In light of the Supreme Court’s TC Heartland decision, courts around the country have been grappling with venue-related challenges in patent cases. Under the patent venue statute, 28 U.S.C. § 1400(b), venue is proper “where the defendant resides” (“first prong”), or “where the defendant has committed acts of infringement and has a regular and established place of business,” (“second prong”). TC Heartland held that a corporate defendant “resides” only in its state of incorporation but left open the question of where a corporate defendant may be sued pursuant to the second prong of § 1400(b). TC Heartland LLC v. Kraft Food Group Brands LLC, 137 S. Ct. 1514 (2017). In Bristol-Myers Squibb Co. v. Mylan Pharms Inc., Chief Judge Stark provided his framework for analyzing post-TC Heartland venue disputes under the second prong of § 1400(b) in the Hatch-Waxman context, where the act of infringement is prospective and artificial. C.A. No. 17-379, Dkt. 36 (D. Del. Sept. 11, 2017).
Defendant Mylan Pharmaceuticals Inc. (“Mylan”) submitted an abbreviated new drug application (“ANDA”) to market a generic form of BMS’ Eliquis®, 2.5 and 5 mg strength apixaban tablets. Mylan is incorporated in and has its principal place of business West Virginia.
BMS sued Mylan for patent infringement in the District of Delaware. Following the TC Heartland decision, Mylan moved to dismiss for improper venue under Federal Rule of Civil Procedure 12(b)(3).
Burden of Proof
The Court first determined that Mylan bore the burden to establish that venue was improper. Recognizing a split in courts, the Court noted that venue is a procedural, non-patent issue, and, as such, is controlled by the law of the regional circuit. Therefore, the Court applied Third Circuit law “to the procedural aspects of Defendant’s improper venue motion, which places the burden on Defendant to prove improper venue.” Id. at 10.
“Act of Infringement”
The Court identified the tension between the use of the backward looking present perfect tense in the statute – “where the defendant has committed acts of infringement” – and the forward looking temporal focus of the Hatch-Waxman infringement analysis. In other words, a Hatch-Waxman suit is “not about a generic product the defendant has sold or is selling” but about the generic product that the defendant “will manufacture and sell and offer for sale in the future (after obtaining FDA approval).” Id. at 11, 13.
The Court rejected Mylan’s argument that the act of infringement occurs either where the ANDA submission is made from or where the center of gravity of the ANDA preparation work took place. Relying heavily on the Federal Circuit’s decision in Acorda Therapeutics Inc. v. Mylan Pharm. Inc., 817 F.3d 755 (Fed. Cir. 2016), the Court reasoned that the relevant inquiry is: whether, if a particular drug were put on the market, it would infringe the relevant patent in the usual, non-artificial sense. The Court concluded that “acts of infringement” an ANDA filer “has committed” includes all of the acts that would constitute patent infringement if the generic product were to be launched after FDA approval. In the Court’s view, “non-speculative future acts of the ANDA filer must be deemed, for purposes of the litigation, to have already occurred.” Id. at 22. The Court recognized that its analysis effectively accords a different meaning to “acts of infringement” in the Hatch-Waxman context than in the non-Hatch-Waxman context. Nevertheless, the Court explained that to conclude otherwise would render the second prong of § 1400(b) a nullity in a Hatch-Waxman suit.
“Regular and Established Place of Business”
The Court then analyzed whether Mylan had a regular and established place of business in Delaware. The Court noted that “some sort of meaningful physical manifestation in the district” is required. Id. at 31. The Court provided some guidance in the form of business activities that are not, in and of themselves, sufficient to demonstrate regular and established place of business: (a) doing business or being registered to do business in the district; (b) having “minimum contacts” with the district; (c) maintaining a website that allows customers to purchase goods within the district; (d) shipping goods into the district or maintaining an exclusive distributorship in the district. Based on the record before it, the Court was unable to determine whether Mylan had a “regular and established place of business” in Delaware. As such, the Court allowed BMS to take expedited venue-related discovery.
While the Court was unable to determine whether Mylan had a “regular and established business” in Delaware, the Court noted that a key part of Mylan’s generic drug business is engaging in Hatch-Waxman suits, many of which occur within the district. Judge Stark indicated he would consider Mylan’s Hatch-Waxman filings and participation within the district as part of the Court’s assessment of whether Mylan has a continuous and permanent presence, and therefore, a regular and established place of business in Delaware.
The court denied Mylan’s motion to dismiss without prejudice and granted BMS venue-related discovery. Mylan will be able to renew its motion if, after venue discovery, it can meet its burden to show that it has no “regular and established place of business” in Delaware. Because the business model of generic companies is “predicated upon participating in a large amount of litigation,” and the District of Delaware hears many such cases, the District could be viewed as a regular and established place of business for generic companies.