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Merck Gilead Patent Trial 6/10/16
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Judge Sides With Gilead Against Merck in Case Over Hepatitis C Drug Patents
Jun 7, 2016 | The Wall Street Journal
By Peter Loftus
A federal judge has reversed a jury’s verdict that Gilead Sciences Inc. should pay $200 million to Merck & Co. in a drug-patent dispute, after the judge concluded Merck engaged in misconduct in its efforts to obtain patents for hepatitis C drugs. -
Gileads escapes liability in hepatitis C patent fight with Merck
Jun 6, 2016 | Reuters
By Andrew Chung
A U.S. judge on Monday found a pattern of misconduct by Merck & Co including lying under oath and other unethical practices, freeing Gilead Sciences Inc from paying any damages for infringing Merck's patents with its lucrative treatments for hepatitis C, Sovaldi and Harvoni. -
Merck’s Patent Win Over Gilead Reversed Over False Testimony
Jun 6, 2016 | Bloomberg
By Kartikay Mehrota
Merck & Co.’s $200 million jury verdict against Gilead Sciences Inc. was voided in a patent dispute over a breakthrough for hepatitis C because of misconduct by a witness at the companies’ trial. -
A Merck Lawyer’s ‘Failed Memory Rings Hollow,’ Judge Rules
Jun 7, 2016 | Big Law Business – BNA
By Gabe Friedman
Having a judge say you committed serious patent infringement never looks good. -
Merck Atty's Lies Unravel $200M Patent Win Against Gilead
Jun 7, 2016 | Law360
By Suevon Lee
Merck forfeited its right to enforce two patents covering an ingredient in hepatitis C drugs against rival Gilead due to “numerous unconscionable acts” before and during trial, a California federal judge ruled Monday in a stunning takedown of the drugmaker’s $200 million March jury verdict. -
Judge cites misconduct of in-house lawyer in tossing $200M patent verdict
Jun 7, 2016 | ABA Journal
By Debra Cassens Weiss
A federal judge in San Jose, California, is citing the rarely successful legal doctrine of unclean hands in tossing a $200 million infringement verdict obtained by Merck & Co. against Gilead Sciences in a patent dispute over a hepatitis C drug. -
Big Pharma bombshell: Judge finds Merck lied in patent trial, overturns $200-million verdict
Jun 8, 2016 | Los Angeles Times
By Michael Hiltzik
The public doesn’t have a very high opinion of drug manufacturers for various reasons, and now federal Judge Beth Labson Freeman of San Jose has provided another one. Finding that Merck & Co. lied to a business partner and to the court itself, Freeman this week threw out a patent infringement judgment Merck had won against Gilead Sciences, and overturned a $200-million jury award in the case. -
Judge nixes Merck's $200M hep C patent win, citing 'fabricated' testimony, 'pervasive' misconduct
Jun 7, 2016 | FiercePharma
By Tracy Staton
Merck & Co. won’t collect the $200 million it won in a hepatitis C patent fight against Gilead Sciences after all. And according to a federal judge, that’s Merck's own fault--and crucially, the fault of one of its expert witnesses. -
Gilead won’t have to pay $200 million in patent case because Merck lawyer lied
Jun 7, 2016 | STAT News
By Ed Silverman
In an embarrassing blow to Merck, a federal court judge on Monday decided that Gilead Sciences does not have to pay $200 million in damages that was recently awarded in a patent dispute because Merck displayed a “pervasive pattern of misconduct.” -
Why Gilead May Not Have to Pay Merck $200 Million After All
Jun 7, 2016 | Fortune
By Sy Mukherjee
A judge has ruled that Gilead Sciences GILD -0.10% won’t have to pay rival Merck MRK -0.28% $200 million in damages (and potentially billions in future royalties) due to misleading testimony from a former Merck scientist during a recent trial. -
Court bars Merck from prosecuting Gilead in patent infringement case
Jun 8, 2016 | Healio
A jury of the U.S. District Court barred Merck from further asserting the patent suit for hepatitis C treatments against Gilead Sciences after they found Merck to be guilty of “unclean hands” and their patent attorney’s actions to be “dishonest and duplicitous,” according to court documents. -
Judge: Merck's A Liar, Has Dirty Hands; Gilead Won't Have To Pay
May 3, 2016 | Scrip Intelligence
By Donna Young
The full article from Scrip Intelligence is behind paywall, but what is available has been pasted below. -
Federal Judge Frees Gilead From Damages in Merck HCV Patent Dispute
Jun 7, 2016 | FDA News
The full article from FDA News is behind paywall, but what is available has been pasted below.
Client Attorney Privileged/Attorney Work Product/At Request of Counsel
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Full Text of Stories Below
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Judge Sides With Gilead Against Merck in Case Over Hepatitis C Drug Patents
Jun 7, 2016 | The Wall Street Journal
By Peter Loftus
A federal judge has reversed a jury’s verdict that Gilead Sciences Inc. should pay $200 million to Merck & Co. in a drug-patent dispute, after the judge concluded Merck engaged in misconduct in its efforts to obtain patents for hepatitis C drugs.
U.S. District Judge Beth Labson Freeman castigated Merck in a 65-page order filed in federal court in San Jose, Calif., on Monday, concluding a former Merck in-house patent attorney involved in obtaining patents for hepatitis C drugs was “dishonest and duplicitous” and thus “crossing the line to egregious misconduct.”
