Merck Misconduct Invalidates $200 Mln Patent Verdict

Merck & Co. lost its $200 million jury verdict over Gilead Sciences Monday for its own misconduct in the dispute over a wildly successful Hepatitis C drug.

U.S. District Judge Beth Labson Freeman said in a 65-page ruling that Merck’s “pervasive patter of misconduct” rendered its rights to two patents unenforceable against Gilead.

In 2013, Gilead won Food and Drug Administration approval to market and sell Sovaldi, an oral drug to treat chronic Hepatitis C infections, and later another related drug Harvoni for the same purpose.

Merck claimed its 2002 patents covered the same active ingredient. Gilead sued seeking a court declaration that Merck’s patents were invalid.

Following a March trial, jurors awarded Merck $200 million in damages for Gilead’s alleged patent infringement.

In April, Freeman reopened the case to allow Gilead to argue that Merck engaged in misconduct, including false testimony by a key scientist for Merck.

She called the Merck scientist, who also served as its patent attorney, “dishonest and duplicitous” in his actions with Gilead and with the court, “thus crossing the line to egregious misconduct.”

“Merck is guilty of unclean hands and forfeits its right to prosecute this action against Gilead,” Freeman said.

The misconduct turned on the actions of former Merck scientist and patent lawyer, Dr. Phil Durette, who misrepresented his actions in confidential discussions in 2004 with Pharmasset, a company later purchased by Gilead.

Merck and Pharmasset established a firewall to prevent anyone at Merck working on the same Hep C drugs to participate in a critical phone call with Pharmasset to protect the highly confidential information.

But Durette did participate in the call, even though he was working on the same chemistry and should not have been on the call.  He later lied about his role during trial testimony and deposition, according to the court.

Durette learned shortly before trial that a Gilead participant in the phone call had taken notes and recorded that Durette was there. Durette attempted to backpedal and recant his deposition statements during the trial.

As a lawyer he also continued to prosecute Merck’s own Hep C patents, despite his violation of the firewall terms.

“Candor and honest define the contours of the legal system,” Freeman wrote. “When a company allows and supports its own attorney to violate these principles, it shares the consequences of those actions.”
She called Durette “dishonest and duplicitous in his actions with Pharmasset, with Gilead and with this court, thus crossing the line to egregious misconduct.”

Merck, she said, is barred from asserting claims on its two patents against Gilead and Merck “shall take nothing by this suit.”

Case: Gilead Sciences v. Merck, No. 13-4057




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