Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_17-cv-06731/USCOURTS-cand-3_17-cv-06731-1/pdf.json

Nature of Suit Code: 890
Nature of Suit: Other Statutory Actions
Cause of Action: 15:1125 Trademark Infringement (Lanham Act)

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United States District Court

Northern District of California

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

VALEANT PHARMACEUTICALS 

NORTH AMERICA LLC,

Plaintiff,

v.

BELCHER PHARMACEUTICALS, LLC, 

et al.,

Defendants.

Case No. 17-cv-06731-RS 

ORDER DENYING MOTIONS TO 

DISMISS

I. INTRODUCTION

This case was originally brought against multiple unrelated defendants. Pursuant to a 

stipulation of the parties, the claims against various defendants, or defendant groups, were severed 

into separate actions. The defendants remaining in this matter are Virtus Pharmaceuticals, LLC, 

(“Virtus LLC”) and Virtus Pharmaceuticals OPCO II, LLC (“OPCO”) (collectively “the Virtus 

entities”).1

In two separate motions, the Virtus entities seek dismissal (1) for lack of personal 

jurisdiction, (2) for improper venue, (3) on the basis of the “primary jurisdiction” doctrine, and/or,

(4) for assorted other alleged pleading defects. Although OPCO has made an adequate showing 

that it is not subject to personal jurisdiction in this forum and must be dismissed, the motions will 

 

1

 An additional defendant not severed from this case, Belcher Pharmaceuticals, LLC, has since 

been dismissed by stipulation.

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be denied as to Virtus, LLC.

II. BACKGROUND

Plaintiff, Valeant Pharmaceuticals North America, LLC manufactures, markets, and sells

Librax® (hereinafter, “Librax”), a drug approved by the FDA for treatment of gastritis, peptic 

ulcers, and irritable bowel syndrome. Librax consists of 2.5 mg clidinium bromide and 5 mg 

chlordiazepoxide hydrochloride. Librax allegedly has been reviewed, determined to be safe and 

effective for the indicated use, and on that basis approved for marketing in the United States by the 

FDA. 

The Virtus entities allegedly manufacture, market, and/or sell various versions of a drug 

(the “accused products”) that also purportedly consists of 2.5 mg clidinium bromide and 5 mg

chlordiazepoxide hydrochloride. Valeant asserts, however, that the accused products

(1) have not been evaluated for safety and effectiveness by the FDA or the state of California, and 

(2) have not been approved under the Federal Food, Drug and Cosmetic Act (“FDCA”) or any 

relevant California act or agency. Valeant contends the Virtus entities’ marketing of the accused 

products is deceptive and actionable because they promote them as “‘generic’ versions – i.e., 

FDA-approved copies – of Librax.” Valeant sets out claims for relief under the Lanham Act, 

California’s UCL (Cal. Bus. & Prof. Code § 17200) and California’s False Advertising Law (Cal. 

Bus. & Prof. Code § 17500).

III. DISCUSSION

A. Personal jurisdiction

When there is no applicable federal statute governing personal jurisdiction, the law of the 

state in which the district court is located applies. California’s long-arm statute, Cal. Code Civil 

Procedure § 410.10, permits the exercise of jurisdiction “on any basis not inconsistent with the 

Constitution of this state or of the United States.” Rocke v. Canadian Automobile Sport Club, 660 

F.2d 395, 398 (9th Cir. 1981). Accordingly, the exercise of jurisdiction must comport with due 

process. A defendant who is not present in the forum may be subject to jurisdiction only when he 

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has certain minimum contacts with the forum state such that maintenance of the suit does not 

offend traditional notions of fair play and substantial justice. International Shoe Co. v. 

Washington, 326 U.S. 310, 316, 66 S.Ct. 154 (1945). 

In judging minimum contacts, a court properly focuses on “the relationship among the 

defendant, the forum, and the litigation.” Shaffer v. Heitner, 433 U.S. 186, 204, 97 S.Ct. 2569 

(1977). The Supreme Court has held that a non-resident’s allegedly intentional and tortious acts 

expressly aimed at a California resident are sufficient to trigger jurisdiction over that non-resident. 

