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Gilead Sciences, Inc. v. Merck & Co.

Improper Conduct in Inter-Company Discussions, With Compounding Litigation Misconduct, Leads to Patent Unenforceability

Gilead Sciences, Inc. v. Merck & Co., __ F.3d __, 2018 WL ____ (Fed. Cir. Apr. 25, 2018) (TARANTO, Clevenger, Chen) (N.D. Cal.: Freeman) (3 of 5 stars)

Fed Cir affirms judgment of patent unenforceability for unclean hands. The case involved Merck’s assertion of patents relating to compounds used in treating Hepatitis C, and Merck accuses Gilead’s Sovaldi and Harvoni (sofosbuvir) treatments of infringement. The district court’s fact findings, which recited a variety of pre-litigation business misconduct by Merck, were supported by substantial evidence, which the opinion discusses. The misconduct related to Merck improperly failing to “firewall” one of its patent attorneys, Phillipe Durette, from inter-company conversations with Pharmasset, a company that was researching Hepatitis C treatments during the prosecution period for the patents Merck later asserted. Pharmasset was subsequently acquired by Gilead. The participation of Dr. Durette in these conversations was contrary to “a clear ‘firewall’ understanding between Pharmasset and Merck that [corresponding individuals] not be involved in related Merck patent prosecutions[.]” Op. at 16. Dr. Durette thus improperly learned the structure of a molecule Pharmasset was developing, PSI-6130, and subsequently used that knowledge during prosecution of the patents later asserted against Gilead. “Dr. Durette’s knowledge of PSI-6130, acquired improperly, influenced Merck’s filing of narrowed claims, a filing that held the potential for expediting patent issuance and for lowering certain invalidity risks.” Id. Discussing the record, the opinion finds no clear error in these findings.

There was also no clear error in the district court’s findings relating to litigation misconduct attributable to Merck. This related to Dr. Durette’s intentionally false deposition testimony concerning his participation in a key conference call, and his trial statements about the role of key documents in patent prosecution “that the [district] court found so incredible as to be intentionally false.” Op. at 23.

In view of such findings, the district court did not abuse its discretion in finding that the balancing of equities warranted a determination of unenforceability for both Merck patents against Gilead. The opinion notes that such balancing was a “closer” matter for one Merck patent than the other, but notes, as the district court did, that Dr. Durette’s participation in the second patent’s prosecution in contravention of the firewall agreement was serious misconduct, and that the litigation misconduct “infected this entire case, covering both patents-in-suit.” Op. at 29 (quoting district court).

The opinion does not reach the issues raised in Gilead’s conditional cross-appeal concerning denial of JMOL of invalidity.

KEYWORDS: UNCLEAN HANDS; UNENFORCEABILITY