The U.S. District Court in NJ Enhances Its Stature As a Venue for Patent Litigation

The U.S. District Court in New Jersey has enacted its new Local Patent Rules (L.Civ.R. 9.3, eff. Jan. 1, 2009). These new comprehensive and self-executing rules have encouraged numerous articles and “blawgs” recommending that litigants keep an eye on New Jersey to see whether these procedures shorten the delays associated with litigation of patent cases, thereby making New Jersey the next favored jurisdiction or IP “rocket docket.” See, e.g., “Will NJ Be the Next 'Rocket Docket?” A. Johnson, Law360, March 11, 2009, http://ip.law360.com/print_article/86081; “Texas IP Rocket Docket Headed for a Burnout?” T. Baldas, The National Law Journal, Dec. 28, 2004. They speculate that New Jersey might even take the honor once held by the Eastern District of Virginia and now held by the Eastern District of Texas. The early numbers do not suggest that patent infringement complaints are piling up in New Jersey's federal vicinages in Camden, Trenton, and Newark. Nevertheless, there are good reasons to go to the Garden State with patent litigation.

The Local Rules

The District of New Jersey knows its caseload. Therefore, the Local Rules provide a separate format for self-executing disclosure for the many Hatch-Waxman Act cases filed there. This is important to the pharmaceutical industry because drug testing and FDA submission requirements create distortions in the patent law that can give de facto extensions to patent holders and create barriers to marketing new generic drugs. The Drug Price Competition and Patent Term Restoration Act of 1984 (a.k.a. the Hatch-Waxman Act), was designed to promote generics. It allows generics to work toward FDA marketing approval without fear of infringement during the back end of an existing patent. It also gives “pioneering” companies a period of additional marketing exclusivity to make up for the time a patented drug is mired in development on the front end of a patent. The term “patented invention” used in the Act extends beyond just drugs to various medical devices and products. See Proveris Scientific Co. v. InnovaSysytems, Inc., 536 F.3d 1256 (Fed. Cir. 2008), (analyzing the safe harbor provision of 29 U.S.C. ' 271(e)). Section 271(e) excludes activities designed to generate data for submission to the FDA from patent infringement. These barriers or protections can mean years of profits.

Other than the Hatch-Waxman provisions, the New Jersey Rules mirror those currently used by the U.S. District Court for the Northern District of California. One of the most attractive things about the District of New Jersey as a jurisdiction is that it is “lawyer-friendly.” Fortunately, the New Jersey Rules are consistent with local practice whereby the U.S. Magistrate Judges direct pretrial matters. The New Jersey judges are accessible and will routinely entertain informal correspondence and schedule phone calls on matters involving discovery during which they often give informal advisory opinions and adjust case management orders, thereby avoiding the expense of discovery motions. New Jersey's federal judges are generally disinclined to take lawyers' cases away from them. Furthermore, Ben Franklin was probably correct when he called New Jersey “a beer keg tapped at both ends” by New York and Philadelphia. The lawyer admitted pro hac vice need not worry too much about being “home-towned.” New Jersey's federal judges are welcoming to lawyers from other states.

'Self-Executing' Provisions

The “self-executing” provisions of the new Local Patent Rules that apply to all New Jersey patent cases are:

2.1(a): To the extent possible, the timing and format of claim construction hearings is now on the Rule 26 initial conference agenda.

2.2: Confidentiality and business secrets are presumptively protected. The court has posted a proposed discovery confidentiality order on its Web site. Based on U.S. Magistrate Judge Tonianne J. Bongiovanni's comments at the Jan. 29, 2009 USDC-NJ CME/ECF Attorney Dinner Forum in Cherry Hill, NJ, the court will likely defer to the posted form, not only in patent cases, but in any case where a litigant has a good faith confidentiality concern.

3.1: The parties must make disclosure of asserted claims and infringement contentions within 14 days after the initial scheduling conference.

3.2: Limited document disclosure must accompany the asserted claims and infringement contentions.

3.3 and 3.4: Similarly, 45 days after the service of the asserted claims and infringement contentions, invalidity contentions, also accompanied by document production, must be served.

4, et. seq.: Section 4 of the Local Patent Rules provides a self-executing timetable devoted to the orderly development of claim construction proceedings. A claims construction hearing is presumed.

Rules of Interest to the Pharmaceutical Industry

As discussed, the pharmaceutical industry is most interested in the Hatch-Waxman provisions of the New Jersey Local Rules, which include:

3.6: There is a special format
for self-executing disclosure in Hatch-Waxman Act cases that requires the defendant to produce its “Abbreviated New Drug Applications” and requires the defendant to produce invalidity contentions, non-infringement contentions, claims charts, etc.

