Appeals Court Upholds Decision in Merck and Gilead’s $2.54 Billion Patent Fight

The U.S. Court of Appeals upheld the decision to toss out a $2.54 billion patent infringement judgment leveled against Gilead Sciences. Last year, a judge overturned a decision that ordered Gilead to pay Merck 10% of the revenue earned by hepatitis C drugs due to an infringement on patents held by Merck.

In February 2018, the judge overturned a previous jury decision that called for Gilead to pay Merck $2.54 billion, which was 10% of the combined $25.4 billion revenues generated from those drugs that provided a virtual cure for hepatitis C. But in something that Merck will likely consider a vicious Halloween trick, on Oct. 30, the appeals court upheld last year’s ruling that threw out that $2.54 billion judgment. In 2018, the judge overturned the $2.54 billion verdict saying that the Merck patent should never have been granted in the first place because “it did not meet a requirement that it disclose how to make the treatment it covered without undue experimentation,” Reuters reported this morning.

A disappointed Merck said it was reviewing its options for a possible appeal, Reuters reported this morning, while a pleased Gilead said if an appeal came, it was confident a higher court would come to the same verdict as the federal appeals court.

The patent dispute between the two companies has been going on for several years. In 2014, Merck acquired a company called Idenix Pharmaceuticals to boost its hepatitis C pipeline, which includes Zepatier. A few years before that, Gilead had acquired Pharmasset for $11 billion, which is where it picked up the asset that would later become Sovaldi. The two companies that were acquired had already been in patent disputes, so when the larger companies picked them up, they also picked up the legal battle.

In a separate battle over hepatitis C patents, the U.S. Supreme Court refused to hear an appeal from Merck earlier this year over a $200 million award. In 2016, Gilead Sciences had been ordered to pay Merck the money after the court ruled that patents for Harvoni and Sovaldi infringed on Merck’s patents. The case advanced to the nation’s highest court due to questions about the actions of a Merck patent attorney who was accused of altering patent applications.

Over the past several years the hepatitis C market has waned due to the efficacy of the number of drugs on the market that can virtually cure the disease in about eight weeks.