Federal Circuit Upholds Home Field Advantage in Generic Drug Cases

Under United States law, the holder of a patent on a brand-name, FDA-approved drug can bring suit for patent infringement against a generic drug manufacturer even before the generic manufacturer brings the drug to market.  That right to sue is triggered by the generic manufacturer’s filing of the short-cut application to the FDA to sell the drug known as an Abbreviated New Drug Application, or “ANDA.”  On March 18, 2016, the Federal Circuit Court of Appeals held that a generic drug manufacturer’s intent to manufacture and market drugs in a particular state – even before they start selling there – is enough to sue the generic manufacturer in the federal court in that state.  The decision will go a long way in cementing “home field advantage” for branded drug companies that traditionally bring suit in their home state before the generic drug is ever actually manufactured or marketed there.

The decision came in the context of two separate actions brought in Delaware against generic drug manufacturer Mylan Pharmaceuticals Inc.  In both cases, the plaintiffs sought to halt Mylan’s efforts to manufacture and market allegedly infringing generic drugs described in Mylan’s ANDA’s filed with the FDA.  Mylan moved to dismiss both cases on the basis that Delaware could not exercise jurisdiction over Mylan because Mylan lacked sufficient “minimum contacts” with Delaware as required under the United States Constitution.  The Federal Circuit held that Mylan’s efforts to obtain FDA approval to manufacture and/or sell its generic drugs in Delaware, along with Mylan’s established distribution channels, satisfied the minimum-contacts standard.  Although fairness and undue burden should always be considered, generally speaking, the courts need not wait for a product to be manufactured or sold within a particular state before hearing a case in which the propriety of such future, potentially infringing conduct is considered.

It has become commonplace for branded drug companies to bring ANDA-related lawsuits in their home states, most commonly New Jersey and Delaware, with the generic manufacturer vigorously fighting to dismiss and/or remove the case to another state (such as the generic company’s state of incorporation) based on jurisdictional arguments.  Barring an appeal to the United States Supreme Court, the Federal Circuit’s decision should greatly reduce the number of such disputes, with the majority of cases remaining in New Jersey and Delaware, where the sheer volume of ANDA cases has resulted in a familiarity and expertise among the judiciary that remains largely unmatched throughout the country.