EDTX & NDTX Monthly Wrap-Up — April 2019

A Tale of Two ANDAs: Jurisdiction and Venue in a Non-Traditional Sense

Judge Gilstrap's recent opinion in Apicore US LLC v. Beloteca, Inc., No. 2:19-CV-00077-JRG, 2019 WL 1746079 (E.D. Tex. Apr. 18, 2019), highlights interesting personal jurisdiction and venue issues in a non-traditional pharmaceutical suit involving patents asserted by an ANDA filer against another ANDA filer. With respect to personal jurisdiction, the court found sufficient minimum contacts based on the Federal Circuit's Acorda decision even though the defendant had not submitted a Paragraph IV certification. Nevertheless, Judge Gilstrap transferred the case to the Northern District of Illinois on the basis of improper venue under 28 U.S.C. § 1400(b).

Unlike traditional Hatch-Waxman disputes where the plaintiff is the holder of an NDA and lists patents in the FDA's Orange Book, no party in Apicore holds the NDA. In other words, the asserted patents are not listed in the Orange Book.[1] Here is a brief timeline of the events that led to this case:

1. In 1981, Hirsch Industries and its successor-in-interest Covidien Ltd. developed and commercialized a 1% injectable solution of (isosulfan blue ("ISB")) under the trade name Lymphazurin.[2] Covidien, the original NDA holder, listed various patents in the Orange Book covering Lymphazurin.[3] Covidien met with many difficulties in synthesizing and purifying ISB.[4]
2. In the early 2000s, Apicore partnered with a predecessor to Mylan Institutional to develop and market a generic version of Lymphazurin.[5]
3. Plaintiff Apicore developed an improved process to manufacture highly pure ISB and acquired patents related to that process including the patents-in-suit.[6] Apicore filed an ANDA on its generic Lymphazurin, which the FDA approved in 2010.[7] Co-plaintiff Mylan is the exclusive license to the patents-in-suit.[8] As neither Apicore nor Mylan were the NDA filer, neither company was required to (and did not) submit the patents-in-suit to the FDA for addition to the Orange Book.[9]
4. In 2011, Covidien withdrew Lymphazurin from the market.[10]
5. In 2017, Defendant Beloteca filed an ANDA to market an ISB injection product, which FDA approved in 2019.[11] Because the patents-in-suit were not listed in the Orange Book, Beloteca did not submit a Paragraph IV certification with its ANDA.[12]
6. The day after its ANDA was approved, Beloteca filed a declaratory judgment action for non-infringement and invalidity against Apicore and Mylan in the Northern District of Illinois.[13]
7. Two months later, Apicore and Mylan filed a declaratory judgment suit for infringement against Beloteca in the Eastern District of Texas.[14]
8. Beloteca sought to dismiss the E.D. Texas case for lack of personal jurisdiction or improper venue.[15]

Personal Jurisdiction

The parties' arguments on personal jurisdiction centered on the Federal Circuit's opinion in Acorda Therapeutics Inc. v. Mylan Pharmaceuticals Inc., 817 F.3d 755 (Fed. Cir. 2016). In Acorda, a traditionally-postured Hatch-Waxman case, the Federal Circuit found sufficient contacts to support personal jurisdiction in Delaware where a non-Delaware ANDA filer did not dispute that it would market and distribute its generic products throughout the country, including in Delaware, if approved.[16]

Mylan argued that the reasoning in Acorda applied equally in the present case.[17] Specifically, Mylan argued that like the defendant in Acorda, Beloteca's filing of an ANDA in combination with its plans to market its ISB product nationwide were sufficient to support personal jurisdiction.[18] Judge Gilstrap agreed, finding Beloteca had sufficient contacts with the Eastern District of Texas in light of its ANDA filing and approval as well as Beloteca's intent to sell its ISB product through a third-party with an established distribution network in Texas.[19]

Judge Gilstrap rejected Beloteca's two arguments against personal jurisdiction. First, Beloteca argued that in the absence of a Paragraph IV certification, Mylan's declaratory judgment action was not a Hatch-Waxman case, seemingly removing the jurisdiction analysis from the Acorda framework.[20] Judge Gilstrap disagreed, finding that "paragraph IV certification is not required to sustain a § 271(e)(2) infringement claim."[21] Second, Beloteca argued that an ANDA filing cannot be the sole basis for jurisdiction, and Acorda is limited to defendants with existing distribution networks.[22] But the court held that the ANDA filing and Beloteca's third-party agreement for future distribution of the products satisfied minimum contacts.

Venue

Despite his finding of personal jurisdiction, Judge Gilstrap nevertheless concluded that venue in the Eastern District of Texas was improper under § 1400(b) because Beloteca is a California corporation having a place of business in San Diego, California. Mylan argued that because it filed its action as a declaratory judgment action for future patent infringement, the more permissive venue provisions of § 1391 governed.[23] But having already found that Mylan had a cognizable claim under § 271(e)(2), the court rejected this argument as an end-run around § 1400(b).[24] Mylan could therefore not avoid TC Heartland and made no argument that venue was proper under the standards set forth in TC Heartland.[25]

