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Regents of University of Minnesota v. Gilead Sciences, Inc.

United States District Court, D. Minnesota

October 20, 2017

Regents of the University of Minnesota, Plaintiff,
v.
Gilead Sciences, Inc., Defendant.

          Brian J. Slovut, Christopher W. Henry, Edward R. Gates, Gerald B. Hrycyszyn, Marie A. McKiernan, Michael A. Albert, Wolf Greenfield & Sacs, P.C., Erin E. Conti, John R. Marti, Katherine N. Arnold, Dorsey & Whitney LLP, Kenneth A. Liebman, and Timothy E. Grimsrud, Faegre Baker Daniels LLP for Plaintiff.

          Adam K. Mortara, Faye Paul, J. Scott McBride, Katherine G. Minarik, Nevin Gewertz, Rebecca T. Horwitz, Bartlit Beck Herman Palenchar and Scott LLP, Alison G. Wheeler, Glen E. Summers, Nosson D. Knobloch, Bartlit Beck Herman Palenchar and Scott LLP, Barbara P. Berens, Carrie L. Zochert, and Erin K. Fogarty Lisle, Berens & Miller, PA, for Defendant.

          MEMORANDUM OPINION AND ORDER

          SUSAN RICHARD NELSON, UNITED STATES DISTRICT COURT JUDGE

         Before the Court is Defendant's Motion to Transfer Venue [Doc. No. 142]. For the reasons stated herein, Defendant's Motion is granted, and this case is transferred to the Northern District of California.

         I. BACKGROUND

         In this patent infringement suit, the Regents of the University of Minnesota (“the University”) allege that Gilead Sciences, Inc. (“Gilead”) infringes the University's intellectual property rights in a patent for a drug known as sofosbuvir. (Compl. ¶ 3 [Doc. No. 1].) Sofosbuvir is an antiviral agent used to treat the hepatitis C virus (“HCV”) infections. (See id. ¶ 41.) The University holds all rights to the patent at issue (the ‘830 Patent). (id. ¶ 33.) The University alleges that Gilead has infringed the ‘830 Patent by selling over one billion dollars in sofosbuvir-containing medicines, including Gilead's Sovaldi®, Harvoni®, and Epclusa® brand-name medicines, without obtaining the University's authorization or otherwise compensating the University. (Id. ¶¶ 3; 46-55.)

         A. Factual Background

         Gilead is a Delaware corporation, with its principal place of business in Foster City, California. (Id. ¶ 2.) Between 2014 and 2016, Gilead employed the following twelve employees in Minnesota in the positions of Regional Sales Director, Therapeutic Specialist, Community Specialist, and Medical Scientist: Chad Blomgren, Mary Ellen Feldstein, Byron Hamilton, Tracey Johnson, Ajit Kulkarni, Joe Llewellyn, Julie Miller, Carson Munroe, Jaymee Murakami, Christi Murphy, Allison Passolt, and Thomas Wolfe.[1] (Def.'s Resp. to Pl.'s Second Set of Interrogs., Interrog. Resp. No. 5, Ex. A to Minarik Decl. [Doc. No. 157]; D. Johnson Decl. ¶ 5 [Doc. No. 145].)