“Merck is guilty of unclean hands and forfeits its right to prosecute this action against Gilead,” the judge wrote.
The ruling overturns the March decision by a federal jury ordering Gilead to pay Merck $200 million, after finding that two U.S. patents held by Merck and its partner, Ionis Pharmaceuticals Inc., were valid and infringed by Gilead’s multibillion-dollar hepatitis C drugs, Sovaldi and Harvoni. The trial arose from Gilead’s 2013 lawsuit seeking a judgment that the Merck patents were invalid.
The Merck-Ionis patents cover a range of compounds treating hepatitis C. Merck recently began selling its own hepatitis C drug, Zepatier. Gilead recorded $19.1 billion in combined 2015 sales for Harvoni and Sovaldi.
After the jury verdict and award in March, Judge Freeman presided over a bench trial in which Gilead argued it shouldn’t have to pay Merck because Merck was dishonest in obtaining its patents.
Gilead said that in 2004, then-Merck patent attorney Philippe Durette had a conference call with employees of Pharmasset Inc., in which he learned the chemical structure of an experimental hepatitis C drug that Pharmasset was developing, code-named PSI-6130. Gilead later spent more than $11 billion to acquire Pharmasset and its hepatitis C drugs.
Gilead said Mr. Durette misused what he learned on the call to subsequently change claims in pending Merck patent applications in a way that would cover Pharmasset’s technology.
Judge Freeman largely sided with Gilead in her ruling on Monday, finding that Mr. Durette lied to Pharmasset by saying he wasn’t involved in Merck’s internal hepatitis C research, and that he subsequently lied about the 2004 conference call in a deposition and court testimony in the patent lawsuit.
Mr. Durette couldn’t be reached for comment. A call made to a phone number listed for him wasn’t answered.
A Merck spokeswoman said Mr. Durette no longer works for the company. She said the judge’s ruling “does not reflect the facts of the case,” and it plans to appeal. She said the jury recognized that patent protections are essential to the development of new medical treatments.
A Gilead spokeswoman said the company was pleased with the ruling. “Gilead has always believed Merck’s patents are invalid and unenforceable, and we feel vindicated by today’s decision,” she said.
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Gileads escapes liability in hepatitis C patent fight with Merck
Jun 6, 2016 | Reuters
By Andrew Chung
A U.S. judge on Monday found a pattern of misconduct by Merck & Co including lying under oath and other unethical practices, freeing Gilead Sciences Inc from paying any damages for infringing Merck's patents with its lucrative treatments for hepatitis C, Sovaldi and Harvoni.
The dramatic ruling comes after a federal jury in San Jose, California, on March 24 ordered Gilead to pay $200 million in damages, based on findings that Merck's patents were valid.
U.S. District Judge Beth Labson Freeman said Gilead proved that in the process of applying for its patents, Merck deceptively used confidential information from Pharmasset, Inc, a company Gilead bought in 2011.
Freeman also said Merck cannot enforce the patents because Merck's own lawyer gave inconsistent and untruthful testimony during the trial. "Merck's acts are even more egregious because the main perpetrator of its misconduct was its attorney," she said.
In a statement, Merck spokeswoman Lainie Keller said Gilead's allegations against the patents are without merit and the company would appeal. "The judge's ruling does not reflect the facts of this case."
Gilead feels "vindicated" by the decision, spokeswoman Michele Rest said.
Gilead had also been facing a demand from Merck for an ongoing royalty of at least 12 percent of all future sales of the drugs, according to court papers. Gilead made $23 billion on the two pills in the U.S. alone over the last two years.
Pharmaceutical firms such as Merck, which recently launched its own hepatitis C drug, Zepatier, are trying to chip away at Gilead's dominant position in the market for a new generation of drugs, which cure the liver disease in well over 90 percent of patients.
Some policy makers and insurers have criticized their costs. Harvoni, for instance, lists at $1,125 per pill before discounts and $94,000 for a 12-week regimen.
The case dates back to 2013 when Gilead and Merck sued each other, claiming ownership of laboratory work underlying sofosbuvir, the active ingredient in Gilead's drugs.
After the jury verdict, Freeman separately dealt with Foster City, California-based Gilead's accusations of Merck's unethical conduct in obtaining the patents.
Merck, based in Kenilworth, New Jersey, countered that it had already known of the technology Gilead claimed was Pharmasset's.
Merck's partner in the suit and co-owner of the patents, Ionis Pharmaceuticals Inc, stood to receive 20 percent of any damages awarded Merck.
The case is Gilead Sciences, Inc v Merck & Co, Inc, in the U.S. District Court for the Northern District of California, No. 13-cv-4057. (Reporting by Andrew Chung; Editing by Bernard Orr and Andrew Hay)
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Merck’s Patent Win Over Gilead Reversed Over False Testimony
Jun 6, 2016 | Bloomberg
By Kartikay Mehrota
Merck & Co.’s $200 million jury verdict against Gilead Sciences Inc. was voided in a patent dispute over a breakthrough for hepatitis C because of misconduct by a witness at the companies’ trial.
A federal judge concluded Monday that dishonest and duplicitous testimony by a retired Merck scientist before and during a March trial played into the jury’s finding that the company was responsible for early discoveries that led to the development of Gilead’s Sovaldi and Harvoni medicines.
