Javelin Pharmaceuticals, Inc. et al v. Mylan Laboratories Limited et al
Filing
102
MEMORANDUM ORDER re 58 MOTION to Dismiss for Improper Venue under Fed. R. Civ. P. 12(b)(3) or, in the alternative, Motion to Transfer Venue filed by Mylan Laboratories Limited, Mylan Pharmaceuticals Inc., Mylan Inc. is DENIED WIHOUT PREJUDICE to renew after a period of venue-related discovery. Signed by Judge Leonard P. Stark on 12/1/17. (ntl)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE
JAVELIN PHARMACEUTICALS, INC.,
HOSPIRA, INC., and JANSSEN
PHARMACEUTICA N.V.,
Plaintiffs,
v.
C.A. No. 16-224-LPS
MYLAN LABORATORIES LIMITED,
MYLAN, INC., and MYLAN
PHARMACEl!TICALS INC.,
Defendants.
MEMORANDUM ORDER
Pending before the Court is Defendants Mylan Laboratories Limited ("MLL"), Mylan,
Inc. ("Inc."), and Mylan Pharmaceuticals Inc. 's ("MPI," and collectively with MLL and Inc.,
"Mylan" or "Defendants'') motion to dismiss for improper venue or, in the alternative, to transfer
venue to the Northern District of West Virginia. Having considered the parties' motion briefing
(D.I. 59, 65, 66) and letter briefing in response to the Court's September 11, 2017 Oral Order
(D.I. 73, 74, 75, 76), and for the reasons stated below, IT IS HEREBY ORDERED that Mylan's
motion (D.1 .. 58) is DENIED WITHOUT PREJUDICE to renew after a period of venue-related
discovery. IT IS FURTHER ORDERED that the parties shall meet and confer and, no later than
December 8, 2017, submit a joint status report with their position(s) as to the scope and timing of
the discovery to be taken pursuant to this Order. "
The Venue Defense Was Not Waived
As an initial matter, Mylan's venue challenge is not untimely. As the Court of Appeals
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· for the Federal Circuit recently held, "[t]he Supreme Court changed the controlling law when it
decided TC Heartland[ 1] in May 2017." In re Micron Tech., Inc.,_ F.3d _··, 2017 WL
5474215, at *6 (Fed. Cir. Nov. 15, 2017). Therefore, "[t]he venue objection was not available
until the Supreme Court decided TC Heartland because, before then, it would have been
improper, given controlling precedent, for the district court to dismiss or to transfer for lack of
venue." Id. at *3. Hence, Mylan did not waive its challenge to venue by failing to press it until .
after TC Heartland. See id.
The Venue Defense Was Not Forfeited
Nor does the Court find that Mylan forfeited its challenge to venue due to its conduct in
this litigation; and Mylan is not otherwise estopped from prevailing on this challenge. See
Micron, 2017 WL 5474215, at *7 ("[D]istrict courts have authority to find forfeiture of a venue
objection."); Boston Sci. Corp. v. Cook Grp. Inc., 2017 WL 3996110, at *9 (D. Del. Sept. 11,
201 7) ("It may well be that in any particular case the Court, after excusing waiver based on TC
Heartland, should next proceed by assessing whether, in any event, a defendant should not be
permitted to press its effort to change venue. Prototypical examples of where the Court might
reach such a conclusion include whether a defendant raises venue for the first time on the eve of
trial, or many months (or years) after TC Heartland was handed down, or where dismissal or
transfer would unduly prejudice a plaintiff. Or a party may have taken affirmative steps in the
litigation that should, in particular circumstances, be viewed as essentially estopping that party .
from prevailing on an improper [venue] defense.") (internal citations omitted).
Plaintiffs Javelin Pharmaceuticals, Inc., Hospira, Inc., and Janssen Pharmaceutica N.V.
1
TC Heartland LLC v. Kraft Foods Grp. Brands LLC, 137 S. Ct. 1514 (2017).
