RODNEY GILSTRAP, District Judge.
Before the Court is Defendant Beloteca, Inc's ("Beloteca") Motion to Dismiss for Lack of Personal Jurisdiction, Improper Venue, and Prior Pending Action (the "Motion"). (Dkt. No. 21.) Having considered the Motion and the relevant authorities, the Court is of the opinion that the Motion should be
Plaintiff Apicore US LLC ("Apicore") owns U.S. Patent Nos. 8,969,616 (the "'616 Patent") and 9,353,050 (the "'050 Patent") (collectively, the "Asserted Patents"). (Dkt. No. 1 ¶ 28.) The claims of the Asserted Patents cover a highly pure isosulfan blue ("ISB") active pharmaceutical ingredient ("API") and methods for making the same. (See Dkt. No. 1-1 at Abstract (the '616 Patent); Dkt. No. 1-2 at Abstract (the '050 Patent).) On March 4, 2019, Apicore and Co-plaintiff Mylan Institutional LLC ("Mylan") (collectively, "Plaintiffs") filed a Declaratory Judgment Action Of Infringement based on the Asserted Patents against Beloteca for its intended "manufacture, use, offer to sell, sale, and/or import into the United States an [ISB] injection product" (the "Accused ISB Product") corresponding to Abbreviated New Drug Application ("ANDA") No. 210714. (Dkt. No. 1 ¶¶ 1-2.)
Beloteca submitted ANDA No. 210714 to the Food and Drug Administration ("FDA") on July 26, 2017, and the FDA approved ANDA No. 210714 on January 16, 2019. (Dkt. No. 37-3; Beloteca, Inc. v. Apicore US LLC, No. 1:19-cv-00360 (N.D. Ill. Jul. 26, 2017) (the "Illinois Action"), Dkt. No. 1 ¶ 27.) One day later, Beloteca filed a declaratory judgment action of non-infringement and invalidity in the Northern District of Illinois directed to the '616 Patent, the '050 Patent, and U.S. Patent No. 7,662,992 (the "'992 Patent").
Apicore is a Delaware limited liability company with a place of business at 49 Napoleon Court, Somerset, New Jersey 08873. (Dkt. No. 1 ¶ 6.) Mylan is a Delaware limited liability company with a place of business at 1718 Northrock Court, Rockford, Illinois 61103. (Dkt. No. 1 ¶ 9.) Mylan is the exclusive licensee of the Asserted Patents for incorporating Apicore's API into an ISB product. (Id. ¶ 29; see also Dkt. No. 5 at 3.) Mylan also filed and obtained an ANDA with the FDA based on the Asserted Patents. See Mylan Institutional LLC v. Aurobindo Pharma Ltd., 857 F.3d 858, 863 (Fed. Cir. 2017). Although Mylan's ISB API is designated by the FDA as the Reference Standard
Beloteca is a California corporation having a place of business at 10525 Vista Sorrento Parkway, Suite 100, San Diego, California 92121. (Illinois Action, Dkt. No. 1 ¶ 3; Dkt. No. 21-1 ¶ 2 (Declaration of Fred Defesche, CEO of Beloteca).) Beloteca is not licensed to do business in Texas, does not have a registered agent in Texas, does not have a Texas Taxpayer Number, is not licensed with the Texas Department of State Health Services, and is not licensed as a distributor of prescription drugs sold in Texas. (Dkt. No. 21-1 ¶¶ 3, 7-9.) To market and sell the Accused ISB Product, Beloteca has entered into a sales, marketing, and distribution agreement (the "TruPharma Agreement") with TruPharma, LLC ("TruPharma"), a Delaware limited liability company with its principal place of business in Florida. (Dkt. No. 37-6 at Background). Since February 3, 2016, TruPharma has been licensed to sell pharmaceutical drugs in Texas. (Dkt. No. 58-5 (Texas HHS website showing license).) Under the TruPharma Agreement, "TruPharma will sell, market and distribute [Beloteca's generic pharmaceutical products] on an exclusive basis in the Territory [i.e., United States]." (See Dkt. No. 37-6 at Background, § 1(y).) The TruPharma Agreement, which does not exclude Texas from the scope of the agreement, also requires TruPharma to "use all commercially reasonable efforts to market and distribute the Product(s) in the Territory" and to "use commercially reasonable efforts to maximize Net Profit." (Id. § 3(a).)