The scientist “intentionally fabricated testimony” and Merck supported his “bad faith conduct,” U.S. District Judge Beth Labson Freeman in San Jose, California, said in her ruling.
The reversal of the fifth-largest U.S. verdict this year vindicates Gilead in its refusal to share royalties with Merck on the more than $20 billion revenue the hepatitis C drugs generated from 2013 through 2015 in the U.S. The Foster City, California-based company’s sales have started to slow this year as competition for the liver disease market intensifies among drugmakers.
“This is a nice little bump for Gilead who’d already accounted for the $200 million,” said Bloomberg Intelligence analyst Asthika Goonewardene. “But of course, this is a big win and will be beneficial to Gilead and how they can claim ownership of the drug in the long run.”
Merck Appeal
Merck vowed to appeal Monday’s ruling, saying it “does not reflect the facts of the case.”
“In its decision, the jury recognized that patent protections are essential to the development of new medical treatments,” the company said in an e-mail. “The compounds and methods at issue in this case facilitated significant advances in the treatment of patients with HCV infection, and achieving these advancements required many years of research and significant investment by Merck and its partners.”
Gilead said it “has always believed Merck’s patents are invalid and unenforceable.”
“We are pleased the court has ruled in Gilead’s favor and determined that Merck’s patents are unenforceable against Gilead, and therefore, Merck is not entitled to recover any damages,” the company said in an e-mail.
Labson Freeman re-opened the case in April after Gilead alleged that ex-Merck scientist Phil Durette gave conflicting statements about his participation in a key phone call some 15 years earlier when the drug’s basic composition was first presented to Merck.
Pretrial Deposition
Durette initially said in a pretrial deposition he wasn’t on a phone call in which secrets about the compound’s basic chemistry were discussed while Merck was exploring a take-over of Pharmasset Inc., a company that was later acquired by Gilead. When testifying to the jury after checking his notes, Durette admitted to playing a role in the meeting.
“Dr. Durette’s lying at his deposition, recanting that testimony at trial without proper prior notice to Gilead, and further untruthful testimony at trial all support the court’s conclusion that Merck did intend to deceive Gilead and the court,” the judge wrote.
She said Merck’s actions were “even more egregious” because Durette was acting as the company’s patent attorney.
Merck’s victory at trial had set the stage for it to seek future royalty payments from Harvoni and Sovaldi, which sells for $1,000-a-pill in the U.S., before discounts and rebates.
While Gilead continues to dominate the market, the lull in its hepatitis C treatment revenue opened the door to Amgen Inc. retaking its place as the world’s top biotech firm by market capitalization.
The case is Gilead Sciences Inc. v. Merck & Co., 13-cv-04057, U.S. District Court, Northern District of California (San Jose).
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A Merck Lawyer’s ‘Failed Memory Rings Hollow,’ Judge Rules
Jun 7, 2016 | Big Law Business – BNA
By Gabe Friedman
Having a judge say you committed serious patent infringement never looks good.
But it looks better than a judge accusing you of “egregious misconduct,” which is what happened on Monday in a patent dispute between Merck & Co and Gilead Sciences.
In the case, a federal judge in San Jose voided a $200 million patent infringement verdict from earlier this year that a jury awarded Merck against Gilead related to royalties on two drugs, Harvoni and Sovaldi.
As Bloomberg reported, U.S. District Judge Beth Labson Freeman wrote in her ruling that an in-house patent prosecutor for Merck “intentionally fabricated testimony” and Merck supported his “bad faith conduct.”
The judge wrote that Merck’s in-house patent prosecutor Philippe Durette gave “inconsistent, contradictory, and untruthful” testimony. One issue was whether Durette participated in a conference call in which a Gilead partner disclosed the chemical structure of a compound that became critical to the drugs at the center of the patent dispute with Merck.
According to the judge’s order, the call was scheduled as part of a collaboration between Merck and the Gilead partner, and Durette’s participation in the call would have barred him from prosecuting the patents in the case. He testified in deposition to not being on the call but later recanted that testimony at trial saying he couldn’t remember what had happened 11 years earlier.
The judge did not buy it. “Dr. Durette’s trial testimony about failed memory rings hollow,” she wrote.
Freeman wrote:
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 Gilead and with this Court, thus crossing the line to egregious misconduct. Merck is guilty of unclear hands and forfeits its right to prosecute this action against Gilead.
Here’s a copy of the order via Bloomberg Law.
Freeman also reserved harsh words for Merck’s outside counsel, which was lead by Williams & Connolly’s Bruce Genderson.
The judge wrote that it is “troubling” that Merck’s counsel’s failed to disclose that Durette “would recant his prior testimony as soon as Merck learned” his testimony was inconsistent with the prior record.
Genderson did not return calls seeking comment.
It marks a swift reversal for what had been a major jury trial victory, which is still listed on Genderson’s bio on Williams & Connolly’s website as of Tuesday afternoon.
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Merck Atty's Lies Unravel $200M Patent Win Against Gilead
Jun 7, 2016 | Law360
By Suevon Lee
Merck forfeited its right to enforce two patents covering an ingredient in hepatitis C drugs against rival Gilead due to “numerous unconscionable acts” before and during trial, a California federal judge ruled Monday in a stunning takedown of the drugmaker’s $200 million March jury verdict.