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("Plaintiffs") filed their complaint on April 4, 2016. (D.I. 1) In its answer, filed on June 13,
2016, Mylan contended that venue was not proper in this District (D.I. 15 at 18, 29), which put
Plaintiffs (and the Court) on notice that Mylan believed it should not have to litigate this case in
Delaware. Consistent with the then-governing legal precedent, see VE Holding Corp. v. Johnson
Gas Appliance Co., 917 F.2d 1574 (Fed. Cir. 1990), over the next 14 months Mylan complied
with the Court's scheduling order (D.I. 21) and rules of procedure and actively participated in
this litigation- which included the claim construction process (see, e.g., D.I. 44, 48, 53), leading
to the Court's issuance of a claim construction opinion and order (D.I. 91, 92). Then, on August
7, 2017, less than three months after TC Heartland was decided, Mylan filed its.pending motion
to dismiss or transfer, due to improper venue, pursuant to Federal Rule of Civil Procedure
12(b)(3). Trial in this case is not scheduled to begin until April 9, 2018 (D.I. 21 at 11) and the
30-month stay on FDA approval ofMylan's ANDA for its generic drug product does not expire
until August 2018 (D.I. 3).
The Court discerns nothing in Mylan' s participation in this litigation that should be
deemed as having forfeited a now potentially-meritorious venue objection. See Micron, 2017
WL 5474215, at *7-8 (identifying non-exclusive bases on which forfeiture of venue challenge
may be found, including "untimeliness or consent," "submission through conduct," and where
objection "was not made until long after" change in law "took effect") (internal quotation marks
omitted). Nor does the Court's conclusion of no forfeiture threaten Plaintiffs with any undue
prejudice, particularly given that the Court is not modifying the trial date and given that a parallel
action is pending in the District of West Virginia, with trial scheduled at approximately the same
date as the trial scheduled by this Court. (See D.I. 59 at 1-2) Regardless of which side has the
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burden with respect to waiver, forfeiture, and estoppel, the Court finds that none of these
doctrines here precludes Mylan from proceeding with its challenge to venue in this case. 2
Defendants Are Not Delaware Residents for Purposes of Patent Venue
Venue in a patent case is governed exclusively by 28 U.S.C. § 1400(b), TC Heartland,
137 S.Ct. at 1516, which provides: "[a]ny civil action for patent infringement may be brought in
the judicial district where the defendant resides, or where the defendant has committed acts of
infringement and has a regular and established place of business." For purposes of§ 1400(b), a
defendant which is a domestic corporation "resides" only in its state of incorporation. See TC
Heartland, 137 S.Ct. at 1517. It is undisputed that MLL, Inc., and MPI-which are, respectively,
incorporated in India, Pennsylvania, and West Virginia (D.I. 15 at 3-4)- do not "reside" in
Delaware.
Venue Is Potentially Proper ~ere Under the Second Prong of§ 1400Cb)
Venue is proper in this District unless Mylan can show that the second prong of
§ 1400(b) is not satisfied. See Bristol-Myers Squibb Co. v. Mylan Pharm. Inc., 2017 WL
3980155, at *5 (D. Del. Sept. 11, 2017) ("BMS'') (holding that burden is on party opposing
venue). That is, Delaware is a proper venue for this lawsuit unless Mylan can meet its burden to
show either that (i) a defendant has not committed acts of infringement in Delaware, or (ii) a
defendant does not have a regular and established place of business in Delaware. If Mylan can
show either of the foregoing is true with respect to one or more of the Defendants, then venue
2
Should Mylan ultimately choose to renew its venue challenge after the period of venuerelated discovery being ordered, Mylan will not be deemed to have forfeited its venue objection
based solely on its compliance with discovery orders or its (required) participation in all aspects
of this litigation during the venue-discovery period.
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here is improper with respectto such Defendant(s), and the Court will have to dismiss or transfer
this case (at least as to one or more Defendants). Mylan contends it has met its burden with
respect to both requirements of this second prong of§ 1400(b).
