CELGENE CORPORATION v. DISTINCT PHARMA et al

Filing 15

OPINION. Signed by Judge Kevin McNulty on 3/13/2019. (ld, )

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY

CELGENE CORPORATION,
Plaintiff,
No. 2: 17-cv-5303-KM-JBC
vs.
OPINION
DISTINCT PHARMA and JOHN DOES
#1-10,
Defendants.

KEVIN MCNULTY, U.S.D.J.:

This is an action asserting claims of Trademark Infringement (Count I),
Unfair Competition (Count II), and False Designation of Origin (Count III) under
the Lanham Act, 15 U.S.C.

§

1051 et seq.; and violation of the New Jersey

Deceptive Trade Practices Act (Count IV).’ Plaintiff Celgene Corporation, a
Delaware corporation, sues Distinct Pharma, an entity located in Mumbai,
India, for unauthorized and regulatorily unapproved internet sales of Celgene’s
drug REVLIMID® (lenalidomide). Defendant Distinct Pharma has not appeared
or responded to the complaint. The court denied Celogen’s prior motion for
default judgment for lack of proof of service that satisfied the requirements of
due process. (Opinion filed September 6, 2018, DE 10; Order, DE 11) Since
that time, Celgene has filed proof of service (DE 12); the clerk has again entered

Count IV is titled “New Jersey Deceptive Trade Practices Act,” and it cites N.J.
Stat. Ann. 56:8-2, which identifies fraud in connection with saie or advertisement of
merchandise as an unconscionable practice. Such an unconscionable practice is
actionable under the New Jersey Consumer Fraud Act (“NJCFA”), N.J. Stat. Ann. 56:819.
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default (DE 13 and entry following); and Celgene has renewed its motion for a
default judgment (DE 14). For the reasons stated herein, the renewed motion
for a default judgment is granted.
I.

DISCUSSION

“[T]he entry of a default judgment is left primarily to the discretion of the
district court.” Hritz v. Woma Corp., 732 F.2d 1178, 1180 (3d Cir. 1984) (citing
Tozer v. Charles A. Krause Milling Co., 189 F.2d 242, 244 (3d Cir. 1951)).
Because the entry of a default judgment prevents the resolution of claims on
the merits, “this court does not favor entry of defaults and default judgments.”
United States z.,, $55,518.05 in US. Currency, 728 F.2d 192, 194 (3d Cir. 1984).
Thus, before entering default judgment, the court must determine whether the
“unchallenged facts constitute a legitimate cause of action, since a party in
default does not admit mere conclusions of law.” DirecTV, Inc. u. Asher, No.
3-cv-1969, 2006 WL 680533, at *1 (D.N.J. Mar. 14, 2006) (citing 1OA Wright &
Miller, Federal Practice & Procedure

§ 2688 (3d ed. 1998)).

“[D]efendants are deemed to have admitted the factual allegations of the
Complaint by virtue of their default, except those factual allegations related to
the amount of damages.” Doe v. Simone, No. 12-cv-5825, 2013 WL 3772532, at
*2 (D.N.J. July 17, 2013). While “courts must accept the plaintiffs well-pleaded
factual allegations as true,” they “need not accept the plaintiffs factual
allegations regarding damages as true.” Id. (citing Chanel, Inc. v. Gordashevsky,
558 F. Supp. 2d 532, 536 (D.N.J. 2008)). Moreover, if a court finds evidentiaiy
support to be lacking, it may order or permit a plaintiff seeking default
judgment to provide additional evidence in support of the allegations in the
complaint. Id. at *23.
A. Personal Jurisdiction and Service of Process

