Valeant Pharm. N. Am. LLC v. Mylan Pharm. Inc. United States Court of Appeals of the Federal Circuit,2020 978 F.3d 1374

1. Statutory and legal backdrop

Prior to 2017, defendants hoping to transfer Hatch-Waxman cases to a different district generally objected to a plaintiff's chosen venue on personal jurisdiction grounds. We definitively resolved those arguments in Acorda Therapeutics Inc. v. Mylan Pharmaceuticals Inc., 817 F.3d 755 (Fed. Cir. 2016), where we held that planned future acts were sufficient to justify the exercise of specific personal jurisdiction over a defendant in ANDA cases. In Acorda, we held that planned future interactions with the state in the form of marketing activities met the constitutional minimum requirements for personal jurisdiction. Id. at 760. While we did not address any statutory venue questions and specifically disclaimed having done so, this holding was important to the then-extant venue analysis because, at that point in time, our case law effectively had equated personal jurisdiction with venue by incorporating the definition of “reside” in the general venue statute, 28 U.S.C. § 1391(c)(2), into § 1400(b). See VE Holding Corp. v. Johnson Gas Appliance Co., 917 F.2d 1574, 1584 (Fed. Cir. 1990) (holding that changes to the general venue statute meant that, in patent cases, corporations reside in every venue where personal jurisdiction is proper). Thus, if personal jurisdiction over an ANDA filer could be obtained in any district where that filer intended to market the generic product described in the ANDA, then venue under § 1400(b) would be proper in the same district because the ANDA filer would be deemed to “reside” there for venue purposes as well.

The practical significance of Acorda was markedly contracted when the Supreme Court changed the venue landscape for patent cases in TC Heartland. That decision not only overturned VE Holding and its progeny, it reopened the effectively resolved question of where Hatch-Waxman cases could be venued.

When faced with other questions growing out of TC Heartland, we have narrowly construed the requirements of venue in patent cases. In Cray, for example, we narrowly construed § 1400(b)'s requirement of a “regular and established place of business.” 871 F.3d at 1361 (“[T]he requirement of venue is specific and unambiguous; it is not one of those vague principles which, in the interests of some overriding policy, is to be given a liberal construction.” (quoting Schnell v. Peter Eckrich & Sons, Inc., 365 U.S. 260, 264, 81 S.Ct. 557, 5 L.Ed.2d 546 (1961))). We held that (1) there must be “a physical, geographical location in the district from which the business of the defendant is carried out”; (2) the defendant's presence “must for a meaningful time period be stable, established”; and (3) “it must be a place of the defendant.” Id. at 1362–63 (emphasis in original). In In re Google LLC, we further reinforced the narrowness of the venue inquiry by clarifying that the venue statute excludes “agents' activities, such as maintenance, that are merely connected to, but do not themselves constitute, the defendant's conduct of business . … ” 949 F.3d 1338, 1347 (Fed. Cir. 2020); see also id. at 1346 (“[T]he Supreme Court has cautioned against a broad reading of the venue statute.”). Consistently, we have warned that “[c]ourts should be mindful of [the specific and unambiguous nature of venue] in applying the statute and be careful not to conflate showings that may be sufficient for other purposes, e.g., personal jurisdiction or the general venue statute, with the necessary showing to establish proper venue in patent cases.” Cray, 871 F.3d at 1361.

We have had no chance since TC Heartland to address the question of where infringement occurs in an ANDA case, however. District courts have struggled with the question and two competing views have emerged. The first significant case to address the question was Bristol-Myers Squibb, 2017 WL 3980155. There, the district court identified what it called “an almost impenetrable problem” of reconciling the venue statute's use of the present perfect tense (“where the defendant has committed acts of infringement” (emphasis added)) with the Hatch-Waxman scheme, which focuses on potential future acts. Id. at *6–7. Ultimately, the court reasoned that, because the actual substance of ANDA litigation is not about the documents filed with the FDA but about whether potential future conduct would infringe a valid patent, it must be those future acts that are relevant to the venue analysis. Id. at *8. The court concluded that “[t]he submission of an ANDA is a stand-in that serves to move forward in time the infringement and invalidity challenges that otherwise would come later in time, such as after approval or marketing of the ANDA drug.” Id. And, though acknowledging that it was not controlling of the issue presented, the court noted that our Acorda decision supported the result reached. Id. at *8–10.

