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Drug Patent Owners Face New Venue Hurdle in Anti-Generic Cases

Nov. 6, 2020, 6:46 PM

A Federal Circuit decision limiting venue for patent infringement suits over generic drugs may complicate such litigation, especially during the Covid-19 pandemic.

Suits by branded drugmakers alleging proposed generics will infringe their patents can only be brought in districts where actions related to the submission of an Abbreviated New Drug Application occur, the U.S. Court of Appeals for the Federal Circuit said in a precedential opinion Thursday.

“The Federal Circuit’s ruling provides some much needed clarity on where venue lies in Hatch-Waxman litigation, and resolves a split between several district courts,” Mark H. Remus, shareholder at Brinks Gilson & Lione in Chicago who specializes in Hatch-Waxman litigation, said in an email. “The court stuck to the plain meaning of the patent venue statute and found that there are not special venue rules for Hatch-Waxman cases.”

But the ruling could lead to inefficiencies, particularly for patent owners who will no longer be able to sue all ANDA filers for a particular drug in the same court, Remus said.

The realities of pandemic-related remote work might also make the venue determination more challenging, pharmaceutical intellectual property litigation partner Kassie Helm of Dechert LLP in New York said.

If work-from-home policies become permanent after the pandemic, they could lead to more discovery and parallel litigation, creating “potential gaming and increased litigation fees for all involved,” Helm said in an email.

The court rejected the position of branded drugmaker Bausch Health Cos., formerly Valeant Pharmaceuticals, which wanted the court to expand venue for such Hatch-Waxman Act suits to everywhere the generic drugmaker plans to market its product. Under its new rule, the Federal Circuit said Bausch sued two Mylan Inc. entities—seeking to sell a generic of Bausch’s Jublia nail fungus drug—in the wrong court.

The parties in the case didn’t immediately respond to requests for comment.

Potential Inefficiencies

Mylan filed its ANDA with the Food and Drug Administration from its West Virginia corporate office. That’s the only alleged act of infringement under the Federal Circuit’s new rule. Since it didn’t occur in New Jersey where Bausch sued, and Mylan has no regular and established place of business there, New Jersey isn’t the proper venue.

Because many generic companies are based in New Jersey or Delaware and submit their applications from there, Hatch-Waxman suits filed in those districts won’t be affected by the ruling, Remus said.

“But for the largest Hatch-Waxman cases where there can be over twenty ANDA filers, there are likely to venue complications,” he said.

The ruling will force branded drugmakers to file parallel cases in different courts against the individual generic companies. That may lead to “additional work for the parties and create the potential for inconsistent rulings,” Remus said.

The Federal Circuit acknowledged that possibility, suggesting parties consider multidistrict litigation, where suits from around the country are centralized in one court for pretrial proceedings. But the court said that MDLs can be “cumbersome for these types of cases.”

Still, the decision may lead to an increase in the use of MDLs to manage one patent owner’s suits in different courts against separate defendants, Remus said.

More Discovery

The Federal Circuit said “the only concrete locations that will ever be touched by a non-hypothetical past act of infringement are those connected to the submission of the ANDA itself.”

Helm said the decision may not take into account how an increase in remote work in the wake of the pandemic could affect where ANDAs are filed.

“The court rejects the argument that an ANDA submission is a ‘conceptual’ nationwide act and holds it to be either the ‘submitter’s’ regular and established place of business or its place of incorporation,” Helm said. “But what about when the ANDA is submitted from a venue different than either of those locations?”

There might be more ambiguity now that employees are working remotely than there might have been in cases before Covid-19, she said.

“I think it’s safe to assume that the people preparing the ANDAs are not all sitting at their desks in Morgantown, W. Va. these days—and may never be again,” Helm said.

Courts may allow for more venue-based fact discovery, and branded drugs may file more parallel “protective suits” in the defendant’s home state in case the suit in their preferred court is dismissed, she said.

If the patent holder properly files its Hatch-Waxman suit, the ANDA is stayed for 30 months while the case is litigated. But if their suit is dismissed for lack of venue and they don’t have a backup, they forfeit that protection.

The case is: Valeant Pharm. N.A. LLC v. Mylan Pharm. Inc., Fed. Cir., No. 19-2402, 11/5/20.

To contact the reporter on this story: Perry Cooper in Washington at pcooper@bloomberglaw.com

To contact the editors responsible for this story: Melissa B. Robinson at mrobinson@bloomberglaw.com, Keith Perine at kperine@bloomberglaw.com

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