A reversal of fortunes: Judge voids order Gilead must pay $2.5B to Merck over a patent dispute
In a reversal of fortunes, a federal judge overturned a jury verdict ordering Gilead Sciences (GILD) to pay $2.54 billion to Merck (MRK) for infringing a patent in order to develop a pair of blockbuster hepatitis C treatments.
In a 52-page opinion, U.S. District Court Judge Leonard Stark ruled late Friday that a Merck patent at issue was invalid, because the inventions did not meet a requirement for disclosing how to make and use the treatment it covered without undue experimentation.
The verdict, which was largest ever in a U.S. patent case, stemmed from a long-running dispute concerning the Sovaldi and Harvoni hepatitis C pills, which revolutionized treatment, helped spark a national debate over the cost of medicines, and quickly provided Gilead with billions of dollars in sales.
The litigation has been part of an intriguing drama between the companies over hepatitis C patents, which have proven extremely lucrative. Since its launch more than four years ago, Sovaldi has generated more than $20 billion in sales for Gilead, while Harvoni, which is an enhanced version of its predecessor, has notched nearly $29 billion since becoming available in 2014.
SOVALDI® (sofosbuvir)
For its part, Merck plans to appeal. “We believe the judge’s ruling does not reflect the facts of the case,” a Merck spokeswoman wrote us. “The patent 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 our subsidiary and its partners.”
As for Gilead, a spokeswoman wrote us to say “it has always been our strong belief that [the] patents were invalid” and the decision will be upheld on appeal. Another patent had been dropped from the case before the December 2016 trial.
Here is the backstory: A small company called Idenix Pharmaceuticals, which Merck bought in 2014 to bolster its portfolio of hepatitis C products, filed a lawsuit the prior year against Gilead, claiming patent infringement. Idenix argued Sovaldi patents were, effectively, too closely related to patents for a hepatitis C treatment that had been developed years earlier and sought to block the Sovaldi launch.
However, Sovaldi was originally developed by yet another company called Pharmasset, which Gilead bought in 2011 for $11 billion. And Gilead owned and launched Sovaldi in 2013 when Idenix filed its lawsuit. As we noted previously, the dispute originated with small companies that were later snatched up by two of the world’s largest drug makers.
During the trial, Idenix argued that Pharmasset founder Raymond Schinazi conveyed proprietary information about Idenix research to scientists at his company while working as a consultant for Idenix. And Schinazi was reportedly a close friend of Idenix cofounder Jean-Pierre Sommadossi, who testified that he shared confidential information with Schinazi — while Schinazi also led work at Pharmasset.
This is, by the way, the second victory Gilead has notched in a patent dispute with Merck. Nearly two years ago, a federal court judge decided the biotech did not have to pay $200 million in damages that had been awarded in a separate patent lawsuit over Sovaldi because Merck displayed a “pervasive pattern of misconduct.” The judge concluded a Merck lawyer intentionally gave false testimony about his role in failed negotiations between Merck and Pharmasset.
February 17, 2018
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