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Novartis Pharmaceuticals Corporation v. Accord Healthcare Inc.

United States District Court, D. Delaware

June 17, 2019

ACCORD HEALTHCARE INC., et al., Defendants.



         Defendant MPI Pharmaceutical Inc. ("Defendant" or "MPI") has moved to dismiss this action as against it due to improper venue. (D.I. 118) Plaintiff Novartis Pharmaceuticals Corporation ("Novartis" or "Plaintiff) sued MPI and 22 additional groups of generic drug makers, all of whom had filed abbreviated new drug applications ("AND As") related to the drug fingolimod, pursuant to the Hatch-Waxman Act, 21 U.S.C. § 355(j). The parties and the Court have coordinated discovery and scheduling for all of the related cases. (See D.I. 216) (joint scheduling order)[1]

         MPI, a West Virginia corporation, filed its motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(3). After the matter was fully briefed, this Court issued its decision in Bristol-Meyers Squibb Co. v. Aurobindo Pharma USA Inc., 2018 WL 5109836 (D. Del. Oct. 18, 2018) ("BMS IF), which dismissed a different Hatch-Waxman action against MPI based on improper venue here in the District of Delaware. The Court then ordered supplemental briefing, to permit the parties to address the impact of BMSII on MPI's motion here. (See D.I. 209; see also D.I. 119, 163, 206, 219, 220, 224, 225) In its supplemental briefing, Novartis insisted MPI's motion should still be denied and also sought, in the alternative, venue-related discovery (a request it had also made in its original briefing) and leave to file an amended complaint. MPI argued that the BMS II decision only strengthened the basis for dismissal here.

         Having carefully considered all of the materials before the Court, IT IS HEREBY ORDERED THAT MPI's motion (D.I. 118) is GRANTED and Plaintiffs request for discovery and to file an amended complaint is DENIED.

         Generally, "venue provisions are designed, not to keep suits out of the federal courts, but merely to allocate suits to the most appropriate or convenient federal forum." Brunette Mack Works, Ltd. v. Kockum Indus., Inc., 406 U.S. 706, 710 (1972). When a party feels it has been sued in an improper federal venue, it may move to dismiss or transfer venue under Rule 12(b)(3). See also 28 U.S.C. § 1406(a) (stating that court granting Rule 12(b)(3) motion based on improper venue "shall dismiss, or if it be in the interest of justice, transfer such case to any district or division in which it could have been brought"). When such a motion is filed, the Court must determine whether venue is proper in accordance with the applicable statutes. See Albright v. W.L. Gore & Assocs., Inc., 2002 WL 1765340, at *3 (D. Del. July 31, 2002).

         In a patent infringement action, venue is governed solely and exclusively by the patent venue statute, 28 U.S.C. § 1400(b) ("Section 1400(b)"). See TC Heartland LLC v. Kraft Foods Grp. Brands LLC, 137 S.Ct. 1514, 1516 (2017). The general venue statute, 28 U.S.C. § 1391 ("Section 1391"), does not have any application in a patent case. See Id. at 1521. Section 1400(b) provides: "Any civil action for patent infringement may be brought in the judicial district [i] where the defendant resides, or [ii] where the defendant has committed acts of infringement and has a regular and established place of business" (internal numbering added).

         Generally, "it is not necessary for the plaintiff to include allegations in his complaint showing that venue is proper." Great W. Mining & Mineral Co. v. ADR Options, Inc., 434 Fed.Appx. 83, 86-87 (3d Cir. 2011). However, "upon motion by the Defendant challenging venue in a patent case, the Plaintiff bears the burden of establishing proper venue." In re ZTE (USA) Inc., 890 F.3d 1008, 1013 (Fed. Cir. 2018). The Court will accept any venue-related allegations in the complaint as true, unless they are contradicted by the defendant's evidence. See Bockman v. First Am. Mktg. Corp., 459 Fed.Appx. 157, 158 n.l (3d Cir. 2012); In re First Solar, Inc. Derivative Litig., 2013 WL 817132, at *2 (D. Del. Mar. 4, 2013). In addition, the Court may consider affidavits. See Bockman, 459 Fed.Appx. at 161 (affirming dismissal of complaint "because Defendants satisfied their burden of showing improper venue by offering evidence that the wrongful acts alleged in the Complaint did not occur in Pennsylvania, and Plaintiffs failed to rebut that evidence").