In a 65-page opinion, U.S. District Judge Beth Labson Freeman tore through what she called a “pervasive pattern of misconduct by Merck and its agents” in events harking back more than a decade ago through to trial earlier this year, showing Merck has unclean hands and cannot prosecute Gilead for infringing patents relating to the latter’s top-selling hepatitis C drugs, Sovaldi and Harvoni.
The ruling — issued just three months after a California federal jury found Merck’s patents for U.S. Patent Nos. 7,105,499 and 8,481,712 to be valid and ordering Gilead Sciences to pay $200 million to its rival — turned on the judge’s findings that a key Merck witness and retired in-house patent prosecutor lied in deposition testimony and at trial about his participation in a March 2004 call with the developers of what would later become Gilead’s lucrative hepatitis C drugs.
“Any one of these acts — lying, unethical business conduct or litigation misconduct — would be sufficient to invoke the doctrine of unclean hands; but together, these acts unmistakably constitute egregious misconduct that equals or exceeds the misconduct previously found by other courts to constitute unclean hands,” Judge Freeman wrote. “Merck’s acts are even more egregious because the main perpetrator of its misconduct was its attorney.”
Following a two-week trial that began March 7, a jury unanimously found that all 10 claims of the two Merck & Co. Inc. patents covering the drug ingredient sofosbuvir were valid. Sofosbuvir is a critical configuration of atoms known as a nucleoside and is found in Gilead Sciences Inc.’s top-selling hepatitis C drugs Sovaldi and Harvoni, which logged combined sales of $19.1 billion last year.
Philippe Durette is the Merck organic chemist-turned-attorney who swore under oath he was not privy to a confidential call on March 17, 2004, between Merck officials and Pharmasset, Gilead’s predecessor-in-interest, in which Pharmasset disclosed the discovery and development of an antiviral agent against the hepatitis C virus, a lead compound called PSI-6130, according to Monday's ruling.
Pharmasset only agreed to share this information with Merck — with whom it was then exploring possible business collaborations — under the condition that only “firewalled” Merck personnel, or those without any involvement in Merck’s internal HCV campaign, would be on the call to avoid any conflict of interest.
Durette at the time was an in-house patent attorney for Merck responsible for prosecuting patent applications relating to drugs used to treat hepatitis C, including the company’s own ‘499 patent for sofosbuvir.
Despite the potential conflict of interest sown by having one of its patent attorneys assigned to prosecute a patent docket related to hepatitis C listen to a potential competitor’s development of the PSI-6130 compound used to treat hepatitis C, Durette nonetheless participated in the call, which occurred one month after Merck was told its ‘499 application was acceptable for review.
A couple of months after the March 2004 call, Judge Freeman’s ruling noted, Durette canceled all pending claims in the ‘499 patent application and wrote new claims to cover Pharmasset’s confidential compound — or what the ruling deemed a “crown jewel” for the biopharmaceutical company due to its worth.
“The court finds that Dr. Durette would not have written new claims to cover PSI-6130 in February 2005 but for his improper participation on the March 17, 2004, patent due diligence call and learning the structure of PSI-6130 ahead of the structure being published," Judge Freeman said.
What’s more, the judge held, the former patent prosecutor lied in a May 2015 deposition about his recollection of his involvement on the call, saying he was “positive” he never learned of the structure of this compound ahead of time. Even though Durette’s testimony at trial changed to reflect that he indeed had participated in the 2004 call, Merck’s counsel “never indicated that Dr. Durette’s deposition testimony was untruthful or incorrect,” she said.
Monday’s order condemned Merck’s complicity in the untruthful testimony, saying the drugmaker chose to make Durette “a centerpiece of its case, from the opening statement to the closing argument” which had the effect of infecting the entire lawsuit to the extent that Merck can neither enforce the ‘499 nor ’712 patent.
“Dr. Durette, as Merck’s former employee and 30(b)(6) witness, lied repeatedly at his deposition and at trial,” Judge Freeman said. “The court cannot condone such conduct from any witness, let alone an attorney.”
Following the March jury verdict, Gilead had asked the judge to reopen the record so it could admit more evidence to show that the Merck attorney lied to access Gilead’s confidential information.
Judge Freeman at the time said that Gilead’s request claiming Merck obtained its two patents with unclean hands was “an extraordinary remedy” and “an enormous punishment for unclean hands if I can find it,” but she permitted an examination of the full record.
Monday's ruling, however, declined to find that Merck had waived its patent infringement claims.
The judge denied Merck’s arguments in rebuttal, rebuffing Merck’s contention that there was no relation between the asserted claims and alleged misconduct, saying the misconduct relates directly to Gilead.
Gilead, which originally sued Merck in 2013, had sought a ruling that it didn’t infringe on two of Merck’s patents or alternatively that Merck’s patents were invalid.
In February, Judge Freeman shot down Gilead’s motion for summary judgment of invalidity, saying Merck presented enough evidence to show that a person of ordinary skill could understand the usefulness of sofosbuvir and that there was ample data suggesting nucleoside analogs such as sofosbuvir could be used to treat the potentially lethal hepatitis C virus.
Representatives for the companies didn’t immediately respond to a request for comment Monday.
The patents-in-suit are U.S. Patent Numbers 7,105,499 and 8,481,712.
