Uncertainty Surrounding Personal Jurisdiction in Hatch-Waxman Litigation

IP LAWSUITS

A few years ago, there seemed to be a consistent approach to personal jurisdiction in Hatch-Waxman cases.  Generic drug manufacturers typically file new drug applications throughout the country and district courts would assert general jurisdiction over them because there was no “real” act of infringement in any district.  This broad application of general jurisdiction was purportedly reined in by the Supreme Court in Goodyear Dunlopand Daimler AGSee Goodyear Dunlop Tires Operations, S.A. v. Brown, 131 S. Ct. 2846, 180 L. Ed. 2d 796 (U.S. 2011); Daimler AG v. Bauman, 134 S. Ct. 746, 187 L. Ed. 2d 624 (2014).  In Daimler, the Court ruled that general jurisdiction is appropriate where the defendant’s forum contacts render it “essentially at home.”  Daimler at 769.  Accordingly, generic drug manufacturers would no longer be subject to general jurisdiction wherever they had substantial sales.  Id. at 750.

Surprisingly, district courts’ initial reaction to Goodyear Dunlop and Daimler was to continue asserting general jurisdiction in a similar all-encompassing manner as before the decisions.  District courts in New Jersey and Delaware exercised general jurisdiction based on the companies’ registrations to do business in the respective states.  See Otsuka Pharm. Co. v. Mylan Inc., No. CIV.A. 14-4508 JBS, 2015 WL 1305764, (D.N.J. Mar. 23, 2015); Acorda Therapeutics, Inc. v. Mylan Pharm. Inc., 78 F. Supp. 3d 572 (D. Del. 2015).  Some district courts have refrained from finding that general jurisdiction exists but still used other broad approaches to exercise personal jurisdiction.  For example, a district court in Indiana found the existence of personal jurisdiction based solely on a company’s receipt of a notice letter.  See Eli Lilly & Co. v. Nang Kuang Pharm. Co., No. 1:14-CV-01647-TWP, 2015 WL 5022920, at *2 (S.D. Ind. Aug. 24, 2015).  After these decisions and others similar to them, it seemed as though Goodyear Dunlop and Daimler’s holdings did not rein in the application of general jurisdiction in Hatch-Waxman cases as much as previously expected.  

Last month, two Delaware federal judges changed course by dismissing two separate patent cases against generic drug companies on jurisdictional grounds.  See Purdue Pharma L.P. v. Collegium Pharm., Inc., No. CV 15-260-SLR, 2015 WL 4653164 (D. Del. Aug. 6, 2015); Novartis Pharm. Corp. v. Zydus Noveltech Inc., No. 14-CV-1104-RGA, 2015 WL 4720578 (D. Del. Aug. 7, 2015).  In both cases, the generic defendants moved to dismiss because they did not have sufficient contacts in the state.  The brand name drug makers argued that the generic defendants had some limited contact with Delaware and one argued that the proposed generic drug would be sold in Delaware.  The judges stated that the contacts were not enough to find jurisdiction.  Further, one judge stated that the potential sale of the drug in Delaware was “entirely speculative” before any drug had been approved.   None of these district court general jurisdiction decisions turned on whether the company had substantial sales in the forum, so it remains to be seen how the courts will handle such an issue. 

The Federal U.S. Circuit Court of Appeals appears set to weigh in on the increasingly controversial personal jurisdiction issue later this year since two of these generic drug patent cases are currently on appeal. See Acorda Therapeutics, Inc. v. Mylan Pharm. Inc., 78 F. Supp. 3d 572 (D. Del. 2015); AstraZeneca AB v. Mylan Pharm., Inc., 72 F. Supp. 3d 549 (D. Del. 2014) motion to certify appeal granted sub nom. Astrazeneca AB v. Aurobindo Pharma Ltd., No. CV 14-664-GMS, 2014 WL 7533913 (D. Del. Dec. 17, 2014).  Those appeals are now docketed as Case Nos. 15-1456 and 15-1460 and the case documents can be found here.

Photo by Root66 and available at https://commons.wikimedia.org/wiki/File%3AGelules-et-comprimes.jpg

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