High Court Venue Ruling May Have Limited Impact on Drug Patent Cases

By Dana A. Elfin

The U.S. Supreme Court is poised to rule in a case with the potential to limit where patent owners can file infringement suits, but experts say the ruling may not significantly alter the landscape for drug patent litigation.

Drug patent litigators said the outcome of the TC Heartland LLC v. Kraft Foods Group Brands LLC case may not wind up dramatically affecting where drug patent cases under the Hatch-Waxman Act are filed. They spoke at the American Conference Institute’s 11th Annual Paragraph IV Disputes conference in New York April 24.

The impact of how the high court rules in TC Heartland is probably more important for general patent cases than Hatch-Waxman cases, Nicolas P. Barzoukas, of Reed Smith LLP in Houston, told conference attendees.

The high court heard oral arguments in the case in late March ( TC Heartland LLC v. Kraft Foods Group Brands LLC, U.S., No. 16-341, argued 3/27/17 ).

Venue Could Narrow

In the high court case, the justices are considering whether the U.S. Court of Appeals for the Federal Circuit’s broad interpretation of venue statutes—permitting patent infringement suits to be brought in almost any federal district court—is correct.

TC Heartland appealed the Federal Circuit’s April 2016 ruling to the Supreme Court, arguing a narrower concept of venue should apply. TC Heartland wants venue limited to where the defendant is incorporated or where the defendant has committed infringing acts and has a regular place of business.

But conference panelists said even if the high court applies a more restrictive interpretation of venue, it may not significantly affect Hatch-Waxman practice. Currently, patent holders bring the bulk of infringement suits over generic drug companies’ abbreviated new drug applications in federal district courts in Delaware and New Jersey.

Risk Is Driver

“The biggest driver in this is risk,” John J. Molenda, with Steptoe & Johnson LLC in New York, told the group. “If a generic could craft a strategy to transfer venue, does it necessarily want to?”

“The folks in Delaware and New Jersey know a lot about patent law,” Molenda said. “It may be better to be with the devil you know than the devil you don’t know,” he said.

“There is some comfort in dealing with the venues the parties already know,” Barzoukas agreed.

Timing of Cases Said Critical

In addition, because of the timing issues in abbreviated new drug application cases resulting from the Hatch-Waxman Act’s automatic 30-month stay provision, it’s helpful to have a judge who’s familiar with these types of cases, Lisa Jakob, legal director of intellectual property litigation at Merck & Co. in Rahway, N.J., said.

Under the Hatch-Waxman Act, an automatic 30-month stay on regulatory approval is triggered when a branded drugmaker sues a generic drugmaker over its filing of an abbreviated new drug application seeking FDA approval to make a generic version of the branded drug.

“The sophistication of the forum benefits everyone,” Jakob said.

And even if TC Heartland’s position is adopted, it’s far from guaranteed that generic companies will move to transfer venue, Paul A. Ainsworth, of Sterne Kessler Goldstein & Fox LLP, said.

“A lot of things go into the decision of whether to transfer,” he said, including whether there are other related cases pending in the patentee’s chosen forum.

Cost Is Big Factor

An important consideration for generic companies, Molenda said, is cost. “Do you want to get into a costly fight over jurisdiction and venue?”

“I think it’s very company dependent,” Barzoukas said. “Some will consent to the plaintiff’s choice of venue and some will spend a lot of money to fight jurisdiction because it’s worth it to them.”

“For some companies, they want to maintain some control over where they’re sued,” Ainsworth said.

Mylan Is Outlier

For example, Mylan Inc. has moved to transfer venue to federal court in West Virginia on the grounds it’s incorporated there and has lots of employees there.

But Mylan is unusual in that regard.

“It’s very hard for other companies to establish the home court advantage Mylan has,” Molenda said. It will be business as usual for most other companies, he added.

And even if the high court winds up narrowing venue in the TC Heartland case, if multiple related ANDA suits are pending in multiple jurisdictions, they could wind up being consolidated into multidistrict litigation anyway, the speakers said.

Outcome Far From Certain

No one on the panel was willing to place wagers on whether the high court would adopt a broader or a more restrictive interpretation of the venue statutes.

“It’s a little difficult to do much tea leaf reading here,” Steven M. Coyle of Cantor Colburn LLP, who moderated the panel, said, observing the justices’ questions at oral argument went in both directions.

Bradford J. (Jim) Badke, of Sidley Austin LLP in New York, also participated on the panel.

To contact the reporter on this story: Dana A. Elfin in Washington at delfin@bna.com

To contact the editor responsible for this story: Brian Broderick at bbroderick@bna.com

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