Gilead is represented by Juanita R. Brooks, Jonathan E. Singer, Douglas E. McCann, John M. Farrell and Michael E. Florey of Fish & Richardson PC.
Merck is represented by Bruce R. Genderson, Jessamyn S. Berniker, Stanley E. Fisher, Jessica Bodger Rydstrom, Sanjiv P. Laud and Jessica Palmer Ryen of Williams & Connolly LLP, Stephen S. Rabinowitz, Patrice P. Jean and Mitchell Epner of Hughes Hubbard & Reed LLP, and Joshua H. Lerner and Laura E. Miller of Durie Tangri LLP.
The case is Gilead Sciences Inc. v. Merck & Co. Inc. et al., case number 5:13-cv-04057, in the U.S. District Court for the Northern District of California.
--Additional reporting by Erin Coe and Y. Peter Kang. Editing by Philip Shea. -
Judge cites misconduct of in-house lawyer in tossing $200M patent verdict
Jun 7, 2016 | ABA Journal
By Debra Cassens Weiss
A federal judge in San Jose, California, is citing the rarely successful legal doctrine of unclean hands in tossing a $200 million infringement verdict obtained by Merck & Co. against Gilead Sciences in a patent dispute over a hepatitis C drug.
U.S. District Judge Beth Labson Freeman attributed much of the misconduct to an in-house Merck patent prosecution lawyer who is also a scientist, report Law.com, Bloomberg News and Reuters.
Freeman said the lawyer, Philippe Durette, “lied repeatedly at his deposition and at trial” and used confidential information to pursue patent claims. Though Durette no longer works at Merck, the company relied on his testimony at trial and his conduct can be imputed to the company, Freeman said.
Durette had said in his deposition that he didn’t take part in a 2004 conference call with Pharmasset Inc. that discussed the structure of the compound later used in the hepatitis C drug. Merck was exploring the possibility of collaboration with Pharmasset during the call and had agreed to a nondisclosure agreement that allowed Merck to test Pharmasset’s drug compound but not to disclose its chemical structure to others in Merck’s hepatitis C program.
Gilead acquired the compound when it purchased Pharmasset for $11 billion in 2011.
At trial, Durette experienced “sudden moments of purported clarity,” Freeman wrote. Durette said he had reviewed deposition exhibits and concluded he did play a role in the call. Durette’s participation in the call was a conflict because any information he learned about the compound’s structure would overlap with his patent prosecution docket for Merck, Freeman said.
Instead of withdrawing from patent prosecution because of the conflict, Durette continued to write new hepatitis C patent applications and to write new claims that targeted Pharmasett’s work, according to Freeman. He also falsely told Pharmasett during the call that he was within a firewall that would keep the information confidential.
Freeman concluded that Durette used the confidential information to amend patent claims filed by Merck 18 days after Pharmasett recorded its patent claim for the compound at issue. Durette waited until Pharmasset published the structure of its compound to give the appearance he learned it from a public source, Freeman said.
“Merck’s misconduct includes lying to Pharmasset, misusing Pharmasset’s confidential information, breaching confidentiality and firewall agreements, and lying under oath at deposition and trial,” Freeman wrote. “Merck’s acts are even more egregious because the main perpetuator of its misconduct was its attorney.”
Freeman also noted that Merck’s outside law firm failed to alert the court before trial that Durette would be changing his testimony and would no longer deny that he participated in the call. “Opening statement was not the preferred time for such a disclosure,” she wrote. Williams & Connolly represented Merck at trial, Law.com reports.
Merck said the ruling “does not reflect the facts of the case” and it plans to appeal, according to Law.com. A Williams & Connolly spokesperson did not immediately return a request for comment by the ABA Journal.
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Big Pharma bombshell: Judge finds Merck lied in patent trial, overturns $200-million verdict
Jun 8, 2016 | Los Angeles Times
By Michael Hiltzik
The public doesn’t have a very high opinion of drug manufacturers for various reasons, and now federal Judge Beth Labson Freeman of San Jose has provided another one. Finding that Merck & Co. lied to a business partner and to the court itself, Freeman this week threw out a patent infringement judgment Merck had won against Gilead Sciences, and overturned a $200-million jury award in the case.
This is a big deal, involving one of the most profitable drugs on the market today—Gilead’s blockbuster Sovaldi treatment for the hepatitis C virus—and the world’s fourth-largest drug company Merck..
“This is a jaw-dropping reversal of fortune for Gilead and Merck,” concludes Randy Lilleston of BioPharmaDive. It’s also a window into the intricate dances drug companies do with each other when trying to make deals for potentially lucrative new drugs—and the perils of allowing a promising formula to fall into the wrong hands. It also places a different cast on a jury award that Merck had crowed over. In its announcement of its victory in March, the company spoke sanctimoniously about how the jury verdict “upholds patent protections that are essential to the development of new medical treatments.” Merck says it will appeal Freeman’s ruling.
Merck won the $200-million jury award in March, after accusing Gilead of infringing its patents for Sovaldi. Gilead claimed in response that the patents were invalid, but it really drew blood when it accused Merck of misconduct and the patent defense of “unclean hands.” The judge, plainly aghast at what she learned, spared no invective in lowering the boom on Merck, finding the company guilty of “numerous unconscionable acts.”
