Hatch-Waxman[1] litigators are accustomed to cases with multiple generic drug company defendants. Brand drug company plaintiffs often sue multiple defendants in the same district court, even when those defendants are not incorporated in the district and have no facilities there. Until now, as long as the court had personal jurisdiction over a defendant, there was little that defendant could do to get out of that court.[2] With the Supreme Court’s decision in TC Heartland LLC v. Kraft Foods Group Brands LLC,[3] a defendant may now be able to dismiss a case for improper venue, even from a court that has personal jurisdiction over that defendant.

So where can Hatch-Waxman and BPCIA[4] plaintiffs file cases now that venue is no longer coextensive with personal jurisdiction? The Supreme Court provided one answer: A domestic company can be sued in its state of incorporation. But questions remain about where else a defendant can be sued and whether plaintiffs will be forced to litigate cases with common issues in different district courts. Here, we examine some of those possibilities, and we analyze how TC Heartland might change ANDA[5] and aBLA[6] litigation.

Background

Since the Federal Circuit ruled, in VE Holding Corp. v. Johnson Gas Appliance Co.,[7] that venue in patent cases was proper in any court having personal jurisdiction over the defendant, venue has been coextensive with personal jurisdiction. When the Supreme Court narrowed general personal jurisdiction in Daimler AG v. Bauman,[8] some practitioners thought it would limit the courts in which an ANDA filer could be sued because most courts would lack personal jurisdiction over the defendant.[9] Historically, courts relied on the generic defendant’s large sales revenues in a forum as justification for asserting general personal jurisdiction. After Daimler, however, large sales revenues in the jurisdiction were no longer enough to confer general personal jurisdiction. In addition, most courts have not relied on specific personal jurisdiction in ANDA cases because it required a relationship between the in-state activity and the lawsuit, and a generic company’s activities in a jurisdiction were usually unrelated to the patent infringement action.

Daimler has had limited effect on ANDA and aBLA cases because of the Federal Circuit’s recent decision in Acorda Therapeutics, Inc. v. Mylan Pharm., Inc.[10]There, the generic drug manufacturers argued against specific personal jurisdiction. They noted that filing an ANDA with a paragraph IV certification was a technical act of infringement,[11] but it was not aimed at any particular forum. Moreover, ANDA cases typically arrive before the generic product has been approved, let alone sold into a jurisdiction, and therefore typically before any in-forum infringement.[12] In Acorda, the Federal Circuit looked past this and held that the “link” between an ANDA filing and the filer’s subsequent entry into the market[13] subjected the filer to specific personal jurisdiction in any district court where it intends to sell the generic product in the future, i.e., nearly any district court.[14] Thus, despite Daimler,personal jurisdiction remained a weak or nonexistent defense.

Suing a Generic Company Defendant

After TC Heartland The Supreme Court’s decision in TC Heartland[15] uncoupled venue from personal jurisdiction by overturning the VE Holding Corp. decision and holding that 28 U.S.C. § 1400(b)[16] is the sole provision governing venue in patent infringement cases. Under § 1400(b), there are two prongs for determining where a plaintiff can bring a patent infringement action against a domestic corporation: (1) “where the defendant resides,” or (2) “where the defendant has committed acts of infringement and has a regular and established place of business.”[17]

A Brand Plaintiff Can Sue Where the Generic Company Defendant Is Incorporated

Following TC Heartland, a brand plaintiff will be able to sue in any district in the state where the generic company defendant is incorporated. In particular, TC Heartland reaffirmed the Court’s 1957 decision that under the first prong of § 1400(b), a domestic corporation “resides” only in its state of incorporation.[18]

A Brand Plaintiff May Be Able to Sue Elsewhere

If a brand plaintiff wants to sue a generic company defendant in a district outside the defendant’s state of incorporation, it must rely on the second prong of § 1400(b): “where the defendant has committed acts of infringement and has a regular and established place of business.”[19] Because of the expansive nature of venue under VE Holding Corp. in 1990, this part of § 1400(b) has not been litigated recently, but courts are already beginning to entertain motions regarding this second prong. Both requirements of the second prong raise questions for ANDA and aBLA cases.

Committing an Act of Infringement for ANDA and aBLA Cases

One question that a brand plaintiff must consider before suing a domestic corporation in a district court outside the defendants’ state of incorporation is whether the defendant “has committed acts of infringement” there.[20] In a typical ANDA or aBLA case brought under 35 U.S.C. § 271(e)(2), the only “act of infringement” the defendant “committed” is the act of filing the ANDA or aBLA with the FDA. Based on the current state of the law, it unclear where that “act of infringement” has occurred.

One possibility is that, for purposes of venue, infringement may be deemed to have been committed in any district where the generic company intends to sell the ANDA product. That possibility extends the analysis of Acorda[21] for specific personal jurisdiction into the venue context. If courts follow Acorda, venue would be proper in any district court where a defendant has a “regular and established place of business.”

