Gilead (GILD) Ordered to Pay Merck $200M for Patent Infringement
Shares of Gilead Sciences Inc. (GILD) were trading down -1.71 or -1.87 percent to $89.61 in Friday’s premarket after news broke late yesterday that the company was ordered by a federal judge to pay Merck & Co. (MRK) $200 million in damages for infringing on two patents belonging to Merck. Gilead Sciences stock closed at $91.32 per share, up +1.24 or +1.38 percent in Thursday’s regular trading session.
Foster City, California based Gilead Sciences Inc. was founded in 1988 by 29 year old Michael L.
On Thursday, a federal judge ordered Gilead to pay $200 million in damages to Merck & Co. and collaboration partner Ionis Pharmaceuticals, to settle Gilead Sciences, Inc versus Merck & Co, Inc, in the U.S. District Court for the Northern District of California, No. 13-cv-4057. The settlement fell far short of the $2 billion originally demanded by Merck when the suit was filed in 2013.
The subject of the lawsuit was for Gilead infringing on Merck’s patent on Gilead’s hepatitis C medications, Sovaldi and Harvoni, which combined had more than $20 billion in sales in the United States in 2014 and 2015. The dispute was over the validity of the patents, which was upheld by the same jury earlier this week.
In an emailed statement, Merck said that, “We are pleased that the jury recognized that patent protections are essential to the development of new medical treatments. The compounds and methods at issue in this case facilitated significant advances in the treatment of patients with HCV infection, and achieving these advancements required many years of research and significant investment by Merck and its partners."
Gilead bought Pharmasset, Inc. in 2011 where it obtained sofosbuvir, the active ingredient of Harvoni and Sovaldi. Merck claimed that Pharmasset developed the compound from a Merck patent filed in 2002. In addition, Merck is seeking a 10 percent cut of Gilead’s future sale of the drugs, which will be argued in a separate non jury trial before U.S. District Judge Beth Labson Freeman beginning next week.
Gilead said it would appeal the decision if the verdict stands. A spokesperson for Gilead said that, “Since Merck made no contribution and assumed none of the risk in the discovery and development of sofosbuvir, we do not believe Merck is entitled to any amount of damages”.
Gilead will present equitable defenses in the case before Judge Freeman next week and is expected to argue that Merck had “unclean hands” due to the company’s HCV patent prosecutor Phillippe Durette being present at a licensing meeting with Pharmasset in 2004. Pharmasset then disclosed the structure of the compound which would later become sofosbuvir. Nevertheless, Merck says that Durette took no action at the U.S. Patent and Trademark Office until Pharmasset published the makeup of the compound in 2005. The jury already found that Merck’s inventors possessed the subject matter for the claim in 2002.
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