Reproduced with permission from Pharmaceutical Law & Industry Report, 12 PLIR 721, 05/16/2014. Copyright
2014 by The Bureau of National Affairs, Inc. (800-372-1033) http://www.bna.com
L I T I G ATION
In this BNA Insight, attorney Paul Ragusa examines the impact of a recent U.S. Supreme
Court decision on litigation involving foreign corporations and abbreviated new drug applications.
He says it may become more challenging to assert general jurisdiction over foreign
and out-of-state corporations in states that are not the corporation’s principal place of business
or state of incorporation.
Establishing Personal Jurisdiction Over Foreign Corporations in ANDA Cases
BY PAUL RAGUSA
When can personal jurisdiction be properly asserted
against a foreign corporation based on
the general local activities of its subsidiary in the
forum state? In an opinion authored by Justice Ginsberg,
the Supreme Court recently considered this and
other questions in Daimler AG v. Bauman,1 and overturned
a lower court’s decision that held a parent corporation
subject to general jurisdiction in a state based
on the in-state contacts of its subsidiary.
Fundamentals of General Personal
Jurisdiction: Perkins, Helicopteros &
In two often cited decisions, Perkins v. Benguet Consolidated
Mining Co.2 and Helicopteros Nationales de
Columbia v. Hall3, the Supreme Court delineated the
scope of general jurisdiction and its applicability to corporations.
In Perkins, the Court held that a court could
exercise general personal jurisdiction over a corporation
on the basis of that company’s ‘‘continuous and
systematic’’ contacts with the forum state. The Court
further stated that a foreign corporation’s temporary re-
1 134 S. Ct. 746 (2014).
2 342 U.S. 437 (1952).
3 466 U.S. 408 (1984)(survivors of U.S. citizens who died in
a helicopter crash in Peru instituted wrongful-death actions in
a Texas state court against the owner and operator of the helicopter,
a Colombian corporation).
Paul Ragusa is a partner in the New York
office of Baker Botts, LLP, where he practices
intellectual property law including patent
litigation, licensing, and counseling. The
author thanks Dr. Carolyn Pirraglia, a scientific
advisor at Baker Botts LLP in New York,
New York, for her assistance in preparing this
COPYRIGHT 2014 BY THE BUREAU OF NATIONAL AFFAIRS, INC. ISSN 1542-9547
& Industry Report®
location of operations to a state can be considered ‘‘continuous
and systematic’’ to subject that corporation to
proceedings in that state.4 Accordingly, it was proper to
exercise general jurisdiction over a Philippine corporation
in Ohio, the state where the company’s operations
were temporarily managed during World War II.
Helicopteros involved a Colombian corporation that
purchased helicopters and obtained some pilot training
from a Texas manufacturer, and entered into a contract
with a Texas joint venture to provide helicopter transportation
services. When one of its helicopters crashed
in Peru, Helicopteros and the Texas manufacturer were
sued by the estates of its former American employees.
In Helicopteros, the Court distinguished Perkins and
determined that the repeated purchasing of products
from a state and sending employees to the state for
business and training ‘‘cannot be described or regarded
as a contact of a ‘continuous and systematic’ nature’’ to
warrant general personal jurisdiction over the corporation
in that state.5 Helicopteros, according to the Court,
did not have the level of general business contacts that
the Court found in Perkins.6
The ‘‘continuous and systematic’’ standard set forth
in Perkins and Helicopteros has been frequently invoked
by lower courts but has led to inconsistent interpretations
of what type of contacts satisfy this standard,
particularly when corporate affiliates are involved. In
Goodyear Dunlop Tires Operations, S. A. v. Brown, the
Supreme Court had occasion to clarify the legal standard
of general personal jurisdiction.7 In Goodyear, the
families of two children that were killed in a bus crash
in France brought suit in North Carolina, alleging that
the accident was due to faulty tires manufactured and
distributed by foreign subsidiaries of Goodyear USA. In
response, Goodyear USA’s foreign subsidiaries maintained
that North Carolina lacked adjudicatory authority
over them and moved to dismiss. The North Carolina
Court of Appeals, however, exercised general jurisdiction
over the foreign corporation on the basis that the
defective tire, which was manufactured and sold
abroad, ‘‘had reached North Carolina through ‘the
stream of commerce.’ ’’8
The Supreme Court, in a unanimous decision, overturned
the lower court’s ruling, stated that such a limited
‘‘connection  between the forum and the foreign
corporation  is an inadequate basis for the exercise of
general jurisdiction.’’9 The Court held that Goodyear
USA’s foreign subsidiaries’ ‘‘attenuated connections to
the state  fall far short of the ‘the continuous and systematic
general business contacts’ necessary to empower
North Carolina to’’ warrant general personal jurisdiction.
