A federal judge ruled Tuesday that Merck & Co. "is guilty of unclean hands" in its patent fight with Gilead Sciences Inc. over competing hepatitis C drugs and overturned a $200 million verdict against Gilead.
U.S. District Judge Beth Labson Freeman ruled Merck's patent lawyer gave untruthful testimony during the trial, saying the actions crossed the line "to egregious misconduct."
A Merck spokeswoman told the Wall Street Journal the company would appeal.
This is a jaw-dropping reversal of fortune for Gilead and Merck. Judge Freeman strongly criticized Merck and its patent attorney in the case, using the sort of blunt language that is rarely seen in a court ruling. Gilead had sought to scuttle the award in the case because of Merck's alleged conduct, and Freeman essentially agreed.
"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," Freeman wrote. "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. Merck is guilty of unclean hands and forfeits its right to prosecute this action against Gilead."
In March, a federal jury ruled in favor of Merck in the patent suit, upholding 10 claims of patent violations related to sofosbuvir, the compound at the heart of Gilead's Harvoni and Sovaldi franchises. The drugs are Gilead's top-selling products.
The jury subsequently ruled Gilead should pay Merck $200 million for the violations. Merck had sought $2 billion.
In the ruling, Freeman said Gilead had indeed infringed on patents, saying the company admitted as much in court filings. But she ruled that Merck's conduct in the case was "egregious," and constituted "a pervasive pattern of misconduct amply supported by the evidence."
She lambasted former Merck in-house patent prosecutor Philippe Durette, saying he "intentionally fabricated testimony in this case and that Merck supported that bad faith conduct." Durette was involved in Merck's talks a decade ago with Pharmasset, concerning a collaboration on hep C compounds. At the same time, he worked on Merck's hep C patents — an action Freeman called "dishonest and duplicitous."
Freeman said she had to balance the validity of the patent violation claim against Merck's improper conduct. She ruled Merck's "litigation misconduct including Dr. Durette's lying at his deposition, recanting that trestimony 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."
A Merck spokeswoman told The Wall Street Journal that Durette no longer works at Merck and the company would appeal the ruling.