Calder v. Jones, 465 U.S. 783, 789-90, 104 S.Ct. 1482 (1984).

The party seeking to invoke the jurisdiction of the federal court shoulders the burden of 

establishing that such jurisdiction exists. Data Disc, Inc. v. Systems Technology Assoc., 557 F.2d 

1280, 1285 (9th Cir.1977). Personal jurisdiction may arise from general jurisdiction or specific 

jurisdiction. To establish general jurisdiction, the defendant’s activities within the forum state 

need to be “continuous and systematic” or “substantial” such that the state is considered to have a 

sufficient relationship with the defendant. Lake v. Lake, 817 F.2d 1416, 1420 (9th Cir.1987). The 

standard for establishing general jurisdiction is high, and requires that the defendant’s contacts 

with the forum state “approximate physical presence.” Tuazon v. R.J. Reynolds Tobacco Co., 433 

F.3d 1163, 1169 (9th Cir.2006) (citing Bancroft & Masters, Inc. v. Augusta Nat’l Inc., 223 F.3d 

1082, 1086 (9th Cir.2000)). 

Specific jurisdiction may be invoked if there is a relationship between the quality of the 

defendant’s forum contacts and the particular claims for relief advanced by plaintiff. Hirsch v. 

Blue Cross, Blue Shield of Kansas City, 800 F.2d 1474, 1477 (9th Cir.1986). The Ninth Circuit 

has set forth a three-part analysis to determine whether specific jurisdiction may attach to a claim 

arising out of a defendant's forum-related activities. First, the non-resident defendant must perform 

some act by which he purposefully avails himself of the privilege of conducting activities in the 

forum, thereby invoking the benefits and protections of its laws. Second, the claim must be one 

that arises out of defendant’s forum-related activities. Third, exercise of jurisdiction must be 

reasonable. Gray & Co. v. Firstenberg Mach. Co., Inc., 913 F.2d 758, 760 (9th Cir.1990). In cases 

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involving intentional conduct, the “purposeful availment” prong can be satisfied by meeting the 

“effects test,” which requires: “(1) intentional actions; (2) expressly aimed at the forum state; (3) 

causing harm, the brunt of which is suffered-and which the defendant knows is likely to be 

suffered-in the forum state.” See Calder, 465 U.S. at 791, 104 S.Ct. at 1488. 

Here, there is no real dispute that the only contacts the Virtus entities have with California 

is that that they sell the accused products in this state as part of their nationwide sales. While the 

percentage of total sales that involve California customers is not high, it apparently still represents 

a relatively important market. 

Valeant’s suggestion that general jurisdiction might be available based on the Virtus 

entities continuous sales to California customers is not persuasive, as that does not “approximate 

physical presence.” See Tuazon, 433 F.3d at 1169 (To be subject to general jurisdiction, “a 

defendant must not only step through the door, it must also sit down and make itself at home.”).

The sales, however, are sufficient to support specific jurisdiction because Valeant’s alleged 

injuries—lost sales due to competitors alleged false advertising—flow directly from those sales.2 

See, World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297–98, 100 S. Ct. 559, 567 

(1980). (“The forum State does not exceed its powers under the Due Process Clause if it asserts 

personal jurisdiction over a corporation that delivers its products into the stream of commerce with 

the expectation that they will be purchased by consumers in the forum State.”)

Additionally, the Supreme Court’s decision last year in Bristol-Myers Squibb v. Superior 

Court, 137 S. Ct 1773, 1781 (2017) is instructive by way of contrast. Bristol-Myers was a class 

action brought in state court alleging a specific drug caused personal injuries to the class members. 

Specific jurisdiction over Bristol-Myers in California was found to exist with respect to claims by 

those members of the class who purchased the drug here, as their injuries arose directly from those 

sales. The Court held, however, that no personal jurisdiction existed over Bristol-Myers in 

 

2

 Admittedly, Valeant seeks to recover for its lost sales nationally, so not all of its injuries arise 

from defendants’ sales in California. For jurisdictional purposes, however, the sales here suffice.

