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Aug. 12 — Merck & Co. must pay Gilead's attorneys' fees, a federal district court held Aug. 11, rejecting Merck's argument that denial of its $200 million jury award for Gilead's infringement of its hepatitis C treatment patents was punishment enough ( Gilead Scis., Inc. v. Merck & Co. , 2016 BL 260550, N.D. Cal., Case No. 13-cv-04057-BLF, 8/11/16 ).
The U.S. District Court for the Northern District of California agreed with Gilead that Merck shouldn't be able to avoid attorneys’ fees simply because its misconduct affected the judgment.
“Merck’s position would serve to emphasize deterrence at the expense of compensation and force Gilead to be liable for defending an action in which the record demonstrated egregious misconduct. By awarding Gilead attorneys’ fees, both considerations of compensation and deterrence are advanced, consistent with” court precedent and the statute, wrote Judge Beth Labson Freeman.
A jury found March 24 that Merck's scientists were responsible for the early breakthroughs that led to the development of Sovaldi and Harvoni, which helped Gilead become the world's largest biotechnology company by market value. The verdict was that Gilead had infringed Merck's patents (10 LSLR 07, 4/1/16). Gilead's drugs carry U.S. list prices from $84,000 for a 12-week course to $94,500 before discounts.
But the court found June 6 that under the doctrine of “unclean hands,” Merck's “numerous unconscionable acts, including lying, unethical business conduct, and litigation misconduct” barred it from asserting infringement of its patents (10 LSLR 12, 6/10/16).
Gilead filed a motion for attorneys' fees, arguing that the case was “exceptional” under 35 U.S.C. §285 and that it was the “prevailing party.”
In response to Merck's argument that it not be required to pay the fees, Freeman wrote, “If §285 were designed solely as a penalty provision, Merck’s argument that foregoing the $200 million jury verdict and future royalties provides a more than adequate deterrent effect might be persuasive.”
But the court cited the reasoning of the U.S. District Court for the Northern District of Illinois in Nilssen v. Wal-Mart Stores, Inc., N.D. Ill., No. 04-cv-5363, 11/24/08.
The Nilssen court wrote, “With respect to the exercise of discretion in awarding fees, plaintiffs complain that they have been punished enough. [But this] argument loses sight of the primary purpose of §285 litigation: to compensate defendants who are forced to incur significant expenses in the defense of cases that never should have been brought in the first place.”
The Northern District of California granted Gilead's motion for attorneys' fees and ordered the parties to propose by Aug. 18 a briefing schedule regarding the amount that should be awarded to Gilead.
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The court's order is at http://src.bna.com/hHy.
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