United States: Federal Circuit Upholds Broad Hatch-Waxman Venue Options For Innovator Pharmaceutical Companies

On March 18, 2016, the United States Court of Appeals for the Federal Circuit issued a combined opinion in Acorda Therapeutics Inc. v. Mylan Pharmaceuticals Inc., No. 2015-1456, and AstraZeneca AB v. Mylan Pharmaceuticals Inc., No. 2015-1460, holding that an Abbreviated New Drug Application ("ANDA") filer is subject to specific personal jurisdiction in any state where the filer will engage in post-approval marketing and sales of its ANDA product.

This decision marks the first time the Federal Circuit has addressed the issue of personal jurisdiction in the Hatch-Waxman context since the Supreme Court's 2014 decision in Daimler AG v. Bauman, 134 S. Ct. 746 (2014). Daimler held that general jurisdiction over a defendant is limited to those "exceptional" situations where the defendant's contacts are such that it is "at home" in the forum. Daimler was interpreted by some legal commentators as limiting brand-name companies' venue options in bringing Hatch-Waxman suits against generic manufacturers. Acorda suggests that, even after Daimler, personal jurisdiction over ANDA filers in Hatch-Waxman cases may be proper in any jurisdiction in which an innovator company can reasonably allege that the generic manufacturer intends to market and sell its proposed ANDA product. 

District Court Proceedings

The opinion addressed separate actions filed in the United States District Court for the District of Delaware against Mylan. These cases related to Mylan's ANDAs seeking approval to market generic versions of the multiple sclerosis drug Ampyra® (sold by Acorda) and the type II diabetes drug Onglyza® (manufactured by AstraZeneca). In both ANDAs, Mylan certified under 21 U.S.C. § 355(j)(2)(A)(vii)(IV) that the patents listed in the Food and Drug Administration's ("FDA") Orange Book for the two innovator products were invalid, unenforceable, and/or would not be infringed by Mylan's proposed generic products ("Paragraph IV certifications").

In both cases, the brand name company filed a patent infringement suit against Mylan in Delaware under 35 U.S.C. § 271(e)(2)(A). Mylan, which is incorporated and has its principal place of business in West Virginia, moved to dismiss both suits, arguing that it was not subject to personal jurisdiction in Delaware. Mylan's motions were denied in each case, with different judges in Delaware reaching opposite conclusions on general jurisdiction but ultimately both holding that Mylan was subject to specific jurisdiction. Specifically, in AstraZeneca, Chief Judge Stark ruled that Mylan's compliance with a Delaware statute requiring appointment of an agent for service of process as a precondition to conducting business in Delaware was not sufficient to establish general jurisdiction. In contrast, in Acorda, Judge Sleet found that Mylan consented to general jurisdiction when it complied with that statute and registered to conduct business in Delaware. Yet in both cases, the court found that Mylan had sufficient contacts with Delaware related to the subject of the cases to allow the court to exercise specific jurisdiction over Mylan.

Both judges certified their decisions for interlocutory appeal. The issues before the Federal Circuit were: (i) whether Mylan consented to general personal jurisdiction in Delaware by registering to conduct business and appointing an agent for service of process in that state; and (ii) whether the act of filing an ANDA application with the FDA—seeking approval to market a generic product throughout the United States—satisfies the "minimum contacts" standard required for a state to exercise specific personal jurisdiction over a defendant.

The Majority Opinion

In an opinion by Judge Taranto, the Federal Circuit affirmed the two decisions below. The Federal Circuit's decision rested on specific personal jurisdiction and did not address the issue of general personal jurisdiction. Recounting the standard set forth by the Supreme Court, the Federal Circuit noted that the exercise of personal jurisdiction over a defendant does not violate Due Process where the defendant has "certain minimum contacts" with the forum such that "maintenance of suit does not offend traditional notions of fair play and substantial justice." Acorda Therapeutics v. Mylan Pharms. Inc., No. 2015-1460, slip op. at 7-8 (Fed. Cir. Mar. 8, 2016) (internal citations omitted). The "minimum contacts" standard, the Federal Circuit stated, is met where the defendant "purposefully direct[s] activities at the forum" and creates a substantial connection with the forum state through its "suit-related conduct." Id. According to the Federal Circuit, Mylan's ANDA filing was such conduct, and the court explained as follows:

Mylan has taken the costly, significant step of applying to the FDA for approval to engage in future activities—including the marketing of its generic drugs— that will be purposefully directed at Delaware (and, it is undisputed, elsewhere). If Mylan had already begun its deliberate marketing of these drugs in Delaware, there is no doubt that it could be sued for infringement in Delaware. Its Delaware sales would be acts committed in the State that are wrongful—if the plaintiffs here are right about infringement and validity—and would concretely injure Acorda and AstraZeneca in the State by displacing some of their Delaware sales and likely lowering the price they could charge there. In our view, the minimum-contacts standard is satisfied by the particular actions Mylan has already taken—its ANDA filings—for the purpose of engaging in that injury-causing and allegedly wrongful marketing conduct in Delaware.

