Tuesday, July 18, 2017

[U] Merck Ordered To Pay $12.6 Million Of Gilead's Legal Fees, For Former Merck Patent Counsel's "Egregious Misconduct"

I have been in the wild northern wood -- where not even cell-phone coverage exists (as a general rule). [But this is a follow up, from a year past.]

Regretably, and consequently -- I missed mentioning on Friday past, that the ever able Judge MayBeth Labson Freeman, in the US District Court in San Jose, California has now finally entered her opinion (as a 17 page PDF file), as to the specific amount of attorneys' fees to be awarded -- and ruled that Merck must pay $12.59 million worth of its opponent's legal expenses, in the Sovaldi® patent litigation, from last summer.

. . . .Specifically, the numerous unconscionable acts included lying to Pharmasset, misusing Pharmasset’s confidential information, breaching confidentiality and firewall agreements, and lying under oath at deposition and trial. The Court found that any one of these acts — lying, unethical business conduct, or litigation misconduct — would be sufficient to invoke the doctrine of unclean hands; but together, these acts unmistakably constitute egregious misconduct that equals or exceeds the misconduct previously found by other courts to constitute unclean hands. . . .

Gilead is entitled to $12,591,636.53 for the work done by Fish through June 30, 2016.

Since the total amount of reductions is about 9.35% based on Fish’s fees through June 30,2016, the additional fees incurred after June 30, 2016, are subject to the same proportional reduction based on the parties’ agreement. . . .

Gilead is also entitled to fees of $1,365,470 for Deloitte’s work. . . .

The case (overall) is still pending on appeal, in the Ninth Circuit. But the notion that Merck would have to pay for Gilead's fees was well known -- the exact amount of those fees awarded wasn't known before Friday.

And NOW, you know. Onward -- to a gloriously busy week. . . with Saturn D Ring Plunge Number 13 now underway as I post this, twisting as it streaks past, in a near blur -- into the dawn "out there. . ." smile. . . .

UPDATED -- mid morning: We wish Justice Kennedy's wife a speedy and full recovery, from her hip fracture. She apparently took a fall, while traveling with the Justice, in Saltzburg, Austria -- and (since he is assigned to handle West Coast petitions, during summer recess) that may delay action on the pending clarification request, on Ban 2.0, in the Supremes. Even so, we expect the People of Hawaii will have a brief on file at the nation's highest court in about two hours, now. We will provide it in a new post, then -- at noon Central, today.



Richie said...

As prior general counsel/chief legal officer and as current CEO Ken Frazier is responsible for this. The buck starts and stops with him.
He should pay the $13 MM out of his own pocket. And hopefully the Board should consider terminating him for cause.

The egregiousness of this illegal, unethical and immoral behavior is such that there can can no accommodation for ex gen cousel Frazier.

condor said...

I do hear your frustration, Richie. Permit me to mildly disagree with your view, if I may:

I've followed this case pretty closely, and the one lawyer -- a lower level, internal patent counsel (who only went to law school after being a chemist for some years), a functionary if you will -- in the intellectual property group at Merck, then helmed by Richard C. Clark -- seems to have gone rogue. . . and done all of this completely on his own.

Even so, Merck the company must pay for what is done in its name -- as here.

But based on my experience, the vast bulk of the current Merck internal lawyers are too highly accomplished to need to resort to this sort of chicanery. Also based on my experience, the lawyer who engaged in this conduct reported to another boss, who reported to another boss, who ultimately would have reported to the then General Counsel (and at the time, that wasn't even Mr. Frazier, yet).

To be sure, the conduct here is reprehensible -- but there is no evidence from 2002 or 2003 forward, that even his own boss (let alone Mr. Frazier) ever knew about it (let alone authorized it).

The guy pretended that he was "inside the firewall", on a huge eleven party diligence teleconference call, where highly secretive competitor intellectual property ideas and proposals were discussed in copious detail (as Merck considered, but ultimately abandoned, the idea of buying Pharmasset). He then went off, and promptly wrote up a proposal to have Merck's own patents amended -- amended, to specifically read on the inventions he had only learned of from Pharmasset -- and then under an obligation of complete confidentiality (and non-use).

It was not until almost a deacade later, after Merck's patent had issued, that everyone learned how "prescient" his oddly detailed amendment to the patent application had been.

Obviously, he no longer works for Merck.

If you are a regular reader, you know that I take Merck (and Mr. Frazier) to task for a great many things -- but at least as to Mr. Frazier -- this would not fairly be one to lay at his personal doorstep.

As a leader, he should set the tone, going forward -- a tone of honesty and integrity -- and zealous advocacy, within the bounds of the law. But not beyond it.

And in the main, based on nearly a decade of very close observation, here -- I think he does just that.

Namaste, and do stop back. . . off for a mountain bike ride, now. Whoosh. . .

Richie said...

Problem is that it is a long established pattern that business leaders always place blame for issues found during their incumbency on their predecesors. They never step up and accept responsibility as THE LEADER.
Whats the point of accountability then?

I also have to differ midly in some aspects from your argument. Some of the bad behavior took place during pre-trial and at trial.
And when caught, Merck issued no mea culpa but instead tried to deny and defend against the charges. THAT is wholly on Frazier's doorstep.
But of course he will not own to it nor face consecuences.
Thats a clear sign that as a society we are headed to olygarchy.

condor said...

The able Judge Labson-Freeman overnight ordered Merck to pay over an additional $257,000 in court costs -- related to the failed appeal:

. . .Costs Taxed in amount of $257,168.65 against Merck & Co., et al. . . .

I do hear you Richie -- and I think reasonable people may fairly differ with one another, so I hope you won't hold this one against me.

Please do look at how I laid the Not-Petya viral problem of a few weeks back -- on the current CEO's doorstep.

That one seemed pretty avoidable -- with regular Windows patches.

Namaste -- and onward!