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AstraZeneca's Hatch-Waxman Patent Action Dismissed For Lack of Personal Jurisdiction

Thursday, March 1, 2012
Aude Gerspacher | Bloomberg Law AstraZeneca Pharmaceuticals LP v. Intellipharmaceutics Corp., No. 11-02973, 2012 BL 36332 (D.N.J. Feb. 15, 2012) The U.S. District Court of New Jersey dismissed a Hatch-Waxman act patent infringement action brought by AstraZeneca Pharmaceutical LP and AstraZeneca UK Limited (collectively, "AstraZeneca") against Intellipharmaceutics Corp. and Intellipharmaceutics International, Inc. (collectively, "IPC") for lack of personal jurisdiction.

AstraZeneca's ANDA Litigation

In its complaint, AstraZeneca alleged patent infringement based on Intellipharmaceutics Corp.'s filing of an Abbreviated New Drug Application ("ANDA") seeking approval from the Food and Drug Administration to market a generic version of AstraZeneca's SEROQUEL XR. IPC immediately challenged personal jurisdiction, seeking to dismiss the complaint or transfer the case to the Southern District of New York. AstraZeneca subsequently filed an amended complaint adding Intellipharmaceutics International, Inc as a defendant. AstraZeneca then filed a "protective suit" in the Southern District of New York in order to preserve its rights to the statutory 30-month stay of approval of IPC's ANDA, which the New York court stayed pending the outcome of this action.

Court Finds No General or Specific Personal Jurisdiction Exists

AstraZeneca alleged that both general and specific personal jurisdiction existed over IPC. The district court first noted that "a plaintiff must demonstrate significantly more than 'minimum contacts' to establish general jurisdiction over a defendant." AstraZeneca, 2012 BL 36332 at 5 (citing Provident Nat'l Bank v. Cal. Fed. Sav. & Loan Assoc., 819 F.2d 434, 437 (3rd Cir. 1987)). To establish general personal jurisdiction, a defendant's contacts with the state must be both "continuous and systematic." Id. (citing Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 414 (1984)). IPC is a Canadian pharmaceutical company with offices in Toronto, Canada. IPC does not have any offices, agents or employees in New Jersey, nor do they advertise or sell products in New Jersey. AstraZeneca alleged the following as IPC's "continuous and systematic" contacts with New Jersey:
(1) Defendants have "repeatedly partnered" with New Jersey companies to develop pharmaceutical products, . . . ; (2) Defendants engaged a consultant from New Jersey; (3) Defendants have used a New Jersey Transfer Agent; (4) Defendants have sourced [*6] materials and equipment from New Jersey; (5) Defendants have paid "more taxes in New Jersey than the majority of, if not all, other states;" . . .; (6) Defendants have negotiated and entered confidentiality agreements with New Jersey entities; and (7) Defendants have "assert[ed] counterclaims in this Court," . . .
Id. at 5-6. The New Jersey court disagreed, finding that IPC's drug development agreements with New Jersey companies were inadequate to support the existence of general jurisdiction, because these were generally unrelated to the ANDA at issue. Further, the court noted that the relatively random purchases over a period of many years of goods and services by IPC from companies located in New Jersey are also insufficient. See Helicopteros, 466 U.S. at 417. Finally, the court disagreed with AstraZeneca's assertion that IPC's "annual tax payments in New Jersey are routinely one of, if not the highest payment, among all 50 states." AstraZeneca, 2012 BL 36332 at 7. The court noted that AstraZeneca failed to identify the type of tax payments, which turned out to be sales taxes paid for products purchased. The court found that these tax payments appear to be the only "contact" with New Jersey that AstraZeneca had established for IPC, and found them insufficient to confer general jurisdiction over IPC. Accordingly, the court ruled that the evidence does not establish that IPC had continuous and systematic contacts with New Jersey, and AstraZeneca has failed to show general jurisdiction over IPC. Regarding specific personal jurisdiction, the court noted that "[s]pecific jurisdiction exists when the claim arises from or relates to conduct purposely directed at the forum state." Id. at 9 (quoting Marten v. Godwin, 499 F.3d 290, 296 (3rd Cir. 2007)). AstraZeneca alleged three IPC activities were purposefully directed at New Jersey: 1) ICV's use of magnesium stearate bought from a New Jersey company; 2) the disclosure of a possible New Jersey company for manufacture of the generic tablets; and 3) IPC's reliance of Drug Master Files located in Parsippany, New Jersey. The court found no evidence that IPC had purchased any magnesium stearate from the company's New Jersey office, but instead found that IPC dealt with the St. Louis, Missouri, office where the magnesium stearate was produced. The court then found that IPC's contact with manufacturers was for packaging, not the generic tablets, and that IPC's ANDA did not rely on the Drug Master Files. The court then concluded that none of the elements of the specific jurisdiction analysis have been satisfied, and found AstraZeneca had not established specific jurisdiction exists. Accordingly, the court granted IPC's motion and dismissed AstraZeneca's complaint without transferring it to the Southern District of New York, noting that the action could be pursued in the New York action currently pending. DisclaimerThis document and any discussions set forth herein are for informational purposes only, and should not be construed as legal advice, which has to be addressed to particular facts and circumstances involved in any given situation. Review or use of the document and any discussions does not create an attorney-client relationship with the author or publisher. To the extent that this document may contain suggested provisions, they will require modification to suit a particular transaction, jurisdiction or situation. Please consult with an attorney with the appropriate level of experience if you have any questions. Any tax information contained in the document or discussions is not intended to be used, and cannot be used, for purposes of avoiding penalties imposed under the United States Internal Revenue Code. Any opinions expressed are those of the author. The Bureau of National Affairs, Inc. and its affiliated entities do not take responsibility for the content in this document or discussions and do not make any representation or warranty as to their completeness or accuracy.©2014 The Bureau of National Affairs, Inc. All rights reserved. Bloomberg Law Reports ® is a registered trademark and service mark of The Bureau of National Affairs, Inc.

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