The First Requirement: Acts ·of Infringement
Mylan has failed to show that any of the Defendants has not committed acts of
infringement in Delaware, given the Court's understanding of the meaning of this statutory
requirement in the context of Hatch-Waxman litigation. See BMS, 2017 WL 3980155, at *12
(holding that "acts of infringement" in this context include acts "the ANDA applicant nonspeculatively 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 this District"). Mylan gives
the Court no persuasive reason to reconsider this determination.
The Second Requirement: Regular and Established Place of Business
Venue;..Related Discovery.
Turning to whether one or more of the Defendants lacks a regular and established place of
business in Delaware, the Court concludes that the record, at present, does not permit it to make a
finding. Therefore, the Court will allow Plaintiffs to take venue-related discovery.
As the Federal Circuit recently explained in In re Cray, 871 F.3d 1355, 1362 (Fed. Cir.
2017), "[t]hree general requirements [are] relevant to the [regular and established place of
business] inquiry: (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. If any statutory
requirement is not satisfied, venue is improper under§ 1400(b)."
"In deciding whether a defendant has a regular and established place of business in a
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district, no precise rule has been laid down and each case depends on its own facts." Id. The
Federal Circuit "stress[ed] that no one fact is controlling" and all facts must be "taken together"
in determining whether venue is proper. Id. at 1366. This suggests that, at least in a difficult
case, the Court should permit venue-related discovery, to allow the adversarial process· to aid the
Court in making a fact-specific decision on a well-developed factual record.
Related Mylan Entities May Be Relevant to the
Regular and Established Place of Business Inquiry
While Defendants contend that "there is no evidence to establish the Mylan Defendants
have a regular and established place of business.here" (D.I. 73 at 2), the Court finds Plaintiffs'
theory - that the "places" of any Mylan entity, including Mylan affiliates, subsidiaries, parents, or
alter egos, may be attributable to the named Mylan Defendants for purposes of venue - is not
frivolous and justifies some limited venue-related discovery. 3
Defendants declare: "[n]one of Mylan Inc., MPI, or MLL ... maintain any offices,
warehouses, manufacturing plants, or other real property in Delaware;" nor do they "have a mailing address or telephone listing in Delaware," "have any employees or officers working in
Delaware," or "advertise or represent that they have any place of business in Delaware." (D.I. 60
at 2-3) Plaintiffs contend, however, that MPI and MLL are wholly-owned subsidiaries of Inc.,
3
Contrary to Mylan's contentions, the record here is not "replete with sworn facts proving
that th[e] three requirements [of Cray] are not met with respect to Defendants." (D.I. 75 at 2)
Plaintiffs alleged in their Complaint that Defendants "collaborated in the development of
Mylan's Product and preparation and filing ofMylan's ANDA" and ifthe ANDA is approved,
Defendants "plan to and will act in concert to manufacture, distribute, import, offer for sale
and/or sell Mylan's Product throughout the United States, including within the State of
-Delaware." (D.I. 1 ~~ 15, 20)
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and that Inc. has at least 20 subsidiaries incorporated in the State of Delaware. 4 (D.I. 1 if 36) In
Plaintiffs' view, it is possible that through Inc. 's various Delaware subsidiaries, one or more of
the named Defendants may be found to have a regular and established place of business in this
District.
As this legal theory was not addressed by Cray, the Court sees no basis on which to find
that Plaintiffs' theory as to how the named Defendants might be found to have a regular and
established place of business in Delaware, based on other Mylan entities having a regular and
established place of business here, to be frivolous. It does not appear that Cray disturbed the
prior holding of the Federal Circuit in Minnesota Mining & Manufacturing Co. v. Eco
Chemicals, Inc., 757 F.2d 1256, 1265 (Fed. Cir. 1985), that "venue in a patent infringement case
[may be] proper with regard to one corporation by virtue of the acts of another, intimately
connected, corporation."
