Venue and Pleading Infringement in Hatch-Waxman Litigation Turn on Location and Identity of ANDA Filer
In Celgene Corp. v. Mylan Pharm. et al., Appeal No. 21-1154, the Federal Circuit held that in Hatch-Waxman litigation: (1) infringement occurs where the ANDA is submitted and not where the patentee receives notice of the ANDA submission; (2) the presence of an affiliated entity or employees in the district is insufficient to show a regular and established place of business; and (3) pleadings must explain how a defendant was involved in the ANDA submission to support a claim for infringement.
Mylan Pharmaceuticals Inc. (“MPI”) filed an Abbreviated New Drug Application (“ANDA”) for a generic version of Celgene’s pomalidomide drug. Celgene (residing in New Jersey) filed patent infringement actions in the District of New Jersey against MPI (residing in West Virginia), Mylan Inc. (residing in Pennsylvania), and Mylan N.V. (residing in Pennsylvania and the Netherlands) (collectively “Mylan”). Mylan moved to dismiss for improper venue as to MPI and Mylan Inc., and for failure to state a claim as to Mylan N.V. The district court agreed with Mylan regarding venue and dismissed the claims against Mylan N.V. because it did not submit the ANDA. Celgene appealed.
The Federal Circuit affirmed the dismissal of MPI and Mylan Inc. for improper venue. It was undisputed that neither entity resided in New Jersey. Thus, Celgene needed to prove that infringement occurred in New Jersey and that MPI and Mylan Inc. had regular and established places of business there. With respect to infringement, the Federal Circuit rejected Celgene’s argument that MPI’s ANDA submission (which did not occur in New Jersey) extended nationwide to future acts of marketing and sales. The Federal Circuit also rejected Celgene’s argument that receipt of notice of MPI’s ANDA filing at its headquarters in New Jersey constituted part of the infringing ANDA submission. Thus, no act of infringement occurred in New Jersey.
The Federal Circuit also affirmed the finding that MPI and Mylan Inc. did not have regular and established places of business in New Jersey. Celgene argued that several Mylan employees lived in New Jersey and rented storage lockers, but the court found this insufficient and noted that a physical location must be “of the defendant, not solely . . . of the defendant’s employee.” Alternatively, Celgene argued that Mylan Labs. Inc., a defunct, indirect subsidiary of MPI, once had an office in New Jersey that should be imputed to MPI and Mylan Inc. for venue purposes. The Federal Circuit disagreed because Celgene failed to establish any disregard of corporate formalities or separateness that would allow the subsidiary’s venue to be imputed to its parent.
Lastly, the Federal Circuit affirmed the dismissal as to Mylan N.V. for failure to state a claim. It was undisputed that MPI was the entity that signed and submitted the ANDA to the FDA. The Federal Circuit rejected Celgene’s argument that the chain of ownership from Mylan N.V. to MPI was sufficient to state a claim against Mylan N.V. based on MPI’s ANDA submission. Celgene also alleged that the entities acted in concert and that Mylan N.V. directed and controlled MPI. However, the Federal Circuit found these statements to be mere legal conclusions, lacking allegations or evidence, for example, as to how Mylan N.V. was involved in the ANDA process or how Mylan N.V. controls or directs MPI.
No Standing for Second Bite at the Apple
In Apple, Inc. v. Qualcomm, Inc., Appeal No. 20-1683, the Federal Circuit held that Apple lacked standing to appeal an IPR decision upholding patents that Apple licensed from Qualcomm, in light of a prior decision with identical operative facts.
