Opinion
08 Civ. 03710 (PGG), 08 Civ. 08112 (PGG).
February 17, 2009
OPINION AND ORDER
Before the Court is Sandoz, Inc.'s ("Sandoz") motion to transfer two cases bearing docket numbers 08 Civ. 03710 and 08 Civ. 08112 to the District of Nevada pursuant to 28 U.S.C. § 1404(a). For the reasons stated below, Sandoz's motion is DENIED.
BACKGROUND
There are currently three lawsuits pending between the same parties. All three lawsuits relate to claims of patent infringement regarding two oral contraceptive drugs: Yasmin and Yaz. Two of these suits are pending in the Southern District of New York; the remaining action is pending in the District of Nevada. Plaintiffs have joined Defendant Sandoz's transfer motion; the Watson entities oppose the motion.
A. The Parties
Plaintiff Bayer Schering Pharma AG is a corporation organized under the laws of Germany and has its principal places of business in Germany. (08 Civ. 03710 Cmplt. ¶ 4) Plaintiff Bayer HealthCare Pharmaceuticals, Inc. is a corporation organized under the state laws of Delaware and has its principal place of business in New Jersey. (Id. ¶ 5) Plaintiffs Bayer Schering Pharma AG and Bayer HealthCare Pharmaceuticals Inc. ("Bayer") are the holders of several patents relating to the pioneer oral contraceptive drugs Yasmin and Yaz. (Id. ¶¶ 20, 21; 08 Civ. 08112 Cmplt. ¶¶ 24, 25)
Defendant Sandoz is a generic drug manufacturer incorporated in Colorado, with a principal place of business in New Jersey. (08 Civ. 03710 Cmplt. ¶ 6) Defendant Watson Pharmaceuticals, Inc. and Watson Laboratories, Inc. ("Watson") are generic drug manufacturers, and Watson asserts that these entities are incorporated in Nevada. (See Transcript of Initial Conference dated Oct. 1, 2008 ("Tr.") at 14:21-25)
B. The ANDA Framework
Sandoz and Watson filed abbreviated new drug applications ("ANDA") to manufacture, use or sell generic versions of Yasmin or Yaz. (See 08 Civ. 03710 Cmplt. ¶¶ 14, 15; 08 Civ. 08112 Cmplt. ¶¶ 16, 20) Under the Hatch-Waxman amendments to the Federal Food, Drug and Cosmetic Act, a pharmaceutical manufacturer seeking expedited Food and Drug Administration ("FDA") approval to market a generic version of a patented drug may submit an ANDA. See Eli Lilly Co. v. Medtronic, Inc., 496 U.S. 661, 676 (1990). As a safeguard against patent infringement, ANDA filers are required to submit a certificate explaining why their generic drug manufacturing will not infringe the brand-name drug patent. See id. at 677. Both Sandoz and Watson submitted Paragraph IV certifications alleging that Bayer's patents are invalid or will not be infringed by the use, manufacture, or sale of a generic version of Yasmin or Yaz. (See 08 Civ. 03710 Cmplt. ¶¶ 18, 19; 08 Civ. 08112 Cmplt. ¶¶ 19, 23)
An ANDA-filer who makes a Paragraph IV certification is statutorily required to send a letter to the brand-name patent holder explaining why it believes the patent is invalid or will not be infringed. See Eli Lilly Co., 429 U.S. at 677. An ANDA containing a Paragraph IV certification may become immediately effective only if the patent owner does not initiate a lawsuit for infringement within forty-five days of receiving the notice letter. See id. at 677. If the patent holder brings suit within the forty-five day period, then the ANDA will not be approved until a court rules that the patent is not infringed or until the expiration of thirty months — whichever comes first. See id. at 677-78.
Both Sandoz and Watson sent the statutorily-required ANDA notice letters to Bayer. (See 08 Civ. 03710 Cmplt. ¶¶ 18, 19; 08 Civ. 08112 ¶¶ 19, 23) In response, Bayer sued Sandoz and Watson in the District of Nevada and in the Southern District of New York.
