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 The dramatic ruling comes after a federal jury in San Jose,
California, on March 24 ordered Gilead to pay $200 million in
damages, based on findings that Merck's patents were valid.
U.S. District Judge Beth Labson Freeman said Gilead proved that in
the process of applying for its patents, Merck deceptively used
confidential information from Pharmasset, Inc, a company Gilead
bought in 2011.
Freeman also said Merck cannot enforce the patents because Merck's
own lawyer gave inconsistent and untruthful testimony during the
trial. "Merck's acts are even more egregious because the main
perpetrator of its misconduct was its attorney," she said.
In a statement, Merck spokeswoman Lainie Keller said Gilead's
allegations against the patents are without merit and the company
would appeal. "The judge's ruling does not reflect the facts of this
case."
Gilead feels "vindicated" by the decision, spokeswoman Michele Rest
said.
Gilead had also been facing a demand from Merck for an ongoing
royalty of at least 12 percent of all future sales of the drugs,
according to court papers. Gilead made $23 billion on the two pills
in the U.S. alone over the last two years.
Pharmaceutical firms such as Merck, which recently launched its own
hepatitis C drug, Zepatier, are trying to chip away at Gilead's
dominant position in the market for a new generation of drugs, which
cure the liver disease in well over 90 percent of patients.
Some policy makers and insurers have criticized their costs. Harvoni,
for instance, lists at $1,125 per pill before discounts and $94,000
for a 12-week regimen.
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The case dates back to 2013 when Gilead and Merck sued each other,
claiming ownership of laboratory work underlying sofosbuvir, the
active ingredient in Gilead's drugs.
After the jury verdict, Freeman separately dealt with Foster City,
California-based Gilead's accusations of Merck's unethical conduct
in obtaining the patents.
Merck, based in Kenilworth, New Jersey, countered that it had
already known of the technology Gilead claimed was Pharmasset's.
Merck's partner in the suit and co-owner of the patents, Ionis
Pharmaceuticals Inc, stood to receive 20 percent of any damages
awarded Merck.
The case is Gilead Sciences, Inc v Merck & Co, Inc, in the U.S.
District Court for the Northern District of California, No.
13-cv-4057.
(Reporting by Andrew Chung; Editing by Bernard Orr and Andrew Hay)
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