         A majority of the twelve employees work in sales and marketing positions as Therapeutic Specialists or Community Specialists, or as managers of those positions. (See Passolt Decl. ¶¶ 2-3 [Doc. No. 147]; Miller Decl. ¶¶ 2-3 [Doc. No. 152]; Vogel Decl. ¶¶ 4-5 [Doc. No. 1154]; Wolfe Decl. ¶¶ 2-3 [Doc. No. 155]; T. Johnson Decl. ¶¶ 2-3 [Doc. No. 156]; Hamilton Decl. ¶ 4 [Doc. No. 148]; Blomgren Decl. ¶ 4 [Doc. No. 149].) Therapeutic Specialists visit and educate “learned intermediaries, ” such as health care providers, hospitals, and pharmacies, about Gilead's products, and Community Specialists also visit learned intermediaries, as well as community groups. (See D. Johnson Decl. ¶¶ 4; 6; see also D. Johnson Dep. at 14-15, Ex. E to Hrycyszyn Decl.) Therapeutic Specialists and Community Specialists also occasionally plan local exhibits or conferences. (Id.) (See D. Johnson Decl. ¶ 6 [Doc. No. 145]; D. Johnson Dep. at 9, Ex. E to Hrycyszyn Decl.) David Johnson, Gilead's Vice President of Sales and Marketing, Liver Disease Unit, asserts that while these are sales positions, “sales” in the pharmaceutical industry do not involve direct sales from the salesperson to the customer. (See D. Johnson Dep. at 13-15, Ex. E to Hrycyszyn Decl.) Rather, pharmaceutical salespersons attempt to sway medical providers to prescribe particular medications to their patients. (See id.) Consistent with Johnson's testimony, Gilead's Minnesota Therapeutic Specialists, Community Specialists, and their managers contend that they do not take orders from customers or solicit sales directly from distributors, wholesalers, pharmacies, or pharmacy benefit managers. (Passolt Decl. ¶ 10; Hamilton Decl. ¶ 10; Blomgren Decl. ¶ 11; Murphy Decl. ¶ 10 [Doc. No. 150]; Miller Decl. ¶ 11; Feldstein Decl. ¶ 10; Vogel Decl. ¶ 9; Wolfe Decl. ¶ 10; T. Johnson Decl. ¶ 11.)

         Gilead's Medical Scientists in Minnesota respond to questions from healthcare providers about Gilead's products, and coordinate experiments and clinical projects regarding Gilead's various drug therapies. (See D. Johnson Decl. ¶ 4; Kulkarni Decl. ¶ 4 [Doc. No. 146]; Llewellyn Decl. ¶ 5 [Doc. .No. 151].) Like the Therapeutic Specialists and Community Specialists, Medical Scientists do not take customers' orders or make direct sales. (Kulkarni Decl. ¶ 10; Llewellyn Decl. ¶ 11.)

         Through its headquarters in Foster City, California, Gilead sells its healthcare products to wholesalers or pharmacies. (D. Johnson Decl. ¶ 7.) Gilead's Minnesota sales force likewise understands that all orders are placed with corporate headquarters in California. (Kulkarni Decl. ¶ 10; Passolt Decl. ¶ 10; Hamilton Decl. ¶ 10; Murphy Decl. ¶ 10; Llewellyn Decl. ¶ 11; Miller Decl. ¶ 11; Wolfe Decl. ¶ 10; T. Johnson Decl. ¶ 11.)

         Three Minnesota employees perform a greater portion of their work outside of Minnesota, (Kulkarni Decl. ¶ 5; Hamilton Decl. ¶ 5; Miller Decl. ¶ 5), as was also true of another employee, during the time that he lived in Minnesota. (Blomgren Decl. ¶ 6.) Yet another employee splits her time equally between Minnesota and a neighboring state, (T. Johnson Decl. ¶ 5), while six others perform the majority of their work in Minnesota. (Passolt Decl. ¶ 5; Murphy Decl. ¶ 5; Llewellyn Decl. ¶ 6; Feldstein Decl. ¶ 5; Wolfe Decl. ¶ 5; T. Johnson Decl. ¶ 5.)

         None of the employees work from a physical Gilead office in Minnesota. (Kulkarni Decl. ¶ 5; Passolt Decl. ¶ 5; Hamilton Decl. ¶ 5; Blomgren Decl. ¶ 6; Murphy Decl. ¶ 5; Llewellyn Decl. ¶ 6; Miller Decl. ¶ 5; Feldstein Decl. ¶ 5; Vogel Decl. ¶ 7; Wolfe Decl. ¶ 5; T. Johnson Decl.) Instead, they perform the majority of their work “in the field, ” i.e., in health care providers' offices, clinics, hospitals, and pharmacies. (Id.)