3.7: The parties may amend their contentions, with leave of court. Given local custom, unless vigorously contested, most of these applications will be made informally to the Magistrate Judge.

3.8: Parties relying on attorney advice as a defense to infringement are required to produce that advice and the documents supporting it within 30 days of the court's claim construction order.

'Patent Hot Spots'

The latest Statistical Report on U.S. Courts from the Director of the Administrative Office of the U.S. Courts, part of the 416-page “Judicial Business of the United States Courts,” reveals the surprising fact that patent case filings were more or less flat from 2003 through 2007. The Executive Director of the Intellectual Property Owner's Association, Herbert C. Wamsley, testified on March 10, 2009 before the Senate Judiciary Committee on the Patent Reform Act of 2009. He predicted that the litigation trend might be further suppressed, because patent filings at the USPTO have started to wane. Regardless, the Statistical Report identifies “patent hot spots” in order of popularity to patent litigation filers, as set forth in Table 1.

Table 1 below suggests that the District of Delaware is the sleeper court for patent litigation, with 45 cases per judge, compared with about 10 per judge in the District of New Jersey, assuming an equal distribution of cases. Of course, patent cases are not distributed evenly throughout the judiciary. Some judges, such as the District of Massachusetts' William G. Young, are patent “specialists” and get more than their share. In fact, Judge Young has been sitting by designation on the Federal Circuit Court of Appeals. Also see, Judge James Holderman, The Patent Litigation Predicament in the United States, 2007 Univ. of Ill. J.L. Tech. & Pol'y 101 (2007), www.jltp.uiuc.edu/archives/Holderman.pdf. Regardless, based on volume, the greatest patent expertise resides in Delaware. The exception is the Trenton Vicinage in New Jersey, which, as U.S. Magistrate Judge Bongiovanni said on Jan. 29, 2009, attracts more than its share of pharmaceutical patent cases, an observation confirmed by a review of recent filings. The New Jersey docket shows that of the 80 cases readily identifiable as patent cases filed in the District of New Jersey during the six-month span from Dec. 1, 2008 to May 1, 2009, 54 were pharmaceutical patent or medical device cases. Of those, 33 were assigned to Trenton. That means that each judge in the Trenton Vicinage inherited five or six new pharmaceutical patent cases during the six-month period ending May 1, 2009. Incidentally, the 80 filings in six months is a 14% drop from the figures reported in the Statistical Report for the previous year end, which refutes the proposition that litigants are lining up to file general patent cases in New Jersey.

Numbers notwithstanding, patent rules are rare, and by accounting for the special needs of Hatch-Waxman cases, the District of New Jersey is unique. In fact, the District of Delaware and the Northern District of Virginia have no comprehensive local patent rules at all, while the Eastern District of Texas and the Northern District of California have only general local patent rules.

Speed is integral to the plaintiff's selection of the venue. The data are not readily calculable to compare the time it takes in the various districts to get to a preliminary injunction hearing. Topical familiarity is likely to confer greater judicial confidence, so it is reasonable to assume that any one of the jurisdictions listed in the Table 1 is a good place to look for above-average familiarity with patent issues, which presumably should lead to a more rapid disposition of requests for preliminary injunctions. Self-executing rules for patent cases should help both before and after the preliminary injunction stage.

Since less than 1% of the cases in the federal system are patent cases (see Table C-2, Administrative Office of the U.S. Courts, Federal Judicial Caseload Statistics: March 31, 2007), patent litigation should be well served in any of the districts in the table. New Jersey's U.S. District Court may not be a rocket docket just yet, but it is a sophisticated jurisdiction with an accessible bench. For pharmaceutical and especially Hatch-Waxman cases, the data and the new Local Patent Rules suggest that New Jersey is the jurisdiction of choice. It is fair to assume that the Local Patent Rules will also encourage a supportive venue with sophisticated judges for general patent cases.

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Stephen P. Pazan is a senior commercial litigator with Spector Gadon & Rosen, P.C.'s Moorestown, NJ office and frequently appears in the U.S. District Court for the District of New Jersey. He was lead trial and appeal counsel in Proveris Scientific Co. v. InnovaSystems, Inc., 536 F.3d 1256 (Fed. Cir. 2008), a case arising under 29 U.S.C. ' 271(e)1 ' part of the Hatch-Waxman Act. He may be contacted via e-mail at [email protected] or by phone at 856-914-4918.