In fact, Cray can be read as having provided further support to the viability of Plaintiffs'
theory. In Cray, the Federal Circuit found that a defendant's employee's home may, in some
circumstances, constitute a "place of the defendant." See 871 F.3d at 1363. Cray approvingly
cites the Federal Circuit's prior decision In re Cordis Corp., 769 F.2d 733, 735 (Fed. Cir. 1985),
where an employee's home was found to support a finding that the named-defendant employer
had a regular and established place of business in a district. Where an employee's home is used
"to store its [i.e., the named defendant's] literature, documents, and products ... that the
employees then directly took to its [the named defendant's] clients," that home may be found to
4
Mylan admitted that "certain subsidiaries of Mylan Inc. are incorporated in the State of
Delaware," but did not address the number of subsidiaries. (D.I. 15 at 14)
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be a regular and established place of business of the named defendant. Cray, 871F.3dat1362.
It may be more likely with respect to corporate entities than it is with respect to
employees for a regular and established place of business to be properly treated, for venue
purposes, as a regular and established place of business of anamed defendant. Several of the
reasons given in Cray for why the employee's home there was not a regular and established place
. of the employer's business seem less applicable to relationships within a corporate family. As
Cray observed, "[ e]mployees change jobs. Thus, the defendant must establish or ratify the place
of business. It is not enough ~hat the employee does so on his or her own." Id. at 1363. It seems
likely that a corporate subsidiary or other corporate affiliate cannot extricate itself from a
corporate family as easily as an employee can generally depart his job, or as easily as an
employee may keep her job but change her personal residence. Further, unlike employees, who
typically live in homes of their own choice in locations that are not at all "ratified" by their
.employer, it is likely more common for corporate parents to "establish" or "ratify" the place of
business of their subsidiaries or other related corporate entities (with whom, for instance, they
might share space). See id.
In the Court's view, it follows from Cray that the "place" of a corporate affiliate or
subsidiary of a named defendant may, in at least some circumstances, and similar to the place of
a defendant's employee, he treated as a "place of the defendant." Among the pertinent
circumstances to be considered is whether the formalities of corporate separateness are
preserved. 5 Plaintiffs suggest that formal corporate separateness among the various Mylan
5
See generally Soverain IP, LLC v. AT&T, Inc., 2017 WL 5126158, at *1-2 (E.D. Tex.
Oct. 31, 2017) (finding place of subsidiary could not be imputed to parent-defendant because
formal corporate separateness was maintained); Post Consumer Brands, LLC v. Gen. Mills, Inc.,
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entities may not have been preserved. (D.I. 65 at 14) This is a topic on which Plaintiffs will be
permitted to take discovery.
The record presently before the Court does not establish, one way or the other, whether ·
any entity related to Mylan- be it a parent, subsidiary, affiliate, agent, or alter ego-.has any .
regular and established place of business in Delaware. Nor does it address the formal· corporate
separateness between, or the interrelationships among, the named defendants and the related
Mylan entities, including the Delaware subsidiaries. It is appropriate, then, for Plaintiffs to have
an opportunity to take discovery on these matters, and for Defendants thereafter to renew, should
they wish to do so, their challenge to the propriety of venue in this District.
Physical Place in the District
As stated above, the first requirement of Cray is that there "must be a physical place in
the district, . . . i.e., a building or a part of a building set. apart for any purpose or quarters of any
kind from which business is conducted." 871 F.3d at 1362 (internal quotation marks omitted).
While a "virtual space" or "electronic communications from one person to another" will not
suffice, the '"place' need not be a 'fixed physical presence in the sense of a formal office or
store."' Id. All that is required is that there is a "physical, geographical location in the district
from which the business of the defendant is carried out.'' Id. Under Plaintiffs' theory, which
could attribute physical places in Delaware of any Mylan affiliate to one or more of the named
Defendants in this case, it is possible that discovery of the relationships amongst the various
2017 WL 4865936, at *2 (E.D. Mo. Oct. 27, 2017) (denying venue discovery where there was no
suggestion that formal corporate separateness was not preserved); Symbology Innovations, LLC
v. Lego Sys., Inc., 2017 WL 4324841, at *10-11 (E.D. Va. Sept. 28, 2017) (finding formal
corporate separateness prevented imputing place of subsidiary to parent-defendant).
