Thursday, December 15, 2016

Jury Awards Merck $2.54 Billion in Damages Against Gilead

Reuters, the Wall Street Journal, and the International Business Times are reporting that a federal district court jury in Delaware today awarded Merck $2.54 billion--that's "billion," with a "b"--in reasonable royalties in a patent infringement suit relating to the treatment of hepatitis C.  According to the Reuters article, the award "was based on a 10 percent royalty rate from the sales of both drugs through August."  A quick look at Lex Machina indicates that the actual name of the case is Idenix Pharmaceuticals LLC et al v. Gilead Sciences, Inc., No. 1:14-cv-00846-LPS.  (The Reuters article indicates that Idenix is a company Merck acquired in 2014).  According to the International Business Times article, the jury also found that the infringement (which it was told to assume, based on the court's claim construction, according to one of the docket entries on Lex Machina) was willful, which could pave the way for a damages enhancement.

I don't know much about the specifics of this case, and I'm sure the award will be the subject of post-trial motions and probably an appeal, so I don't have much to say about it just yet.  It would be the largest patent damages award in U.S. history, though; and damages awards in the nine- and ten-figure range often are vacated or reversed later on, for one reason or another, so perhaps this one will be too.  Then again, the royalty base--sales revenue from Gilead's hepatitis C drugs Sovaldi and Harvoni--is also enormous, as discussed in the Reuters article and in Hannah Brennan et al., A Prescription for Excessive Drug Pricing:  Leveraging Government Patent Use for Health, 18 Yale J. L. & Tech. 275 (2016).  Thus, if liability and validity hold up, and 10% is the correct royalty rate, $2.54 billion may well be the right number, huge though it is.

Hat tip to Mark Lemley, who alerted many of us to this one by his posting on Facebook a few hours ago.  

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