United States: Mere Clinical Testing In A District May Be Insufficient To Establish Venue For A Patent Infringement Action Based On The Safe-Harbor Provision Of § 271(E)(1)

Abstract

The patent statute safe harbor provision prevents liability for mere clinical testing. So a defendant may challenge a patent owner's choice of venue for litigation if the acts of infringement in that venue are covered by the safe harbor provision for clinical testing. And a defendant may successfully challenge such venue by summary judgment on such basis even if non-except acts of infringement that did not involve clinical testing occurred in other locations outside that venue.  In responding to such venue challenge that no non-exempt acts of infringement occurred in the selected venue, a plaintiff cannot rely on mere venue allegations in its complaint but needs to present evidence of non-exempt acts of infringement in the selected venue.

Background

Snyders Heart Valve sued St. Jude Medical in Texas for infringing its patents related to artificial heart valves. St. Jude alleged its products were designed and manufactured in Minnesota and any sales of those products in Texas were not for commercial purposes, but rather for clinical testing, a defense to infringement liability covered under the safe harbor provision of  §271(e)(1).

St. Jude moved to dismiss, asserting that Texas was an improper venue for litigation. The court denied that motion because the law, at the time, provided that venue was proper for litigation where a plaintiff made a prima facie showing that a defendant was subject to personal jurisdiction in the district of the court in which the litigation was filed. Ten days later, the U.S. Supreme Court changed the venue law in deciding the TC Heartland  case, and St. Jude subsequently asked the Texas court to reconsider its venue decision in light of TC Heartland.

The Texas magistrate's report on the motion for reconsideration focused on whether the acts of alleged infringement occurred in the district and, thus, whether all sales of the accused products in the district are subject to the safe harbor provided in § 271(e)(1). Finding that the safe harbor statute provided the basis for an affirmative defense and that a plaintiff should not be required to negate an affirmative defense at a motion to dismiss stage, the report recommended denying St. Jude's motion for reconsideration.

Before the Court adopted the report, St. Jude moved for summary judgment for improper venue arguing that no acts of infringement occurred in the Eastern District of Texas because all of its activities in the district were covered by the safe harbor provision. The Court ultimately agreed with St. Jude.

The Snyders Decision

Because St. Jude was not incorporated in Texas, the Court focused on (1) the relevance of a "safe harbor" defense when determining venue and (2) whether the safe harbor is an "all-or-nothing" defense.

As to the first issue, the Court found that safe harbor was relevant to the venue determination. Reviewing the language of the safe harbor defense under § 217(e)(1) and the venue statute under § 1400(b), the Court noted that both speak of "acts of infringement" not acts of "alleged" infringement. So at the summary judgement stage, once a defendant comes forward with evidence that the accused acts of infringement in the district are solely clinical trials covered by the safe harbor defense of § 217(e)(1), venue is improper and a plaintiff cannot rely on mere allegations of infringement in its complaint to rebut summary judgment.

As to the second issue, the Court rejected Snyders's argument that the safe harbor defense was an "all or nothing" defense. Under Snyder's theory, once a defendant makes and sells the accused products anywhere in the United States for commercial purposes, none of the sales are protected by the safe harbor provision. Relying on Federal Circuit precedent, the Court explained that the law requires "each use of a patented invention be evaluated separately" when determining whether the safe harbor provision applies. The relevant inquiry here was not whether St. Jude engaged in uses outside the District that are not "solely" or "reasonably related" to seeking FDA approval, but rather, whether St. Jude had engaged in any such uses in this  District so that venue is proper. The Court ultimately found that all of St. Jude's acts of infringement in the Eastern District of Texas were clinical and therefore exempt under the safe harbor provision, despite non-exempt activity in Minnesota.

Synders also made a procedural challenge to St. Jude's motion for summary judgment, arguing the motion was improper and untimely based on the prior denial of St. Jude's motion to dismiss and the findings from the Court that a plaintiff should not have to negate an affirmative defense to overcome a venue challenge. The Court disagreed and found the issue of venue could be revisited once there is a determination of noninfringement on the merits and can be decided after the case has passed the stage when motion to dismiss are filed.

Strategy and Conclusion

Venue challenges can be raised past the stage when motions to dismiss are filed, and parties should be aware of the relationship between the safe harbor provision of § 271(1)(e) and the requirements of the venue statute to seek and provide the relevant and proper discovery to establish or challenge venue in a specific district. 

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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Finnegan is a Conference App sponsor of DeviceTalks West, hosted by MassDevice. The program will take place at the Hilton Orange County hotel in Costa Mesa, California.

12 Dec 2018, Seminar, Washington, DC, United States

Finnegan partner Anthony Tridico will present “U.S. Case Law Update” during the Chartered Institute of Patent Attorneys’ Patent Case Law program.

 
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