Fish & Richardson Wins Federal Circuit Affirmance of Reversal of $200 Million Damages Against Gilead After Merck's "Unclean Hands"

All women litigation team led the Federal Circuit argument; Federal Circuit confirms Merck forfeited its right to assert patents against Gilead due to litigation misconduct that "infected this entire case"

Fish won a unanimous Federal Circuit opinion today that affirmed its June 2016 post-trial wipe-out of a $200 million jury verdict against client Gilead Sciences, Inc. after proving Merck had forfeited its right to assert its hepatitis C drug patents against Gilead because of litigation and business misconduct constituting “unclean hands.” The Federal Circuit oral argument team was led by all women - principals Juanita Brooks, Deanna Reichel, and Elizabeth Flanagan from Fish & Richardson, and from Gilead, Lorie Ann Morgan, Vice-President Intellectual Property, and Andrea Hutchison, Associate General Counsel IP Litigation - with Brooks handling the actual argument. The argument lasted almost two hours (three times longer than the normal length of an appellate argument). The opinion notes that Merck's litigation misconduct "infected this entire case."

Fish has been representing Gilead for over five years in its worldwide, complex patent battle with Merck and Idenix Pharmaceuticals (now owned by Merck) over Gilead's two blockbuster hepatitis C drugs, Sovaldi® and Harvoni®. In February 2018, Fish won a motion for Judgment as a Matter of Law (JMOL) that reversed a $2.5 billion jury verdict - the largest patent damages award in history - against Gilead in federal court in Delaware in its litigation with Idenix over its '597 patent for an element of a hepatitis C treatment.

This case, Gilead Sciences, Inc. v. Merck & Co. Inc. et al., began after Merck requested that Gilead license two patents ('499 and '712). Gilead filed suit in 2013 seeking declaratory judgment that its products did not infringe and that the patents were invalid. Merck counterclaimed, alleging infringement and seeking over $2 billion in damages. On March 20, 2016, a jury found Merck's patents were not invalid and awarded Merck $200 million in damages.

After the verdict, a bench trial on Gilead's unclean hands defense was held. On June 6, 2016, Judge Beth Labson Freeman of the Northern District of California vacated the jury verdict and held that due to Merck's business and litigation misconduct, the patents were unenforceable against Gilead. Judge Freeman found that Merck's misconduct included "lying to Pharmasset [Gilead's predecessor company], misusing Pharmasset's confidential information, breaching confidentiality and firewall agreements, and lying under oath at deposition and trial."

In August 2016, Judge Freeman ruled the case "exceptional" and that Gilead was entitled to attorneys' fees. On July 17, 2017, Merck was ordered to pay $14 million in attorneys' fees "based on the amount at stake in this case, the complexity of the issues, and the results Fish has achieved for Gilead."

In today's ruling, the Federal Circuit affirmed Judge Freeman's finding of unclean hands, holding that this case involves clear misconduct by Merck in breaching commitments to a third party and clear misconduct in litigation.

In addition to the all women Gilead oral argument team, Gilead was also represented on the brief by Fish principals Craig Countryman, Jonathan Singer and Robert Oakes.

Read more about this precedential opinion in coverage from The Recorder here.