Case Name: Beloteca, Inc. v. Apicore US LLC, 2019 U.S. Dist. LEXIS 59935 (N.D. Ill., April 8, 2019) (Tharp, J.)
Drug Product and Patent(s)-in-Suit: Isosulfan blue (ISB); U.S. Pats. Nos. 8,969,616 (“the ’616 patent”) and 9,353,050 (“the ’050 patent”)
Nature of Case and Issue(s) Presented: Plaintiff Beloteca was a California corporation with its principal place of business in California. Defendant Apicore was a Delaware company with its principal place of business in New Jersey. Defendant Mylan LLC was a Delaware company and domiciled in Illinois. Apicore owned three patents covering “a novel process for manufacturing ISB resulting in a composition of high purity isosulfan blue products.” Mylan was the exclusive licensee of those patents. Beloteca filed an ANDA for a 1% ISB on July 26, 2017, and the FDA approved the application on January 16, 2019. Fearing an infringement lawsuit from Apicore and Mylan, Beloteca filed a declaratory-judgment action on January 17, 2019. Apicore and Mylan file a patent-infringement action against Beloteca in the Eastern District of Texas.
At issue here was whether the Northern District of Illinois had subject matter jurisdiction over the controversy, whether to transfer the case to the Eastern District of Texas, and whether it had personal jurisdiction over Apicore. The court ruled that no subject matter jurisdiction existed.
Why Defendants Prevailed: Declaratory judgment actions are permitted only if an actual controversy exists between the parties. In analyzing the issue of jurisdiction, courts only consider facts existing at the time the case arose. Without a “definite and concrete” controversy “touching the legal relations of the parties,” subject matter jurisdiction was lacking. Beloteca, relying on the Supreme Court’s decision in MedImmune v. Genentech, argued that an actual controversy existed between the parties at the time it filed the declaratory judgment action. The court rejected this argument and clarified that the issue was whether Beloteca had an “adequate basis to infer such a risk.” In MedImmune, the plaintiff received a letter threating to file suit before filing its own complaint. No such letter was sent to Beloteca, and Apicore and Mylan stated that “they never even heard of Beloteca” prior to the lawsuit. Apicore and Mylan filed an infringement lawsuit against Beloteca in the Eastern District of Texas after six weeks of negotiations.
Beloteca next relied on the fact that Apicore and Mylan previously filed an infringement suit against another manufacturer of ISB products. The court rejected this argument too. That previous suit alone said nothing about whether Apicore and Mylan would sue Beloteca. Furthermore, the Federal Circuit rejected the argument that patent litigation history alone couild give rise to an actual controversy.
Next, in light of its decision that subject-matter jurisdiction was lacking, the court rejected defendants’ motion to transfer. The court explained that subject matter jurisdiction was lacking in any federal court because Beloteca prematurely brought the declaratory-judgment action.
In the interest of judicial economy, the court addressed the question of whether it had personal jurisdiction over Apicore. Beloteca argued that Apicore was subject to specific personal jurisdiction in Illinois due to Apicore’s exclusive licensing agreement with Mylan, an Illinois citizen. But the Federal Circuit rejected this argument in New World Int’l, Inc. v. Ford Glob. Techs., LLC, holding that “the grant of an exclusive license to a licensee that resides or regularly does business in the forum” may satisfy the minimum contact requirement over the patent holder if the agreement “imposes an obligation on the patent holder to enforce or defend the patent on behalf of the licensee.” Here, the court found that the license agreement between Apicore and Mylan granted Apicore the right to sue infringers, but it did not impose an obligation on Apicore to do so. Beloteca argued, however, that this was enough to show that the agreement created an ongoing relationship to enforce and defend the patents. The court distinguished New World because the agreement in that case provided the patent holder with much broader discretion in whether or how to enforce the patents. In contrast, the agreement between Apicore and Mylan did not give Apicore, the patent holder, such broad discretion. For example, Apicore retained the right not join a suit initiated by Mylan only if it were to provide a good-faith basis for declining to do so. Unlike the agreement in New World, Apicore had to surrender control over litigation strategy to Mylan. Further, it expressly stated that Apicore and Mylan shared a common interest in enforcing the patents. Finally, the court stated it was not unfair to compel Apicore to answer the infringement claims in Illinois because it had been sued there previously.
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