New Jersey Rulings Allay Personal Jurisdiction Concerns Raised by Daimler and Goodyear

New Jersey Rulings Allay Personal Jurisdiction Concerns Raised by Daimler and Goodyear

SUMMARY

Two judges in the U.S. District Court for the District of New Jersey have denied motions to dismiss for personal jurisdiction in Hatch-Waxman litigations based on the defendants’ compliance with New Jersey’s foreign corporation licensing and registration statute.  These decisions significantly lessen the anticipated impact that some commentators claimed would result from the Supreme Court’s Daimler and Goodyear decisions, which addressed general personal jurisdiction over out-of-state defendants.  Specifically, this makes it more likely that innovator drug companies can successfully defend against motions to dismiss for lack of personal jurisdiction filed by generic drug manufacturers.

In the two recent decisions in cases arising under the Hatch-Waxman Act, the judges found that a defendant corporation’s compliance with New Jersey’s foreign corporation licensing and registration statute creates a sufficient basis for the court to exercise general personal jurisdiction over the corporation.  The decisions in Otsuka Pharm. Co., Ltd. v. Mylan Inc. and Boehringer Ingelheim Pharma GmbH & Co. KG v. Teva Pharms. USA, Inc. clarified that, although the U.S. Supreme Court may have re-focused the general personal jurisdiction analysis in Daimler AG v. Bauman and Goodyear Dunlop Tires Ops., S.A. v. Brown, consent remains a valid basis for courts in the District of New Jersey to exercise personal jurisdiction over out-of-state corporate defendants.

As Chief Judge Jerome B. Simandle recognized in Otsuka, prior to the Supreme Court’s Daimler decision, district courts typically exercised general personal jurisdiction in Hatch-Waxman litigation based on a defendant’s substantial, continuous, and systematic business activities within the forum.  However, the Daimler court seemed to veer away from that broad application of general jurisdiction and held that the relevant inquiry is whether the defendant corporation’s connections with the state are so continuous and systematic that the corporation can be said to be “at home” in the state.  The Daimler court further explained that a corporation is typically “at home” where it is incorporated and where it has its principal place of business, but left open the possibility that there could be exceptional cases where a corporation has substantial enough operations in another forum to subject it to general jurisdiction there as well. 

The Supreme Court’s restriction on general jurisdiction in Daimler created a fear that it would be difficult for plaintiffs in Hatch-Waxman litigation to file patent infringement suits against generic drug manufacturers in any state other than those where they are incorporated or maintain their principal place of business.  The extent of Daimler’s impact was of particular concern for parties litigating in the District of New Jersey, where Hatch-Waxman litigation against out-of-state corporations is common.  However, the two recent decisions in Otsuka and Boehringer Ingelheim make clear that defendant corporations that comply with New Jersey’s foreign corporation licensing and registration statute will still be subject to general personal jurisdiction in the District of New Jersey.

In both Otsuka and Boehringer Ingelheim, generic drug manufacturer Mylan Pharmaceuticals Inc. (“Mylan”) was a defendant, based on having filed an Abbreviated New Drug Application (“ANDA”) with the U.S. Food & Drug Administration (“FDA”) seeking approval to commercially manufacture, use, or sell a drug claimed in the plaintiff’s patent before the patent’s expiration.  After the plaintiffs filed suits against Mylan alleging patent infringement, Mylan moved to dismiss the complaints in each case pursuant to Federal Rule of Civil Procedure 12(b)(6) for lack of personal jurisdiction.  In Otsuka, both Mylan and its corporate parent conceded that they complied with New Jersey’s registration statute, which requires every foreign corporation authorized to transact business in New Jersey to maintain a registered office and a registered agent for service of process.  The court concluded that these activities, together with the substantial amount of business that the defendants conducted in New Jersey, amounted to consent to personal jurisdiction in New Jersey, and on that basis denied Mylan’s motion to dismiss.  Most recently, in Boehringer Ingelheim, Judge Mary L. Cooper denied Mylan’s motion to dismiss and relied on the Otsuka court’s reasoning to again conclude that Mylan consented to personal jurisdiction by complying with New Jersey’s registration requirements and appointing an in-state agent to accept service of process.

Therefore, despite the concern that the Supreme Court’s Daimler decision would cripple Hatch-Waxman litigation in the District of New Jersey against out-of-state generic drug manufacturer defendants, the decisions in Otsuka and Boehringer Ingelheim have allayed those concerns.  However, before filing suit against any out-of-state defendants, innovator drug companies might investigate whether the defendants have complied with New Jersey’s foreign corporation licensing and registration statute.  Confirming this information in advance of filing suit might assist in defeating a defendant’s subsequent motion to dismiss the complaint for lack of personal jurisdiction.

Members of Saul Ewing’s Life Sciences and Intellectual Property & Technology Practices are experienced in protecting intellectual property and handling ANDA litigation arising under the Hatch-Waxman Act.  For more information on the implications of these rulings from the District of New Jersey, or assistance with ANDA cases, please contact the authors or the attorney at the firm with whom you are regularly in contact.

View Document(s):