United States: Venue In ANDA Cases: The Effect Of The Heartland Decision On The Plaintiff's Choice Of Forum

On May 22, 2017, the Supreme Court issued its decision in T.C. Heartland LLC v. Kraft Foods Group Brands LLC, U.S., No. 16-341, 5/22/17 (slip op.). The dispute arose when Kraft, a Delaware corporation, sued Heartland, an Indiana corporation whose only connection with Delaware was sales of its product, in the U.S. District Court for the District of Delaware. Heartland moved to dismiss or transfer, arguing that venue in Delaware was improper. The statute governing venue in patent infringement cases, 28 U.S.C. § 1400(b), states: "Any civil action for patent infringement may be brought in the judicial district where the defendant resides, or where the defendant has committed acts of infringement and has a regular and established place of business." The district court denied the motion, and the Federal Circuit denied Heartland's petition for a writ of mandamus, relying on its 1990 decision in VE Holding Corp. v. Johnson Gas Appliance Co., 917 F.2d 1574 (Fed. Cir. 1990) that § 1400(b) is subject to the general venue provisions that define "residence" for venue purposes as any district that can exercise personal jurisdiction over the defendant. Heartland petitioned the Supreme Court for a writ of certiorari, arguing that the Federal Circuit's reliance on VE Holding was misplaced.

The Supreme Court, agreeing with Heartland, unanimously upended over 35 years of venue jurisprudence and held that a domestic corporation "resides" only in its state of incorporation for purposes of the patent venue statute. The Court agreed with Heartland that the Federal Circuit had improperly ignored a 1957 Supreme Court precedent, Fourco Glass Co. v. Transmirra Products Corp., 353 U.S. 222 (1957) that had held that the patent venue statute should not be read in light of the other venue provisions, but instead was a stand-alone statute that consistently referred only to the state of incorporation from its inception.

The Heartland decision has been widely touted as a game-changing decision, and it is a fair bet that it will affect where Abbreviated New Drug Application (ANDA) litigations will be brought. To understand the impact of Heartland, however, requires an understanding of interplay between venue and personal jurisdiction in ANDA litigations. In 2014, the Supreme Court clarified in Daimler that general personal jurisdiction can be exercised over a defendant where it is "at home," which typically would be its state of incorporation or principal place of business. Daimler AG v. Bauman, et al., 134 S. Ct. 746 (2014). Apparently recognizing the difficulty this standard created for plaintiffs in ANDA litigations, the Federal Circuit more recently held in Acorda Therapeutics Inc. v. Mylan Pharms. Inc., 817 F.3d 755 (Fed. Cir. 2016), that specific personal jurisdiction in ANDA cases can be based on the filing of an ANDA coupled with the ANDA filer's intent to market its proposed drugs in the forum. Because the Federal Circuit had determined in VE Holding that venue was coextensive with personal jurisdiction, the Acorda decision subjected ANDA filers to suit under the Hatch-Waxman Act in any state in the country.

The Heartland decision, however, has divorced the venue analysis from the personal jurisdiction analysis. The simplest route will be to file suit in the ANDA filer's home state of incorporation which, in one fell swoop, will satisfy both the "residence" standard of § 1400(b) for venue and the "at home" standard under Daimler for general personal jurisdiction. A plaintiff who wishes to look beyond the ANDA filer's home state should be able to establish specific personal jurisdiction under Acorda in any jurisdiction but now must satisfy the "committed acts of infringement and has a regular and established place of business" prong of § 1400(b).

Looking first at the "committed acts of infringement" portion of that test, under the reasoning of the Acorda decision, the situs of infringement is all states in which the ANDA filer intends to market its proposed generic drug product. But, to satisfy § 1400(b), the plaintiff will now have to confine its choice of forum to those venues in which the ANDA filer "has a regular and established place of business." How courts will interpret this language of § 1400(b) remains to be seen, but guidance can be found in the Federal Circuit's 1990 decision in In re Cordis Corp., 769 F. 2d 733, 737 (Fed. Cir. 1985). In Cordis, the Federal Circuit noted that what constitutes a "regular and established place of business" is a fact intensive inquiry centered on whether the corporate defendant does its business in that district through a permanent and continuous presence,"
not "whether it has a fixed physical presence in the sense of a formal office or store." Relevant factors may include whether the ANDA filer maintains an office or facility in the district; the number, nature, and job responsibilities of representatives stationed there; whether sales are continuous or isolated; whether the ANDA filer is registered to do business or registered with the state board of pharmacy—the same factors that were often relied upon for personal jurisdiction prior to the Acorda decision.

Because of its more restrictive reading of the special patent venue provision, the Heartland decision has tempered the effect of the Acorda decision. Arguably Heartland has eliminated the national jurisdiction for cases brought under the Hatch-Waxman Act that was created by Acorda. The practical effect of the Heartland decision may be to simply return forum choice in Hatch-Waxman Act cases to the status quo as it existed prior to Acorda: the same arguments may be made to support the plaintiff's choice of forum, but will be now phrased in terms of venue instead of personal jurisdiction.

Originally printed in  BNA's Pharmaceutical Law & Industry Report on June 16, 2017.

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.

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