Questions Raised by Apicore

1. Can a plaintiff sustain a claim under § 271(e) without a Paragraph IV certification?

Although Judge Gilstrap held that a Paragraph IV certification is not required to support a claim under § 271(e), his opinion in Apicore acknowledges that other district courts have reached the opposite conclusion. Indeed, this question is far from settled.[26] In the context of jurisdiction, as Judge Gilstrap noted, this question seems to be more applicable to subject matter jurisdiction inquires, which were not at issue in Apicore.[27] Judge Gilstrap noted that "whether Plaintiffs have a cognizable claim under § 271(e) due to [the] . . . lack of a paragraph IV certification [in Beloteca's ANDA] has little bearing on this Court's personal jurisdiction over Beloteca."[28]

In Apicore, however, this question appeared to have a significant impact on the venue inquiry. Judge Gilstrap's opinion highlights the inequities in venue selection between plaintiffs and defendants in Hatch-Waxman cases following TC Heartland. The general venue statute, § 1391, apparently governed Beloteca's earlier filed declaratory judgment action in the Northern District of Illinois,[29] but Judge Gilstrap found the mirror version of Beloteca's case filed by Apicore in the Eastern District of Texas was governed by the stricter patent venue statute, § 1400(b). The same situation would presumably arise where an ANDA filer pursues a declaratory judgment of non-infringement and invalidity against an NDA or patent holder pursuant to § 271(e)(5) in the absence of an earlier filed suit by the patent holder.

Venue issues in Hatch-Waxman cases following TC Heartland and Acorda have come up in other cases as well, resulting in at least one district court split.[30] Compare Galderma Labs., L.P. v. Teva Pharm. USA, Inc., 290 F. Supp. 3d 599, 608 (N.D. Tex. 2017) (declining to find "that an act of infringement occurs wherever an ANDA filer intends to market the accused product" and finding venue improper on that basis) with Bristol-Myers Squibb Co. v. Mylan Pharm. Inc., No. CV 17-379-LPS, 2017 WL 3980155, at *13 (D. Del. Sept. 11, 2017) ("[A]n applicant's submission of an ANDA . . . can be sufficient to demonstrate that the ANDA-filing Defendant '€˜has committed' '€˜acts of infringement' in this District."). Further attention from both Congress and the Federal Circuit is necessary to tie-up the loose ends in Hatch-Waxman venue selection created by TC Heartland.

2. Does Acorda apply in non-traditional pharmaceutical patent cases?

While Apicore is not a traditional Hatch-Waxman case between an NDA holder and an ANDA filer, Judge Gilstrap nevertheless applied the Federal Circuit's Acorda decision. Although Acorda was a traditional Hatch-Waxman case involving an NDA holder and an ANDA filer and the Federal Circuit relied heavily on the Hatch-Waxman Act to support its conclusion in Acorda, the Federal Circuit ultimately based its finding of personal jurisdiction on (1) the defendant's ANDA filing and (2) the defendant's intent to distribute its generic products. Both factors were present in Apicore and would have remained so even if Judge Gilstrap had found Mylan did not have a claim under § 271(e). Other courts could find, however, that these factors have specific implications solely in the realm of traditional Hatch-Waxman cases, which "recognize[] the close connection between an ANDA filing and the real-world acts that approval of the ANDA will allow and that will harm patent-owning brand-name manufacturers."[31]

3. Has Acorda shifted the burden to show minimum contacts to defendants?

While the initial burden of showing minimum contacts lies with the plaintiff, Acorda and its progeny marks a slight shift in this burden to defendants. In both Acorda and Apicore, the defendants had entered into agreements with third-parties to distribute their proposed drugs. But both courts focused on the absence of a dispute that the defendants intended nationwide distribution to establish that intent. And the Federal Circuit in Acorda went into great detail on the substantial costs of preparing and filing an ANDA submission to support future marketing and distribution "in Delaware (at least)."[32]

Both Acorda and Apicore therefore suggest that a plaintiff may satisfy personal jurisdiction by simply alleging an ANDA filing and an intent to distribute in light of that filing. Under this construct, it is up to the defendant to bring forward some fact demonstrating it does not have an intent to distribute in a jurisdiction. The Acorda line of cases thus may have put a thumb on the scale in favor of minimum contacts when the defendant has submitted an ANDA.

[1] Apicore US LLC v. Beloteca, Inc., No. 2:19-CV-00077-JRG, 2019 WL 1746079, at *2 n.5 (E.D. Tex. Apr. 18, 2019).

[2] Mylan Inst. LLC v. Aurobindo Pharma Ltd., 857 F.3d 858, 862 (Fed. Cir. 2017).

[3] Id.

[4] Id. at 862–63.

[5] Id. at 863.

[6] Id.; see Apicore, 2019 WL 1746079, at *1.

[7] Id.

[8] Id. at *2.

[9] Id. at *2 n.5.

[10] Mylan, 857 F.3d at 862.

[11] Apicore, 2019 WL 1746079, at *1.

[12] Id. at *2 n.6.

[13] Id.

[14] Id.

[15] Id. at *2.

[16] Acorda Therapeutics Inc. v. Mylan Pharms. Inc., 817 F.3d 755, at 760 (Fed. Cir. 2016).

[17] Apicore, 2019 WL 1746079, at *3.

[18] Id.

[19] Id. at *4.

[20] Id. at *3–*4.

[21] Id. at *4.

[22] Id. at *5.

[23] Id. at *7.

[24] Id.

[25] Id. at *7–*8.

[26] Id. at *4 n.9 (listing cases).

[27] Id. at *4 n.8.

[28] Id. at *4.

[29] See id. at *7 n.13.

[30] See id. at *4 n.9.

[31] Acorda, 817 F.3d at 760.

[32] Id. at 762.