Before a court may enter default judgment against a defendant, the
plaintiff must have properly served the summons and complaint, and the
defendant must have failed to file an answer or otherwise respond to the
complaint within the time provided by the Federal Rules, which is

twenty-one

2

days. See Gold Kist, Inc. v. Laurinburg Oil Co., Inc., 756 F.2d 14, 18—19 (3d Cir.
1985); Fed. R. Civ. P. 12(a).
I. Personal jurisdiction
Personal jurisdiction, unlike subject matter jurisdiction, may be waived,
and a court generally will not raise personal jurisdiction sua sponte as grounds
for dismissal. See Allaham v. Naddaf, 63SF. App5c 32, 36 (3d Cir. 2015).
Nonetheless, when a default judgment is requested, a court is required to make
a threshold determination regarding any jurisdictional defects. See id.; Bolden
v. Se. Penn. Transp. Auth., 953 F.2d 807, 812 (3d Cir. 1991) (citing Mansfield,
Coldwater&LakeMichiganR.R. u. Swan, 111 U.s. 379, 382 (1884)). If a court
lacks personal jurisdiction over a defendant, the court does not have authority
to render a default judgment, and any such judgment will be deemed void.
Budget Blinds, Inc. v. White, 536 F.3d 244, 258 (3d Cir. 2008). “In the absence
of an evidentiary hearing, a plaintiffs complaint need only establish a prima
facie case of personal jurisdiction.” Allaham, 635 F. App5c at 36-37 (citing
Eurofins Phanna US. Holdings v. BioAlliance Phanna SA, 623 F.3d 147, 155 (3d
Cir. 2010); Metcalfe v. Renaissance Marine, Inc., 566 F.3d 324, 330 (3d Cir.
2009)). If an evidentiary hearing is held, a plaintiff bears the burden of proving
that the court has personal jurisdiction over the defendant by a preponderance
of the evidence. See Control Screening LLC v. Tech. Application & Prod. Co., 687
F.3d 163, 167 (3d Cir. 2012); Carteret Say. Bank, FA u. Shushan, 954 F.2d 141,
142 n.1 (3d Cir. 1992).
“A district court sitting in diversity may assert personal jurisdiction over
a nonresident defendant to the extent allowed under the law of the forum
state.” Metcalfe, 566 F.3d at 330; see Fed. R. Civ. P. 4(k)(1)(A) (authorizing the
exercise of personal jurisdiction over a defendant “who is subject to the
jurisdiction of a court of general jurisdiction in the state where the district
court is located”). In a state such as New Jersey, where the long-arm statute
allows the exercise of personal jurisdiction to the full extent permitted by the
Constitution, the standard for a federal court sitting in diversity is whether a
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“defendant ha[sj ‘minimum contacts,”’ such “that the exercise of jurisdiction
comport[sJ with ‘tradition notions of fair play and substantial justice.’” Allaham,
635 F. App’x at 37 (Remick a Manfredy, 238 F.3d 248, 255 (3d Cir. 2001)
(quoting Int’l Shoe Co. a Washington, 326 U.S. 310, 316 (1945))).
There are two distinct theories under which personal jurisdiction can
arise: general and specific. Grimes v. Vitalink Commc’ns Corp., 17 F.3d 1553,
1559 (3d Cir. 1994), A court has general jurisdiction when a defendant has
“continuous and systematic” contacts with the forum state. O’Connor a Sandy
Lane Hotel Co., 496 F.3d 312, 317 (3d Cir. 2007). A court has specific
jurisdiction when a plaintiffs claim arises from a defendant’s actions within the
forum state, such that the defendant could “reasonably anticipate being haled
into [the state’sJ court[s].” Vetrotex Certainteed Corp. v. Consol. Fiber Glass
Prods. Co., 75 F.3d 147, 151 (3d Cir. 1996) (quoting World-Wide Volkswagen
Corp. v. Woodson, 444 U.S. 286, 297 (1980)) (internal quotation marks
omitted).
Celgene does not claim that this court has general jurisdiction over
Distinct Pharma. Rather, Celgene argues that the court has specific jurisdiction
because Distinct Pharma sells its allegedly infringing pharmaceuticals in places
including New Jersey.
To satisfy federal due process limits (incorporated by the New Jersey
long-arm statute), a defendant’s minimum contacts are examined in relation to
“the nature of the interactions and

type

of jurisdiction asserted.” Telcordia Tech

Inc. a Telkom SA Ltd., 458 F.3d 172, 177 (3d Cir. 2006). “[T]he relationship
[is] the central concern of
among the defendant, the forum, and the litigation
...

