A federal district court judge has overturned a 2016 jury award of $2.54 billion against Gilead Sciences relating to patent-infringement litigation with Merck & Co. over Gilead’s two blockbuster hepatitis C drugs, Harvoni(ledipasvir and sofosbuvir) and Sovaldi (sofosbuvir). The judge also ruled against Merck & Co. in its claims to royalties on sofosbuvir, an active ingredient in the two drugs.

The litigation between the companies dates back to 2013 when Idenix Pharmaceuticals, a now Merck & Co. subsidiary, which Merck acquired for $3.85 billion in 2014, sued Gilead for infringement of patents relating to methods used to develop sofosbuvir. Gilead had obtained sofosbuvir in 2012 from its $11.2-billion acquisition of Pharmasset, a clinical-stage pharmaceutical company. In August 2013, Idenix contacted Gilead requesting that it pay royalties on the sales of sofosbuvir and obtain a license to its US patents (US Patent Nos. 7,105,499 and 8,481,712). Gilead, in turn, filed a lawsuit in August 2013 in a federal district court in California seeking a declaratory judgment that the Merck patents were invalid and not infringed.

In March 2016, a jury determined that Gilead had not established that Merck’s patents were invalid and awarded Merck $200 million in damages as a royalty for sales (as of December 2015) of Gilead’s sofosbuvir-containing products, Harvoni and Sovaldi. Harvoni was approved by the US Food and Drug Administration in October 2014 and Sovaldi in December 2013. The dispute took an additional turn as the California federal district court later sided with Gilead in a June 2016 ruling under a so-called “unclean hands” defense over testimony from a witness about how he obtained proprietary information regarding of one of the patents under issue and that Gilead did not have to pay the $200 million in damages.

Concurrent to this litigation, in December 2013, Idenix sued Gilead for alleging that the commercialization of sofosbuvir would infringe additional US patents held by the company (US Patent Nos. 6,914,054 and 7,608,597) in a case that was transferred to a federal district court in Delaware. Although Idenix/Merck would later drop a claim against one of the patents (US Patent No. 6,914,054), it continued with its case involving the other patent (US Patent No. 7,608,597). After a two-week trial in December 2016, a jury found that Gilead failed to prove that the asserted patent claims by Idenix/Merck were invalid and awarded Idenix/Merck $2.54 billion in damages, an award that a judge has now overturned.

In his ruling, US District Judge Leonard Stark of the US District Court in Delaware ruled that Idenix/Merck’s asserted patent claims were invalid and struck down the jury award. He said that the company’s patent claims were too broad and that sofosbuvir could not be easily derived from the Idenix patent and the patent did not meet the enablement requirement. Enablement refers to the US Patent and Trademark Office requirement that is aimed at ensuring the claimed invention is described with sufficient detail to make and use the patented invention.

The decision is significant for the companies as they compete in the hepatitis C market, in particular for oral drugs to treat that disease. Gilead’s Sovaldi (sofosbuvir), the first oral treatment for hepatitis C, was Gilead’s top-selling drug in 2014 and was one of the industry’s top-selling drugs that year with 2014 sales of $10.28 billion, making it one of the most successful first-year launches for a new molecular entity. Gilead’s Harvoni, an oral combination of sofosbuvir and ledipasvir for treating hepatitis C, was later approved in 2014 and has since surpassed Sovaldi in product sales. Although both drugs are still strong-selling products, they faced declining sales in 2017 due to increased competition in the hepatitis C market, including from additional products from Gilead. In 2017, Harvoni had sales of $4.37 billion, down from 2016 sales of $9.08 billion, and Sovaldi had 2017 sales of $964 million, down from 2016 sales of $4.0 billion. Other hepatitis C drugs from Gilead are Epclusa (sofosbuvir and velpatasvir), which had 2017 sales of $3.51 billion, and Vosevi (sofosbuvir, velpatasvir and voxilaprevir), which had 2017 sales of $293 million. Merck & Co.’s oral hepatitis C drug, Zepatier (elbasvir and grazoprevir), had 2017 sales of $1.66 billion.

Source: United States District Court for the District of Delaware