In the instant Motion, Beloteca seeks dismissal of the above-styled case under Federal Rule of Civil Procedure 12(b)(2) and (3) for lack of personal matter jurisdiction, in favor of the forum corresponding to the first-filed action, and for improper venue. (Dkt. No. 21 at 2.) As an alternative to dismissal, Beloteca requests transfer pursuant to 28 U.S.C. § 1406 to either (1) the Northern District of Illinois or (2) the Southern District of California. (Id. at 16.) Likewise, Plaintiffs request that "[i]f this Court is inclined to grant Beloteca's [M]otion, . . . the Court should transfer this action in the interests of justice[ ] [because] [a]ll the preliminary injunction briefing has been before this Court and the parties have already entered into a cross-use agreement for any discovery produced in this action or the Illinois action." (Dkt. No. 37 at 11 n.8.) This notwithstanding, on April 8, 2019, the Northern District of Illinois dismissed the first-filed case before it due to a lack of case or controversy under Art. III. (See Illinois Action, Dkt. No. 43 at 1, 11-12 (Apr. 8, 2019).)
Federal Circuit law governs personal jurisdiction where "a patent question exists." See Celgard, LLC v. SK Innovation Co., 792 F.3d 1373, 1377 (Fed. Cir. 2015). "[W]hether a defendant is subject to specific personal jurisdiction in the forum state involves two inquiries: first, whether the forum state's long-arm statute permits service of process and, second, whether the assertion of jurisdiction is consistent with due process." Id. "Because the Texas long-arm statute extends to the limits of federal due process, the two-step inquiry collapses into one federal due process analysis." Johnston v. Multidata Sys. Int'l Corp., 523 F.3d 602, 609 (5th Cir. 2008); accord Grober v. Mako Prod., Inc., 686 F.3d 1335, 1345 (Fed. Cir. 2012) ("California and federal due process limitations are coextensive, and thus the inquiry collapses into whether jurisdiction comports with due process.") (internal quotation marks omitted).
For due process to be satisfied, the defendant must have "certain minimum contacts with [the forum] such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice." Int'l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945) (internal quotations omitted). Upon a showing of purposeful minimum contacts, the defendant bears the burden to prove unreasonableness. Elecs. for Imaging, Inc. v. Coyle, 340 F.3d 1344, 1350 (Fed. Cir. 2003). In rare circumstances, a defendant may defeat the exercise of personal jurisdiction by "present[ing] a compelling case that the presence of some other considerations would render jurisdiction unreasonable." Burger King Corp. v. Rudzewicz, 471 U.S. 462, 477 (1985).
Beloteca argues that "[t]he act of merely filing an ANDA, standing alone, is insufficient as a matter of law to establish personal jurisdiction." (Dkt. No. 21 at 17.) Beloteca also argues that Mylan's reliance on Acorda Therapeutics Inc. v. Mylan Pharm. Inc., 817 F.3d 755 (Fed. Cir. 2016), is misplaced and cannot be reconciled with Zeneca Ltd. v. Mylan Pharm., Inc., 173 F.3d 829 (Fed. Cir. 1999), where filing an ANDA did not subject the applicant to personal jurisdiction even in the district where the ANDA was filed and even when the ANDA included a paragraph IV certification. (Dkt. No. 52 at 9.) Beloteca contends that neither Acorda nor its progeny found personal jurisdiction based solely on the act of submitting an ANDA. (Id. at 9.) Rather, those cases involved large, established defendants with already-existing distribution networks in the forums-at-issue with specific and particular contacts unique to those forums, in addition to filing an ANDA. (Id.) Beloteca argues, however, that it is a small startup company that "did not yet have any marketing or distribution channels set up and did not yet have any contacts with this forum into which it is being haled into court."
