By Scott Graham, From The Recorder

Gilead Sciences Inc. and Merck & Co. Inc. went to trial Monday in San Jose over the IP rights to Gilead’s $20 billion hepatitis C drug sofosbuvir.
Lawyers for each company lauded the other’s contributions to treatments for the hepatitis C virus (HCV) while essentially accusing the other of stealing their inventions. Merck has sought a license worth at least $2 billion, according to documents filed in the case.
The invention at issue is sofosbuvir, the key ingredient in Gilead’s blockbuster HCV drugs Sovaldi and Harvoni. Gilead has sued Merck for a declaratory judgment that its two patent claims on the compound are invalid, primarily for lack of enablement.
Gilead attorney Juanita Brooks of Fish & Richardson told six jurors and two alternates that while Merck once claimed a broad swath of compounds with the potential to treat HCV, none was identical to sofosbuvir. “In this world, the smallest change can make the biggest difference,” she said.
If Merck thought it held a valid patent, why did it try to acquire Pharmasett Inc., the New Jersey drug company that developed sofosbuvir and was later bought by Gilead, she asked. “You can’t claim someone else’s invention as your own,” she said. “Or at least, you can’t get away with it, and that’s why we’re here in court.”
Williams & Connolly partner Bruce Genderson said Merck had in 2002 staked the original patent claims to the nucleosides that gave rise to sofosbuvir. He compared Merck to a mining company that scours the earth to locate rare gems. Merck claimed the land, and “they were mining on Merck’s property,” Genderson said.
The two hour-long presentations were mostly genteel and straightforward, especially by usual standards of competitor patent litigation. “We’re not saying that Pharmasset and Gilead did not do important work,” Genderson stressed, while Brooks lauded Merck for eventually coming up with a competing HCV drug, Zepatier, that “benefits everyone.”
The stakes are extremely high in Gilead Sciences v. Merck. According to documents filed by Merck, the company originally sought a 10 percent royalty, and sofosbuvir has generated sales of at least $20 billion to date. Gilead sued without making a counteroffer, according to Merck, which is in turn suing Gilead for patent infringement in Delaware.
Gilead brought sofosbuvir to market as Sovaldi in 2013 and then last year as part of the combination drug called Harvoni. Previously, HCV patients were treated with daily injections of interferon and oral ribavirin, which caused numerous side effects and had only a 50 percent success rate. Harvoni is administered once a day as a pill, and cures 97 percent of patients with HCV. “It’s truly a revolutionary drug,” Brooks said Monday.
The price is revolutionary too. Gilead charges over $1,000 a pill in the United States, or nearly $100,000 for a full course of treatment. Because damages have been deferred to a second phase of trial, Freeman has blocked Merck from raising the price issue—unless Gilead opens the door by portraying itself as receiving unmitigated praise for sofosbuvir.
Merck filed the first of two patents at issue in the San Jose trial in 2002 following several years of research into nucleosides that can inhibit the hepatitis C virus. The first patent includes some 150 examples of compounds that could be used to treat the virus.
That’s all well and good, Brooks said Monday, but none of the examples showed the specific double-ringed “methyl up, fluoro down” combination that Pharmasset was developing independently. It was the Pharmasset scientists who figured out how to get the compound into the liver intact, to stay there, and to get into the viral RNH chain but not into healthy RNA, she said. “It’s clear whose this invention is,” she said. “It’s Pharmasset’s and it’s Gilead’s.”
Brooks said Merck tried to narrow its claim to something closer to sofosbuvir only after company patent prosecutor Philippe Durette learned about Pharmasett’s research while under a confidentiality order. Gilead, she said, will be calling Durette in its case-in-chief. “He’s going to tell you. … Well, I’m not sure what he’s going to say but you’re going to be hearing from him,” Brooks said.
She also previewed emails from a Merck executive saying, “We want to block as many routes as possible to effective HCV therapies.”
Genderson seemed to go back and forth between saying Merck had invented sofosbuvir in 2002 and then saying it had only laid out a roadmap. “We never derived it from their compound. It was there from the beginning,” he said, repeating throughout his argument that “we had it back then” in the claim specification.
But he acknowledged that the specification didn’t precisely describe the molecule. Rather it was “like a cookbook” that contained “clear information about how to do that for persons skilled in the art.”
As for Durette, he had immediately stopped a conference call when it became clear that Pharmasett was describing a compound that Merck had already invented. It will be proven by notes taken by Pharmasett employees on the call, he said.
Genderson pointed to email from a Pharmasset executive saying, “We need to identify the holes in their patents and file ASAP while we still can.”
Picking the jury was slightly challenging as the 35-member venire included at least two attorneys and two people who had relatives that had worked at Gilead. Another would-be juror said he worked at Apple, and thought the “billions” of dollars spent on patent litigation were bad for consumers.
Genderson said he understood well because he represents cellphone companies “and we get sued all the time.”
But you get the money, the venire person responded. He was not added to the jury.

IMAGE: Juanita Brooks, Fish & Richardson

For more on this story go to: http://www.therecorder.com/id=1202751632138/Gilead-Opens-Trial-Over-20-Billion-Drug#ixzz42PWQQJMo