         When they are not working in the field, the employees work from their respective home offices, as opposed to a separate, physical Gilead office in Minnesota.[2] (Kulkarni Decl. ¶ 7; Passolt Decl. ¶ 7; Hamilton Decl. ¶¶ 5; 7; Blomgren Decl. ¶ 7; Murphy Decl. ¶¶ 5; 7; Llewellyn Decl. ¶¶ 6; 8; Miller Decl. ¶¶ 5; 7; Feldstein Decl. ¶ 7; Wolfe Decl. ¶ 7; T. Johnson Decl. ¶ 7.) Two employees have taken a tax deduction for their home office at some point, (Kulkarni Decl. ¶ 7; Miller Decl. ¶ 7), although the majority have not. (Passolt Decl. ¶ 7; Hamilton Decl. ¶ 7; Blomgren Decl. ¶ 7; Murphy Decl. ¶ 7; Feldstein Decl. ¶ 7; Wolfe Decl. ¶ 7; T. Johnson Decl. ¶ 7.)

         Gilead's Minnesota employees do not use an administrative or secretarial service in this state or elsewhere. (Kulkarni Decl. ¶ 7; Passolt Decl. ¶ 7; Hamilton Decl. ¶ 7; Blomgren Decl. ¶ 7; Murphy Decl. ¶ 7; Llewellyn Decl. ¶ 8; Miller Decl. ¶ 7; Feldstein Decl. ¶ 7; Wolfe Decl. ¶ 7; T. Johnson Decl. ¶ 7.) Their respective home offices contain a computer, printer, and iPad provided by Gilead (Kulkarni Decl. ¶ 7; Passolt Decl. ¶ 7; Hamilton Decl. ¶ 7; Blomgren Decl. ¶ 7; Murphy Decl. ¶ 7; Llewellyn Decl. ¶ 8; Miller Decl. ¶ 7; Feldstein Decl. ¶ 7; Vogel Decl. ¶ 8; Wolfe Decl. ¶ 7; T. Johnson Decl. ¶ 7), and in one instance, a projector. (Murphy Decl. ¶ 7.) Gilead pays for its employees' home phone, internet, a portion of their monthly cell phone bills, and the lease on their vehicles. (Kulkarni Decl. ¶ 9; Passolt Decl. ¶ 9; Hamilton Decl. ¶ 9; Blomgren Decl. ¶ 10; Murphy Decl. ¶ 7; Llewellyn Decl. ¶ 10; Miller Decl. ¶ 9; Feldstein Decl. ¶ 9; Vogel Decl. ¶ 8; Wolfe Decl. ¶ 9; T. Johnson Decl. ¶ 9.) Gilead listed the yearly total amount of these auto lease payments as “capitalized rents” and “total property” in its 2014 and 2015 corporation franchise tax returns prepared for the Minnesota Department of Revenue. (See Exs. C [at GSI-SOF00038264] & D [at GSI-SOF00038266] to Hrycyszyn Decl.; D. Johnson Dep. at 37, Ex. E to Hrycyszyn Decl.) Also on these forms, Gilead entered no amount for “average tangible property and land owned/used, ” leaving the line blank. (See Ex. C [at GSI-SOF00038264] & D [at GSI-SOF00038266] to Hrycyszyn Decl.)