Qualcomm sued Apple for infringement of various Qualcomm patents. In response, Apple petitioned for inter partes review (IPR) of Qualcomm’s patents. The Patent Trial and Appeal Board issued four final written decisions holding Apple did not prove the challenged claims in the patents would have been obvious. Apple and Qualcomm then settled all litigation between the two companies worldwide. The settlement included a six-year license agreement for a large portfolio of patents, including the patents at issue. Apple then appealed the Board’s four final written decisions. In April of 2021, the Federal Circuit found that Apple failed to establish standing to appeal the first of the four final written decisions. First, the Federal Circuit rejected Apple’s argument that its payment of royalties under the licensing agreement confers standing, reasoning that the validity of the patents would not impact Apple’s royalty obligations. Second, the Federal Circuit rejected Apple’s assertion of standing based on the possibility that Qualcomm might sue Apple for infringing the patents after the license expires, finding Apple’s assertions lacked the specificity necessary to show that Qualcomm was likely to assert the patents after the expiration of the license agreement. Third, the Federal Circuit rejected the contention that the harm Apple could face from IPR estoppel confers standing, noting Apple failed to show it will likely be engaging in activities that could give rise to a lawsuit based on the patents. Accordingly, the Federal Circuit dismissed the first appeal.
In appealing the second final written decision, Apple asserted that the Federal Circuit’s dismissal of the first appeal did not explain why the threat of liability if Apple ceased licensing payments was insufficient for standing. The Federal Circuit concluded that, while the patent at issue in the first appeal was different from the patent at issue in the second appeal, the settlement and the license agreement covered both patents. Additionally, the Federal Circuit concluded that Apple’s declarations in support of standing in the second appeal were the same as Apple’s declaration in support of standing in the first appeal. The Federal Circuit concluded that the two “cases are on all fours” and “the writing is already on the wall.” The Federal Circuit explained that, where there is a case on point, the Federal Circuit is bound by stare decisis. Because the Federal Circuit concluded that the operative facts of the first appeal were the same as the operative facts of the second appeal, it was bound by the decision in the first appeal. The court therefore dismissed Apple’s second appeal for lack of standing.
Judge Newman dissented, arguing that, because the first appeal and the second appeal presented different issues, different arguments, and different technologic aspects of the devices, and because of Apple’s status as a patent licensee, it was “apparent” that Apple had standing to pursue the current appeal.
What’s in a Name?: Third Party Use of a Descriptive Term Without Secondary Meaning Can Undermine Assertions of Substantially Exclusive Use of the Term
In Galperti, Inc. v. Galperti S.R.L., Appeal No. 21-1011, the Federal Circuit held that evidence of use of a term by any third party, even without a showing of secondary meaning, is relevant to refute an assertion of substantially exclusive use.
Galperti-USA filed a petition to cancel a trademark registration for the GALPERTI mark owned by Galperti S.r.l. (Galperti-Italy) in connection with metal flange products. Galperti-Italy’s application for the trademark registration was initially rejected by the PTO on the grounds that the mark was primarily just a surname. To overcome the rejection, Galperti-Italy asserted that the mark had become distinctive through Galperti-Italy’s substantially exclusive use in the preceding five years. At the TTAB, Galperti-USA asserted that Galperti-Italy had intentionally made a false assertion of substantially exclusive use. The TTAB declined to cancel the registration, and Galperti-USA appealed. The Federal Circuit remanded for the TTAB to consider whether Galperti-USA’s evidence purporting to show falsity of Galperti-Italy’s representation to the PTO was significant or inconsequential. On remand, the TTAB found that Galperti-USA failed to prove there was significant and not inconsequential use that would render Galperti-Italy’s representation false. Galperti-USA appealed again.
On the second appeal, the Federal Circuit found legal error in the TTAB’s falsity analysis on two grounds. First, the court found that the TTAB erroneously required Galperti-USA to establish that its use of the GALPERTI mark during the relevant time period had acquired distinctiveness in order for its use to count in assessing the falsity of Galperti-Italy’s representation. The court held that third party use of a term that lacks secondary meaning can still undermine a claim of substantially exclusive use. Thus, such evidence was pertinent to showing the falsity of Galperti-Italy’s representation. Second, the court found that the TTAB erred in requiring Galperti-USA to demonstrate privity with other users of the GALPERTI mark during the relevant time period. Rather, the court held that, to evaluate whether an applicant has had substantially exclusive use of a mark, any use by a third party, regardless of its relation to the challenger, must be analyzed with regard to the significance of such use. Thus, the court vacated and remanded for further analysis of the falsity of Galperti-Italy’s representation to the PTO.