Most stemmed from Merck’s underhanded interactions with Sovaldi’s inventor, Pharmasset, which was acquired by Gilead for $11 billion. That deal proved to be a bargain, as Sovaldi and its related treatment Harvoni have brought Gilead more than $20 billion in sales since 2013. The drugs are so effective that Gilead’s stratospheric pricing for them has become Exhibit A in the national controversy over the cost of drugs.
“Merck’s misconduct includes lying to Pharmasset, misusing Pharmasset’s confidential information, breaching confidentiality and firewall agreements, and lying under oath at deposition and trial,” Freeman ruled.
Much of the judge’s ire was directed at retired Merck patent attorney Phillippe Durette, who was working on patents for antiviral drugs during a period when Merck was trying to do a deal with Pharmasset, which was developing the formulation that was then known as PSI-6130 and would eventually be marketed as Sovaldi.
As is often the case, Merck signed a nondisclosure agreement, or NDA, with Pharmasset, pledging not to use the latter’s secret information for any purpose other than to decide whether to pursue the relationship. Pharmasset turned over information including the structure of PSI-6130 to a single Merck scientist who was to be “firewalled”—that is, he couldn’t discuss it with anyone in Merck’s own drug development loop.
That worked until a March 2014 conference call between Merck and Pharmaasset officials regarding a possible business deal. Pharmasset was willing to reveal the structure of PSI-6130 on the call, because it was led to believe everyone on the call would be subject to the confidentiality agreement or firewalled. But it included Durette, who wasn’t firewalled and was in a position to turn what he heard into a potential goldmine for Merck.
According to Freeman, that’s what happened. Durette shouldn’t have been allowed on the call, she found, but afterwards he should have been excluded from Merck’s other related patent program. Instead, he subsequently rewrote Merck’s earlier patent claims so that they would appear to apply to Pharmasset’s upcoming release of PSI-6130. In 2011, Merck even threatened Pharmasset with a patent lawsuit over the drug.
What irked the judge even more, she ruled, is that Durette lied about attending the conference call. In a deposition, he repeatedly denied having been on the call. He recanted from the witness stand at trial only after he was confronted with notes taken by a Pharmasset employee during the call, showing that he had participated. At that point, he pleaded a faulty memory.
Freeman didn’t buy it. “It is overwhelmingly clear...,” she ruled, “that Dr. Durette sought at every turn to create the false impression that Merck’s conduct was aboveboard.” She blamed Merck, which she said “sponsored and encouraged” his conduct, then sought to minimize its importance by attributing the fiasco to “the failed memory of a retired employee.”
But it was central to Merck’s case. Adding to the temerity of the big drug-maker, it originally sued Gilead for $2 billion before having to settle for $200 million. Now, pending appeal, it won’t get even that much for its patent claims, and its reputation for integrity will carry a value of less than zero.
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Judge nixes Merck's $200M hep C patent win, citing 'fabricated' testimony, 'pervasive' misconduct
Jun 7, 2016 | FiercePharma
By Tracy Staton
Merck & Co. won’t collect the $200 million it won in a hepatitis C patent fight against Gilead Sciences after all. And according to a federal judge, that’s Merck's own fault--and crucially, the fault of one of its expert witnesses.
Judge Beth Labson Freeman found “a pervasive pattern of misconduct” by Merck in the patent fight, according to a Monday ruling. A retired Merck scientist and lawyer “intentionally fabricated testimony” about early discoveries that led to the development of next-generation hepatitis C drugs, including Gilead’s blockbuster duo, Harvoni and Sovaldi, the ruling states. And Merck supported the “bad faith conduct,” the judge said.
A trial jury had awarded Merck $200 million back in March, after hearing evidence about R&D at Pharmasset, the drug developer Gilead bought in 2011 for its hep C meds. The judge reopened the case last month when Gilead served up evidence of potential misconduct on Merck’s part.
Merck says it plans to appeal. Labson Freeman’s ruling “does not reflect the facts of the case,” the drugmaker said in an emailed statement.
The ruling turns on testimony by Philippe Durette, an in-house patent lawyer at Merck who previously worked in the company’s chemistry labs. Durette served on the team that drafted Merck’s applications for its ‘499 and ‘712 patents--the two patents Merck is defending against Gilead.
In a pre-trial deposition, Durette had said he did not participate in a due diligence phone call between Merck and Pharmasset about the latter’s hepatitis C program. At the time, Merck was considering acquiring the smaller company, and Pharmasset had disclosed confidential specifics about its in-development compounds.
During the deposition, Durette said he was “positive” that the structure of Pharmasset’s key compound was “never” revealed to him--and he said he was certain he didn’t participate in that call, partly because his other patent work created a conflict of interest, the judge’s ruling notes.
At trial, however, Durette admitted that he had participated in that call, saying that it had previously slipped his mind. After that call, rather than recusing himself from related hep C patent work, Durette continued to tweak Merck’s pending patent applications, the ruling states. And Labson Freeman concluded that Durette made those changes partly because of what he’d learned on the conference call with Pharmasset.
“Dr. Durette’s lying at his deposition, recanting that testimony at trial without proper prior notice to Gilead, and further untruthful testimony at trial all support the court’s conclusion that Merck did intend to deceive Gilead and the court,” the judge wrote.
Merck obviously does not agree, and says it “will be filing the appropriate motions to begin the appeals process.”