The U.S. District Court in New Jersey has enacted its new Local Patent Rules (L.Civ.R. 9.3, eff. Jan. 1, 2009). These new comprehensive and self-executing rules have encouraged numerous articles and “blawgs” recommending that litigants keep an eye on New Jersey to see whether these procedures shorten the delays associated with litigation of patent cases, thereby making New Jersey the next favored jurisdiction or IP “rocket docket.” See, e.g., “Will NJ Be the Next 'Rocket Docket?” A. Johnson, Law360, March 11, 2009, http://ip.law360.com/print_article/86081; “Texas IP Rocket Docket Headed for a Burnout?” T. Baldas, The National Law Journal, Dec. 28, 2004. They speculate that New Jersey might even take the honor once held by the Eastern District of Virginia and now held by the Eastern District of Texas. The early numbers do not suggest that patent infringement complaints are piling up in New Jersey's federal vicinages in Camden, Trenton, and Newark. Nevertheless, there are good reasons to go to the Garden State with patent litigation.

The Local Rules

The District of New Jersey knows its caseload. Therefore, the Local Rules provide a separate format for self-executing disclosure for the many Hatch-Waxman Act cases filed there. This is important to the pharmaceutical industry because drug testing and FDA submission requirements create distortions in the patent law that can give de facto extensions to patent holders and create barriers to marketing new generic drugs. The Drug Price Competition and Patent Term Restoration Act of 1984 (a.k.a. the Hatch-Waxman Act), was designed to promote generics. It allows generics to work toward FDA marketing approval without fear of infringement during the back end of an existing patent. It also gives “pioneering” companies a period of additional marketing exclusivity to make up for the time a patented drug is mired in development on the front end of a patent. The term “patented invention” used in the Act extends beyond just drugs to various medical devices and products. See Proveris Scientific Co. v. InnovaSysytems, Inc. , 536 F.3d 1256 (Fed. Cir. 2008), (analyzing the safe harbor provision of 29 U.S.C. ' 271(e)). Section 271(e) excludes activities designed to generate data for submission to the FDA from patent infringement. These barriers or protections can mean years of profits.

Other than the Hatch-Waxman provisions, the New Jersey Rules mirror those currently used by the U.S. District Court for the Northern District of California. One of the most attractive things about the District of New Jersey as a jurisdiction is that it is “lawyer-friendly.” Fortunately, the New Jersey Rules are consistent with local practice whereby the U.S. Magistrate Judges direct pretrial matters. The New Jersey judges are accessible and will routinely entertain informal correspondence and schedule phone calls on matters involving discovery during which they often give informal advisory opinions and adjust case management orders, thereby avoiding the expense of discovery motions. New Jersey's federal judges are generally disinclined to take lawyers' cases away from them. Furthermore, Ben Franklin was probably correct when he called New Jersey “a beer keg tapped at both ends” by New York and Philadelphia. The lawyer admitted pro hac vice need not worry too much about being “home-towned.” New Jersey's federal judges are welcoming to lawyers from other states.

'Self-Executing' Provisions

The “self-executing” provisions of the new Local Patent Rules that apply to all New Jersey patent cases are:

2.1(a): To the extent possible, the timing and format of claim construction hearings is now on the Rule 26 initial conference agenda.

2.2: Confidentiality and business secrets are presumptively protected. The court has posted a proposed discovery confidentiality order on its Web site. Based on U.S. Magistrate Judge Tonianne J. Bongiovanni's comments at the Jan. 29, 2009 USDC-NJ CME/ECF Attorney Dinner Forum in Cherry Hill, NJ, the court will likely defer to the posted form, not only in patent cases, but in any case where a litigant has a good faith confidentiality concern.

3.1: The parties must make disclosure of asserted claims and infringement contentions within 14 days after the initial scheduling conference.

3.2: Limited document disclosure must accompany the asserted claims and infringement contentions.

3.3 and 3.4: Similarly, 45 days after the service of the asserted claims and infringement contentions, invalidity contentions, also accompanied by document production, must be served.

4, et. seq.: Section 4 of the Local Patent Rules provides a self-executing timetable devoted to the orderly development of claim construction proceedings. A claims construction hearing is presumed.

Rules of Interest to the Pharmaceutical Industry

As discussed, the pharmaceutical industry is most interested in the Hatch-Waxman provisions of the New Jersey Local Rules, which include:

3.6: There is a special format
for self-executing disclosure in Hatch-Waxman Act cases that requires the defendant to produce its “Abbreviated New Drug Applications” and requires the defendant to produce invalidity contentions, non-infringement contentions, claims charts, etc.

