Saturday, January 04, 2014

Mixed decision in Allergan v. Athena; matter of permanent injunctions based on state law

From Allergan v. Athena:

Christianson v. Colt is cited on jurisdiction:

We have exclusive jurisdiction over an appeal from a final decision of a district court (including one unrelated to patent issues) when “patent law is a necessary element of one of the well-pleaded claims” in the complaint. Christianson v. Colt Indus. Operating Corp., 486 U.S. 800, 809 (1988); 28 U.S.C. § 1295(a)(1). In some circumstanc- es, a district court’s dismissal without prejudice of a patent claim serves as a constructive amendment to the complaint, effectively removing the patent claim. See Chamberlain Grp. v. Skylink Techs., Inc., 381 F.3d 1178, 1189–90 (Fed. Cir. 2004). We have explained, however, that “[d]ismissals divest this court of jurisdiction only if ‘[t]he parties were left in the same legal position with respect to [all] patent claims as if they had never been filed.’” Id. at 1190 (quoting Nilssen v. Motorola, Inc., 203 F.3d 782, 785 (Fed. Cir. 2000)).

Here, the CAFC noted:

Thereafter, pursuant to the parties’ further agreement, the court dismissed all of the patent claims “without prejudice.” Id., ECF No. 1075 (C.D. Cal. Mar. 28, 2013).

We have jurisdiction over this case because the par- ties were not left in the same legal position as if the ’105 patent claim had never been filed. The court’s dismissal “without prejudice” merely reflects the parties’ agreement that the ’105 patent claim could be re-filed in future litigation between these parties. Should that occur, however, the parties will be bound by the court’s summary judgment ruling—which the court did not vacate. Indeed, Allergan, whose decision it is whether to reassert the ’105 patent against Athena, concedes on appeal that the summary judgment ruling “would bind the parties in future district court litigation against each other.” Oct. 11, 2013 Supp. Br. at 2. The court’s dismissal of the ’105 patent claim did not undo this alteration in legal status, and therefore we have jurisdiction over this appeal pur- suant to 28 U.S.C. § 1295(a)(1).

The CAFC affirmed the district court on the point that there was no pre-emption:

The California Health Code incorporates various provisions of the FDCA, which does not itself allow a private right of action. See 21 U.S.C. § 337(a). The district court held that the FDCA did not preempt Allergan’s UCL claim. It stated that “mentions of the FDCA throughout” its order were “referential” because “[i]n order to deter- mine if the [California Health Code] is violated, the Court looks to whether the federal regulations incorporated therein are violated.” Allergan, No. 8:07-cv-1316, slip op. at 4 (C.D. Cal. Oct. 11, 2012). On appeal, the parties agree that the FDCA does not expressly preempt Aller- gan’s claim—the dispute before us concerns implied preemption. (...)

Athena argues that the FDCA impliedly preempts Al- lergan’s UCL claim. It contends that, under Buckman Co. v. Plaintiffs’ Legal Committee, 531 U.S. 341 (2001), a state law claim is impliedly preempted if it does not implicate a traditional state law tort principle and exists solely by virtue of a federal statute. Athena argues that Allergan’s claim involves the violation of a California statute that simply incorporates FDCA provisions and is not rooted in state law tort principles.
Athena argues that the Ninth Circuit’s application of Buckman in PhotoMedex, Inc. v. Irwin, 601 F.3d 919 (9th Cir. 2010) governs this case. (...)

We agree with Allergan and hold that the FDCA does not impliedly preempt its UCL claim. “[T]he purpose of Congress is the ultimate touchstone in every pre-emption case.” Id. at 565 (quoting Medtronic, Inc. v. Lohr, 518 U.S. 470, 485 (1996)). “‘In all pre-emption cases, and particularly in those in which Congress has legislated in a field which the States have traditionally occupied, we start with the assumption that the historic police powers of the States were not to be superseded by the Federal Act unless that was the clear and manifest purpose of Con- gress.’” Id. (quoting Medtronic, 518 U.S. at 485) (altera- tions omitted).

On the matter of the permanent injunction:

The district court entered a permanent injunction barring Athena from manufacturing, marketing, selling, and/or offering for sale “any and all” “eyelash growth product(s)” “anywhere within the United States.” Allergan, No. 8:07-cv-1316, slip op. at 15 (C.D. Cal. Mar. 6, 2013). (...)

Athena argues that it was an abuse of discretion for the court to issue a nationwide injunction. It argues that the injunction impermissibly reaches outside of California to remedy a violation of California law. Athena argues that the injunction violates the Commerce Clause by regulating commerce that occurs wholly outside of Cali- fornia. It emphasizes that California is not part of the supply chain for the most recent formulation of the prod- ucts at issue. (...)

We agree with Athena and hold that the district court abused its discretion by entering an injunction that regulates any and all out-of-state conduct. As the Cali- fornia Supreme Court has stated, “[n]either the language of the UCL nor its legislative history provides any basis for concluding the Legislature intended the UCL to oper- ate extraterritorially.” Sullivan v. Oracle Corp., 254 P.3d 237, 248 (Cal. 2011). The injunction impermissibly im- poses the UCL on entirely extraterritorial conduct regard- less of whether the conduct in other states causes harm to California. This injunction is so broad that it would bar Athena from making its product in Idaho, distributing it from a facility in Nevada, and selling it to Connecticut consumers.
Allergan argues that Norwest Mortgage, Inc. v. Superior Court of San Diego County, 72 Cal. App. 4th 214 (1999), supports the court’s imposition of a nationwide injunction in this case. It does not. (...)
The Commerce Clause “dictates that no State may force an out-of-state merchant to seek regulatory approval in one State before undertaking a transaction in another.” Id. at 337. This rule applies regardless of whether Athena can demonstrate that the laws of other states do—or even could—conflict with the UCL or the California Health Code. In short, California may, as it has in this case, conclude that its own unfair competition law has been violated, and it may prohibit any future conduct within its borders that would cause continued violation of its law. California is not permitted, however, to extend its unfair competition law to other states. (...)

We vacate the permanent injunction. On remand, the district court should limit the scope of the injunction to regulate conduct occurring within California.


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