The Recent Federal Circuit Decision in Acorda Therapeutics v. Mylan Pharmaceuticals May Not be the Last Word on Personal Jurisdiction in ANDA Cases

Guest Post By: Paul Dietze and Mini Kapoor, Haynes and Boone, LLP[1]

 On March 18, 2016, the Federal Circuit held that Mylan Pharmaceuticals, Inc. (“Mylan”), a generic drug manufacturer, was subject to specific personal jurisdiction in Delaware because Mylan had filed an abbreviated new drug application (“ANDA”) and “contemplate[d] plans to engage in marketing of the proposed generic drugs” in the state.[2]  The ruling affirmed two different decisions by judges in the United States District Court for the District of Delaware that Mylan was subject to specific jurisdiction in Delaware.[3]  However, as noted below, it looks like Mylan intends to seek panel or en banc rehearing and possibly pursue a petition for certiorari if the Federal Circuit does not grant the rehearing or re-hears the case and continues to find personal jurisdiction.

I. Procedural Posture of the Cases

Mylan filed two separate ANDAs with the U.S. Food & Drug Administration (“FDA”) seeking permission to market generic versions of unrelated pharmaceutical products marketed by Acorda Therapeutics, Inc. and AstraZeneca AB under the statutory scheme outlined in the Hatch-Waxman Act (the “Act”).  As permitted under the Act, Mylan certified that the patents of the brand name drug companies listed in the FDA’s Approved Drug Products with Therapeutic Equivalence Evaluations (“the Orange Book”) were either invalid or would not be infringed by Mylan’s marketing of its proposed generic versions of the drugs.  Each certification is deemed an artificial act of infringement under the Act, and permits the brand name drug companies to sue the generic drug company.  Acorda and AstraZeneca sued Mylan for patent infringement in separate lawsuits filed in Delaware.  Mylan moved to dismiss in both cases, arguing that it was not subject to either general or specific personal jurisdiction.[4]

Specifically, Mylan, citing the Supreme Court’s decision in Daimler AG v. Bauman,[5] argued that it was not subject to general jurisdiction in Delaware because it did not have contacts with Delaware that were so continuous “as to render it essentially at home in the forum state,” and was not subject to specific jurisdiction because it did not satisfy the minimum contacts requirement.[6]  Both district court decisions held that Mylan was subject to specific jurisdiction in Delaware.[7]  The district court decisions, however, differed as to whether or not Mylan was subject to general jurisdiction in Delaware.

II. The Opinion

On appeal, the majority opinion of the Federal Circuit panel affirmed specific jurisdiction without addressing general jurisdiction.[8]  The panel identified Mylan’s ANDA filings as “formal acts that reliably indicate plans to engage in marketing of the proposed generic drugs” and held the particular actions that “Mylan has already taken—its ANDA filings—for the purpose of engaging in that injury-causing and allegedly wrongful marketing conduct in Delaware” were sufficient to satisfy the minimum contacts requirement.[9] The court also identified the significant expense a generic drug company incurs in the ANDA application process as evidence of an ANDA-filer’s plans to market the drug.[10]  The court further noted that Mylan’s distribution channels in Delaware make clear that these future marketing activities would “unquestionably take place in Delaware (at least).”[11] The court concluded that the planned sales were “close enough” to the subject of the lawsuits to satisfy the minimum contacts requirement and justify specific jurisdiction in Delaware.[12]

Having found the minimum contacts requirement satisfied, the court considered whether Delaware’s exercise of jurisdiction would “offend traditional notions of fair play and substantial justice.”[13]  The court held that other considerations, such as those identified in Burger King Corp. v. Rudzewicz,[14] would not render jurisdiction unreasonable.

III. The Logical Implications

 By establishing specific personal jurisdiction by virtue of filing an ANDA with plans to direct sales of a generic drug into a particular state, a generic drug manufacturer, such as Mylan, would appear to be subject to specific jurisdiction in any state in which it intends to market the generic drug.  Almost always, this will be any state in the country.

