Opinion
02 Civ. 2803 (SHS)
September 4, 2003
OPINION ORDER
Plaintiff Purdue brings this action to enforce its patent over OxyContin, its brand-name form of the drug oxycodone. Plaintiff alleges that the efforts by Impax Laboratories, Inc. to manufacture and market a generic form of oxycodone infringe upon its patent. Defendant has moved to dismiss the complaint for lack of personal jurisdiction pursuant to Fed.R.Civ.P. 12(b)(2). For the reasons set forth below, that motion is denied.
I. BACKGROUND
Plaintiffs (collectively "Purdue") are as follows. Purdue Pharma L.P. ("Purdue Pharma") is a Delaware limited partnership, having places of business in Connecticut and New York. The Purdue Frederick Company ("Purdue Frederick'") is a New York corporation with is principal place of business in Connecticut. Purdue Pharma and Purdue Frederick are general partners of The Purdue Pharma Company, a Delaware general partnership having its principal place of business in Connecticut. P.F. Labs is a New Jersey corporation with its place of business in New Jersey. Purdue is the owner by assignment of the patents covering the pharmaceutical OxyContin and manufactures, markets, and sells OxyContin in the United States.
Defendant Impax Laboratories, Inc. ("Impax") is a pharmaceutical company incorporated in Delaware with its principal place of business in California. Impax has filed an Abbreviated New Drug Application ("ANDA") with the U.S. Food and Drug Administration seeking approval to engage in the commercial manufacture, use or sale of a generic form of extended-release oxycodene. Purdue alleges that Impax's submission of its ANDA inflinges upon its patents for the extended-release form of OxyContin.
At the time of the commencement of this action, Impax was not registered to do business in New York, and had no facilities, assets, offices, employees, or bank accounts in New York. Impax solicited business in New York mainly through advertising in trade catalogues and journals, and the mailing of product brochures to its customers in New York. (Nix Decl., Tabs 11-18) In addition, Impax had made a small number of sales calls to New York, and operated a website that solicited business nationally and internationally. (Nix Decl., Tab 2, Tr.31, 45-48, 59, 86-87) Impax generated 3.61% ($590,477) of its sales revenues from direct sales to New York accounts. (Doll Decl. ¶ 6) Impax also sold a significant amount of its drugs to wholesalers and distributors based in New Jersey, who in turn sold the products to New York pharmacies and hospitals. When the revenues from these sales are included, the New York share of Impax's revenues rose to 8.0%-8.1% ($1.1-$1.5 million). (Carino Decl. ¶ 2-4, Tab A).
The relevant time period for the jurisdictional inquiry pursuant to the N.Y.C.P.L.R. is at the time of service of the summons and complaint.See Gaboury v. Central Vermont Ry. Co., 250 NY. 233, 236, 165 N.E. 275 (1929); Andros Compania Maritima S.A. v. Intertanker Ltd., 714 F. Supp. 669, 675 (S.D.N.Y. 1989).
In addition to its solicitation of and revenue from sales, Impax had sought investment capital from New York investment banks at conferences hosted by New York investment banks for pharmaceutical companies. Impax's CEO had solicited capital from hedge funds and "target investors" in New York, and has marketed the firm to leading investment firms. (Nix Decl., Tabs 34-36, 38, 42-44) In addition, Impax developed plans for the issuing of secondary stock offerings with two New York underwriters. (Nix Decl., Tabs 38, 40, 47-48,)
II. DISCUSSION
Plaintiffs bear the burden of proving that this Court has personal jurisdiction over Impax. See e.g., Whitaker v. American Telecasting Inc., 261 F.3d 196, 208 (2d Cir. 2001); Ball v. Matallurgie Hoboken-Overpelt, 902 F.3d 194, 197 (2d Cir. 1990). The determination of personal jurisdiction over an out-of-state defendant in patent litigation is comprised of two inquiries: (1) whether the forum state's long-arm statute permits the assertion of jurisdiction and (2) whether the assertion of jurisdiction would violate federal due process. See Graphic Controls Corp. v. Utah Med. Prods., Inc., 149 F.3d 1382, 1385 (Fed Cir. 1998). See also Bensusan Restaurant Corp. v. King, 126 F.3d 25, 27 (2d Cir. 1997) (applying standard in trademark case). Plaintiffs have met their burden on both inquiries, and therefore this court finds that it has personal jurisdiction over Impax in this matter.