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California for any non-California plaintiffs, as their injuries were not related to the company’s 

sales in California. Here, of course, Valeant is a non-California plaintiff. The Virtus entities’

attempt to argue that makes it like the non-California plaintiffs in Bristol-Myers is misplaced, 

however, because Valeant’s alleged injuries do arise from defendants’ California sales. Thus, 

Valeant is in the same position as the California plaintiffs in Bristol-Myers, who were entitled to 

assert personal jurisdiction in this state over the defendant.

That said, Virtus LLC has shown it did not make any sales in California or elsewhere. 

OPCO is the entity that sells the accused product. Accordingly, dismissal of Virtus LLC for lack a 

personal jurisdiction is warranted, but the motion must be denied as to OPCO.

B. Venue

The Virtus entities’ contention that this case is improperly venued is premised on the same 

untenable argument that the California sales of the accused products can be disregarded. 

Under 28 U.S.C. § 1391(b), a civil action may be brought in a judicial district: (1) in which any 

defendant resides, if all defendants are residents of the State in which the district is located; (2) in 

which a substantial part of the events or omissions giving rise to the claim occurred, or a 

substantial part of property that is the subject of the action is situated; or (3) if there is no district 

in which an action may otherwise be brought as provided in this section, any judicial district in 

which any defendant is subject to the court’s personal jurisdiction with respect to such action. 

(Emphasis added). The allegedly wrongful marketing and sales of the accused products in 

California and plaintiff’s resulting lost California sales render venue proper here.3

C. Primary jurisdiction/FDCA preemption

Librax was found by the FDA to be “safe” in 1961, at a time when the regulations did not 

 

3

 The Virtus entities also make an almost passing reference to a transfer for convenience under 28 

U.S.C. §1404. They have not met their burden to show such a transfer would be warranted.

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require the FDA also to approve a drug as “effective.” In the following decades, the assumption 

was that Librax was still subject to the Drug Efficacy Safety Study Review Program (“DESI”) and 

therefore not fully “FDA approved.” Under those circumstances, generic versions apparently

could be sold without creating a misleading impression that they were also FDA approved. 

In May of 2016, the FDA issued a notice that Librax actually had received full FDA 

approval in 1973, pursuant to a settlement of a lawsuit between Valeant’s predecessor and the 

FDA. As such, Librax is not presently under DESI review. The Virtus entities are challenging the 

FDA’s change in position, and contend this suit should be dismissed, or perhaps stayed, in 

deference to administrative proceedings. The Virtus entities are contending, in effect, that there 

will be no basis to find that the accused products are being marketed unlawfully, if Librax is 

determined to still be subject to DESI review.

Valeant, on the other hand contends these suits are not intertwined with anything the FDA 

may be deciding. According to Valeant, its false advertising claims rest on “two simple facts: (i) 

Defendants advertise and promote their Accused Product in a manner that represents or implies to 

purchasers that it is an FDA-approved generic product, or an FDA-approved generic version of 

Valeant’s FDA-approved Librax product, and (ii) Defendants’ Accused Product is not in fact an 

FDA-approved generic version of Librax, or any other drug, and as they admit, is not FDAapproved at all.”

At this point in time, the FDA considers Librax an approved product. That it may have 

reached that conclusion in error, or that it might reverse course again does not somehow render the 

Virtus entities’ alleged current conduct lawful. While it is true that this court cannot decide 

whether Librax should or should not be deemed approved, adjudicating the claims in these 

lawsuits does not require that question to be answered, and does not require the court to apply, 

interpret, or enforce the FDCA. The motion to dismiss under the primary jurisdiction doctrine or 

FDCA preemption fails.4

 

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 The Virtus entities’ remaining arguments effectively seek to strike particular alleged 

misrepresentations or omissions as inactionable. Such parsing at the motion to dismiss stage is not 

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IV. CONCLUSION

The motion to dismiss for lack of personal jurisdiction is granted as to Virtus 

Pharmaceuticals, LLC. The motions are otherwise denied.

IT IS SO ORDERED.

Dated: January 18, 2019

______________________________________

RICHARD SEEBORG

United States District Judge

 

warranted.

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