Unlike specific personal jurisdiction, however, infringement is expressly required for venue in § 1400(b), which states that “the defendant has committed acts of infringement.” To the extent Acorda relies on the prospect of future infringement as a justification for personal jurisdiction, a court interpreting § 1400(b) literally may not follow it because those future acts of infringement have not yet been “committed.” Thus, if courts construe “committed” to require a prior, real-world act of infringement, venue may be restricted to a district court in the domestic generic company defendant’s state of incorporation or in a forum in which there is a regular and established place of business and where the courts ultimately deem the technical act of infringement to have occurred.[22]

Regular and Established Place of Business

Another question a brand plaintiff must consider before suing a domestic generic company defendant in a district court outside the defendant’s state of incorporation is whether the defendant has a “regular and established place of business” in that district. The statute seems to require a physical “place” of business, and some courts appear to have required a “physical location” in the forum,[23] but what is required to have a “place of business” will likely be a point of contention. The Federal Circuit last addressed the “regular and established place of business” portion of § 1400(b) in 1988 in In re Cordis Corp.,[24] and adopted a liberal approach to find that Cordis Corp. had a “regular and established place of business” in Minnesota.

In Cordis, defendant Cordis Corp. was a Florida corporation with a principal place of business in Miami and was sued for patent infringement in the District of Minnesota. Among other things, Cordis Corp. had two full-time sales staff who worked out of their homes in Minnesota and sold allegedly infringing products out of their homes. Cordis Corp. argued that venue was improper because it did not have a regular and established place of business in Minnesota. The Federal Circuit disagreed, holding that:

in determining whether a corporate defendant has a regular and established place of business in a district, the appropriate inquiry is whether the corporate defendant does its business in that district through a permanent and continuous presence there and not . . . whether it has a fixed physical presence in the sense of a formal office or store.[25]

According to the Federal Circuit, the actions of Cordis Corp. and its employees created a sufficient permanent and continuous presence in the forum.[26] It is currently unclear what level of physical presence is required in a forum for a “regular and established place of business,” and this issue will likely be extensively litigated over the next few years.

Practical Effects

Over the long term, there are at least three scenarios for the practical impact of TC Heartland for ANDA and aBLA cases involving domestic generic companies. Each depends on how courts interpret the second prong of § 1400(b): “where the defendant has committed acts of infringement and has a regular and established place of business.”

First, if the phrase “where the defendant has committed acts of infringement” requires a prior act of real-world patent infringement, then venue will likely only be proper in the generic defendant’s state of incorporation.[27] The result may be that more cases will be brought in the most common venues for incorporation, e.g., California, Delaware, or Florida, instead of traditional pharmaceutical patent litigation venues like the District of New Jersey. This may still permit brand companies to sue multiple defendants in a single district court, so long as all are incorporated there. If not, the brand company might consider filing a motion with the Judicial Panel on Multidistrict Litigation to have the cases consolidated for pretrial proceedings in a single jurisdiction.[28] Under this interpretation, TC Heartland may significantly impact the cost, litigation mechanics, and factors affecting settlement of ANDA and aBLA litigation particularly to the extent the cases do not settle and must be remanded back to the district from which it was transferred for trial.[29]

Second, if courts consider an ANDA filer to have “committed infringement”[30] in any district where its products will be sold, perhaps by adopting similar rationale to the Federal Circuit’s ruling in Acorda, venue would be proper in any district court where a defendant has a “regular and established place of business.” Under this interpretation, it will be important to see what level of presence courts require to find a “regular and established place of business” in the forum. If courts decide to adopt an expansive reading of “regular and established place of business,” such that it begins to approach the limits of personal jurisdiction, then TC Heartland will have a negligible impact on ANDA and aBLA cases.

Third, if courts consider an ANDA filer to have “committed infringement” in any district where its products will be sold, and interpret “regular and established place of business” to require a physical place of business (or its equivalent, as in Cordis), then TC Heartland could likely have a substantial impact. As with the first scenario discussed above, TC Heartland would allow domestic generic companies to control where they can be sued and may significantly impact the cost, litigation mechanics, and factors affecting settlement.

In the short term, to test any of the possible scenarios above, brand company plaintiffs will likely file protective suits where the generic company is incorporated, and prepare to litigate the venue issue in a second suit in another district court.[31] The result is likely to be that, until the law is settled, litigating in two or more forums will be the norm, which will increase costs for both brand and generic companies.

Foreign generic companies were not addressed in TC Heartland, and venue for their cases continues to be governed by § 1391(c), with venue proper in any court having personal jurisdiction. Some plaintiffs may try to sidestep TC Heartland by only suing foreign companies and not naming their U.S. subsidiary as a defendant. In response, companies may want to strategically move FDA-related functions to a domestic subsidiary.

Looking Forward

TC Heartland uncoupled venue from personal jurisdiction for domestic pharmaceutical company defendants in patent litigation. While the Supreme Court established that venue is proper in a district court in the defendant’s state of incorporation, it left open the question of what other venue may be proper. There are several issues that courts must resolve before a proper venue beyond the state of incorporation can be predictably determined.