the inquiry into personal jurisdiction.” Shaffer a Heitner, 433 U.S. 186, 204
(1977). For specific jurisdiction, the Supreme Court has delineated three due
process requirements: First, the plaintiff must demonstrate that the defendant
“purposefully directed [its] activities at the forum.” O’Connor, 496 F.3d at 317
(quoting Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472 (1985)) (internal
quotation marks omitted). Second, “the litigation must ‘arise out of or relate to’
4

at least one of those activities.” Id. (quoting Helicopteros iVacionales dc
Colombia, S.A. u. Hall, 466 U.S. 408, 414 (1984)). Third, if the plaintiff satisfies
the first two requirements, “a court may consider whether the exercise of
jurisdiction otherwise ‘comport[s] with fair play and substantial justice.”’ Id.
(quoting Burger King Corp., 471 U.S. at 476) (internal quotation marks
omitted).
A defendant can be subject to personal jurisdiction in a state it never
entered:
Jurisdiction in these circumstances may not be avoided merely
because the defendant did not physically enter the forum State.
Although territorial presence frequently will enhance a potential
defendant’s affiliation with a State and reinforce the reasonable
foreseeability of suit there, it is an inescapable fact of modern
commercial life that a substantial amount of business is
transacted solely by mail and wire communications across state
lines, thus obviating the need for physical presence within a State
in which business is conducted. So long as a commercial actor’s
efforts are “purposefully directed” toward residents of another
State, we have consistently rejected the notion that an absence of
physical contacts can defeat personal jurisdiction there.
Burger King, 471 U.S. at 476.
Celgene has pled a prima facie case of specific jurisdiction. First, Celgene
alleges that Distinct Pharma purposefully directed its activities to New Jersey.
It is alleged that Distinct Pharma sold pharmaceutical products directly to
customers in New Jersey (and elsewhere in the United States). (Compl. ¶ 22)
See J. McIntyre Mach., Ltd.

ii.

Nicastro, 564 U.S. 873, 884-86 (2011) (noting the

difference, for personal jurisdiction purposes, between directly selling products
to a forum and products that end up in a forum because of the stream of
commerce). Second, the litigation arises out of this activity. Those alleged New
Jersey sales are sales of the very products that, according to Celgene’s
complaint, violate federal and state trademark and unfair competition laws.
Third, the exercise of jurisdiction comports with “fair play and substantial
justice.” Factors to consider in this inquiry include “the burden on the
5

defendant,” “the forum State’s interest in adjudicating the dispute,” “the
plaintiffs interest in obtaining convenient and effective relief,” “the interstate
judicial system’s interest in obtaining the most efficient resolution of
controversies,” and the “shared interest of the several States in furthering
fundamental substantive social policies.” World-Wide Volkswagen Corp., 444
U.S. at 292; see also Burger King, 471 U.S. at 477. These factors do not weigh
against a finding of personal jurisdiction.
2. Service of process
Service of process must satisfy both the statute under which service is
effectuated and constitutional due process. When the defendant resides
abroad, the statutory prong is governed principally by the Hague Convention
on the Service Abroad of Judicial and Extrajudicial Documents in Civil or
Commercial Matters, an international treaty that has been ratified by several
countries, including the United States and India. As a ratified treaty, the Hague
Convention is “the supreme Law of the Land.” See U.S. Const. Art. VI, cl. 2;
Ackennann v. Levine, 788 F.2d 830, 838-39 (2d Cir. 1986).
Article 15 of the Hague Convention permits a default judgment based on
service of a foreign defendant as long as:
(a) the document was served by a method prescribed by the
internal law of the State addressed for the service of documents in
domestic actions upon persons who are within its territory, or
(b) the document was actually delivered to the defendant or to his
residence by another method provided for by this Convention, and
that in either of these cases the service or the delivery was effected
in sufficient time to enable the defendant to defend.
Convention Done at the Hague Nov. 15, 1965, art. 15, 20 U.S.T. 361.
Article 5 of the Convention permits service via a “Central Authority” of
it
the country in which service is to be made.2 Celgene has submitted an affidav

Articles 2 and 5 of the Hague Convention delineate how a plaintiff can
effectuate process on an international party through a “Centrai Authority.”
Article 2 provides, in pertinent part:

2

6

attesting that the appropriate documents were delivered to the “Central
Authority” of India on August 16, 2017. (ECF No. 7).
In its prior motion, Celgene relied on a backstop provision of the Hague
Convention which essentially presumes service where process has been
delivered to the foreign authority and where, despite reasonable efforts, a
period of six months has elapsed without receipt of a certificate.3 I held that
Celgene had not made an adequate showing under this backstop provision that
Distinct Pharma had been notified of the pendency of this action in a manner
consistent with due process. (Opinion, DE 10)

Each contracting State shall designate a Central Authority which will
undertake to receive requests for service coming from other contracting
States and to proceed in conformity with the provisions of articles 3 to 6.
Hague Convention, Art. 2.
Article 5 provides, in pertinent part:
The Central Authority of the State addressed shall itself serve the
document or shall arrange to have it served by an appropriate agency,
either—
(a) by a method prescribed by its internal law for the service of
documents in domestic actions upon persons who are within its
territory, or
(b) by a particular method requested by the applicant, unless such
a method is incompatible with the law of the State addressed.
Hague Convention, Art. 5.
Those conditions, more formally, are as follows:
(a) the document was transmitted by one of the methods provided for in
this Convention,
(b) a period of time of not less than six months, considered adequate by
the judge in the particular case, has elapsed since the date of the
transmission of the document,
(c) no certificate of any kind has been received, even though every
reasonable effort has been made to obtain it through the competent
authorities of the State addressed.
Hague Convention, Art. 15.
7

Now, however, Celgene has returned to court with proof of actual service

on Distinct Pharma. (DE 12) The Government of India, Ministry of Law &
Justice, Department of Legal Affairs (Judicial Section), certifies that, in
response to the U.S. request for judicial assistance, Distinct Pharma was duly
served in person on April 23, 2018. (Id.) It was based on that service and
Distinct Pharma’s failure to appear or defend that the Clerk properly entered
default.
B. Gold 1(1st Factors

I next evaluate the following three factors: (1) whether the party subject
to default has a meritorious defense, (2) the prejudice suffered by the party
seeking default, and (3) the culpability of the party subject to default. Gold Kist,
Inc. u. Laurinburg Oil Co., Inc., 756 F.2d 14, 19 (3d Cir. 1985); accord Doug
Brady, Inc. v. N.J Bldg. Laborers Statewide Funds, 250 F.R.D. 171, 177 (D.N.J.
2008) (citing Emcasco Ins. Co. v. Sambrick, 834 F.2d 71, 74 (3d Cir. 1987)).
1. Meritorious defense
As to Gold Kist factor number one, my review reveals no suggestion that
Celgene’s claims are legally flawed or that Distinct Pharma possesses a
meritorious defense to them.
The central claim of the complaint is one of trademark infringement. A
claim of infringement under the Lanham Act, 15 USC. § 1051, requires the
plaintiff to establish that
(1) the mark is valid and legally protectable;
(2) the mark is owned by the plaintiff; and
(3) the defendant’s use of the mark is likely to create confusion
concerning the origin of the goods or services.
Freedom Card, Inc. u. JPMorgan Chase & Co., 432 F.3d 463, 470 (3d Cir. 2005)
(line breaks added). “If the mark at issue is federally registered and has become
incontestable, then validity, legal protectability, and ownership are proved.
Otherwise, validity depends on proof of secondary meaning, unless the

8

unregistered or contestable mark is inherently distinctive.” Vista India v.
Raaga, LLC, 501 F. Supp. 2d 605, 612 (D.N.J. 2007) (quoting Commerce Nat’l
Ins. Services, Inc. a Commerce Ins. Agency, Inc., 214 F.3d 432, 438 (3d Cir.
2000)).
Factually, the complaint alleges as follows:
Celgene is a global biopharmaceutical company and is the owner of
all proprietary rights in and to the drug REVLIMID:® (lenalidomide).
REVLIMID® drug is approved by the Food and Drug Administration (FDA’),
for treatment of previously treated multiple myeloma (mm) and for del Sq
myelodysplastic syndrome (MDS).
Celgene is the owner of all trademark rights in and to the REVLIMID®
mark throughout the world. See U.S. Reg. No. 3,255,216; U.S. Reg. No.
3,074,309; U.S. Reg. No. 2,925,808. The latter has acquired incontestable
status. 15 U.S.C.