C. Procedural History
On November 5, 2007, Bayer sued Watson in the District of Nevada for patent infringement of various patents relating to Yaz. More specifically, the patents at issue are U.S. Patent No. 6,787, 531 ("the `531 patent"), U.S. Reissue Patent No. 37,564 ("the `564 patent"), and U.S. Reissue Patent No. 37, 838 ("the `838 patent"). (See Steven J. Moore Aff., Ex. C at ¶¶ 15, 16, 17, 18)
On April 17, 2008, Bayer sued Watson and Sandoz in the Southern District of New York for patent infringement of U.S. Patent No. 5,569, 652 ("the `652 patent") in connection with Yasmin (hereinafter "New York Yasmin action"). (See 08 Civ. 037110 Cmplt. ¶¶ 20, 21) On July 11, 2008, Sandoz answered the complaint and asserted twelve counterclaims. (See Moore Aff., Ex. B) Sandoz's counterclaims involve the `652 patent, the `531 patent, and U.S. Patent No. 6,933,395 ("the `395 patent"). (See id. ¶¶ 8, 96, 104) Watson has not answered or otherwise responded in the New York Yasmin action.
On August 1, 2008, Bayer sued Sandoz in the District of Nevada alleging infringement of the `564 patent and the `838 patent listed in connection with Yaz. (See Moore Aff, Ex. G. ¶¶ 13, 14) Sandoz answered the complaint on September 19, 2008, and asserted twenty-six counterclaims. (See Moore Aff., Ex. H) These counterclaims involve a multitude of patents including: the `564 patent, the `838 patent, the `652 patent, the `531 patent, the `395 patent, U.S. Patent No. 5,798,338, U.S. Patent No. 6,958,326, U.S. Patent No. 6,987,101, U.S. Patent No. 7,163,931, U.S. Patent No. 1,163,931, and U.S. Reissue Patent No. 38,253. (See id. ¶¶ 8, 50, 149, 156, 164, 173, 180, 187, 194, 201) On November 24, 2008, the Nevada District Court consolidated the two Yaz actions (hereinafter "Nevada Action"). (See Letter from Delphine W. Knight Brown dated January 14, 2009 (Docket No. 41))
Finally, on September 18, 2008, Bayer sued Sandoz and Watson in the Southern District of New York alleging infringement of the `652 patent in connection with Yaz (hereinafter "New York Yaz action"). (See 08 Civ. 08112 Cmplt. ¶¶ 24, 25) Neither Watson nor Sandoz has answered or otherwise responded in the New York Yaz action.
On September 22, 2008, Sandoz filed a motion to transfer the New York Yasmin action to the District of Nevada pursuant to 28 U.S.C. § 1404(a). Bayer subsequently joined that motion. (See Tr. at 7:5-6; Letter from Peter B. Bensinger dated September 25, 2008 (Docket No. 37)) Sandoz and Bayer also requested that the New York Yaz action be transferred to the District of Nevada. (See Tr. at 4:15-17; Letter from Peter B. Bensinger dated September 25, 2008 (Docket No. 37)) Watson opposes the motion to transfer the New York actions. (See Tr. at 11:23-12:6; Letter from Cedric C. Tan dated September 24, 2008 (Docket No. 36))
DISCUSSION
Title 28, United States Code, § 1404(a) states that "[f]or the convenience of parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other district or division where it might have been brought." "A motion to transfer venue requires a two-part inquiry: first, whether the action to be transferred might have been brought in the transferee court; and second, whether considering the convenience of parties and witnesses, and the interest of justice, a transfer is appropriate." Fuji Film Co., Ltd. v. Lexar Media, Inc., 415 F. Supp. 2d 370, 373 (S.D.N.Y. 2006) (quotations omitted). Sandoz, as the moving party here, bears the burden of demonstrating that transfer is proper. See Ford Motor Co. v. Ryan, 182 F.2d 329, 330 (2d Cir. 1950).
