Federal Circuit Dramatically Narrows Scope of Proper Venue in Paragraph IV Litigation

Valeant v. Mylan, No. 19-2402 (Fed. Cir.)

    by Alex Menchaca

In a precedential decision last week, the Federal Circuit settled how the Supreme Court's TC Heartland decision bears on venue issues in Hatch-Waxman litigation. Valeant details the court's pre-TC Heartland patent venue jurisprudence when venue for patent infringement cases could be established by showing personal jurisdiction—i.e., for large corporations, virtually anywhere in the United States. Valeant further explains how the court's Acorda decision, addressing specific personal jurisdiction in ANDA cases, led to a wide-open venue analysis. In Acorda, the Federal Circuit had held that "planned future acts were sufficient to justify the exercise of specific personal jurisdiction over a defendant in ANDA cases." As noted, pre-TC Heartland wherever there was personal jurisdiction, there was venue.

Valeant settles that venue in Hatch-Waxman litigation must follow the example of TC Heartland and its narrow reading of 35 U.S.C. § 1400(b). The patent venue statute provides for establishing venue in two ways: (i) where a defendant resides or (ii) where the defendant has committed acts of infringement and has an established place of business. TC Heartland established that for purposes of this statute a defendant resides only in its place of incorporation, thus eliminating the pre-TC Heartland wide-open venue analysis based on a mere showing of personal jurisdiction. With the first prong of the venue statute narrowed by TC Heartland, patent owners relied on the second prong to litigate in their favored districts—in ANDA cases often New Jersey and Delaware. Valeant addresses the second prong of the patent venue statute and greatly narrows its reach, likely limiting access to those favored districts.

Before Valeant, district courts struggled to define what was the "act of infringement" in an ANDA case for purposes of the venue statute. In Valeant, the Federal Circuit examines two district court decisions—one from Delaware and the other from New Jersey—that conclude potential future nationwide sales of the generic product may be considered the act of infringement for purposes of establishing venue. Such an analysis subjects the ANDA applicant to nationwide venue. The Federal Circuit, however, rejects that analysis and instead defines a much more narrow conduct that may constitute the act of infringement for venue purposes: "it is the submission of the ANDA, and only the submission, that constitutes an act of infringement." Therefore, when a patent owner seeks to establish venue by alleging a local act of infringement (35 U.S.C. § 1400(b)), only the submission qualifies as such an act and not some potential future plans to sell the ANDA product throughout the United States. In Valeant, the ANDA was sent from West Virginia for filing with the FDA in Maryland. West Virginia (and perhaps Maryland (question not considered)) is the proper venue in this case. This decision dramatically restricts the scope of proper venue for U.S.-based ANDA filers, and will likely lead to a dispersal of ANDA cases outside of Delaware and New Jersey in the future.

Interestingly, the Federal Circuit criticizes the characterization of 35 U.S.C. § 271(e)(2) infringement as an "artificial act of infringement." The statute defines what constitutes infringement and the ANDA filing is simply another form of infringement, according to the court. Perhaps this criticism will remove the phrase "artificial act of infringement" from patent bar parlance.

Also interesting is the Federal Circuit's discussion of Acorda. As noted above, Acorda established specific personal jurisdiction based on "planned future acts." In limiting "acts of infringement" to the sending and filing of the ANDA, Valeant criticized consideration of "planned future acts" in venue considerations. Acorda appears inconsistent with Valeant, but the Federal Circuit may not need to address that inconsistency because Valeant’s clear-cut venue rule may short-circuit any consideration of specific personal jurisdiction issues.

Federal Circuit Dramatically Narrows Scope of Proper Venue in Paragraph IV Litigation