“The compounds and methods at issue in this case facilitated significant advances in the treatment of patients with HCV infection,” the company said in its statement, “and achieving these advancements required many years of research and significant investment by Merck and its partners.”
Merck had hoped to capture a piece of Gilead’s enormous revenue stream from Harvoni and Sovaldi. The earlier jury verdict did not just deliver that $200 million award, but opened the way for Merck to pursue royalties from the two blockbuster drugs’ ongoing sales. Merck’s rival hep C cocktail, Zepatier, recently won FDA approval, but Gilead’s meds have an enormous head start in the market, with more than $23 billion in combined sales since their launches.
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Gilead won’t have to pay $200 million in patent case because Merck lawyer lied
Jun 7, 2016 | STAT News
By Ed Silverman
In an embarrassing blow to Merck, a federal court judge on Monday decided that Gilead Sciences does not have to pay $200 million in damages that was recently awarded in a patent dispute because Merck displayed a “pervasive pattern of misconduct.”
At issue was testimony from a retired Merck patent attorney, who was found to have “lied” repeatedly when recounting events that took place more than a decade ago concerning patents for hepatitis C compounds, according to the 65-page opinion by US District Court Judge Beth Labson Freeman. At the time, Merck held exploratory talks with another company, Pharmasset, about a collaboration.
The judge concluded that the Merck lawyer, Philippe Durette, intentionally gave false testimony during a deposition and a recent trial about his role in those talks. His testimony helped a jury to decide that Merck was responsible for the early discovery work that later led to the development of the Sovaldi and Harvoni pills that are sold by Gilead. And she chided Durette for claiming to have a faulty memory.
Moreover, Freeman decided Merck supported his “bad faith conduct” by directing him to continue work on Merck hepatitis C patents at the same time he was allowed to participate in due diligence meetings with Pharmasset employees. Freeman found that Merck’s misconduct was “egregious” and included lying to Pharmasset, misusing Pharmasset’s confidential information, and breaching confidentiality.
The issue was raised after a jury trial in March and Gilead was allowed to provide new evidence. (The 65-page opinion is dense, but rich with interesting details).
Patent lawsuits are a regular feature of the American courts, but this case has been closely watched for several reasons. For one, the lawsuit involved two titans of the biopharmaceutical industry, both of which are now slugging it out in the highly lucrative market for hepatitis C treatments. And the outcome of the case held the potential to sway their fortunes, at least to some extent.
After spending $11 billion to acquire Pharmasset in 2011, Gilead virtually struck gold when it launched the first of the Pharmasset hepatitis C compounds, called Sovaldi. The medicine initially sold for $1,000 a pill, $84,000 a year, before rebates, thanks to a patient cure rate exceeding 90 percent. A follow-on drugcalled Harvoni was later introduced, and combined sales exceeded $20 billion between 2013 and 2015.
Merck filed a lawsuit, however, claiming it was owed damages and royalties from Gilead because the Pharmasset compounds closely mimicked the hepatitis C compounds it was researching a dozen years ago when talks with Pharmasset were held. But the judge noted that Durette improperly revised Merck patent filings after participating in talks with Pharmasset and learning about its compounds.
Unaware of these issues, the jury decided that Gilead had infringed on Merck’s patents and was ordered to pay $200 million in damages to Merck. Given the sales generated by Sovaldi and Harvoni, this was a relatively modest sum. But the decision also meant that Merck could seek royalties from Gilead, although it was never clear whether these would be considerable.
A Merck spokeswoman wrote us that “the judge’s ruling does not reflect the facts of the case” and the drug maker plans to appeal. “The compounds and methods at issue in this case facilitated significant advances in the treatment of patients with HCV infection, and achieving these advancements required many years of research and significant investment by Merck and its partners,” she added.
As for Gilead, a spokesman sent us a note saying the company is “pleased” by the decision that “Merck’s patents are unenforceable against Gilead.” The biotech, she continued. “has always believed Merck’s patents are invalid and unenforceable, and we feel vindicated by today’s decision.”
In an investor note, Jefferies analyst Brian Abrahams wrote that the case is likely to generate numerous appeals that will take a year or more to play out. Gilead can be expected to argue that Merck’s patents are invalid and not infringed by Sovaldi, and that both the judge and jury erred in the initial findings during the case. Merck, meanwhile, will continue to deny it had what Freeman called “unclean hands.”
Abrahams posited that Merck may have a slight advantage in appeals courts since they usually give more deference to jury decisions based on facts, at least when it comes to damages and invalid patents. But he also pointed out that Merck “may have a hard time rebounding from the scathing view the judge had of Merck’s attorney’s conduct.”
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Why Gilead May Not Have to Pay Merck $200 Million After All
Jun 7, 2016 | Fortune
By Sy Mukherjee
A judge has ruled that Gilead Sciences GILD -0.10% won’t have to pay rival Merck MRK -0.28% $200 million in damages (and potentially billions in future royalties) due to misleading testimony from a former Merck scientist during a recent trial.
The Monday decision reverses a big legal win for Merck in March that would have given the company a significant boost in its next-gen hepatitis C drug scuffle with Gilead.
The case centers on a patent dispute in which Merck claimed Gilead infringed on two of its and partner Ionis Pharmaceuticals’ patents on compounds similar to the ones at the center of Gilead’s bestselling (and pricey) hep C meds Sovaldi and Harvoni. The two treatments brought in sales of $12.4 billion in 2014 and $19.1 billion in 2015.
