Docket No. 2016-2302, -2615
TARANTO, CLEVENGER, CHEN
April 25, 2018
Brief summary: DC’s “unenforceability judgment based on unclean hands” with respect to Merck’s patents relating to Gilead’s Sovaldi® and Harvoni® Hepatitis C treatements affirmed.
Summary: Merck appealed the DC’s “unenforceability judgment based on unclean hands” with respect to its US 7,105,499 and 8,481,712 relating to Gilead’s Sovaldi® and Harvoni® Hepatitis C treatements (“both based on the compound sofosbuvir”). Gilead previously sought a DJ that the patents are invalid and not infringed but eventually stipulated to infringement under the DC’s claim construction (not challenged here). Gilead’s defense that “Merck did not actually invent the subject matter but derived it from another inventor” was unsuccessful. But the DC found Gilead’s equitable unenforceability defense persuasive, “finding both pre-litigation business misconduct and litigation misconduct attributable to Merch, and it barred Merck from asserting the patents against Gilead” and awarded Gilead attorney’s fees, “relying on the finding of unclean hands.” Merck appealed here, and Gilead cross-appealed the DC’s invalidity decision but only if the FC panel set aside the unenforceability judgment. The FC panel explained that under Keystone Driller (US 1933) and Precision Instrument (US 1945) the “misconduct” must have “immediate and necessary relation to the equity” sought and that to avoid misconduct the party must “have acted fairly and without fraud or deceit as to the controversy in issue”; in addition, the DC is afforded “wide range to the [its] use of discretion in refusing to aid the unclean litigant.” The DC found that Merck’s patent attorney Dr. Durette learned of the structure of Gilead’s (at the time Pharmasett’s) compound “in a conference call with Pharmaseset representatives, violating a clear ‘firewall’ understanding…that call participants not be involved in related Merck patent prosecutions” (he knew “any information” about Pharmasset’s compound “would overlap…his patent prosecution docket”), and even though he “stopped participating” in the collaboration, “Merck continued to use Dr. Durette in the related patent prosecutions even after the call”. The knowledge of the compound, the DC found, “acquired improperly, influenced Merck’s filing of narrowed claims” of the ‘499 patent (writing “new claims that targeted Pharmaseset’s work… the call played a significant role in his actual process of decision-making that led him to file claims focusing on that and similar structures”, and “he filed (and immediately amended) the application that became the ‘712 patent”), “a filing that held the potential for expediting patent issuance and for lowering certain invalidity risks”, “establish[ing] serious misconduct” and “violating clear standards of probity in the circumstances, that led to…the less risky ‘499 patent and, thus, was immediately and necessarily related to the equity” at issue here. Regarding litigation misconduct, “Dr. Durrette gave testimony” in deposition “that he did not participate in the March 2004 call-testimony that was later conceded to be false and that the court found to be intentionally so” and later “gave testimony” to the DC “that the court found so incredible as to be intentionally false” (with respect to a published Pharmasset patent application (“Clark”)). The FC panel also saw “no reversible error in the [DC’s] balancing of the equities” and no abuse of discretion in its finding on this point (“both patents were tainted by the patentee’s misconduct”). It therefore affirmed the DC decision.