A. New York Long-Arm Jurisdiction
Purdue asserts that long-arm jurisdiction exists over Impax pursuant to N.Y, C.P.L.R. § 301. Section 301 provides jurisdiction over parties who are "doing business" in New York. A corporation is considered to be "doing business" when it is present in the state "not occasionally or casually, but with a fair measure of permanence and continuity." Landoil Resources v. Alexander Alexander Servs. Inc., 918 F.2d 1039, 1043 (2d Cir. 1990)(quoting McGowan v. Smith, 52 N.Y.2d 268, 272, 437 N.Y.S.2d 643, 645 (1981)). In making this determination, New York courts look initially at the following factors: "The existence of an office in New York; the solicitation of business in New York; the presence of bank accounts or other property in New York; and the presence of employees or agents in New York." Id.
While Impax had no office, bank account, other property, employees or agents in New York, it had engaged in solicitation of business in New York. Solicitation alone will not justify a finding of corporate presence in New York with respect to a foreign manufacturer or purveyor of services. See Laufer v. Ostrow. 55 N.Y.2d 305, 10 (1982). However, if the solicitation is substantial and continuous, and defendant engages in other activities of substance in the state, then personal jurisdiction may be found to exist. See Landoil at 1043-44. Under this "solicitation-plus" rule, "once solicitation is found in any substantial degree very little more is necessary to a conclusion of 'doing business.'" Id. at 1044.
Impax, through its generic marketing division Global Pharmaceuticals, Inc., marketed, sold, and distributed Impax's generic products in New York, Impax solicited business in New York in a variety of ways. It made sales calls to its customers via telephone, e-mail and face-to-face communication. (Nix Decl., Tabs 11-18) Impax advertised its products in trade catalogs and journals that were distributed in New York. Impax mailed product brochures to its New York customers. In addition, Impax operated a website that solicited business nationally and internationally. (Nix Decl., Tab 2). The combined effect of Impax's various marketing strategies had been to garner significant revenue from New York sales. These direct sales (which did not include the even larger quantity of drugs sold to regional wholesalers and distributors for resale in New York) accounted for 3.61% of Impax's total revenues, or about $600,000 per year. (Doll Decl. ¶ 6) Impax's solicitation of business in New York is therefore properly considered to have been "substantial" and "continuous."
Impax's substantial solicitation of business was not its sole contact with New York; it had also engaged in additional "activities of substance" in New York through its efforts to acquire investment capital. Solicitation of investment has been found to confer jurisdiction in the context of jurisdiction pursuant to N.Y.C.P.L.R. 302(a)(1). See PDK Labs, Inc. v. Friedlander, 103 F.3d 1105, 1109-10 (2nd Cir. 1997);Bank of Montreal v. Mitsui Manufacturers Bank, No, 85 Civ. 1519, 1987 WL 5829 at *l-2 (S.D.N.Y. Jan. 21, 1987),
The U.S. Court of Appeals for the Second Circuit has found that a three-month effort by the defendants' New York attorney to procure investments in the defendants' product constituted "business transacted in New York." PDK Labs, Inc., 103 F.3d at 1109. Similarly, the solicitation of investment conferred jurisdiction in an action arising out of a defaulted letter of credit. See Bank of Montreal, 1987 WL 5829 at *2. The solicitation of investment in New York is jurisdictionally significant and to be properly designated in this instance as an activity "of substance." Thus, while Impax's solicitation of investment in New York is insufficient by itself to establish jurisdiction pursuant to N.Y.C.P.L.R. 301, see Clarke v. Fonix. No. 98 CIV. 6116, 1999 WL 105031 at *5 (S.D.N.Y. March 1, 1999); Daniel v. American Board of Emergency Medicine, 998 F. Supp. 127, 224 (W.D.N.Y. 1997), Impax's substantial and continuous solicitation of business in New York, when combined with its solicitation of investment in New York, establishes that it was not merely in the state occasionally or casually, but rather was present with a "fair measure of permanence and continuity."