3.7: The parties may amend their contentions, with leave of court. Given local custom, unless vigorously contested, most of these applications will be made informally to the Magistrate Judge.

3.8: Parties relying on attorney advice as a defense to infringement are required to produce that advice and the documents supporting it within 30 days of the court's claim construction order.

'Patent Hot Spots'

The latest Statistical Report on U.S. Courts from the Director of the Administrative Office of the U.S. Courts, part of the 416-page “Judicial Business of the United States Courts,” reveals the surprising fact that patent case filings were more or less flat from 2003 through 2007. The Executive Director of the Intellectual Property Owner's Association, Herbert C. Wamsley, testified on March 10, 2009 before the Senate Judiciary Committee on the Patent Reform Act of 2009. He predicted that the litigation trend might be further suppressed, because patent filings at the USPTO have started to wane. Regardless, the Statistical Report identifies “patent hot spots” in order of popularity to patent litigation filers, as set forth in Table 1.

Table 1 below suggests that the District of Delaware is the sleeper court for patent litigation, with 45 cases per judge, compared with about 10 per judge in the District of New Jersey, assuming an equal distribution of cases. Of course, patent cases are not distributed evenly throughout the judiciary. Some judges, such as the District of Massachusetts' William G. Young, are patent “specialists” and get more than their share. In fact, Judge Young has been sitting by designation on the Federal Circuit Court of Appeals. Also see, Judge James Holderman, The Patent Litigation Predicament in the United States, 2007 Univ. of Ill. J.L. Tech. & Pol'y 101 (2007), www.jltp.uiuc.edu/archives/Holderman.pdf. Regardless, based on volume, the greatest patent expertise resides in Delaware. The exception is the Trenton Vicinage in New Jersey, which, as U.S. Magistrate Judge Bongiovanni said on Jan. 29, 2009, attracts more than its share of pharmaceutical patent cases, an observation confirmed by a review of recent filings. The New Jersey docket shows that of the 80 cases readily identifiable as patent cases filed in the District of New Jersey during the six-month span from Dec. 1, 2008 to May 1, 2009, 54 were pharmaceutical patent or medical device cases. Of those, 33 were assigned to Trenton. That means that each judge in the Trenton Vicinage inherited five or six new pharmaceutical patent cases during the six-month period ending May 1, 2009. Incidentally, the 80 filings in six months is a 14% drop from the figures reported in the Statistical Report for the previous year end, which refutes the proposition that litigants are lining up to file general patent cases in New Jersey.

Numbers notwithstanding, patent rules are rare, and by accounting for the special needs of Hatch-Waxman cases, the District of New Jersey is unique. In fact, the District of Delaware and the Northern District of Virginia have no comprehensive local patent rules at all, while the Eastern District of Texas and the Northern District of California have only general local patent rules.

Speed is integral to the plaintiff's selection of the venue. The data are not readily calculable to compare the time it takes in the various districts to get to a preliminary injunction hearing. Topical familiarity is likely to confer greater judicial confidence, so it is reasonable to assume that any one of the jurisdictions listed in the Table 1 is a good place to look for above-average familiarity with patent issues, which presumably should lead to a more rapid disposition of requests for preliminary injunctions. Self-executing rules for patent cases should help both before and after the preliminary injunction stage.

Since less than 1% of the cases in the federal system are patent cases (see Table C-2, Administrative Office of the U.S. Courts, Federal Judicial Caseload Statistics: March 31, 2007), patent litigation should be well served in any of the districts in the table. New Jersey's U.S. District Court may not be a rocket docket just yet, but it is a sophisticated jurisdiction with an accessible bench. For pharmaceutical and especially Hatch-Waxman cases, the data and the new Local Patent Rules suggest that New Jersey is the jurisdiction of choice. It is fair to assume that the Local Patent Rules will also encourage a supportive venue with sophisticated judges for general patent cases.

[IMGCAP(1)]

Stephen P. Pazan is a senior commercial litigator with Spector Gadon & Rosen, P.C.'s Moorestown, NJ office and frequently appears in the U.S. District Court for the District of New Jersey. He was lead trial and appeal counsel in Proveris Scientific Co. v. InnovaSystems, Inc. , 536 F.3d 1256 (Fed. Cir. 2008), a case arising under 29 U.S.C. ' 271(e)1 ' part of the Hatch-Waxman Act. He may be contacted via e-mail at [email protected] or by phone at 856-914-4918.