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Hoffman-La Roche, Inc. v. Invamed

October 22, 1998

HOFFMAN-LA ROCHE, INC., & SYNTEX, (U.S.A.), INC.,
PLAINTIFFS,
V.
INVAMED, INC., ET AL.,
DEFENDANTS.



The opinion of the court was delivered by: Joel A. Pisano United States Magistrate Judge

FOR PUBLICATION

OPINION

JOEL A. PISANO, UNITED STATES MAGISTRATE JUDGE:

Before the Court is plaintiffs' motion to recover costs of service of process and attorneys' fees pursuant to Federal Rule of Civil Procedure 4(d)(5). Defendants filed opposition and cross-moved for sanctions under 28 U.S.C. § 1927. The Court heard oral arguments on October 13, 1998, and reserved judgment on both motions. For the reasons set forth below, both motions are denied.

FACTS

Plaintiff Syntex owns six patents concerning the composition and synthesis of ticlopidine hydrochloride, a platelet aggregation inhibitor. Plaintiff Hoffman-La Roche is the exclusive distributor of that drug under the six Syntex patents. Defendants are drug companies that sell generic versions of brand name drugs, and plaintiffs' complaint alleges that defendants have infringed or will soon begin infringing the Syntex patents. *fn1

Plaintiff Hoffman-La Roche is a corporation organized under the laws of New Jersey with its principal place of business in Nutley, New Jersey, while Plaintiff Syntex is a Delaware corporation with its principal place of business in Palo Alto, California. Plaintiffs allege that defendant Genpharm Incorporated is a Canadian corporation whose principal place of business is Ontario, Canada.

Plaintiffs filed suit on March 18, 1998, and filed a first amended complaint on April 2, 1998. Plaintiffs requested that pursuant to Federal Rule of Civil Procedure 4(d) defendant Genpharm Incorporated waive formal service of a summons. Defendant refused to do so and insisted that service be effected under the Hague Convention. *fn2 As a result, plaintiffs employed a Canadian law firm in order to serve on Genpharm the summons and first amended complaint. Formal service was completed on May 13, 1998, in Toronto, Ontario, Canada.

In accordance with Rule 4(d), plaintiffs moved this Court on September 15, 1998, to award costs of service and attorneys' fees because defendant Genpharm refused to waive formal service of process and summons. Defendant opposed the motion, claiming that Rule 4(d) expressly requires both the plaintiff and defendant to be located within the United States in order for the cost-shifting provision of the rule to apply. Defendant also filed a cross motion seeking sanctions pursuant to 28 U.S.C. § 1927, which permits the Court to sanction an attorney who "unreasonably and vexatiously" multiplies case proceedings. *fn3 The Court heard oral arguments on October 13, 1998, and reserved judgment in order to issue a formal, written opinion.

DISCUSSION

I. PLAINTIFFS' MOTION FOR COSTS UNDER RULE 4(D)

Federal Rule of Civil Procedure 4(d) envisions a process in which a defendant saves time and money by waiving formal service of the summons and complaint. The rule provides, in relevant parts, that a defendant "has a duty to avoid unnecessary costs of serving the summons. To avoid costs, the plaintiff may notify such a defendant of the commencement of the action and request that the defendant waive service of a summons. . . . If a defendant located within the United States fails to comply with a request for waiver made by a plaintiff located within the United States, the court shall impose the costs subsequently incurred in effecting service on the defendant unless good cause for the failure be shown." Fed. R. Civ. P. 4(d) (emphasis added).

The current Rule 4(d) took effect on December 1, 1993. See The New (Dec. 1, 1993) Rule 4 of the Federal Rules of Civil Procedure: Changes in Summons Service and Personal Jurisdiction, 151 F.R.D. 441, 441 (1994) (authored by Professor David D. Siegel of the Albany Law School of Union University). Rule 4(d) provides for waiver of formal service, which began in concept as the "service by mail" provision of the 1983 version of Rule 4(c)(2)(C)(ii). Service by mail permitted a plaintiff to mail to the defendant the summons and complaint together with an acknowledgment form. See id. at 447. Service by mail and waiver of service are substantially similar, but the chief benefit of waiver derives when the defendant is located in a foreign country. See id. Service by mail constituted formal service of process and might conceivably offend a foreign sovereign, as service by mail might be construed to be a hostile act on foreign soil against the foreign defendant. See id. at 447-48. A request for waiver of service, on the other hand, is simply a private plaintiff's request that a defendant make formal service of process unnecessary by agreeing in writing to waive it. See id. at 448. If a foreign defendant refuses to waive formal service, plaintiff must serve him in accordance with the procedures of the Hague Convention. See Fed. R. Civ. P. 4(f).

It is clear from the language of Rule 4(d) that its application is preconditioned upon both plaintiff and defendant being located in the United States. In urging the Court to apply the rule to the case at bar, plaintiffs argue that "located in the United States" means something akin to "subject to personal jurisdiction in the United States," such that if an alien defendant does business in and has significant ...


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