When faced with the same question a few months later, one district court in the District of New Jersey adopted the reasoning in Bristol-Myers Squibb. See Celgene Corp. v. Hetero Labs Ltd., No. 17-cv-3387-ES-MAH, 2018 WL 1135334, at *3 (D.N.J. Mar. 2, 2018). On that basis, it denied a motion to dismiss for improper venue filed by some of the generic defendants in that case.

A district court in the Northern District of Texas respectfully disagreed with the Delaware court's reasoning. Galderma Labs., L.P. v. Teva Pharms. USA, Inc., 290 F. Supp. 3d 599, 606–09 (N.D. Tex. 2017). The court concluded both that § 1400(b) requires a past infringement and that the plain language of the Hatch-Waxman Act does not identify any act of infringement other than the ANDA submission. Id. at 607–08. The court reasoned that, because the potential future acts that the Hatch-Waxman act anticipates are speculative—many actions never happen precisely because of the litigation—they cannot control the venue of the action. Id. at 608. Noting that Cray warned away from conflating the personal jurisdiction and venue analyses, the court held that only the locations where the ANDA materials were prepared and from which it was submitted are relevant to the venue analysis. Id. at 608–09.

The district court's opinion in this case took a position akin to that taken by the district court in the Northern District of Texas. We agree with the district court that venue is improper in New Jersey as to MPI and Mylan Inc. For the reasons discussed below, we hold that venue in Hatch-Waxman cases must be predicated on past acts of infringement—i.e., acts that occurred before the action alleging infringement was filed. And we hold those acts occur only in districts where actions related to the ANDA submission occur.

2. Venue was not available in New Jersey for MPI and Mylan Inc

We review whether venue is proper under § 1400(b) de novo. Westech Aerosol Corp. v. 3M Co., 927 F.3d 1378, 1381 (Fed. Cir. 2019). This is an issue unique to patent law and is therefore governed by Federal Circuit precedent. ZTE, 890 F.3d at 1012.

We begin our analysis with the plain language of the statutes. At least by the time briefing was complete in this appeal, both parties agreed that § 1400(b) requires a past act of infringement. See Appellees' Br. 14–21; Appellants' Reply Br. 5. Specifically, “has committed acts of infringement,” a present perfect phrase, counsels that the acts accused of infringement must have already occurred. This understanding is supported by Congress's choice of words for the rest of the provision. Congress included two phrases that are plainly in the present tense (“where the defendant resides” and “where the defendant … has a regular and established place of business”), indicating that its choice to place the infringement in the past was intentional. The heart of the dispute, therefore, is the nature and scope of the act of infringement defined by 35 U.S.C. § 271(e)(2).

As noted, the Hatch-Waxman Act makes it “an act of infringement to submit [an ANDA] for a drug claimed in a patent or the use of which is claimed in a patent … if the purpose of such submission is to obtain approval under such Act to engage in the commercial manufacture, use, or sale of a drug … claimed in a patent or the use of which is claimed in a patent before the expiration of such patent.” 35 U.S.C. § 271(e)(2). A plain language reading of this provision directs us to the conclusion that it is the submission of the ANDA, and only the submission, that constitutes an act of infringement in this context. Valeant makes several arguments as to why we should understand § 271(e)(2) as encompassing more. None persuade us to reach a different conclusion.