Plaintiffs argue that this Court and its sister courts have found, in view of Acorda, sufficient minimum contacts to support specific personal jurisdiction where a defendant's "ANDA [seeks] to market [its drug] nationwide, including in Texas and within this district as [Plaintiff's] Complaint plausibly allege[d]." (Dkt. No. 37 at 14-15 (quoting Warner-Chilcott v. Mylan Pharms., Inc., 2:15-CV-01740-JRG-RSP, 2017 WL 603309, at *2 (E.D. Tex. Jan. 19, 2017) (Payne, J.); citing Allergan, Inc. v. Teva Pharm. USA, Inc., No. 2:15-CV-1455-WCB, 2016 WL 1572193, at *3 (E.D. Tex. Apr. 19, 2016) (Bryson, J., sitting by designation) ("The Federal Circuit explained [in Acorda] that by filing an ANDA a drug company `confirm[s] its plan to commit real-world acts that would make it liable for infringement if it commits them without the patentees' permission." (citation omitted))).) Since (1) Beloteca has already received FDA approval for ANDA No. 201714 and (2) the Complaint in this case—which repeats facts set forth in Beloteca's complaint in the Illinois Action—plausibly alleges that Beloteca will manufacture, market, distribute, and sell the Accused ISB Product in the United States, Plaintiffs contend that Beloteca has sufficient contacts with this District for this Court to exercise personal jurisdiction. (Id. at 16-17 (citing Dkt. No. 1 ¶¶ 3, 18, 19).) Plaintiffs also argue that the TruPharma Agreement does not include a carve-out for Texas and thus confirms Beloteca's intent, through TruPharma, to sell, market, and distribute the Accused ISB Product throughout the United States, including in Texas and this District. (Id. at 19-20.)
The Court finds that Beloteca has sufficient contacts with this forum for the Court to exercise personal jurisdiction over Beloteca. Beloteca's ANDA filing and approval—in combination with its intent to market, distribute, and sell the Accused ISB Product through TruPharma's established distribution network, which includes Texas—constitute sufficient minimum contacts with Texas. Beloteca's arguments boil down to two objections: (1) Plaintiffs do not have a cognizable act of infringement under § 271(e) because ANDA No. 201714 did not include a paragraph IV certification; and (2) under Zeneca, the filing of ANDA No. 201714 was not sufficient contact with Texas to support personal jurisdiction, and Acorda is distinguishable. Beloteca is wrong on both points.
First, whether Plaintiffs have a cognizable claim under § 271(e) due to ANDA No. 201714's lack of a paragraph IV certification has little bearing on this Court's personal jurisdiction over Beloteca.
It seems implausible to require a paragraph IV certification to sustain a § 271(e)(2) claim where: (1) a paragraph IV certification is directed to patents—unlike the Asserted Patents—that are listed in the Orange Book, and (2) the first ANDA filer is not required to submit its patents for inclusion in the Orange Book. See 21 C.F.R. § 314.53 ("Who must submit patent information [to the Orange Book]. This section applies to any applicant who submits to FDA an NDA or an amendment to it . . . ."); cf. also C.F.R. § 314.94(a)(12)(i)(A)(4)(i), (ii) ("[T]he [ANDA] applicant shall provide the patent number and certify, in its opinion and to the best of its knowledge . . . that the patent is invalid, unenforceable, or will not be infringed by the manufacture, use, or sale of the drug product for which the abbreviated application is submitted. The applicant shall entitle such a certification `Paragraph IV Certification' . . . . The certification must be accompanied by a statement that the applicant will . . . provid[e] [ ] notice to each owner of the patent or its representative and to the NDA holder.").