§ 1065.

uses
The complaint alleges that Distinct Pharma, without authorization,
the REVLIMID mark in connection with the sale of the same drug,
for
lenalidomide. REVLIMID, it appears, is distinctive and would not be taken
anything but a trademark owned by Celgene.
and
The complaint adequately states a claim of trademark infringement,
no meritorious defense is apparent from the filings now before the court.
2. Prejudice, culpability of defaulting party
ant
The second and third factors also weigh in favor of default. Defend
manner.
was properly served but has failed to appear and defend itself in any
CIV.
,
See Teamsters Pension Fund of Philadelphia & Vicinity v. Am. Helper Inc.,
*4 (D.N.J. Oct. 5, 2022) (finding that
11-624 JBS/JS, 2012 WL 4729023, at
e
“Plaintiffs have been prejudiced by the Defendants’ failure to answer becaus
ery,
they have been prevented from prosecuting their case, engaging in discov
the contrary,
and seeking relief in the normal fashion.”). Absent any evidence to
ility in [the]
“the Defendant[s’] failure to answer evinces the Defendant[s9 culpab
default. Id. And “[t]here is nothing before the Court to show that the
9

*4
Defendant[s’] failure to file an answer was not willfully negligent.” Id. at
(citing Prudential Ins. Co. of America u. Taylor, No. 08—2108, 2009 WL 536403,
at *1 (D.N.J. Feb. 27, 2009) (finding that when there is nothing before the court
to suggest anything other than that the defendant’s willful negligence caused
the defendant to fail to file an answer, the defendant’s conduct is culpable and
warrants default judgment)).
Accordingly, I find that the entry of a default judgment is appropriate.
C. Remedy
Celgene seeks a default judgment awarding permanent injunctive
relief. To grant a permanent injunction, the court must apply four familiar
factors:
(1) the moving party has shown actual success on the merits;
(2) the moving party will be irreparably injured by the denial of
injunctive relief;
(3) the granting of the permanent injunction will not result in even
greater harm to the non-moving party; and
(4) the injunction would be in the public interest.
GucciAmerica, Inc. i.’. Daffy’s, Inc., 354 F.3d 228, 236-37 (3d Cir. 2003)
(trademark case; line breaks added for clarity).
For the reasons stated above, Celgene has adequately demonstrated
that it is entitled judgment. It has established the elements of an
infringement claim on the merits.
Irreparable injury is often found in trademark infringement claims,
because damages are difficult to quantify and impairment of the trademark
holder’s business good will and reputation is manifest. See Gucci, 354 F.3d
at 237. Where the field is ethical pharmaceuticals and the rights in
question are exclusive rights to sell a cancer drug, such considerations are
often a matter of common sense. The potential damage to Celgene’s
reputation, moreover, overlaps with the public interest, discussed below.

10

There is no cognizable harm to Distinct Pharma. By hypothesis, it is
an infringer, and has no legitimate right to market the drug (whether or not
under the REVLIMID trademark, see infra).
Finally, the public interest favors an injunction. There is a public interest
in the protection of trademarks. Here, that interest is intertwined with the
critical public interest in regulation of pharmaceuticals. Because of the
potential toxicity of this drug, and to minimize the chance of fetal exposure,
this drug is approved for marketing only under a special restricted distribution
program, known as REVLIMID REMS® in the United States. Only prescribers
and pharmacists registered to do so may prescribe and dispense REVLIMJD®.
Distinct Pharma’s sales, in addition to violating Celgene’s trademark, are in
violation of the requirements of the REVLIMID REMS® program. The
consuming public is placed in danger by Distinct Pharma’s unauthorized use of
the REVLIMID® mark in connection with its unauthorized distribution of
lenalidomide outside of the controls established by the FDA.
The permanent injunctive relief sought is therefore appropriate.
U.

CONCLUSION

For the foregoing reasons, Celgene’s motion for default judgment is
granted, and a permanent injunction will be entered in the form proposed by
Celgene.
Dated: March 13, 2019

United States District Judge

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