On Jun 17, 2019 Delaware Court granted Mylan’s (MPI) motion to dismiss for improper venue & denied Novartis’ motion for additional venue discovery.
In a patent infringement action, venue is governed solely and exclusively by the patent venue statute, 28 U.S.C. § 1400(b) [TC Heartland LLC v. Kraft Foods Grp. Brands LLC, 137 S. Ct. 1514, 1516 (2017)]. The general venue statute, 28 U.S.C. § 1391, does not have any application in a patent case. 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.”
Novartis argued that, the general venue statute, Section 1391, and not the patent venue statute, Section 1400(b), governs venue in Hatch-Waxman cases. 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.” 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.”
But, Court said that as in BMS II (Apixaban case), this court found that the instant action is “incontestably a ‘ civil action for patent infringement,’ governed solely and exclusively by§ 1400(b).” 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. Moreover, under TC Heartland, the proper venues for such patent infringement actions are determined solely and exclusively by Section 1400(b).
Court next turned to whether Novartis has met its burden to show that venue is proper in this District under Section 1400(b). Court said that 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 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. But court said that 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. In denying the request for discovery, the Court has considered – and rejected- Novartis’ contention that venue may turn out to be proper in this District based on the existence of a single MPI employee who lives and works in Delaware. Court further said that nothing in the record supports Novartis’ assertion that “it is not happenstance that [the employee] lives in the very territory she covers.” Also, it is uncontested that Delaware is not the employee’s only territory. No evidence indicates that MPI required or even encouraged the employee to live in Delaware. Merely doing business in Delaware does not make Delaware a regular and established place of business for MPI. “The statute clearly requires that venue be laid where the defendant has a regular and established place of business, not where the defendant’s employee owns a home in which he carries on some of the work that he does for the defendant.”
Finally, Novartis included a new, additional request in its supplemental post-BMS II briefing. Novartis asked for leave to file an amended complaint which would include a declaratory judgment claim against MPI, pursuant to 28 U.S.C. Section 2201. Novartis states that by seeking this amendment, it is opting to forgo “the unique regulatory remedies that [the Hatch-Waxman Act, 35 U.S.C. § 271(e)] provides,” and that it is willing to do so “in order to keep its case against MPI together with the cases against over 20 other generics in this district.” But court said that Novartis did not include a declaratory judgment claim in its original complaint, did not seek or suggest it would seek leave to amend to add such a claim during the first two months that MPI’s motion to dismiss was pending, and only first suggested it wished to pursue this approach in supplemental briefing the Court sua sponte invited after issuing its BMS II decision. Novartis could and should have anticipated that the Court might resolve MPI’s co-pending motion to dismiss in BMS II in favor of MPI, and should have moved to amend substantially sooner.
Court finally said that while it recognizes that this decision is prejudicial to Novartis, Novartis is free to file a new declaratory judgment action against MPI, in any District in which it believes it can prove venue is proper (which may include Delaware).