         Gilead's Minnesota employees do not stock any Gilead products for sale in their homes or elsewhere in Minnesota. (D. Johnson Decl. ¶ 10.) A few employees keep a limited supply of Gilead promotional material in their homes. (Passolt Decl. ¶ 7; Hamilton Decl. ¶ 7; Blomgren Decl. ¶ 7; Miller Decl. ¶ 7; Wolfe Decl. ¶ 7; T. Johnson Decl. ¶ 7.) Two Minnesota Gilead employees keep samples of two different Gilead products (non-HCV) in Minnesota, (D. Johnson Decl. ¶ 10; Miller Decl. ¶ 10; T. Johnson Decl. ¶ 10), in an offsite storage locker leased by Gilead through a third party. (Def's Resp. to Pl.'s Second Set of Interrogs., Interrog. Resp. No. 4, Ex. A to Minarik Decl.) A third Gilead employee, who lives in Wisconsin, keeps a quantity of another Gilead product (non-HCV) in a storage locker located in Minnesota. (Id.) Gilead does not lease or own any other property in Minnesota such as “offices, warehouses, manufacturing plants, research and development centers, laboratories, or any facilities where commercial stocks of Gilead commercial products are consistently maintained.” (Id.; see also D. Johnson Decl. ¶ 10.)

         While Gilead's Minnesota sales force receives business mail at their individual home addresses, (Kulkarni Decl. ¶ 7; Passolt Decl. ¶ 7; Hamilton Decl. ¶ 7; Blomgren Decl. ¶ 7; Murphy Decl. ¶ 7; Llewellyn Decl. ¶ 8; Miller Decl. ¶ 7; Feldstein Decl. ¶ 7; Wolfe Decl. ¶ 7; T. Johnson Decl. ¶ 7), their business cards list Gilead's corporate address in California, not their home addresses.[3] The phone numbers on the business cards for three employees list a California number that forwards to the employees' automated voice messaging mailboxes. (Passolt Decl. ¶ 6; Feldstein Decl. ¶ 6; Wolfe Decl. ¶ 6). Most of the Minnesota employees list their personal cell phone numbers, with Minnesota area codes, on their business cards. (Blomgren Decl. ¶ 7; Passolt Decl. ¶ 6; Hamilton Decl. ¶ 6; Blomgren Decl. ¶ 7; Murphy Decl. ¶ 6; Miller Decl. ¶ 6; Feldstein Decl. ¶ 6; Wolfe Decl. ¶ 6; T. Johnson Decl. ¶ 6.) To the best of their knowledge, none of the employees' home addresses or personal phone numbers are listed in any Minnesota directory as an address or phone number for Gilead. (Kulkarni Decl. ¶ 8; Passolt Decl. ¶ 8; Hamilton Decl. ¶ 8; Blomgren Decl. ¶ 9; Murphy Decl. ¶ 8; Llewellyn Decl. ¶ 9; Miller Decl. ¶ 8; Feldstein Decl. ¶ 8; Wolfe Decl. ¶ 8; T. Johnson Decl. ¶ 8.)

         B. Procedural History

         In the Complaint, filed in August 2016, the University asserts that this Court has personal jurisdiction over Gilead and that venue is proper “under at least 28 U.S.C. § 1391 and 1400.” (Compl. ¶¶ 6-7.) However, on May 22, 2017, while the parties were engaged in discovery, the U.S. Supreme Court issued a decision in TC Heartland LLC v. Kraft Foods Grp. Brands LLC, 137 S.Ct. 1514 (2017), that significantly affected venue in patent cases. In light of TC Heartland, Gilead sought expedited briefing on its motion to dismiss for improper venue, and requested a short stay of all other proceedings. (Def.'s June 8, 2017 Letter at 2-3 [Doc. No. 128].) The Court granted Gilead's request, scheduled the hearing on its motion to dismiss, and stayed all other pending deadlines and non-venue-related discovery. (June 12, 2017 Order at 2 [Doc. No. 140].)

         More recently, on September 21, 2017, and in light of TC Heartland, the Federal Circuit Court of Appeals issued a decision concerning venue in patent infringement cases, In re: Cray, Inc., __ F.3d __, 2017 WL 4201535 (Fed. Cir. Sept. 21, 2017) (“Cray”) that is highly relevant to this case. In response to the parties' joint request for supplemental briefing in light of Cray, (Sept. ...


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