It Seems Increasingly Unlikely That Gilead Will Pay Even $200 Million -- To Merck

In weekend federal District court filings, in San Jose, California -- filings meant to set the stage for the bench trial now beginning, Merck has challenged Gilead's right to introduce several batches of evidence that -- at least possibly -- would suggest that Merck learned the art that became its sofosbuvir patent filings by means of M&A-related confidential due diligence materials on Pharmasset, when Merck briefly considered buying Pharmasset, outright over 15 years ago, now.

Of course, some years later -- long after Merck had declined to buy Pharmasset -- Gilead acquired Pharmasset for $11 billion. And, with that acquisition, Gilead obtained most of what it now knows about making sofosbuvir, the active ingredient branded as Solvaldi^®, and then later (in a fixed-dose combo), as Harvoni^®.

If -- and to be sure, that is a big IF -- the able Judge Labson-Freeman believes Gilead's version of how it is that Merck came to know what it knew, and then file its patent applications on sofosbuvir (i.e., that it essentially filched the central idea from old Pharmasset M&A due diligence materials -- which would certainly have breached the M&A NDAs Whitehouse Station signed), there might well be a substantial reduction in damages, or even an outright reversal -- of the verdict. We shall see -- but here is a bit, from the weekend's court docket:

. . . .The evidence does not pertain to Gilead’s waiver theory and does not pertain to the only unclean hands theory that Gilead disclosed during discovery. In its interrogatory response regarding its unclean hand[s] theory, Gilead identified a single basis for its unclean hands defense: that Merck had "obtain[ed] its patent rights by deriving the invention from Pharmasset’s confidential disclosures which renders it inequitable for Merck to now assert the patents against Gilead. . . ."

We will -- as ever -- keep you well-apprised. Onward, on a wonderful Spring-budding Monday!