Prior to the Supreme Court’s ruling in Daimler, branded-drug companies often asserted jurisdiction in a state based on general jurisdiction, arguing that the generic company was subject to jurisdiction in the state because it intended to sell the generic version of the drug in the state.  In Daimler, however, the Supreme Court held that general jurisdiction cannot attach unless the defendant’s contacts with the forum state are “so continuous and systematic as to render [the non-resident corporate defendant] essentially at home in the forum State.”[15] A corporation is essentially at home only in its state of incorporation and the state where its principal place of business is located.[16] Daimler specifically rejected the notion that general jurisdiction will lie “in every State in which a corporation engages in a substantial, continuous, and systematic course of business.”[17] This decision in Daimler raised the concern as to whether brand name drug companies could continue to rely on general jurisdiction to file suits in the forum of their choice.  However, the court’s ruling in Acorda, by establishing specific jurisdiction based on filing an ANDA with plans to sell the drug in a state, arguably makes the high bar for general jurisdiction established in Daimler of little significance in ANDA cases.

Thus, under Acorda, brand name drug companies are likely to continue to have wide latitude in selecting the forum in which to sue an ANDA-filer.  Delaware and New Jersey, where ANDA cases are often brought, are likely to continue to be forums of choice for ANDA cases.

IV. Expected Future Litigation

 Letters filed by Mylan in pending district court actions indicate that Mylan plans to seek panel and en banc rehearing in Acorda.[18]  The letters provide a preview of Mylan’s potential arguments for rehearing.  Mylan is expected to argue that Acorda’s holding that Mylan is subject to specific jurisdiction in every state “is contrary to the basic notion of specific jurisdiction and the more basic constitutional guarantees at the heart of the Supreme Court’s due process/personal jurisdiction jurisprudence.”[19]  Mylan is further expected to argue that Acorda was wrongly decided because it “simply recreates the pre-Daimler status quo by allowing courts throughout the nation to rely on specific jurisdiction where general jurisdiction is no longer applicable.”[20]  Mylan also indicates that it will argue that Acorda’s reliance on Mylan’s future contacts in Delaware is contrary to the Supreme Court’s Walden v. Fiore decision[21] and that the present decisions are misplaced in view of prior Federal Circuit precedent in Zeneca Ltd. v. Mylan Pharm., Inc.,[22] where the Federal Circuit “held that submission of an ANDA to the FDA in Maryland did not authorize the exercise of jurisdiction over the ANDA-filer by Maryland federal courts.”[23]  Acorda, Mylan argues, makes “Zeneca merely academic.”

Regardless of the Federal Circuit’s final ruling, the losing party may very well file a petition for certiorari with the Supreme Court seeking review of the Federal Circuit’s decision.  That Acorda and Mylan were represented at the Federal Circuit by former Solicitor Generals (Theodore Olson for Acorda and Paul Clement for Mylan), while AstraZeneca was represented by another Supreme Court veteran (Kannon Shanmugam), shows that each party considers this case to be important and that they are likely preparing to ask the Supreme Court to consider the matter.  So the panel decision in Acorda appears to be merely the beginning of the appellate proceedings.  Given these expected actions it will be interesting to see if the brand name drug companies continue to file suits in both the brand name drug company’s preferred jurisdiction as well as where the generic drug company is incorporated or has its principal place of business until all the Acorda appellate proceedings are concluded.

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[1] Paul E. Dietze, Ph.D., is Of Counsel in the Washington, DC office and Mini Kapoor, Ph.D., is an associate in the Houston, Texas office of the law firm of Haynes and Boone, LLP.  Their practices emphasize pharmaceutical patent counseling, patent procurement, and patent litigation.

[2] Acorda Therapeutics Inc. et al. v. Mylan Pharm. Inc., No. 2015-1456 and AstraZeneca AB v. Mylan Pharm. Inc., No. 2015-1460, 2016 WL 1077048 (Fed. Cir. March 18, 2016) [Patently-O Discussion].

[3] Acorda Therapeutics Inc. & Alkermes Pharma Ireland Ltd. v. Mylan Pharm. Inc. & Mylan Inc., 78 F. Supp. 3d 572 (D. Del. 2015) (Stark, C.J.); AstraZeneca AB v. Mylan Pharm. Inc., 72 F. Supp. 3d 549 (D. Del. 2014) (Sleet, J.).

