Federal Circuit affirms Merck ‘unclean hands’ verdict
The US Court of Appeals for the Federal Circuit has affirmed a finding that pharmaceutical company Merck had engaged in misconduct and was not allowed to bring an action against Gilead.
Yesterday, April 25, the Federal Circuit upheld the dismissal of the $200 million verdict because of Merck’s pre-litigation business misconduct and litigation misconduct.
Merck had claimed that US patent numbers 7,105,499 and 8,481,712 had been infringed by the hepatitis C drugs Harvoni (ledipasvir/sofosbuvir) and Sovaldi (sofosbuvir), produced by Gilead.
While Merck had claimed that sofosbuvir infringed its two patents covering related compounds, Gilead contended that it should not be required to share any of the sales of the drugs.
In 2013, Gilead filed a lawsuit claiming that Merck’s patents were invalid and that its hepatitis C drugs didn’t infringe. Merck hit back with a counterclaim for infringement.
Three years later, in March 2016, the US District Court for the Northern District of California upheld the validity of the two patents. Merck was awarded $200 million in damages.
But in June that year, after Gilead had been given time to submit fresh evidence, Judge Beth Freeman overturned the $200 million verdict after finding that Merck had engaged in misconduct.
Freeman found that Merck had misled the court and “shall take nothing from this suit”.
Gilead claimed that Phillip Durette, a former Merck scientist, had lied under oath in the dispute and had misled jurors surrounding patents obtained by Merck that covered the sofosbuvir compound.
Freeman agreed, stating: “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.”
She found that because of Merck’s pre-litigation and litigation misconduct, it was liable for a finding of unclean hands and had forfeited its right to prosecute the action against Gilead.
In affirming the judgment, the Federal Circuit said: “We conclude that the district court made findings that have adequate support in the evidence and that, taken together, justify the equitable determination of unclean hands as a defence to enforcement in this case.”
On Durette’s testimony, the appeals court said that his “intentional testimonial falsehoods qualify” as the kind of misconduct that can support a finding of unclean hands, but added that its decision rests on the totality of the evidence-supported misconduct, not individual elements alone.
The decision was affirmed and Merck was ordered to pay costs.
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