What are “Acts of Infringement” and Where is “A Regular and Established Place of Business” for a Hatch-Waxman Defendant: The District of Delaware Weighs in on the Patent Venue Rule
We previously reported on the Supreme Court’s decision in TC Heartland LLC v. Kraft Foods Group Brands LLC, in which the Supreme Court created a new patent venue rule. The patent venue statute, 28 U.S.C. § 1400(b), provides that patent infringement suits “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.” In TC Heartland, the Supreme Court held that “[a]s applied to domestic corporations, ‘reside[nce] in § 1400(b) refers only to the State of incorporation.”
A Delaware District Court recently considered the provision of the patent venue statute not addressed by TC Heartland – where venue is proper if a “defendant has committed acts of infringement and has a regular and established place of business” in the context of a defendant’s motion to dismiss for improper venue. In Bristol-Myers Squibb Co. v. Mylan Pharmaceuticals Inc., a patent infringement matter brought under the Hatch-Waxman statute and filed before the TC Heartland decision, the parties did not dispute that, in light of TC Heartland, the defendant, a West Virginia corporation, could not be said to “reside” in Delaware. Thus, venue would be proper in Delaware only if the defendant committed act of infringement in Delaware and had a regular and established place of business in Delaware.
The court first concluded that, pursuant to Third Circuit law, the defendant – as the moving party – bore the burden of proving that venue was improper. The court also concluded that § 1400(b) did not require a “relationship between a defendant’s acts of infringement and its regular and established place of business.”
The court addressed whether the defendant had committed an act of infringement in Delaware. The court noted that Hatch-Waxman cases present a unique issue with respect to infringement due to the prospective nature of the litigation as the submission of an Abbreviated New Drug Application (ANDA) to the FDA constitutes the act of infringement albeit, a “highly artificial” one. The court agreed with the defendant’s argument that “there typically will never be an act of actual infringement in an ANDA case” because if the ANDA filer prevails there has been no infringing activity, and, if the patentee prevails, the ANDA filer will be unable to obtain FDA approval to sell its product. In the face of this conundrum, the court relied on the Federal Circuit’s recent decision in Acorda Therapeutics Inc. v. Mylan Pharmaceuticals Inc., where the Supreme Court held that “for purposes of determining personal jurisdiction in a Hatch-Waxman case, the Court must consider all future acts the ANDA filer non-speculatively intends to commit upon receiving final FDA approval for its ANDA product” to reach its conclusion that for purposes of determining venue “in the context of Hatch-Waxman litigation, the ‘acts of infringement’ an ANDA filer ‘has committed’ includes all of the acts that would constitute ordinary patent infringement if, upon FDA approval, the generic drug product is launched into the market.” Thus, “in the context of a venue analysis: planned, future acts that the ANDA filer will take in this District must be considered now in determining whether venue is proper here.”
The court concluded that because it was undisputed that if the defendant’s ANDA was approved it would market and sell its proposed product in Delaware, the defendant failed to meet its burden to show that it had not committed an act of infringement in Delaware for purposes of determining proper venue.
Finally, the court addressed whether the Defendant had a regular and established place of business in Delaware “through a permanent and continuous presence.” The court reasoned that this prong of § 1400(b) required more than (1) “simply doing business . . . or being registered to do business;” (2) the ‘minimum contacts’ needed to establish personal jurisdiction; (3) maintaining a website from which goods could be purchased; or (4) “simply shipping goods into a district.” The court noted that the defendant made and sold generic pharmaceutical products which are distributed in the United States, including Delaware. The court also noted that the defendant was “registered with the Delaware Board of Pharmacy as a licensed ‘Pharmacy – Wholesale’ and ‘Distributor/Manufacturer CSR.’” The court also noted that the defendant was part of a family of companies (the “Mylan entities”) with both a nationwide and global presence and that significant part of Mylan’s business model was based on the defendant’s participation in Hatch-Waxman litigation, the vast majority of which occurs in Delaware. The frequency with which the defendant appeared in Delaware for purposes of Hatch-Waxman cases was a “pertinent consideration” for the court’s venue analysis.
The defendant, however, did not “have any manufacturing plants, corporate offices, facilities, other real property, telephone listings, mailing addresses, or employees in Delaware” and argued that it did not sell products to distributors or wholesalers in Delaware.
In light of the foregoing facts the court could not make a determination regarding whether the defendant had shown it did not have a regular and established place of business in Delaware. Thus, the court denied the defendants’ motion without prejudice to renew the motion after the plaintiff had the opportunity to conduct limited venue discovery.
The decision provides a clear framework for making and defending venue challenges under § 1400(b), at least in the District of Delaware. Gibbons P.C. will continue to monitor and report on this case and other post-TC Heartland patent venue developments.