Merck Has Agreed To Pay Gilead AT LEAST $15 Million In Legal Fees, In California Patent Case...

Regular readers will recall (as we return to our "power alley" narrative line, here) that a former Merck patent attorney engaged in dirty tricks, back before Gilead acquired Pharmasset -- when Merck itself was looking at Pharmasset, under an obligation of confidentiality.

That led to an order (since affirmed on appeal) that Merck must pay for Gilead's legal fees -- in defending in California -- against Merck's (thus largely specious) patent infringement claims -- due to the Merck (former) patent counsel's "unclean hands". Most recently, we estimated that amount as around $15 million -- it is likely higher now, with interest tacked on, and subsequent negotiations about. . . who owes what, given the long appeals process.

So, my guess is the total is closer to $19 million, than $15 million -- but there is zero chance that Gilead will settle for anything below the full $15 million (thus our "at least" headline). Here is the status briefing, from last week:

. . . .The parties have reached an agreement in principal concerning the total amount that Merck will reimburse Gilead for the Court’s award of attorneys’ fees (ECF No. 489), Gilead’s appellate attorneys’ fees, and pre- and post-judgment interest, and are diligently working to obtain the necessary signatures to execute that agreement. Gilead has signed the agreement and Merck is in the process of obtaining the authorized signatures needed for execution. The parties expect that the agreement will be executed in the near term, and payment remitted to Gilead within 10 calendar days of the last Merck signature needed for execution. The parties will further update the Court on this matter by April 1, 2019, or by another date requested by the Court. . . .

Of course, the amount is financially immaterial to both parties, so we may never see the actual figure, in any SEC report (and I am virtually certain the amount will not be required to be disclosed by the able judge) -- but it should serve as a nearly $19 million warning -- against being cavalier with confidentiality agreement obligations, in M&A due diligence -- especially concerning patents, on promising life science candidates.

Onward.

नमस्ते