Case of the Day: Cephalon, Inc. v. Sun Pharmaceutical Industries
Posted on December 22, 2011
The case of the day is Cephalon, Inc. v. Sun Pharmaceutical Industries, Inc. (D.N.J. 2011). Cephalon, which manufactures Gabitril (a drug for treating epilepsy), sued Sun Pharmaceutical Industries, Ltd., an Indian drug manufacturer, alleging that Sun was planning to launch a generic version of Gabitril that would infringe on Cephalon’s patent.
Cephalon served the summons and complaint on Sun at its US affiliate’s offices in Cranbury, New Jersey. (It’s unclear whether the US entity, Sun USA, was a subsidiary of the Indian company, or whether there was some other affiliation between the two). Sun moved to dismiss.
The judge agreed with Sun that the service was improper, which may well have been the right outcome. The judge overstated things when he asserted that “service upon Sun India must be effected in accordance with the Hague Convention,” because the Convention does not apply when the service does not require transmission of the documents abroad, and precisely what’s at issue in the case is whether the service in New Jersey was sufficient under the law of the forum. But the judge did go on to note the precedents permitting service of a corporation by service on its alter ego; he rejected Cephalon’s argument on that point because Cephalon had not provided evidence tending to prove that Sun USA was Sun Pharmaceutical’s alter ego.
Cephalon asked for leave to effect service of process on Sun’s lawyer under Rule 4(f)(3), but the court denied the motion on the grounds that Cephalon had not been diligent enough in attempting to serve Sun in India (though Cephalon had transmitted a request for service of process to the Indian central authority). I think the judge’s position on this was incorrect, though perhaps not an abuse of discretion. Rule 4(f)(3) should not be viewed as a last-ditch method when other means, such as service via the Hague Service Convention have failed. “The use of a court-directed means for service of process under Rule 4(f)(3) is not a disfavored process and should not be considered extraordinary relief.” 4B Wright & Miller § 1134. Indeed, it’s pretty routine for courts to authorize service on a foreign defendant’s US lawyer, and I see no reason why the judge in this case should have been reluctant to grant leave for such service in this case. (Perhaps Cephalon should have considered whether such service would make it more difficult to obtain recognition and enforcement of the eventual judgment in India, but that’s a tactical question, not a question about the appropriateness of applying Rule 4(f)(3)).