[4] Acorda, No. 1:14-cv-00935, 2014 WL 8772659  (Defs.’ Br. Supp. Mot. Dismiss) (Aug. 27, 2014);  AstraZeneca, No. 14-696, 2014 WL 4745288  (Defs.’ Br. Supp. Mot. Dismiss) (June 26, 2014).

[5] 134 S. Ct. 746 (2014).

[6] Acorda, No. 1:14-cv-00935, 2014 WL 8772659 (Defs.’ Br. Supp. Mot. Dismiss 3, 6) (Aug. 27, 2014); AstraZeneca, No. 1:14-00696, 2014 WL 4745288  (Defs.’ Br. Supp. Mot. Dismiss 5, 13) (June 26, 2014).

[7] Acorda, 78 F. Supp. 3d at 597; AstraZeneca, 72 F. Supp. 3d at 560.

[8] Judge O’Malley opined that by virtue of voluntarily electing to do business in Delaware, and registering and selecting an agent for service of process in the state, Mylan was subject to general jurisdiction in Delaware.  Acorda, Nos. 2015-1456 & 2015-1460, 2016 WL 1077048 at *11 – *12 (Judge O’Malley concurring).

[9] Acorda, Nos. 2015-1456 & 2015-1460, 2016 WL 1077048  at *8 -*9.

[10] Id. at *11 – *12.

[11] Id. at *13.

[12] Id.

[13] Id. at *13 -*14 (quoting Int’l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)).

[14] 471 U.S. 462, 477 (1985).

[15] Daimler, 134 S. Ct at 758 n.11 (emphasis added).

[16] Id. at 760.

[17] Id. at 760-61 (internal quotations omitted).

[18] See, for example, Takeda GmbH, et al., v. Mylan Pharm. Inc., 1:15-cv-00093 (N.D. W. Va.) (Defs.’ Letter Status Rep.) (Mar. 25, 2016).

[19] Id.

[20] Id.

[21] 134 S. Ct. 1115 (2014).

[22] Takeda GmbH, et al., v. Mylan Pharm. Inc., 1:15-cv-00093 (N.D. W. Va.) (Defs.’ Letter Status Rep.) (Mar. 25, 2016).

[23] 173 F.3d 829 (Fed. Cir. 1999).

5 thoughts on “The Recent Federal Circuit Decision in Acorda Therapeutics v. Mylan Pharmaceuticals May Not be the Last Word on Personal Jurisdiction in ANDA Cases

  1. Excellent guest post, authors. It’s worth noting that while the ANDA-filer is likely to be subject to personal jurisdiction anywhere in the nation, there is still the venue transfer statute (1404) available if the brand-name pharma company files in a district with little or no connection to the parties or the dispute (E.D. Tex, for example). That still leaves the patent holder with a home court advantage, but then again that has long been the norm when an accused infringer has a national sales presence.

    Query: what if the ANDA-filer were to oppose specific personal jurisdiction by covenanting not to sell or offer to sell the potentially FDA-approved generic in the forum? Maybe that’s a price small enough to justify a more favorable forum for the patent challenge.

  2. So quick question, where is there a valid jurisdiction for the suit, presuming the defendents prevail?

    1. At a minimum, in the state and district where Mylan is incorporated (W.Va.?) and/or where they have their headquarters (PA?).

    2. There’s general jurisdiction in the state of incorporation and the principal place of business. Probably specific jurisdiction anywhere the drug will be produced.

      A lot of these cases will end up staying in Delaware and N.J. Mylan might just be one of the larger exceptions.

  3. One interesting wrinkle: the Delaware Supreme Court case that’s been heavily relied upon for general jurisdiction (based on registration to do business in a state) was just overturned by the Delaware Supreme Court a couple weeks ago (agreeing with Judge Sleet’s holding). Which means that specific jurisdiction is just about the only hook now; this feels like a very weak “stream of commerce” case even for the more liberal justices because it would subject pharmaceutical manufacturers (and really just about major corporation who sells products nationwide) any to nationwide personal jurisdiction.

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