No Specific Personal Jurisdiction over Zydus in the Case of Novartis v. Zydus Novel Tech Inc

On Aug 07, 2015 The District Court Of Delaware granted Zydus novel tech inc (defendants) motion to dismiss the Novartis (plaintiff) complaint for lack of personal jurisdiction.

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Background:
Novartis (Plaintiff) filed a Hatch-Waxman patent infringement action against defendants Zydus Noveltech, Inc., Zydus Pharmaecuticals (USA) Inc., and Cadila Healthcare Ltd for infringing two patents for the “Exelon” transdermal system, which is used to treat dementia. Immediately after filing this case, Plaintiffs filed a parallel action in the District of New Jersey.

Exelon and its patent Litigation’s:
Exelon (Rivastigmine Tartrate) is an acetylcholinesterase inhibitor indicated for treatment of:
a)
Mild to moderate dementia of the Alzheimer’s type (1.1)
b)
Mild to moderate dementia associated with Parkinson’s disease (1.2).

Rivastigmine is chemically known as (S)-N-Ethyl-N-methyl-3-[1-(dimethyl amino)ethyl]-phenyl carbamate hydrogen-(2R,3R).

Rivastigmine was developed by Marta Weinstock-Rosin of the Department of Pharmacology at the Hebrew University of Jerusalem and sold to Novartis by Yissum for commercial development. It is a semi-synthetic derivative of physostigmine.

Novartis received FDA approval for Rivastigmine Tartrate (EQ 1.5MG, EQ 3MG, EQ 4.5MG and EQ 6MG base) on Apr 21, 2000. Further, it also received approval for its film, extended release;transdermal patch (4.6MG/24HR, 9.5MG/24HR and 13.3MG/24HR).

Several generic companies received FDA approval to sell generic version of Rivastigmine Tartrate Capsule;Oral EQ 1.5MG, EQ 3MG, EQ 4.5MG and EQ 6MG base.

From 2011 Novartis filed several ANDA suits against the generic companies in the court of Delaware:
i) 11-1077-RGA and 11-1112-RGA (Novartis v. Par pharma and Novartis v. Watson);

Present Scenario:
Zydus Noveltech sent its ANDA notice letter on July 16, 2014 to Novartis in Switzerland, Germany, and New Jersey. In return Novartis sued Zydus Noveltech in the court of Delaware for infringing two patents for the “Exelon” transdermal system, which is used to treat dementia.

The patents in suits are U.S. Patent No. 6,335,031 and US 6,316,023 which are set to expire on Jan 8, 2019.

Zydus Noveltech have moved to dismiss the complaint for lack of personal jurisdiction, as the Zydus Noveltech is a New Jersey corporation with a principal place of business in Vermont. Previously defendants Zydus Pharmaceuticals and Cadila also moved to dismiss the complaint for failure to state a claim under Federal Rule of Civil Procedure 12(b)(2), and Cadila moved to dismiss for insufficient service of process under Rule 12(b)(5). The Court granted a stipulation to dismiss the complaint against defendants Zydus Pharmaceuticals and Cadila.

Zydus Pharmaceuticals and Zydus Noveltech are sister companies, and Cadila is their ultimate parent company. The majority shareholder of Zydus Noveltech is Zydus International Private Ltd., a subsidiary of Cadila.

Novartis argued that there is specific jurisdiction over Zydus Noveltech for two reasons:
i) Zydus Noveltech directed its notice of ANDA filing to Novartis Pharmaceuticals, a Delaware corporation; and
ii) Zydus Noveltech will eventually, if authorized by the FDA, sell its generic product in Delaware.

Judge Andrews referred AstraZeneca AB v. Mylan Pharmaceuticals, Acorda Therapeutics, Inc. v. Mylan Pharmaceuticals which are similar type of cases.

After hearing the arguments the judge stated that the submission of the ANDA letter triggered an injury against Plaintiff. It does not follow that that injury should be where the Plaintiff is incorporated, Delaware, rather than where the letter was directed, New Jersey. Defendant directed activity to New Jersey, not Delaware.

Further, the court also stated that the act of filing the ANDA and the paragraph IV notification constitute an injury, neither was directed at Delaware because defendant sent its letter to plaintiffs abroad and in New Jersey. Therefore, this court cannot exercise specific personal jurisdiction over Defendant.

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