         Here, then, the burden is on Novartis to demonstrate that venue in this District is proper either because [i] MPI resides in Delaware or [ii] MPI has a regular and established place of business in Delaware and has committed infringing acts here. MPI contends that Novartis has failed to make the required showing under either prong of Section 1400(b). (See D.I. 119 at 4-6)

         Novartis first responds that MPI is urging the Court to undertake an incorrect analysis. To Novartis, the general venue statute, Section 1391, and not the patent venue statute, Section 1400(b), governs venue in Hatch-Waxman cases. (D.I. 163 at 7-15; D.I. 220 at 1) Specifically, Novartis asserts that "a Hatch-Waxman case under 35 U.S.C. § 271(e) is not a 'civil action for patent infringement' under Section 1400(b)," because it "provides for unique forms of regulatory relief prior to actual infringement." (D.I. 163 at 9-10) Novartis likens Hatch-Waxman claims to suits for a declaratory judgment, arguing that "[n]o principled reason exists to treat those two sorts of claims differently for venue purposes." (Id. at 11-12) In making this argument, Novartis emphasizes the disconnect between the word choice of the patent venue statute - "has committed" acts of infringement - and Hatch-Waxman cases, in which the proposed infringing product has not yet been marketed or sold. (Id. at 13) (citing Bristol-Myers Squibb Co. v. MP I Pharm. Inc., 2017 WL 3980155, at *6 (D. Del. Sept. 11, 2017)) Novartis concludes that using Section 1391 leads to the most efficient outcome of permitting it to litigate its similar patent disputes against all ANDA-filing defendants in a single action in a single District, thus "encouraging the uniform determination of patent rights." (Id. at 14-15)

         After Novartis filed its answering brief, but before MPI filed its reply brief, this Court issued its decision in BMSII, rejecting the patentee's argument there that Section 1391, and not Section 1400(b), governs venue in Hatch-Waxman cases. See BMS II at *5-6. In its supplemental briefing, Novartis asks the Court to "reconsider its decision" in BMS II. (D.I. 220 at 3) While Novartis' briefing on the issue is far more extensive than BMS' had been, it does not persuade the Court to reach a different conclusion.

         As in BMS II, the Court finds that the instant action is "incontestably a 'civil action for patent infringement,' governed solely and exclusively by § 1400(b)." BMS II at *6. Novartis, like BMS, expressly alleged in its complaint that it was filing a "patent infringement" action against MPI and cited solely Section 1400(b) as the statutory basis for venue. Novartis' cause of action arises under Section 271(e)(2)(A), which makes it an "act of patent infringement" to do as MPI is alleged to have done here: file an ANDA with the U.S. Food and Drug Administration seeking approval of a pharmaceutical product that reads on a valid, enforceable, unexpired patent. Under TC Heartland, the proper venues for such patent infringement actions are determined solely and exclusively by Section 1400(b).

         Having rejected Novartis' contention that Section 1391, and not Section 1400(b), should govern the venue analysis in this Hatch-Waxman infringement action, the Court next turns to whether Novartis has met its burden to show that venue is proper in this District under Section 1400(b). MPI is not incorporated in Delaware and, therefore, indisputably does not reside here. Nevertheless, Novartis contends that it should be given an opportunity to pursue venue-related discovery, which would, it insists, likely yield sufficient evidence that some MPI-related entity is incorporated in Delaware and/or maintains a regular and established place of business here, and these contacts might be imputable to MPI itself. (D.I. 163 at 17-19)[2]

         "[W]here issues arise as to jurisdiction or venue, discovery is available to ascertain the facts bearing on such issues." Oppenheimer Fund, Inc. v. Sanders, 437 U.S. 340, 351 n.13 (1978). In the context of jurisdictional discovery, the Third Circuit has instructed that "unless a plaintiffs claim is 'clearly frivolous,' jurisdictional discovery should be allowed." Rocke v. Pebble Beach Co., 541 Fed.Appx. 208, 212 (3d Cir. 2013). The law is equally clear, however, that a plaintiff may not "undertake a fishing expedition based only upon bare allegations, under the guise of jurisdictional discovery." Eurofins Pharma U.S. Holdings v. BioAlliane Pharma SA, 623 F.3d 147, 157 (3d Cir. 2010). To show that discovery is warranted, a party must, at a minimum, state a non-frivolous basis for venue and do so with "reasonable particularity." Eastman Chem. Co. v. AlphaPet, Inc., 2011 WL 6004079, at *2 (D. Del. Nov. 4, 2011).

         In BMS II, this Court found that, after a year of discovery directed at (in part) MPI, any further discovery would amount to a fishing expedition. See BMS II at *5. There, the parties debated the relevance of the "relationship between MPI and [MPI] Securitization" (a sister company incorporated in Delaware), which the Court found not to be a basis for venue. Id. at *4-5. Importantly, this Court also found no "evidence of fraud, unfairness, or injustice," nor any likelihood that further ...

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