Galderma Labs., L.P. v. Teva Pharms USA, Inc.

Venue for the Teva USA claims was not proper in the Northern District of Texas as Teva USA did not commit any act of infringement in the district nor did it have a regular and established place of business there.

November 11, 2017

GENERICally Speaking: A Hatch Waxman Litigation Bulletin

Case Name:Galderma Labs., L.P. v. Teva Pharms USA, Inc., Civ. No. 3:17-cv-01076-M (N.D. Tex. Nov. 11, 2017) (Lynn, J.)

Drug Product and Patent(s)-in-Suit: Soolantra® (ivermectin); U.S. Patents Nos. 8,815,816 (“the ’816 patent”), 9,089,587 (“the ’587 patent”), 9,233,117 (“the ’117 patent”), 9,233,118 (“the ’118 patent”), and 8,362,069 (“the ’069 patent”)

Nature of the Case and Issue(s) Presented:  Soolantra is a topical prescription drug that contains ivermectin. It is indicated for the treatment of inflammatory lesions of rosacea. Galderma sued Teva USA and its parent, Teva Israel, for infringement after Teva USA filed an ANDA for a generic ivermectin. Teva USA moved to dismiss for improper venue under Fed. R. Civ. P. 12(b)(3), and Teva Israel moved to dismiss under Rule 12(b)(6)  on the ground that the facts pled are not sufficient to state a plausible case that Teva Israel submitted the ANDA. The court found that venue for the Teva USA claims was not proper in the Northern District of Texas as Teva USA did not commit any act of infringement in the district nor did it have a regular and established place of business there. The court also granted Teva Israel’s motion, but also gave Galderma leave to file a supplemental complaint. It said that Galderma’s allegations did not distinguish Teva Israel’s conduct from Teva USA’s conduct, and that the allegations were unsupported by any specific factual assertions that made the allegation more than a bare-bones conclusion.

Why Teva Prevailed: Teva USA is a Delaware corporation. Under the federal venue statute, venue is proper in Texas generally only if Teva USA resides there or if it is where a substantial part of the events or omissions giving rise to the claim occurred. The court, which placed the burden of establishing proper venue on Galderma, concluded that it had established neither element. The ANDA filing by Teva USA was an act of infringement, but it questioned where that act occurred. More specifically, it addressed whether wherever an ANDA filer intends to market the accused product is a site of infringement. It distinguished the District of Delaware’s recent opinion in Bristol-Myers Squibb Company v. Mylan Pharmaceuticals Inc., 2017 WL 3980155 (D. Del. Sept. 11, 2017), which it said held that “an applicant’s submission of an ANDA, in conjunction with other acts the ANDA applicant non-speculatively intends to take if its ANDA receives final FDA approval, plus steps already taken by the applicant indicating its intent to market the ANDA product in [a particular] District, must all be considered for venue purposes, and can be sufficient to demonstrate that the ANDA-filing Defendant ‘has committed’ ‘acts of infringement’ in [the particular] District.”

The court called the Delaware decision “very thorough,” but nevertheless rejected its reasoning. The court noted that the venue statute looks to where the defendant “has committed” acts of infringement, and it concluded that since defendant has not yet marketed its (unapproved) drug, a reading that eliminated the past-tense language was not sufficiently tethered to the statutory language to support venue. The court also suggested that the Bristol-Myers Squibb case relied on Acorda Therapeutics, Inc. v. Mylan Pharm., Inc., 817 F.3d 755 (Fed. Cir. 2016), which it said stands for the proposition that planned future contacts of an ANDA filer satisfy the minimum contacts standard for personal jurisdiction. But the court also noted that the Federal Circuit had provided a “clear admonition” to avoid importing personal jurisdiction standards into a venue analysis. The court thus concluded that Galderma had failed to establish that venue was proper in the Northern District of Texas.

Galderma also failed to make the required “resides there”. The court said that the venue statute’s “clause imposes three requirements: “(1) there must be a physical place in the district; (2) it must be a regular and established place of business; and (3) it must be the place of the defendant.”  Galderma pointed to the activities of dozens of Teva employees in the district, including sales representatives, to meet these requirements. However, the court discounted the acts of the sales representatives because they were not employees of Teva USA; instead, the worked for another Teva subsidiary. The court identified only two employees of Teva USA who resided in the district, but found their homes were not tied to Teva USA and Teva USA did not hold out those homes as being a place of business, e.g., it did not publicize the home addresses or phone numbers.

Having determined that venue for the Teva USA claims was not proper in Texas, the court considered whether to dismiss the case or to transfer it to Teva USA’s state of incorporation, Delaware. Galderma argued that the interests of justice weighed in favor of transfer over dismissal because dismissal could result in lifting the thirty-month stay and the approval of the ANDA. Teva USA requested dismissal. It objected to the court’s severing the claims against it and transferring only those claims while retaining the claims against Teva Israel. The court, indicating a preference to transfer the claims against Teva USA, to avoid interfering with the statutorily-mandated thirty-month stay, directed the parties to confer and advise the court whether they consent to transfer the case to Delaware.

Turning to Teva Israel’s motion to dismiss for failure to state a claim, the court looked to whether Teva Israel was “actively involved” in preparing the ANDA. Such involvement, the court said, would constitute infringement even if Teva Israel were not to have signed the ANDA or were identified in it as the named applicant.

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