More Venue and Corporate Games: This time with ANDA filing

Celgene Corp. v. Mylan Pharma (Fed. Cir. 2021)

The 2017 Supreme Court decision in TC Heartland gave renewed teeth to the venue statute governing litigation. 28 U.S.C. 1400(b). There are two different ways to show proper venue:

1. Venue by Residence: Venue is proper if the defendant(s) reside in the district where the case is filed. If a non-human person, this requires being incorporated within the state (or the like).
2. Venue by Infringement and Place of Business: Alternatively, venue is proper in a district where the defendant has (allegedly) “committed acts of infringement” and also “has a regular and established place of business.”

It is usually fairly straightforward to determine some location for the “acts of infringement” if we’re talking about making, using, selling, etc.

This case focuses on the unique paper-filing infringement of Section 271(e)(2)(A).   That provision defines infringement as seeking approval from the FDA to market a drug that is covered by a patent. Thus, a generic drug distributor infringes by simply submitting its ANDA application with a Paragraph IV certification.

It shall be an act of infringement to submit . . . an [Abbreviated New Drug Application] for a drug claimed in a patent or the use of which is claimed in a patent  . . . if the purpose of such submission is to obtain approval … to engage in the commercial manufacture, use, or sale of a drug … claimed in a patent or the use of which is claimed in a patent before the expiration of such patent.

Id. For venue, we need to know the location of that “act of infringement.”

Celgene markets a drug treatment for multiple-myeloma (pomalidomide) covered by several of its patents. Mylan created and submitted an ANDA to the FDA, requesting permission to make a generic version of the drug and arguing that the Celgene’s patents were invalid.

Celgene then sued in D.N.J. and Mylan argued improper venue.  Notably, Mylan argued that it is not incorporated in N.J., it does not have any regular-and-established place of business in N.J., and it did not commit acts of infringement in N.J. The state-of-incorporation was not contested, but the other two factors were hotly debated.

Lets talk first about acts of infringement.  Remember for 271(e), the act of infringement is submitting the ANDA to the FDA.  Here, Mylan created its ANDA documents at its West Virginia office and submitted them electronically from that location.  The FDA is headquartered in Maryland, and that was the office that received the ANDA documents.  Thus, it is clear that Mylan’s acts were in W.V., and probably also in Maryland, but not in N.J.

Celgene had a couple of OK arguments:

(1) The intent and effect of the Hatch-Waxman process is national, and thus the acts of infringement should be deemed to have been committed in all states.  This argument was quickly rejected by the court.

(2) The ANDA process requires mailing of a Paragraph IV notice letter to the patentee listed in the Orange Book. And, that letter is required to trigger the Hatch-Waxman timeline.  Mylan did so — sending the letter from W.V. to N.J.   Although the notice letter is a critical aspect of the Hatch-Waxman process, the Federal Circuit found that the letter was not an “act of infringement” as required by the venue statute.  Rather, Section 271 is clear that the act of infringement is submitting the ANDA to the FDA.

Thus, Mylan did not commit any acts of infringement in N.J., and therefore venue in that state is improper.

With regard to the regular-and-established place of business, the court found that the home-offices of several Mylan employees were not sufficient to satisfy that prong of the venue statute.  “Allowing” employees to work in a particular judicial district is not sufficient to find that their homes were the defendant’s place of business.

Celgene also pointed to a wholly owned Mylan subsidiary that, until 2017, did have a  HQ and regular place of business in N.J. On appeal, the Federal Circuit agreed with the lower court that the venue requirement strictly follows corporate lines absent a successful “alter-ego or veil-piercing theory.”  Here, there was not sufficient evidence to consider the sub as the parent’s alter ego.   Sharing marketing and receiving administrative support is insufficient.  Likewise, two separate companies can share the same directors or executives.

= = = =

In the lawsuit, the patentee sued Mylan Pharmaceuticlas Inc. (MPI), Mylan Inc., and Mylan N.V.   This is just a chain of subsidiaries: Mylan N.V. owns Mylan Inc.; Mylan Inc. owns MPI.   MPI is the company that submitted the ANDA, but the complaint does not explain how Mylan N.V. was involved with the submission.  Thus, the district court properly dismissed the claims against Mylan N.V. for failure to state a claim upon which relief could be granted.