November 6, 2020

Federal Circuit Narrows Venue for Patent Infringement Suits Under the Hatch-Waxman Act

The Federal Circuit yesterday issued a decision that narrows the venue options available to patent owners bringing suit against generic drug manufacturers under the Hatch-Waxman Act.  In a unanimous decision, the court held that the act of infringement in Hatch-Waxman Act cases brought under 35 U.S.C. § 271(e)(2)(A) “occurs for venue purposes only in districts where actions related to the submission of the Abbreviated New Drug Application (‘ANDA’) occur — not in all locations where future distribution of the generic products specified in the ANDA is contemplated.”  As a practical matter, the decision will limit venue in Hatch-Waxman cases to either (1) a district connected to preparation and submission of the ANDA (if the defendant also has a regular and established place of business in the district), or (2) a district within the generic applicant’s state of incorporation. Moreover, although the case specifically concerned an ANDA, there is every reason to believe that the same rule will apply to actions premised on the filing of a license application for a biosimilar product.

The Federal Circuit’s decision resolves an important open question created by the U.S. Supreme Court’s 2017 decision in TC Heartland LLC v. Kraft Food Group Brands LLC.  By way of background, venue for patent-infringement actions is determined under 28 U.S.C. § 1400(b), which provides that an infringement action may be brought either in (1) “the judicial district where the defendant resides,” or (2) “where the defendant has committed acts of infringement and has a regular and established place of business.”  Before TC Heartland, the Federal Circuit had held that a corporate defendant “resides” in any jurisdiction where it is subject to personal jurisdiction. And in Acorda Therapeutics Inc. v. Mylan Pharmaceuticals Inc., 817 F.3d 755 (2016), the Federal Circuit held that personal jurisdiction in a Hatch-Waxman Act case could be established based on the generic applicant’s planned marketing activities after approval. Taken together, these decisions effectively allowed for nationwide venue in Hatch-Waxman cases. 

TC Heartland dramatically changed the venue landscape by holding that, for purposes of patent venue, a corporation only “resides” in its state of incorporation. Since the decision, patent owners have increasingly turned to the second path for establishing patent venue, which requires showing both that the defendant has a “regular and established place of business” in a district and that it “has committed acts of infringement” there. In Hatch-Waxman litigation, district courts had divided over how to apply the “acts of infringement” requirement. On one side, some courts extended Acorda’s reasoning to the venue context, holding that future infringing acts in a jurisdiction post-approval count. By contrast, other courts held that section 1400(b)’s use of the past-tense “has committed” required the analysis to focus on whether a generic applicant had prepared and submitted the ANDA in the district—not whether it later intended to market its product there.

In the decision yesterday, the Federal Circuit squarely adopted the latter, narrower view. The Federal Circuit held that venue in Hatch-Waxman cases must be based on “past acts” of infringement, which “occur only in districts where actions related to the ANDA submissions occur.” Moreover, as noted above, there is every reason to believe that the decision’s reasoning will extend to biosimilar litigation premised on an artificial act of infringement from submitting an application to license a biosimilar product.

As the Federal Circuit acknowledged, its decision will have important practical consequences.  Generic drug and biosimilar applicants will now have a much greater ability to control where they can be sued pre-approval. Moreover, the decision increases the possibility that, for products with more than one generic or biosimilar filer, brand drug manufacturers will have to bring actions in multiple jurisdictions, subject only to potential coordination through the MDL process.  The Federal Circuit noted that it was “sympathetic” to concerns that its ruling will make multi-party litigation less efficient, but the court concluded its interpretation was compelled by the statutory text.

The Federal Circuit’s decision still leaves open important questions about what qualifies as an “action related” to the submission of an application to market a generic drug or license a biosimilar medicine. For example, the court acknowledged that it “may well be” that an act of infringement occurs in the District of Maryland (where the FDA receives applications), but it did not resolve that question. The Federal Circuit also declined to define “what all relevant acts involved in the preparation and submission of an ANDA might be,” expressly leaving that issue open for future case development. The court did, however, provide some relevant guidance, specifying that acts protected by the safe-harbor provisions in 35 U.S.C. § 271(e) do not provide a basis for venue.  

The Federal Circuit did not have occasion to address any questions of waiver or forfeiture regarding venue challenges based on the new decision. In response to TC Heartland, the Federal Circuit rejected waiver arguments and allowed defendants to raise new objections based on the change in law. But there is good reason to think that the Federal Circuit’s approach to forfeiture may be different here, since the new decision does not change established law but rather resolves an open issue.  In cases brought in an impermissible venue where a venue objection is timely raised, the district court may transfer the action to a proper one. But the district court often has discretion to dismiss instead. And a dismissal for improper venue can have important consequences for Hatch-Waxman litigation, including terminating the 30-month stay on FDA approval.