A northern California jury recently agreed with Merck’s argument. The decision could have given the company as much as 10% in U.S. royalties from the blockbuster drugs. But U.S. District Judge Beth Labson Freeman was swayed by Gilead’s subsequent argument that former Merck scientist Phil Durette delivered misleading and even contradictory testimony.
“Dr. Durette’s lying at his deposition, recanting that testimony at trial without proper prior notice to Gilead, and further untruthful testimony at trial all support the court’s conclusion that Merck did intend to deceive Gilead and the court,” wrote Freeman in her ruling.
“The judge’s ruling does not reflect the facts of the case, and we will be filing the appropriate motions to begin the appeals process,” Merck said in a prepared statement. The company is planning to appeal the judgment. “In its decision,” Merck continued, “the jury recognized that patent protections are essential to the development of new medical treatments. The compounds and methods at issue in this case facilitated significant advances in the treatment of patients with HCV infection, and achieving these advancements required many years of research and significant investment by Merck and its partners.”
Gilead did not immediately return a Fortune request for comment on the case.
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Court bars Merck from prosecuting Gilead in patent infringement case
Jun 8, 2016 | Healio
A jury of the U.S. District Court barred Merck from further asserting the patent suit for hepatitis C treatments against Gilead Sciences after they found Merck to be guilty of “unclean hands” and their patent attorney’s actions to be “dishonest and duplicitous,” according to court documents.
“In this case, Gilead is guilty of patent infringement. It admitted so much in response to Merck’s motion for summary judgment,” according to the court order. “By contrast, Merck has engaged in business misconduct and litigation misconduct that the Court has found to be egregious.”
The court documents state Merck’s patent attorney Philippe Durette, MD, PhD, — the person responsible for filing claims for prosecution of patents 7,105,499 and 8,481,712— was dishonest with the Court, Pharmasset and Gilead Sciences. They further state Merck allowed and supported its own attorney to violate the principles of the legal system and Merck now “shares the consequences of those actions.”
According to the court order, Durette knowingly misled Pharmasset in regards to his status as being within the firewall during the patent process. Merck approved the misconduct by assigning the HCV patent attorney to handle the Pharmasset due diligence work and thereafter, when Durette ceased his due diligence work on Pharmasset’s compound, directed him to remain active in prosecuting Merck’s overlapping HCV packet docket through which he obtained confidential Pharmasset PSI-61330 disclosure.
The Court further concluded that Durette intentionally “fabricated” testimony during the trial and Merck condoned that as well.
Merck plans to appeal the verdict, according to Lainie Keller, spokesperson for the company.
“The judge’s ruling does not reflect the facts of the case and we will be filing the appropriate motions to begin the appeals process,” Keller told Healio.com/Hepatology via email. “In its decision, the jury recognized that patent protections are essential to the development of new medical treatments. The compounds and methods at issue in this case facilitated significant advances in the treatment of patients with HCV infection, and achieving these advancements required many years of research and significant investment by Merck and its partners.”
Merck and Ionis first filed the patent suit with claims that Gilead infringed upon jointly patented compounds and methods when developing sofosbuvir, which is utilized in Sovaldi (sofosbuvir, Gilead Sciences) and Harvoni (ledipasvir/sofosbuvir, Gilead Sciences). The lawsuit specifically called into questions the two patents, comprising two methods and eight composition of matter claims, and demanded 10% royalty on sales of sofosbuvir-based drugs.
Gilead argued that Merck’s claims were invalid and Merck had waived their rights to the two patents, but the court denied Gilead’s motion of invalidity and granted Merck’s judgment of infringement.
In March, a jury determined Gilead was guilty of patent infringement and awarded $200 million in damages for sales of sofosbuvir and ledipasvir/sofosbuvir through December 31, 2015 to Merck and Ionis Pharmaceuticals. Gilead appealed this decision.
In the appeal, the Court said Gilead did not show Merck waived its right to the two patents. “The record, however, reflects a pervasive pattern of misconduct by Merck and its agents constituting unclean hands, which renders Merck’s ’499 and ’712 Patents unenforceable against Gilead,” the latest document states,
Gilead said in a statement: “We are pleased the court has ruled in Gilead’s favor and determined that Merck’s patents are unenforceable against Gilead, and therefore, Merck is not entitled to recover any damages,” Michele Rest, spokesperson for Gilead, told Healio.com/hepatology via email. “Gilead has always believed Merck’s patents are invalid and unenforceable, and we feel vindicated by [the] decision.” – by Melinda Stevens
Disclosure: Keller is an employee of Merck. Rest is an employee of Gilead.
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Judge: Merck's A Liar, Has Dirty Hands; Gilead Won't Have To Pay
May 3, 2016 | Scrip Intelligence
By Donna Young
Executive Summary
Gilead Sciences Inc. scored a victory in its patent dispute with Merck & Co. Inc., in which the latter company was accused by a federal judge of lying, egregious misconduct and being guilty of "unclean hands," and therefore, could not collect the $200m jury award the company had earlier won.
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Federal Judge Frees Gilead From Damages in Merck HCV Patent Dispute
Jun 7, 2016 | FDA News
A district court judge has spared Gilead from paying a hefty sum in damages to Merck over a HCV patent dispute, overturning a March San Jose federal jury ruling
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