By Scott Graham, From The Recorder

Gilead Sciences Inc.’s once impermeable defense of its hepatitis C medications has been cracked.

Merck & Co. Inc. won a jury verdict of validity Tuesday on two patents covering the key ingredient in the blockbuster drugs Sovaldi and Harvoni. Gilead isn’t contesting infringement, and the trial proceeded to a damages phase Tuesday afternoon before U.S. District Judge Beth Labson Freeman of the Northern District of California.

“Merck believes the jury’s verdict accurately reflects the evidence in this case,” the company said in an e-mailed statement. Williams & Connolly partner Bruce Genderson led Merck’s trial team with help from Hughes Hubbard & Reed.

New Jersey-based Merck and co-plaintiff Ionis Pharmaceuticals Inc. are looking for a 10 percent cut on Gilead’s sales of sofosbuvir, which have rung up more than $20 billion in sales since Sovaldi launched in December 2013. Harvoni is a combination of sofosbuvir and another anti-viral drug that Gilead began marketing in 2014.

“Although we are disappointed by the jury’s verdict today, there are a number of remaining issues to be decided by the jury and the judge,” a Gilead spokeswoman said in a statement. “Therefore, it is premature to comment any further.”

Fish & Richardson partner Juanita Brooks has led Gilead’s team along with partner Jonathan Singer. The six-member jury deliberated 3 1/2 days before returning its verdict.

Foster City-based Gilead acquired sofosbuvir as part of its 2011 acquisition of New Jersey’s Pharmasset Inc. Following the 2013 launch of Sovaldi, Gilead successfully beat back a claim by Roche Holding A.G. that it held rights via an earlier collaboration agreement with Pharmasset. Gilead also knocked out a European patent infringement claim by Idenix Pharmaceuticals Inc., which is now owned by Merck.

Faced with Merck’s litigation threat, Gilead sued for declaratory judgment in 2013 that Merck’s 7,105,499 and 8,481,712 patents were invalid for indefiniteness and/or derivation from Pharmasset’s own prior research.

Merck launched competing hepatitis C treatment Zepatier in January. It has stated in filings that Gilead filed its suit without countering Merck’s 10 percent royalty proposal. Merck is expected to seek more than $2 billion in damages for past infringement plus a 10 percent running royalty on sales of sofosbuvir through the life of Merck’s patents, which is about 2022. Merck’s damages expert is pointing to a 10 percent deal it struck with Roche in 2011 for one of the same patents as “an amazingly comparable license agreement,” according to filings in the case.

Gilead is seeking to argue that a 2011 internal Merck presentation actually set the value of that license at only $73 million over the life of the patent. The company also wants to argue that when Pharmasset rejected Merck’s acquisition bid, Merck considered releasing its claims to sofosbuvir for $346 million.

Merck has argued that Gilead is trying to inject new damages theories into the case at the eleventh hour.

For more on this story go to: http://www.therecorder.com/id=1202752843083/Merck-Wins-Patent-Battle-Over-Hepatitis-C-Drugs#ixzz43mZnOSP9