Valeant first argues that the Hatch-Waxman act of infringement is “artificial” and, therefore, requires us to look to planned future conduct to define what is really infringing. Appellants' Br. 21–25. The Supreme Court, our court, and district courts have referred to the ANDA submission as an “artificial act of infringement.” See, e.g., Eli Lilly & Co. v. Medtronic, Inc., 496 U.S. 661, 678, 110 S.Ct. 2683, 110 L.Ed.2d 605 (1990); Acorda, 817 F.3d at 760; Belcher Pharms., LLC v. Int'l Medication Sys., Ltd., 379 F. Supp. 3d 326, 330 (D. Del. 2019). The Hatch-Waxman Act itself never says the act that constitutes infringement is artificial, however. It speaks in real terms—submission of the ANDA is the infringing act. It does so, moreover, after declaring other acts, which otherwise may have been infringing, to be non-infringing when undertaken solely for purposes of requesting regulatory approval to market a drug—i.e., solely for purposes of submitting the ANDA. 35 U.S.C. § 271(e)(1). Thus, the statute “artificially” declares certain very real acts of infringement to be non-infringing acts and other acts that would not otherwise constitute infringement to be acts of infringement. But, in both instances the result is real; the statute delineates which acts may or may not give rise to a cause of action under the Hatch-Waxman Act. The language used by courts to characterize Hatch-Waxman cases does not change that an ANDA submission is a real, albeit statutorily created, act of infringement. See Eli Lilly, 496 U.S. at 678, 110 S.Ct. 2683 (The Hatch-Waxman Act creates “a highly artificial act of infringement that consists of submitting an ANDA.” (emphasis added)).

Valeant next focuses on the nature and substance of Hatch-Waxman litigation and argues that the act of infringement must encompass more than just submission of the ANDA. Appellants' Br. 24–25. As noted, it is true that the judicial inquiry on the merits once an action has been commenced considers the ANDA defendant's potential future conduct—i.e., whether the conduct in which that defendant would like to engage would infringe a valid patent. The content of the litigation does not, however, turn potential future acts into past infringement. Under the plain language of the statute, the only past infringing act is the ANDA submission, which creates the right to bring suit in the first instance. The result of virtually all Hatch-Waxman litigation is, moreover, that no post-submission infringement happens. Sales and offers for sale of the ANDA product are either non-infringing as determined through the litigation, or such acts typically never occur. In that ordinary circumstance (where there is no at-risk market entry of the generic), the only concrete locations that will ever be touched by a non-hypothetical past act of infringement are those connected to the submission of the ANDA itself.

Valeant also argues that congressional intent supports its interpretation. Appellants' Br. 34–39. Valeant argues that Congress must have meant to allow venue in all the places that might have been available had a generic entered the market at-risk. The statute does not say that, however. Importantly, the Supreme Court told us several things in TC Heartland. First, that its own decision in Fourco Glass Co. v. Transmirra Products Corp., 353 U.S. 222, 77 S.Ct. 787, 1 L.Ed.2d 786 (1957), made clear that Congress enacted § 1400(b) in 1948 to be a standalone venue statute for patent cases. TC Heartland, 137 S. Ct. at 1519. Second, that the term “resides” in the first clause of § 1400(b) was meant to have the same meaning in 1948 as the term “inhabits” had in the earlier version of that statute—i.e., that corporations were only subject to suit in patent cases under the first clause of § 1400(b) in their state of incorporation. Id. Third, that Congress expressed no intention to alter either clause of § 1400 in 1988 when it enacted amendments to the general venue statute and made that intention even clearer when it enacted the current version of the general venue statute in 2011. Id. at 1521. Given this guidance, we similarly must assume that, when Congress enacted the Hatch-Waxman Act in 1984, it did so with a clear understanding of where § 1400(b) allowed patent actions to be commenced at that time. And, we must assume that, when it excepted Hatch-Waxman cases from the new joinder provisions for patent cases enacted in 2011, Congress understood that it was not sub silentio also excepting Hatch-Waxman cases from 1400(b). As the Court noted in TC Heartland, when Congress intends to effect a change as sweeping as a revision to § 1400(b), “it ordinarily provides a relatively clear indication of its intent in the text” of the statute. Id. at 1520 (citing United States v. Madigan, 300 U.S. 500, 506, 57 S.Ct. 566, 81 L.Ed. 767 (1937)). We can glean no such clear guidance from the text of the Hatch-Waxman Act.