Since a second ANDA filer is not required to notify the first ANDA filer that its patent rights may be at risk—as was the situation here—the first and second ANDA filers are not afforded an expedited opportunity to resolve infringement and invalidity disputes prior to the second ANDA filer's market entry. See C.F.R. § 314.107(b)(3)(i)(A) ("[I]f . . . the applicant certifies under . . . 314.94(a)(12) that the relevant patent is invalid, unenforceable, or will not be infringed, and the patent owner or its representative or the exclusive patent licensee brings suit for patent subject matter jurisdiction under both 35 U.S.C. § 271(e)(2) and 28 U.S.C. § 2201."), and Teva Pharm. USA, Inc. v. Abbott Labs., 301 F.Supp.2d 819, 829 (N.D. Ill. 2004) ("The language of § 271(e)(2)(A) does not require that the ANDA contain a certification to constitute an act of infringement."), and Bayer Healthcare LLC v. Norbrook Labs., Ltd., No. 08-C-0953, 2009 WL 6337911, at *9 (E.D. Wis. Sept. 24, 2009) (holding in a case involving an Abbreviated New Animal Drug Application that "a Paragraph IV certification is not required to trigger an infringement action under § 271(e)(2)"). infringement within 45 days of receipt of the notice of certification from the applicant," approval of the ANDA may be delayed.). This seems to be an inadvertent loophole in the Hatch-Waxman statutory framework in which "Congress struck a balance between two competing policy interests: (1) inducing pioneering research and development of new drugs and (2) enabling competitors to bring low-cost, generic copies of those drugs to market." Andrx Pharm., Inc. v. Biovail Corp., 276 F.3d 1368, 1371 (Fed. Cir. 2002); see also Allergan, Inc. v. Alcon Labs., Inc., 324 F.3d 1322, 1337 (Fed. Cir. 2003) ("The patentee, in turn, would profit by enforcing its patent rights before a generic drug manufacturer has moved into the market as a competitor. This balance is what Congress intended when it created the artificial act of infringement under section 271(e)(2)."); Bristol-Myers Squibb Co. v. Royce Labs., Inc., 69 F.3d 1130, 1132 (Fed. Cir. 1995) ("The Hatch-Waxman Act strikes a balance between the interests of a party seeking approval of an ANDA and the owner of a drug patent . . . . [O]nce it is clear that a party seeking approval of an ANDA wants to market a patented drug prior to the expiration of the patent, the patent owner can seek to prevent approval of the ANDA by bringing a patent infringement suit.").
Beloteca's conduct in the Illinois Action—filing an ANDA and challenging the validity and infringement of the Asserted Patents through a declaratory judgment action—mirror the practical results of an ANDA filer's paragraph IV certification—i.e., challenging the validity and/or the infringement of any patents covering the drug in question. Plaintiffs' patent rights should be respected, even if they were not NDA filers. Accordingly, the Court finds that Plaintiffs have a cognizable claim against Beloteca under § 271(e)(2).
Second, the Court finds that Beloteca reads Zeneca too narrowly and misses the distinction of Acorda. In Zeneca, the question was whether personal jurisdiction existed in a Maryland district court where the defendant's
Additionally, Beloteca's attempt to limit Acorda to large, established defendants with already-existing distribution networks is not persuasive. The Acorda court makes no such factual limitation; it focused instead on the alleged infringer's "future real-world market acts . . . sufficiently connected to the ANDA that trigger[ed] the litigation." Acorda, 817 F.3d at 761; see also id. at 763 (explaining that because defendant "seeks approval to sell its generic drugs throughout the United States, including in [the forum], and it is undisputed that [the defendant] plans to direct sales of its generic drugs into [the forum] . . . . [s]uch directing of sales into [the forum] is sufficient for minimum contacts").