Id. at 8-9 (emphasis added).

ANDA filings, according to the Federal Circuit, constitute "formal acts that reliably indicate plans to engage in marketing of the proposed generic drugs." Id. at 9. The Federal Circuit noted that the "Hatch-Waxman Act recognizes the close connection between an ANDA filing" and the post-approval real-world acts and harm to "patent-owning brand-name manufacturers." Id. Further, the Federal Circuit pointed to the "economic realities of preparing an ANDA" in support of its reasoning, such as the $76,030 current filing fee and the costly research required to show bioequivalence to the brand-name drug. Id. at 11. Therefore, the Federal Circuit concluded, "Mylan's ANDA filings, including its certifications regarding the patents at issue here, are thus suit-related, and they have a substantial connection with Delaware because they reliably, non-speculatively predict Delaware activities by Mylan." Id. at 13.

The Federal Circuit refused to accept Mylan's argument that a "rigid past/future dividing line governs the minimum contacts standard," or that a state is forbidden from exercising its judicial power until a defendant's planned conduct actually occurs. Id. Such a rule, reasoned the Federal Circuit, "would run counter to the legal tradition of injunctive actions to prevent a defendant's planned, non-speculative harmful conduct before it occurs." Id.

According to the Federal Circuit, other factors identified by the Supreme Court—such as burden on the defendant, the forum state's interest in adjudicating the dispute, and the plaintiff's interest in obtaining convenient and effective relief—do not render exercising jurisdiction unreasonable:  

The burden on Mylan will be at most modest, as Mylan, a large generic manufacturer, has litigated many ANDA lawsuits in Delaware, including some that it initiated. Delaware has an interest in providing a forum to resolve the disputes before us because they involve the pricing and sale of products in Delaware and harms to firms doing business in Delaware, some of them incorporated or with principal places of business in Delaware. And upholding personal jurisdiction will serve the interests of the plaintiffs and the judicial system in efficient resolution of litigation, because multiple lawsuits against other generic manufacturers on the same patents are pending in Delaware. Indeed, Mylan sent its required notice to Acorda after those actions had already begun. In these cases, there is no substantial argument that considerations of unfairness override the minimum-contacts basis for Delaware's exercise of specific personal jurisdiction over Mylan.

Id.

Judge O'Malley's Concurring Opinion

Judge O'Malley concurred in the judgment, but wrote separately that the Federal Circuit should reach the question of general jurisdiction. See Acorda Therapeutics v. Mylan Pharms. Inc., No. 2015-1460 (Fed. Cir. Mar. 8, 2016) (O'Malley, J., concurring). Judge O'Malley would have held that compliance with a state statute requiring registration and appointment of an in-state agent for service of process in order to conduct business constitutes express consent to general personal jurisdiction. "The relevant inquiry is not whether Mylan voluntarily consented to jurisdiction in Delaware, but whether it voluntarily elected to do business in Delaware and to register and elect an agent for service of process in that state. It undoubtedly did." Id. at 11. The Judge observed that Daimler did not change the law on the issue of consent to jurisdiction. Id. at 10.

As to specific personal jurisdiction, Judge O'Malley noted that both AstraZeneca and Acorda are corporations organized under the laws of the State of Delaware. Thus, Mylan's filing of its Paragraph IV certifications were not random acts but rather were "calculated and directed to cause harm to the intellectual property rights of a known party with a known location," and triggered "an obligation [for the innovator companies] to quickly file an expensive 'infringement' action." Id. at 16. The Judge reasoned that "the harm is targeted only to these Delaware companies, occurs only in Delaware, and is only triggered by the filing of an ANDA," which therefore satisfies the minimum-contacts requirement. Id. at 16-17.

Impact of the Decision

The Federal Circuit's decision appears to give brand-name companies wide latitude to bring suit under the Hatch-Waxman Act anywhere they can reasonably allege that an ANDA filer plans on marketing and selling its proposed drugs. It also potentially reduces legal costs and fees by eliminating the need for protective suits to counter jurisdictional challenges. It remains to be seen whether courts will interpret this decision as providing for nationwide jurisdiction in Hatch-Waxman cases, or whether additional factors identified by the majority—such as burden on the defendant, the forum state's interest in adjudicating the dispute, or the interest of the plaintiff and the judicial system in efficient resolution of litigation—might alter the outcome in some cases. Further, because Mylan retains the right to seek rehearing en banc or certiorari to the Supreme Court, this opinion may not be the final word on this important jurisdictional decision in Hatch-Waxman cases.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions