Judge finds Merck forfeited its right to assert patents against Gilead because of “unclean hands” and “numerous unconscionable acts”.

Fish & Richardson won a major victory for client Gilead on June 6, 2016 when a California federal judge ruled that Merck had forfeited its right to assert its Hepatitis C drug patents against Gilead because of “unclean hands,” and voided the $200 million jury verdict that was awarded to Merck in March 2016.

In a 65-page opinion, Judge Beth Labson Freeman, of the Northern District of California, wrote that, “Candor and honesty define the contours of the legal system.  When a company allows and supports its own attorney to violate these principles, it shares the consequences of those actions.  Here, Merck’s patent attorney, responsible for prosecuting the patents-in-suit, was dishonest and duplicitous in his actions with Pharmasset, with Gilead and with this Court, thus crossing the line to egregious misconduct.”

The case involved Gilead’s Sovaldi® and Harvoni® drugs, which are used to treat chronic Hepatitis C.  Merck asserted that Gilead’s products infringed two of its patents (‘499 and ‘712).  On March 20, 2016, after an eight-day trial, the jury found that the ’499 and ’712 patents were not invalid, and awarded Merck $200 million in damages for sales of Sovaldi and Harvoni through December 31, 2015.

On April 22, 2016, Gilead filed a motion to re-open the record and allow additional evidence.  Fish presented evidence that showed that Merck had previously tried to license the compounds underlying Sovaldi and Harvoni from Gilead’s predecessor company, Pharmasset, and that Merck used information from the licensing negotiations to amend the claims in its own Hepatitis C drug patents.  After reviewing the evidence, the judge found that Merck’s misconduct included “lying to Pharmasset, misusing Pharmasset’s confidential information, breaching confidentiality and firewall agreements, and lying under oath at deposition and trial.”