Will Gilead end up paying Merck $7.6B for patent infringement?

| Jan 3, 2017 | Patent Law

By now, you’ve probably heard that Merck’s Idenix Pharmaceuticals unit has won the largest patent infringement verdict in history. Last month, a federal jury in Delaware awarded the company $2.54 billion in damages after finding that California-based Gilead Sciences, Inc., had infringed on Idenix’s patents for the Hepatitis C drugs Harvoni and Sovaldi.

The jury also found that Gilead’s infringement had been willful. That’s all the authorization needed for the judge to triple the award in an effort to punish Gilead.

Traditionally, punitive damages have been reserved for cases involving truly egregious behavior. That purpose hasn’t changed, but the legal standard for granting them was changed last year in the U.S. Supreme Court case, Halo Electronics v. Pulse Electronics. Before Halo, plaintiffs had to prove that the infringer acted with “objective recklessness” in order to seek punitive damages. The Halo court lowered the bar a bit, so now plaintiffs only need to prove the infringement was willful.

How egregious is egregious?

The federal judge is not required to award punitive damages in an amount tripling the actual damages experienced by the plaintiffs. He could decide the jury’s finding of willfulness was unsupported by the evidence. Or, he could determine that Gilead’s behavior was not very egregious, all things considered.

Keep in mind another recent case Merck brought against Gilead. In March 2016, Merck was awarded $200 million in actual damages for patent infringement by Gilead — but that verdict was overturned when a federal judge learned of unethical behavior by Merck. Allegedly, there was a pattern of troubling behavior, including lies under oath. (Merck has appealed.)

In this case, the parties have submitted briefs on the amount in punitive damages they each believe is appropriate. Unfortunately, according to Law.com, those briefs are heavily redacted. All Law.com could glean from court records was some evidence that Gilead was well aware of Merck’s patent when it began to sell the infringing products.

Will the judge take the largest patent infringement award in U.S. history and triple it? Both companies are undoubtedly waiting with bated breath, but no information is available to indicate when the judge’s order can be expected.