Valeant further contends that the second clause of the patent venue statute, allowing venue where an act of infringement occurs if the accused infringer has a regular and established place of business, is rendered superfluous by a plain-language reading of the statute. Appellants' Br. 25–26. Surely, a statute should be interpreted to give all of its provisions meaning. Corley v. United States, 556 U.S. 303, 314, 129 S.Ct. 1558, 173 L.Ed.2d 443 (2009). But Valeant's argument fails to recognize that the second clause retains meaning in every other type of patent infringement case and will be operative in every Hatch-Waxman case where the ANDA is submitted from a venue different than the submitter's place of incorporation.

Next, Valeant argues that we should hold that an ANDA submission is a nationwide act of infringement based on a “conceptual” aspect beyond the literal act defined in the statute. Appellants' Br. 28; Appellants' Reply Br. 16–21. It cites Transocean Offshore Deepwater Drilling, Inc. v. Maersk Contractors USA, Inc., 617 F.3d 1296, 1309–11 (Fed. Cir. 2010), where we considered which locations can logically be said to be the locations of sales and offers for sale in patent cases. We held that those acts can occur in more than one location. The analysis looks to both the location of the parties at the time of contracting and to the location of anticipated performance. Valeant argues for a similar, but markedly more expansive, analysis in this case. Valeant would have us hold that the literal act of infringement—submission of the ANDA—encompasses a vast “conceptual” element of nationwide infringement in every judicial district. While we have held that sales and offers for sale have both physical and conceptual elements, see Litecubes, LLC v. N. Light Prods., Inc., 523 F.3d 1353, 1369–70 (Fed. Cir. 2008), the conceptual elements in those cases were connected to common law understandings of “sales” and “offers for sale.” There is no analogous common law here that would compel a conclusion that submitting an ANDA has a purely conceptual effect of causing infringement everywhere in the United States. To reach such a broad interpretation of the infringing act, without any textual hook in the statute, would be a bridge too far.

Valeant does have strong policy reasons for adopting its reading of the statutes. For example, a generic company may “game” the system to avoid venue in certain jurisdictions. Appellants' Reply Br. 20. And brand name drug companies may “be required to file and maintain largely identical suits in multiple districts” causing an increase in time and expense to resolve the cases and “result[ing] in inconsistent judgments.” Bristol-Myers Squibb, 2017 WL 3980155, at *12 n.17. While intuitively persuasive, these policy arguments cannot trump the plain language of § 271(e)(2) and the requirements of § 1400(b). We are, as we must be, guided in our analysis by controlling precedent stating that venue is not amenable to such policy concerns. See Cray, 871 F.3d at 1361 (quoting Schnell, 365 U.S. at 264, 81 S.Ct. 557). Congress can revise the two statutes to the extent it finds these, or other, policy concerns compelling; all we can do is give the statutes their current plain meaning.

Finally, Valeant looks to Acorda. Appellants' Br. 29–33. Acorda did not, however, address proper venue—a question of statutory interpretation. It was focused on the narrow constitutional question of whether minimum contacts were present for purposes of personal jurisdiction based on the ANDA submission. We held that submission with an intent to distribute the generic product in a given state was sufficient for personal jurisdiction purposes. Acorda, 817 F.3d at 762. Acorda said nothing about whether an act of infringement had already occurred in any such state or venue. While our then-current venue law meant Acorda had a big impact on the venue analysis in Hatch-Waxman cases, we did not address venue in the case. And, though our venue law has changed, we cannot stretch Acorda to reach that issue now. As we indicated then, we would be remiss to treat venue and personal jurisdiction as the same inquiry. See id. at 763.

Accordingly, we hold that, in Hatch-Waxman cases, venue is not proper in all judicial districts where a generic product specified in an ANDA is likely to be distributed. It is proper only in those districts that are sufficiently related to the ANDA submission—in those districts where acts occurred that would suffice to categorize those taking them as a “submitter” under § 271(e). We find ourselves bound by the plain language of the statutes and a directive from the Supreme Court that venue “is not one of those vague principles which, in the interest of some overriding policy, is to be given a liberal construction.” Schnell, 365 U.S. at 264, 81 S.Ct. 557 (internal quotation marks omitted).

The district court found that no act involved in the submitting of the ANDA occurred in New Jersey. Valeant does not challenge that finding on appeal. We therefore affirm the district court's dismissal of MPI and Mylan Inc. for improper venue.