A. Interest of Justice Factors
Under the second prong of the Section 1404(a) test, there are compelling reasons to transfer these two actions to the District of Nevada. "[W]ith respect to trial efficiency and judicial economy, the Supreme Court has held that the consideration of the `interest of justice' factor encompasses the private and public economy of avoiding multiple cases on the same issue." Williams v. City of New York, No. 03 Civ. 05342, 2006 WL 399456, at *3 (S.D.N.Y. Feb. 21, 2006) (citing Continental Grain Co. v. Barge FBL-585, 364 U.S. 19, 26 (1960)); see also Raiber v. Dentsply Int'l Inc., No. 99 Civ. 0743, 1999 WL 335821, at *2 (S.D.N.Y. May 24, 1999) (explaining "there is a strong policy favoring the litigation of related claims in the same tribunal in order that pretrial discovery can be conducted more efficiently, duplic[ative] litigation can be avoided, thereby saving time and expense for both parties and witnesses, and inconsistent results can be avoided") (citing Wyndham Assocs. v. Bintliff, 398 F.2d 614, 619 (2d Cir. 1968)). "Therefore, courts consistently recognize that the existence of a related action in the transferee district is a strong factor to be weighed with regard to judicial economy, and may be determinative." Williams, 2006 WL 399456, at *3 (citing Citicorp Leasing, Inc. v. United Am. Funding, Inc. No. 03 Civ. 1586, 2004 WL 102761, at *6 (Jan. 21, 2004)).
Here, the parties in the New York and Nevada actions are identical, and the three cases share many overlapping, complex issues. For example, the patents concerning Yaz will be squarely at issue in both districts. Similarly, Sandoz's counterclaims in the Nevada action encompass all of the patents that are at issue in the New York actions. (See Moore Aff., Ex. H) The `652 patent, which is the primary patent at issue in both New York actions, will be at issue in both the Yaz and the Yasmin infringement analyses. (See Tr. at 23:23-24:1)
Yasmin and Yaz also have the same active ingredients and differ only in their regimen. (Id. at 5:18-20) Because the drugs are so similar, it will waste judicial resources as well as the litigants' time and money to educate two courts sitting in two different districts about these drugs. Courts acknowledge that "[p]atent litigation, particularly involving high-technology patents, is notoriously difficult. To conduct such a trial the court must be educated on both the technology in general and the particular patents in suit." Capitol Records, Inc. v. Optical Recording Corp., 810 F. Supp. 1350, 1354 (S.D.N.Y. 1992). Because patent litigation is "notoriously difficult," transfer may aid in preserving scarce judicial resources. See id.
Another factor that weighs heavily in favor of transfer here is the potential for inconsistent judgments if the New York and Nevada cases proceed separately. See Wyndham Assocs., 398 F.2d at 619 (explaining that a relevant consideration for a transfer analysis is whether "duplic[ative] litigation can be avoided");see also Pergo, Inc. v. Alloc, Inc., 262 F.Supp.2d 122, 131 (S.D.N.Y. 2003) (explaining that relevant "public interests factors for the purposes of [transfer] include the avoidance of the potential for inconsistent judgments and the promotion of judicial economy"). Bayer's Complaints in the New York actions focus on the alleged infringement of the '652 patent. The `652 patent, however, is at issue in the Nevada action through Sandoz's counterclaims. (See Moore Aff., Ex. H) Moreover, Sandoz's counterclaims in the New York Yasmin action involve patents that are at issue in the Nevada action. (See Moore Aff., Ex. B) Transferring the New York actions to the District of Nevada would avoid the potential for inconsistent judgments concerning the patents that are at issue in both districts.
Despite these compelling reasons to transfer the two New York actions to the District of Nevada, this Court is constrained — by controlling Supreme Court precedent — to deny the motion to transfer.
B. "Might Have Been Brought" Determination
In Hoffman v. Blaski, 363 U.S. 335 (1960), the Supreme Court made clear that in considering where an action "might have been brought," for purposes of Section 1404(a), the district court must look solely to the state of affairs at "the time of the bringing of the action." Hoffman, 363 U.S. at 342. Accordingly, a defendant's consent to submit to jurisdiction of a proposed transferee court after an action is filed will not satisfy Section 1404(a). As the Hoffman Court stated, "[w]e do not think the § 1404(a) phrase `where it might have been brought' can be interpreted to mean . . . `where it might have been rebrought, with defendants' consent.'" Id. at 342-43. "[T]he power of the District Court under § 1404(a) to transfer an action to another district is made to depend not upon the wish or waiver of the defendant but, rather, upon whether the transferee district was one in which the action `might have been brought' by the plaintiff." Id. at 343-44. The Supreme Court went on to endorse the following analysis:
`If when a suit is commenced, plaintiff has a right to sue in that district, independently of the wishes of defendant, it is a district `where (the action) might have been brought.' If he does not have that right, independently of the wishes of the defendant, it is not a district `where it might have been brought,' and it is immaterial that the defendant subsequently (makes himself subject by consent, waiver of venue and personal jurisdiction defenses or otherwise, to the jurisdiction of some other forum).'Id. (quoting Blaski v. Hoffman, 260 F.2d 317, 321, 469 (7th Cir. 1958)).