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Mylan entities, and of the Delaware places of business of those various entities, may show that
this requirement is satisfied.
Regular and Established Place of Business
Second, the place. "must be a regular and established place of business." Id.
To be "regular," the business should, for example, "operate[] in a steady, uniform,
orderly, and methodical manner.~' Id. at 1362 (internal quotation marks omitted); see also id. at .
1363 ("[A] five-year continuous presence in the district demonstrates that the business was
established for purposes of venue.") (citation omitted). Simply "conduct[ing] business" from a
place in the district or engaging in "sporadic activity cannot create venue." Id. at 1362, 1365-66;
see also id. at 1363 ("[A] business that semiannually displayed its products at a trade show in the
district had only a temporary presence.") (citation omitted).
For a place of.business to be "established," it must have some degree of permanence. See
id. ('" [E] stablished' ... contains the root 'stable,' indicating that the place of business is not
transient. It directs that the place in question must be settled certainly, or fixed permanently.")
(internal quotation maFks omitted); see also id. at 1363 ("[W]hile a business can certainly move
its location, it must for a meaningful time period be stable, established.").
It foHows that transient, sporadic visits to a District - for instance, to a courthouse to
participate in litigation - are not of sufficient permanence or steadiness to be "regular" or
"established."
Still, under Plaintiffs' theory, which could attribute the Delaware "regular and
established" physical places "of business" of any Mylan affiliate to one or more of the named
Defendants in this case, it is possible that discovery of the relationships amongst the various
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·Mylan entities, and of the Delaware places of business of those various entities, may show that
this requirement is satisfied.
Of the Defendant
The third Cray requirement is that "the regular and established place of business must be
the place of the defendant." Id. The "place of the defendant," therefore, must "not. [be] solely a
place of the defendant's employee." Id. (emphasis added). The defendant "must establish or
ratify the place of business. It is not enough that the employee does so on his or her own." Id.
In determining whether a place of business is a place of the defendant, "[r]elevant
considerations include whether the defendant owns or leases the place,. or exercises other
attributes of possession or control over the place." Id. Furthermore, any conditions the employer ·
places on the employee's location or use of the employee's place are more likely to make that a
place that may properly be considered a place of the defendant. Id. ("Another consideration
might be whether the defendant conditioned employment on an employee's continued residence
in the district or the storing of materials at a place in the district so that they can be distributed or
sold from that place."). Further considerations include "[m]arketing or advertisements ... , but
only to the extent they indicate that the defendant itself holds out a place for its business." Id.
"[I]f an employee can move his or her home out of the district at his or her own instigation,
without the approval of the defendant, that would cut against the employee's home being
considered a place of business of the defendant." Id.
It follows that a courthouse - even one in which a defendant like Mylan litigates
frequently, as a necessary and predictable part of its business, in order to obtain approval to enter
the market with its generic drugs - is not a place "of the defendant." Id. The courthouse is not
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owned or leased by Mylan; nor does Mylan exercise other attributes of possession or control over
the courthouse.
Still, under Plaintiffs' theory, which could attribute Delaware physical places of any
Mylan affiliate to one or more of the named Defendants in this case, it is possible that discovery
of the relationships amongst the various Mylan entities, and of the Delaware places of business
of those various entities, may show that this requirement is satisfied.
Conclusion
Consequently, and contrary to Mylan's assertion, Plaintiffs' request for venue discovery
is not "moot." (D.I. 75 at 2) Instead, as Plaintiffs describe, "Mylan essentially asks this Court to
decide the motion on a one-sided factual record, without permitting the facts to be tested." (D.I.
· . 76 at 2)_ The Court has determined that this would not be a reasonable and appropriate method of ·
proceeding to resolve the important, novel venue questions that are now before it. Accordingly,
after receiving specific input from the parties, the Court will order venue-related discovery, to
proceed contemporaneously with the remainder of this case as it proceeds on the merits.
December 1, 201 7
Wilmington Delaware
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