10 The Court emphasized that for proper exercise
of general jurisdiction, the defendant
connections to the state must be ‘‘so ‘continuous and
systematic’ as to render them essentially at home in the
forum state,’’ where the relevant state for a corporation
should be ‘‘equivalent’’ to the state of domicile for an individual.
Daimler AG v. Bauman
Daimler involved claims regarding acts allegedly
committed by Daimler’s Argentinian subsidiary,
Mercedes-Benz Argentina (‘‘MB Argentina’’).’’12 Plaintiffs
named DaimlerChrysler Aktiengesellschaft (Daimler),
the German parent corporation of MB Argentina,
as well as Daimler’s U.S. subsidiary, Mercedes-Benz
USA LLC (‘‘MB USA’’) as defendants in a case filed in
the District Court for the Northern District of California.
The plaintiffs argued that Daimler was subject to personal
jurisdiction in California based on the California
contacts of MB USA. MB USA, which is incorporated in
Delaware and has its principal place of business in New
Jersey, imports Daimler-manufactured vehicles from
Germany and distributes the vehicles among
independently-owned dealerships located throughout
the US, including California. The Ninth Circuit, reversing
the decision of the District Court, held that Daimler
was subject to personal jurisdiction in California because
MB USA was Daimler’s ‘‘agent’’ for jurisdictional
purposes and attributed MB USA’s California contacts
to Daimler.13 The Ninth Circuit primarily relied on its
conclusion that the ‘‘MB USA’s services were ‘important’
to Daimler, as gauged by Daimler’s hypothetical
readiness to perform those services itself if MB USA did
The Supreme Court overturned the Ninth Circuit’s
decision, finding that Daimler was not subject to general
personal jurisdiction. Although the Court did not
expressly overrule the use of an agency test for determining
general jurisdiction, it specifically held that the
Ninth Circuit’s formulation of the ‘‘agency’’ test did not
satisfy the requirements of due process.15 In particular,
an inquiry into the ‘‘importance’’ of a subsidiary is not
a valid test, as it ‘‘will always yield a pro-jurisdiction answer,’’
and will incorrectly subject ‘‘foreign corporations
to general jurisdiction whenever they have an instate
subsidiary , an outcome that would sweep beyond
even the ‘sprawling view of general jurisdiction’ ’’
that the Court previously rejected in its decision in
The Court reiterated the holding of Goodyear, stating
that general jurisdiction is warranted if ‘‘that corpora-
4 Perkins, 342 U.S. 437, 438 (1952).
5 Helicopteros, 466 U.S. at 416 (1984).
7 131 S. Ct. 2846 (2011).
8 Brown v. Meter, 199 N.C.App. 50, 67-68 (2009).
9 Goodyear, 131 S. Ct. at 2851 (2011).
10 Id. at 2857 (quoting Helicopteros, 466 U.S. at 416 (1984)).
11 Id. at 2853-2854 (quoting Brilmayer et al., A General
Look at General Jurisdiction, 66 TEXAS L.REV. 721, 782
12 Daimler AG v. Bauman, 134 S. Ct. 746, 748 (2014).
13 Bauman v. Daimler-Chrysler Corp., 644 F.3d 909 (9th
Cir. 2011). Under the Ninth Circuit ‘‘agency’’ test, a court
could exercise general personal jurisdiction over a foreign parent
corporation for activities that occurred entirely outside of
the U.S. if: (1) it would perform the tasks of the subsidiary if
the subsidiary did not exist and (2) it had the ‘‘right to control’’
the subsidiary. Id. at 920. The ‘‘agency’’ test as applied by the
Ninth Circuit ‘‘is satisfied by a showing that the subsidiary
functions as the parent corporation’s representative in that it
performs services that are sufficiently important to the foreign
corporation that if it did not have a representative to perform
them, the corporation’s own officials would undertake to perform
substantially similar services.’’ Id.
