United States: ANDA Filer May Not Be Sued For Patent Infringement In Texas Based On Its Future Intent To Market Accused Products In Texas

Abstract

In determining where patent infringement actions may be brought against ANDA filers, a Texas court declined to follow the ruling in a Delaware court decision. Instead, it strictly interpreted the venue statute, finding that venue for a patent infringement lawsuit is proper in a district where a defendant "has committed" acts of infringement and not where the ANDA filer intends to market the accused product in the future. 


Under the venue statute, a defendant may only be sued in a district where it "resides," or, alternatively, where it committed acts of infringement and has a regular and established place of business. In  Galderma Labs. L.P. v. Teva Pharm. USA, Inc., a Texas court declined to find an act of infringement occurs wherever an ANDA filer intends to market the accused product.

Background

The Hatch-Waxman Act establishes that filing an Abbreviated New Drug Application (ANDA) and accompanying certification (paragraph IV certification) is an "artificial" act of infringement that opens the door for (i) the patent owner to pursue litigation or (ii) the generic manufacturer to pursue declaratory judgment relief. 

Teva USA submitted an ANDA seeking approval to manufacture, use, and sell a generic drug for treating rosacea. In response, Galderma, the patent owner, filed suit in the Northern District of Texas against Teva USA and Teva Israel. Both Teva USA and Teva Israel moved to dismiss the litigation. 

Teva USA argued that the Northern District of Texas was not a proper venue for the litigation because it  was incorporated in Delaware, prepared its ANDA in New Jersey, and submitted the ANDA to the FDA in Maryland.  Teva Israel argued that Galderma failed to state a claim upon which relief could be granted because the allegations in Galderma's complaint failed to establish that Teva Israel was responsible for the alleged infringement. 

Relying on the Federal Circuit's precedential decision in  In re Cray, Inc., which clarified the venue analysis, the Texas court allowed limited discovery relevant to Teva's motions on venue and then held oral argument on the issue. After considering all the evidence, the court granted both Teva USA and Teva Israel's motions to dismiss the litigation. 

The Galderma Decision

Because Teva USA was incorporated in Delaware and therefore "resides" there, the Northern District of Texas would be a proper venue for litigation only if Teva USA (a) committed acts of infringement in the district  and (b) has a regular and established place of business there. Galderma urged the court to follow a Delaware court decision which found the filing of an ANDA and the ANDA filer's intent to market the products in the district where a patent infringement litigation was brought constituted an act of infringement in that district, making district a proper venue for the litigation.

The Texas court declined to follow the Delaware court decision, noting that the Federal Circuit's recent decision in  In re Cray, Inc.  struck down a patent venue test that was "not sufficiently tethered" to the statutory language. The Texas court also declined to find that Teva USA had committed an act of infringement in Texas when submitting its ANDA paragraph IV challenge to Galderma's patents. While Galderma resided in the Northern District of Texas, venue is not based on the plaintiff's residence, and Galderma failed to carry its burden to show an act of infringement occurred in the district. Ultimately, the court concluded Teva USA had no regular and established place of business in the Northern District of Texas.

  As an additional and alternative basis to grant Teva USA's motion to dismiss, the court also analyzed whether venue was proper under Section 1400(b). Again relying on  In re Cray, Inc., the court explained the Federal Circuit clarified that Section 1400(b) imposes three requirements:  (1) there must be a physical place in the district; (2) it must be a regular and established place of business; and (3) it must be the place of the defendant. 

While Galderma argued that Teva USA employed dozens of people who live and work in the district, all but two were actually employed by a subsidiary of Teva USA. As the court explained, so long as the two entities maintain formal corporate separateness, presence of a separate corporate subsidiary in the district cannot be imputed to the parent for venue purposes. Further, while two employees who reside in the district were employed by Teva USA, there was no evidence that (1) Teva USA conditioned their employment on their residence, (2) the employees maintained inventories in their homes or distributed  Teva-branded drugs to customers; or (3) Teva USA  owned, leased, or rented their homes,  or otherwise held their homes out as the company's place of business

The court also rejected Galderma's arguments that Teva USA's recent activities created venue because venue is determined based on facts that existed at the time the complaint was filed.   Further, revenue that Teva USA's received from a network of authorized distributors in the district did not establish a physical presence in a district. 

In addition to granting Teva USA's motion to dismiss the litigation for failing to establish that the Texas court was a proper venue, the court also found that Galderma failed to establish Teva Israel was responsible for the alleged infringement. Galderma's allegations in the complaint were lumped together against all the defendants and were not specific to Teva Israel. However,  the court permitted Galderma to amend its allegations in the complaint to correct to address these deficiencies.

Strategy and Conclusion

This case provides guidance on the requirements for determining where ANDA filers may be sued for patent infringement Hatch-Waxman litigation and the possible significance of where an ANDA is prepared and filed. Courts may permit limited discovery on facts relating to venue issues before determining where suit may be brought.

The Galderma  opinion can be found  here.

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
Events from this Firm
23 Sep 2018, Seminar, Chicago, United States

Finnegan is a sponsor of the Intellectual Property Owners Association Annual Meeting, supporting the Women in IP Networking Brunch.

26 Sep 2018, Webinar, Washington, DC, United States

This latest series of webinars will explore emerging trends in the changing intellectual property (IP) legal environment in Europe and the United States.

26 Sep 2018, Webinar, Washington, DC, United States

This latest series of webinars will explore emerging trends in the changing intellectual property (IP) legal environment in Europe and the United States.

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