Here, Beloteca's ANDA No. 210714 has already been approved by the FDA. As to the "something more" directed to this forum, the TruPharma Agreement demonstrates that Beloteca has established distribution channels to market and sell the Accused ISB Products throughout the United States—including Texas—since at least November 18, 2015. (Dkt. No. 37-6 at 1.) The Court finds no meaningful distinction between the "distribution channels" of the defendant in Acorda and those contracted for by Beloteca. See 817 F.3d at 762-63; see also Allergan, 2016 WL 1572193, at *3 (noting that defendants did not "represent[ ] that they will not sell nationally, including in Texas, if they receive FDA approval[,] [n]or . . . offer[ ] any reason to believe that . . . they would sell their product in some States, but not in Texas"). The record before the Court indicates, and this Court finds, that Beloteca has sufficient minimum contacts with this forum for the Court to exercise personal jurisdiction. Accordingly, Beloteca's request to dismiss this case for lack of personal jurisdiction is
Although the first-filed rule would ordinarily counsel transfer of this case to the Northern District of Illinois,
Although Plaintiffs purport to bring a declaratory judgment action under 28 U.S.C. § 1391, Beloteca argues that this case is a really "civil action for patent infringement" under 28 U.S.C. § 1400, where the remedy sought for patent infringement is by declaratory judgment. (Dkt. No. 21 at 14.) Arguing further, Beloteca says that venue in this District is improper because: (1) it is undisputed that Beloteca is incorporated in California, (2) Beloteca has committed no alleged acts of infringement in this District, and (3) it is undisputed that Beloteca has no regular and established place of business in this District. (Id. at 1, 15.) Beloteca also argues that Plaintiffs ignore the fundamental fact that their Complaint seeks to assert rights arising from the Asserted Patents in the form of a particular remedy for threatened infringement. (Id. at 15.) As such, Beloteca contends that the proper interpretation of the language "for patent infringement" in § 1400(b) includes cases that seek to vindicate rights under the Patent Act. (Dkt. No. 52 at 7-8 (quoting TC Heartland LLC v. Kraft Foods Grp. Brands LLC, 137 S.Ct. 1514, 1519 (2017)).)
Plaintiffs argue that since their Complaint is a declaratory judgment action for future patent infringement, 28 U.S.C. § 1391 is the governing venue statute. (Dkt. No. 37 at 21-22 (citing Telectronics Pacing Systems v. Ventritex, Inc., 982 F.2d 1520, 1526 n.6 (Fed. Cir. 1992) ("A count under the Declaratory Judgment Act should be distinguished from a count under 35 U.S.C. § 271 for patent infringement."); Proler Steel Corp. v. Luria Bros. & Co., 223 F.Supp. 87, 91 (S.D. Tex. 1963) ("Neither 1400(b) nor 1391(c) should be totally emasculated by the other. The two sections can be read so that each serves its own unique function. In this manner only suits for patent infringement fall within the terms of 1400(b), and other suits relating to patents may have their venue determined by 1391(c).")).) Plaintiffs contend that they are not circumventing § 1400(b) because: (1) they could not assert a 35 U.S.C. § 271(a) infringement claim because Beloteca has yet to commit any infringing acts under § 271(a), (Dkt. No. 37 at 21 (citing Lang v. Pac. Marine & Supply Co., 895 F.2d 761, 765 (Fed. Cir. 1990))); and (2) they could not assert a § 271(e)(2) infringement claim because Beloteca did not file a paragraph IV certification, (id. at 22-23 (citing Eisai 2007 WL 4556958, at *12)).
Though Courts regularly find that declaratory judgment actions for non-infringement and invalidity are governed by § 1391 because no statutory remedy exists under the Patent Act,
This Court cannot ignore the Supreme Court's express rejection of the Federal Circuit's attempt to "apply[ ] § 1391(c) to patent infringement cases [ ] to bring the law of venue in patent cases more in line with" declaratory judgment actions for noninfringement or invalidity. See VE Holding Corp. v. Johnson Gas Appliance Co., 917 F.2d 1574, 1583-84 (Fed. Cir. 1990), cert. denied, 499 U.S. 922 (1991), abrogated by, TC Heartland, 137 S. Ct. at 1521. Particularly where, as here, a plaintiff has an actionable claim under § 271, the plaintiff cannot avoid the requirements of § 1400(b) by wrapping its patent infringement claim inside the blanket of a declaratory judgment action.
When viewed under the proper statute, venue in this District is not proper. Beloteca is incorporated in California, its only apparent place of business is in San Diego, California, and the record does not indicate that it has any regular and established places of business in this District. (Dkt. No. 21 at 15-16; see also Dkt. No. 37 at 2, 20.) Plaintiffs have not proffered any evidence or argument that venue here is proper under § 1400. Instead, Plaintiffs have pinned all their venue hopes to their "declaratory judgment action is not a patent case" arguments—which this Court rejects. Accordingly, the Court is of the opinion that Beloteca's request that the above-styled case be transferred should be and hereby is
Beloteca's Motion to Dismiss for Lack of Personal Jurisdiction, Improper Venue, and Prior Pending Action (Dkt. No. 21) is hereby