Courts in this Circuit routinely follow, as they must, the reasoning of Hoffman. See Ferraro Foods, Inc. v. M/V IZZET INCEKARA, No. 01 Civ. 2682, 2001 WL 940562, at *6 (S.D.N.Y. Aug. 20, 2001) (criticizing the transferor court because it was not clear whether the S.D.N.Y. court "had personal jurisdiction over the defendant and if venue would have been proper at the time the action was commenced"); Kenwin Shops, Inc. v. Bank of Louisiana, No. 97 Civ. 907, 1999 WL 294800, at *2 (S.D.N.Y. May 11, 1999) (explaining that the "might have been brought" analysis "focuses on the time at which the action was commenced, not on subsequent events"); PI, Inc. v. Ogle, 932 F. Supp. 80, 85 (S.D.N.Y. 1996) (denying a motion to transfer because the defendant failed to demonstrate he was subject to personal jurisdiction in the transferee district at the time the suit was originally filed); Am. Tel. Tel. Co. v. Milgo Elec. Corp., 428 F. Supp. 50, 52 (S.D.N.Y. 1977) (explaining the "threshold requirement" for a change of venue under § 1404(a) was whether "at the time [the] New York complaint was filed, the defendants [were] amenable to personal jurisdiction in Kansas, [whether] subject matter jurisdiction . . . existed there, and [whether] venue [was] appropriate"); Garner v. Enright, 71 F.R.D. 656, 661 (E.D.N.Y. 1976) (explaining that "with respect to the main complaint, it, does not appear that the action originally `might have been brought' in Florida, . . . due to defendants' New York residence and no allegation of any transactions having taking place in Florida"); see also Schertenleib v. Traum, 589 F.2d 1156, 1161 (2d Cir. 1978) (interpreting Hoffman, in dicta, to mean that § 1404(a) "authorize[s] transfer only to an alternative forum in which jurisdiction over the defendant could have been obtained at the time suit was brought regardless of his consent").
Under Hoffman, this Court must determine whether Sandoz "might have been" sued in the District of Nevada when the New York actions were commenced. More specifically, this Court must determine whether Sandoz was subject to in personam jurisdiction in the District of Nevada. Because none of the parties addressed this issue in their briefing concerning the motion to transfer, this Court issued an order on November 6, 2008, directing the parties to brief the issue of "whether, when the suits were commenced, the Plaintiffs had a right to sue each of the Defendants in the District of Nevada independent of any subsequent waiver or consent by the Defendants. See generally Hoffman v. Blaski, 363 U.S. 335 (1960)." (November 6, 2008 Order (Docket No. 34)) All parties subsequently submitted letter briefs concerning this issue.
Because this Court concludes that Sandoz has not met its burden of demonstrating that this case could have been brought against Sandoz in the District of Nevada, this Court does not reach the issue of whether Watson could have been sued there. Watson contends that the Watson entities are incorporated in Nevada (Tr. at 14:21-25); Bayer contends that Watson Laboratories, Inc. is incorporated in New York. (08 Civ. 03710 Cmplt. ¶ 9)
Whether the district court in Nevada has in personam jurisdiction over Sandoz depends on (1) whether jurisdiction exists under the law of Nevada; and (2) whether a Nevada court's exercise of personal jurisdiction over Sandoz comports with federal due process. See Bank Brussels Lambert v. Fiddler Gonzalez Rodriguez, 305 F.3d 120, 124 (2d Cir. 2002). Nevada allows its courts to exercise personal jurisdiction to the same extent as is permitted under the Due Process Clause. Nev. Rev. Stat. § 14.065(1). Accordingly, under Int'l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945), this Court must determine whether Sandoz has "minimum contacts" with Nevada such that the exercise of jurisdiction over it would not "offend traditional notions of fair play and substantial justice."
Venue in patent actions is governed by 28 U.S.C. § 1400(b), which provides that "[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." A corporate defendant such as Sandoz "reside[s] in any judicial district in which it is subject to personal jurisdiction at the time the action is commenced." 28 U.S.C. § 1391(c).
