District Court Refuses to Assert Personal Jurisdiction Over Defendants in Declaratory Judgment Action Where Neither Took Steps to Enforce or Defend Its Patents in the Forum

The World in U.S. Courts: Summer and Fall 2016 - Intellectual Property – Patent

Torrent Pharmaceuticals Limited v. Daiichi Sankyo, Inc., U.S. District Court for the Northern district of Illinois, July 25, 2016

Three drug manufacturers in this procedurally complicated case filed suit in Chicago seeking a judicial declaration that their proposed generic versions of the popular blood pressure medicine Benicar® do not infringe the defendant’s patent.  The suit was an effort to circumvent the 180-day head start on the marketing of a generic version of Benicar® that a different generic drug company would enjoy because it was the first to file an application to sell a copy of the drug.  The defendants—a Japanese corporation and its New Jersey-based U.S. subsidiary—sought to dismiss the case on grounds that they were not subject to the Court’s jurisdiction.

Because the personal jurisdiction question was “intimately related to patent law,” the Court used the jurisdictional test developed by the U.S. Court of Appeals for the Federal Circuit, to which all patent cases are sent for review.  That test required the Court to consider whether “(1) the defendant purposefully directed its activities at residents of the forum; (2) the claim arises out of or relates to the defendant's activities with the forum; and (3) assertion of personal jurisdiction is reasonable and fair.”  Of particular importance, the Court noted that in declaratory judgment actions such as the case at bar, the focus of the inquiry is the defendant’s enforcement or defense of the patent at issue, not efforts at commercialization.  In patent infringement cases, by contrast, the personal jurisdiction inquiry focuses on allegedly infringing conduct. 

In the case at bar, the Court observed that the defendants were not alleged to have enforced or defended their patent at all, and so took no actions on which a finding of personal jurisdiction could be based.  The defendants did license the patent at issue, but the Court said that could only form the basis for personal jurisdiction where the license “imposes enforcement obligations with a party residing or regularly doing business in the forum," which was not alleged.

The Court noted Federal Circuit precedent to the effect that, under the specific legislation authorizing the approval of generic drugs, a generic drug manufacturer seeking to copy a drug could likely be sued in any State by the patent holder.  The generics argued that the same result should apply in the mirror-image situation:  The generic also ought to be able to file a suit in any State seeking a declaration that the drug manufacturer’s patent is invalid.  But the Court disagreed, noting that the Federal Circuit rule on jurisdiction in the case of declaratory judgment actions was clear, and that “mirror-image” arguments are not persuasive in the declaratory judgment context, where the patent holder is the defendant.

The Court concluded that its decision did not leave the plaintiffs without a remedy:  Under 35 U.S.C. § 293, the so-called patent long-arm statute, the United States District Court for the Eastern District of Virginia has jurisdiction by statute over every U.S. patent holder.

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