B. Due Process
Impax's contacts with New York also satisfy the due process inquiry. The due process clause of the Fourteenth Amendment to the U.S. Constitution permits a state to exercise personal jurisdiction over a non-resident defendant with whom it has "certain minimum contacts such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice." Kernon v. Kurtz-Hastings Inc., 175 F.3d 236, 242 (2d Cir. 1999) (quoting Calder v. Jones, 465 U.S. 783, 788 (1984)). In determining whether minimum contacts exist, a court considers the relationship among the defendant, the forum, and the litigation. See Keeton v. Hustler Magazine, Inc., 465 U.S. 770, 775 (1984). Even when a cause of action does not arise out of or relate to the foreign corporation's activities in the jurisdiction, "due process is not offended by a State's subjecting the corporation to its in personam jurisdiction when there are sufficient contacts between the State and the foreign corporation." Helicpteros Nacionales de Columbia, S.A. v. Hall. 466 U.S. 408, 415 (1984). When a foreign corporation has continuous and systematic contacts with the jurisdiction as part of its business, general jurisdiction is "reasonable and just." Id. at 415.
Impax's substantial and continuous solicitation, as well as repeated efforts to avail itself of the state for investment purposes, established sufficient contacts between Impax and New York to satisfy the requirements of due process. It is well established that New York's long-arm requirement of "doing business" is more restrictive than the requirement of minimum contacts. See Intermeat Inc. v. American Poulty, Inc., 575 F.2d 1017, 1022 (2d Cir. 1978); Ugalde v. Dyncorp, Inc., No. 98 Civ. 5459, 2000 WL 217502 at *4 (S.D.N.Y. Feb. 23, 2000); Andrulonis v. United States. 526 F. Supp. 183, 189 (N.D.N.Y 1981). In this case, the systematic contacts that establish that Impax was "doing business" in New York also satisfy the requirements of due process.
C. Judicial Economy
While considerations of judicial economy are insufficient to confer jurisdiction when none exists, in this matter they strongly support a finding of jurisdiction. There are eight other actions involving patent rights to oxycodone pending before this Court. All nine cases involve the same plaintiffs, the same patents, and seek essentially the same judgments and relief. In all nine cases the alleged infringing action was the filing of an application with the Food and Drug Administration for approval to market the competing product. If this litigation alone were to go through pretrial proceedings and trial in a different forum than the other cases, it would constitute a significant waste of judicial resources — especially in that it would require a different court to immerse itself in the technical details involved in the OxyContin patents. See SmithKlineCorp. v. Sterling Drug, Inc., 406 F. Supp. 52, 55-56 (D.Del 1975). Public policy is also served by preventing the possibility of inconsistent judicial results, which would further delay the resolution of this dispute. Cf. U.S. v. Alean Aluminum Corp., 990 F.2d 711 (2d Cir. 1993).
In addition to this action, referred to as "Impax I", the other eight cases are Purdue v. Boehringer. 99 Civ. 3658; Purdue v. Endo, 00 Civ. 8029 ("Endo I"); Purdue v. Endo. 01 Civ. 2109 ("Endo II"); Purdue v. Endo. 01 Civ, 8177 ("Endo III"); Purdue v. Teva, 01 Civ. 8507 ("Teva I"); Purdue v. Teva. 01 Civ. 11212 ("Teva II"); Purdue v. Teva. 03 Civ. 2312 ('Teva III"); Purdue v. Impax, 02 Civ. 7569 ("Impax II"); and Purdue v. Impax, 02 Civ. 8036 ("Impax III").
Two cases, Impax II and Impax III, have all parties in common with this action, and would presumably remain in the Southern District of New York even were jurisdiction not found in this action, due to Impax's acquisition of a New York Controlled Substances License on June 25, 2002 (subsequent to the filing of this action, but prior to the filing of Impax II and Impax III).
A bench trial of the Purdue v. Endo actions was held before this Court in June 2003 and is currently sub judice.
III. CONCLUSION
For the reasons set forth above, Impax's motion to dismiss the complaint for lack of personal jurisdiction pursuant to Fed.R.Civ.P. 12(b)(2) is denied in its entirety.