Under the "minimum contacts" test, a defendant may be subject to either specific or general jurisdiction. Specific jurisdiction is established where the cause of action arises from a defendant's contacts with the forum. See U.S. Titan, Inc. v. Guangzhou Zhen Hua Shipping Co., Ltd., 241 F.3d 135, 152 (2d Cir. 2001). General jurisdiction arises when a defendant maintains "continuous and systematic" contacts with the forum state, although those contacts are not related to the alleged cause of action. See id.
Sandoz has not carried its burden of demonstrating that a Nevada court had either general or specific jurisdiction over it when the New York actions commenced. Moreover, its perfunctory and boilerplate submission on this issue is flatly contradicted by a court filing it made in one of the Nevada actions.
Sandoz states in its November 11, 2008 letter brief that it "provides goods and services" in Nevada and "was and is doing business" there. (Letter of Delphine W. Knight Brown dated November 11, 2008 (Docket No. 38)) Sandoz also asserts that the "filing of its ANDA with the FDA" constitutes a "technical act of infringement making it subject to personal jurisdiction wherever it does business, including Nevada." (Id.) (citing Zeneca Ltd. v. Mylan Pharm., Inc., 173 F.3d 829 (Fed Cir. 1999)). This showing is entirely inadequate to demonstrate that Bayer could have obtained in personam jurisdiction over Sandoz in Nevada.
With respect to Sandoz's filing of an ANDA, it is clear that that act provides no basis for a Nevada court to exercise personal jurisdiction over Sandoz. Indeed, there is no evidence that the preparation and filing of the ANDA had any connection with Nevada. Zeneca Ltd. v. Mylan Pharm., Inc., 173 F.3d 829 (Fed Cir. 1999) — which merely holds that a Maryland court could not exercise jurisdiction over a defendant because its ANDA was filed with the FDA in Rockville, Maryland — provides no support for Sandoz's position.
Similarly, the Court cannot conclude on the basis of Sandoz's paltry submission here that its contacts with Nevada are sufficiently substantial or "continuous and systematic" such that a Nevada court may exercise jurisdiction over it. There is no evidence, for example, that Sandoz (1) is incorporated or registered to do business in Nevada; (2) that it maintains any facilities, offices, or employees in Nevada; or (3) has an agent in Nevada authorized to accept service of process. Moreover, in the Nevada action, Sandoz denied in its Answer that venue in Nevada was proper under 28 U.S.C. §§ 1391(b) and (c) and 1400(b). (See Moore Aff., Ex. H) After Watson's counsel alerted this Court to Sandoz's inconsistent assertion in Nevada, Sandoz's counsel submitted a letter asserting that this statement in its Answer was "an error." (Letter of Delphine W. Knight Brown dated November 12, 2008 (Docket No. 40)) Such evidence of gamesmanship merely undermines what was already an entirely inadequate showing.
In the Nevada action, the Bayer Complaint states: "Defendant [Sandoz] has consented to personal jurisdiction in Nevada for the purposes of this action. Furthermore, upon information and belief, Defendant has continuous and systematic contacts with Nevada." (Moore Aff., Ex. G at ¶ 2) In response to this allegation, Sandoz stated that it "Denies the allegations of Paragraph 2 of the Complaint." (Moore Aff., Ex. H at ¶ 2)
Sandoz subsequently amended its answer in the Nevada action. (Letter of Delphine W. Knight Brown dated January 14, 2009 (Docket No. 41))
It appears that Bayer filed in New York because of a concern that Sandoz might not be subject to in personam jurisdiction in Nevada. In response to Sandoz's motion to transfer, Bayer's counsel sent a letter to this Court stating: "Until Sandoz filed its motion to transfer yesterday, Bayer was not aware that Sandoz would consent to litigating this case in Nevada. In view of Sandoz's express willingness to litigate this case in Nevada, Bayer has decided to join Sandoz's motion to transfer." (Letter of Peter B. Bensinger, Jr., dated September 23, 2008 (Docket No. 35)); see also Letter of Peter B. Bensinger, Jr., dated September 25, 2008 (Docket No. 37) ("Bayer originally sued Watson and Sandoz on their Yasmin ANDAs in the Southern District of New York because that is where Bayer concluded that it could get jurisdiction over both.").
CONCLUSION
Sandoz's motion to transfer the New York actions to the District of Nevada is DENIED. The Clerk of the Court is directed to terminate the motion. [Docket No. 22]SO ORDERED.