14 Daimler, 134 S. Ct. at 749 (2014).
16 Id. at 759.
5-16-14 COPYRIGHT 2014 BY THE BUREAU OF NATIONAL AFFAIRS, INC. PLIR ISSN 1542-9547
tion’s ‘affiliations with the State are so continuous and
systematic as to render [it] essentially at home in the forum
State.’ ’’17 According to the Court, ‘‘home’’ should
be defined in relation to the ‘‘corporation’s activities in
their entirety, nationwide and worldwide’’ and should
not rely ‘‘on the magnitude of a defendant’s in-state activities
. . . [o]therwise, ‘at home’ would be synonymous
with ‘doing business’ tests framed before specific jurisdiction
evolved in the United States.’’18
A corporation’s principal place of business and state
of incorporation are considered the ‘‘ ‘[p]aradigm bases
for the exercise of general jurisdiction.’’19 The identification
of such states will assure potential plaintiffs that
they will ‘‘have recourse [in] at least one clear and certain
forum in which a corporate defendant may be sued
on any and all claims.’’20 However, the Court did not
foreclose ‘‘the possibility that in an exceptional case,
see, e.g., Perkins, . . . a corporation’s operations in a forum
other than its formal place of incorporation or principal
place of business may be so substantial and of
such a nature as to render the corporation at home in
Under the facts of the case, even assuming that MB
USA’s contacts could be imputed to its parent, Daimler
was not ‘‘at home’’ in California for purposes of general
jurisdiction. As neither Daimler nor MB USA were incorporated
or have a principal place in California, the
Court held that there is no basis to subject Daimler to
general jurisdiction in California. The Supreme Court
concluded by stating that concerns about international
comity, in particular, the potential effects a broad definition
of general jurisdiction may have on international
agreements and judgments supported its determination
that foreign corporations are not subject to general jurisdiction
in all states merely because their subsidiaries
have sizeable sales.22
Establishing General Personal Jurisdiction in
Under the Hatch-Waxman Act,23 it is considered a
‘‘theoretical’’ act of infringement to file an abbreviated
new drug application (ANDA) seeking Food and Drug
Administration approval to market a patented drug before
the relevant patent expires, ‘‘because the allegedly
infringing product has not yet been marketed.’’24 In
ANDA cases, plaintiffs often rely on general personal
jurisdiction to bring a case into a forum of their choosing,
asserting that general jurisdiction is warranted because
the defendants are licensed to distribute pharmaceuticals
and/or are in the business of making and selling
pharmaceutical products the forum state.25
However, following Daimler, such activities, even if
‘‘continuous and systematic,’’ may not be sufficient to
warrant general personal jurisdiction; the corporation
must be found to be ‘‘at home.’’ As a result, it may become
more challenging to assert general jurisdiction
over foreign and out-of-state corporations in states that
are not the corporation’s principal place of business or
state of incorporation.
Daimler does leave room for ANDA plaintiffs to argue
an appropriate agency test to assert general jurisdiction
over a foreign parent corporation based on local
activities of a subsidiary, although it left open what that
test should look like. It also leaves room for ANDA
plaintiffs to assert an ‘‘exceptional case’’ type of general
jurisdiction, when a defendant’s corporate operations
are substantial enough to render the corporation at
home in a forum other than its place of incorporation or
principal place of business.
Most ANDA cases have historically been filed in New
Jersey or Delaware.26 A potential consequence of the
Daimler decision is that more ANDA cases may be filed
in less frequently visited courts where the defendants
are ‘‘at home,’’27 or where specific personal jurisdiction
can be found.28
17 Id. at 761 (emphasis added).
18 Id. at n. 20.
19 Id. at 749. The Court clarified that the holding in Goodyear
did not limit a corporation to general jurisdiction where it
is incorporated or has its principal place of business but were
only given as ‘‘paradigm examples.’’ Id. at n. 19.
20 Id. at 760.
21 Id. at 761 n 19.
22 Id. at 763.
23 Drug Price Competition and Patent Term Restoration Act
of 1984, Codified at 21 U.S.C. §§ 301-399.
24 35 U.S.C. § 271(e)(2)(A). See, also, Warner-Lambert Co.
v. Apotex Corp., 316 F.3d 1348, 1365 (Fed. Cir. 2003).
25 See, for example, Sandoz v. Pfizer, 2010 WL 502727 (noting
that Sandoz, a Colorado corporation with a principal place
of business in New Jersey, has sufficient contacts in Delaware
to be subjected to personal jurisdiction. Such contacts include
being licensed to distribute pharmaceuticals in the state of
Delaware, and being in the business of making and selling generic
pharmaceutical products for sale throughout the United
States, including Delaware). See, also, In re Cyclobenzaprine
Hydrochloride Extended-Release Capsule Patent Litigation,
693 F. Supp.2d 409 (Del. 2010)(holding that Anchen Pharmaceuticals,
a California corporation with a principal place of
business in California, was subject to general jurisdiction in
Delaware because Anchen derives ‘‘substantial revenue’’ from
Delaware drug sales).
26 See PWC 2013 - Patent litigation study, available at http://
27 For example, a number of generic pharmaceutical companies
are incorporated and headquartered in Pennsylvania
(e.g., Mylan Pharmaceuticals), where, based on the holding in
Daimler, they will be considered ‘‘at home’’ for general jurisdiction
28 Specific jurisdiction applies when a forum state exercises
jurisdiction over a defendant because the defendant’s activities
in that state gave rise to the claim. See, for example, Pfizer Inc.
v. Synthon Holding, B.V., 386 F. Supp.2d 666 (M.D.N.C.
2005)(held that specific jurisdiction is proper in the state
where the defendant and an affiliate extensively prepared and
submitted the ANDA at issue).
PHARMACEUTICAL LAW & INDUSTRY REPORT ISSN 1542-9547 BNA 5-16-14