White Oak, Maryland. The ANDA included a Paragraph IV certification that the Orange-Book-listed patents for Jublia® are invalid, unenforceable, or would not be infringed by the ANDA product. MPI notified Valeant of the ANDA submission in August 2018.

On September 26, 2018, Valeant filed suit against Mylan2 in the District of New Jersey, alleging infringement of Dow's Orange Book patents pursuant to the Hatch-Wax-man Act and requesting declaratory judgment of validity of the Orange Book patents.3 The complaint contained several allegations about Mylan's connection to New Jersey: • Each Mylan defendant "directly, or indirectly, develops, manufactures, markets, and sells generic drug products throughout the United States and in this judicial district, and this judicial district is a likely destination for Mylan's generic efinaconazole topical solution." J.A. 147, ¶ 10 (MPI), 148, ¶ 12 (MLL), 149, ¶ 13 (Mylan Inc.).

• Each Mylan defendant does business in New Jersey and is registered to do so. J.A. 147, ¶ 10 (MPI), 148 ¶ 12 (MLL), 149, ¶ 13 (Mylan Inc.).

• Each defendant has previously submitted to the jurisdiction of the court and has a place of business in New Jersey. J.A. 147-48, ¶ 10 (MPI), 148-49 ¶ 12 (MLL), 149, ¶ 13 (Mylan Inc.).

• MPI applied for FDA approval of its generic drug, which will be "purposefully directed at, upon information and belief, New Jersey and elsewhere. [MPI's] ANDA filings constitute formal acts that reliably indicate plans to engage in marketing of the proposed generic drugs." And MPI plans to market and sell its generic drug into New Jersey upon FDA approval. J.A. 148 ¶ 11.

The next day, Valeant filed an essentially identical protective suit against Mylan in the Northern District of West Virginia. See Complaint, Valeant Pharms. N. Am. LLC v. Mylan Pharms. Inc., No. 18-cv-00184-IMK, D.I. 1 (N.D. W.Va. Sept. 27, 2018). That suit is ongoing.

In January 2019, Mylan moved to dismiss Valeant's New Jersey District Court complaint against MPI and Mylan Inc. for improper venue pursuant to Federal Rule of Civil Procedure 12(b)(3). Mylan further moved to dismiss MLL and Mylan Inc. for failure to state a claim pursuant to Rule 12(b)(6). As to venue, Mylan did not deny the majority of the venue allegations in Valeant's complaint. Instead, it argued that venue was improper under § 1400(b) because no Mylan defendant resides in New Jersey, the only alleged act of infringement-submission of the ANDA-did not occur in New Jersey, and the Mylan defendants do not have regular and established places of business in New Jersey.

In response, Valeant argued that it is unduly narrow to limit "an act of infringement" under § 1400(b) to the act of submitting the ANDA. Valeant contended that "the Court must consider Mylan's planned, future acts." J.A. 760. It maintained that, in the Hatch-Waxman context, the language of § 1400(b) must be deemed to contemplate such planned future conduct. In making this argument, Mylan relied heavily on Bristol-Myers Squibb Co. v. Mylan Pharmaceuticals Inc., No. 17-cv-379-LPS, 2017 WL 3980155 (D. Del. Sept. 11, 2017) (holding that venue was appropriate in ANDA cases, even after TC Heartland, wherever planned future acts likely would occur).

As to the Rule 12(b)(6) motion, Mylan argued that the complaint alleged that MPI alone submitted the ANDA and MPI was thus the only entity against which a case could be brought under the Hatch-Waxman Act. Valeant answered that liability for submitting an ANDA is not limited to the entity that sends the final ANDA to the FDA. J.A. 404 (citing In re Rosuvastatin Calcium Patent Litig., 703 F.3d 511, 527-28 (Fed. Cir. 2012) (holding that a "submitter" can include those who participate in the preparation of the ANDA and intend to directly benefit from marketing of the product identified in it)).

In August 2019, the district court granted Mylan's motion to dismiss the complaint against all defendants based on improper venue. The court found that the ANDA was submitted from West Virginia, rendering venue proper there. The court then discussed the parties' arguments about the relevance of planned future acts to the venue analysis under § 1400(b). Citing In re Cray Inc., 871 F.3d 1355, 1361 (Fed. Cir. 2017), and In re ZTE (USA) Inc., 890 F.3d 1008, 1014 (Fed. Cir. 2018), for the proposition that the requirements of the venue statute are specific, unambiguous, and not amenable to liberal construction based on policy concerns, the court concluded that the discussion of venue in Bristol-Myers Squibb "does not follow from a plain reading of the statute, which is clear: only where a defendant has committed an act of infringement may a party bring a patent suit." Valeant Pharms., 2019 WL 4179832, at *3. Accordingly, the court concluded that the two places...

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