In a case addressing specific personal jurisdiction arising from two Delaware court cases, the Federal Circuit affirmed the rulings of the lower courts, holding that the minimum–contacts requirement for specific personal jurisdiction was satisfied based on ANDA filings and a generic drug company’s plans to market its proposed drugs in a particular state.  The clear implication of the decision is that specific personal jurisdiction can be found in any state where a drug will be marketed.  Looking forward, any appeal to the Supreme Court will be of great interest to pharmaceutical patent litigants, as it comes following the Supreme Court’s holding in Daimler AG v. Bauman, 134 S. Ct. 746 (2014), where general personal jurisdiction required that the corporation’s contacts with a state be such that it is essentially “at home” in the state.

The decision involved two separate cases from the U.S. District Court for the District of Delaware, both involving Mylan Pharmaceuticals Inc.: Acorda Therapeutics Inc. v. Mylan Pharmaceuticals Inc., 2015-1456 (Fed. Cir. March 18, 2016); and Astrazeneca AB v. Mylan Pharmaceuticals Inc., 2015-1460 (Fed. Cir. March 18, 2016).

The selection of jurisdiction in pharmaceutical cases is a high-stakes decision, and litigators have long been aware of the most advantageous jurisdictions, depending on the metric they preferred to use.[1]  Of course, this type of analysis depends on the existing “rules of the game” governing the litigation from a jurisdiction standpoint, and personal jurisdiction in the context of ANDA filings is inherently complex anyway, since infringement of any patent claim is “hypothetical.”  Prior to Daimler, plaintiffs could at least rely on known rules regarding general personal jurisdiction, however, post-Daimler the jurisdiction playbook was modified to reflect the heightened standard for general personal jurisdiction.  The Federal Circuit’s ruling in the cases above represents still another shift in jurisdiction rules.

The majority opinion, authored by Chief Judge Stark, did not address general personal jurisdiction.  However, with respect to the requirements for specific personal jurisdiction, the court held that Mylan’s intent to sell its drugs in Delaware, along with the presence of a distribution network was sufficient to find that personal jurisdiction requirement was met.

Mylan seeks approval to sell its generic drugs throughout the United States, including in Delaware, and it is undisputed that Mylan plans to direct sales of its generic drugs into Delaware.  The complaints in these cases allege that Mylan’s generic drugs would be distributed and sold in Delaware and that Mylan intends to commercially manufacture, use, and sell the generics upon receiving FDA approval.  As Mylan admits, it develops drugs for the entire U.S. market and does some business in every State, either directly or indirectly.  Pursuant to Del. Code Ann. tit. 8, §§ 371(b)(2), 376(a), Mylan has registered to do business in Delaware and appointed an agent to accept service of process there.  Mylan indicated in its certificate of registration that it intends to engage in “[p]harmaceutical manufacturing, distribution and sales” in Delaware, Acorda J.A. 79; AstraZeneca J.A. 65, and Mylan registered with the Delaware Board of Pharmacy as a licensed “Pharmacy-Wholesale” and a “Distributor/Manufacturer CSR.”  And even if Mylan does not sell its drugs directly into Delaware, it has a network of independent wholesalers and distributors with which it contracts to market the drugs in Delaware.  Such directing of sales into Delaware is sufficient for minimum contacts.[2]

A concurring opinion by Judge O’Malley held that Mylan was subject to general personal jurisdiction in Delaware based on a line of Supreme Court cases (not overruled in Daimler) holding “that a corporation may consent to jurisdiction over its person by choosing to comply with a state’s registration statute.”[3]  Judge O’Malley also joined the majority in its holding with respect to specific personal jurisdiction, but for different reasons.   Rather than predicating the exercise of jurisdiction primarily on Mylan’s expression of future interest, the concurrence relied on Calder v. Jones, 465 U.S. 783 (1984), and analogized the filing of the paragraph IV certifications in ANDA applications to acts “calculated and directed to cause harm to the intellectual property rights of a known party with a known location.”[4]

For now, it remains an open question whether the Federal Circuit’s holding with respect to specific personal jurisdiction will be upheld in any appeal to the Supreme Court.  If so, it would mean arriving at such an interpretation thirty years after Congress passed the Hatch-Waxman Act.  My own view is more in line with Judge O’Malley in the concurrence regarding general personal jurisdiction, since with respect to the holding in Daimler, the facts of the current case appears to support the conclusion that AstraZeneca and Acorda were sufficiently “at home” in Delaware for general personal jurisdiction to exist.  In addition to the arguments summarized by Judge O’Malley, Acorda is incorporated in Delaware, and AstraZeneca’s U.S. subsidiary has a principal place of business there.  In Daimler, Mercedes-Benz USA LLC was incorporated in Delaware and had a principal place of business in New Jersey, not in California, where the suit was brought.

[1] For example, PwC’s 2015 Patent Litigation Study illustrates the use a ranking system based on a metric combining time to trial, overall success rate and median damages.

[2] Slip Op at 15.

[3] Slip Op at 7 (concurrence).

[4] Slip Op at 16 (concurrence).

– Bill Reid

This article is for informational purposes, is not intended to constitute legal advice, and may be considered advertising under applicable state laws. The opinions expressed in this article are those of the author only and are not necessarily shared by Dilworth IP, its other attorneys, agents, or staff, or its clients.