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Gilead Sciences v. Merck & Co.

United States Court of Appeals for the Federal Circuit · Civil Procedure

Civil ProcedureEquitable defensesUnclean handsPatent enforcementunclean handsequitypatent enforcementlitigation misconduct

Facts

Merck and Isis collaborated on Hepatitis C treatments and obtained the '499 and '712 patents, while Pharmasset, later acquired by Gilead, developed PSI-6130, which led to sofosbuvir. During business discussions, Pharmasset agreed to disclose PSI-6130 information to Merck only on a firewalled basis, excluding those involved in related Merck patent prosecution, yet Merck had Dr. Durette, its prosecutor for related applications, participate in a March 2004 call where PSI-6130's structure was disclosed. Merck then kept Dr. Durette on the related prosecutions, and in February 2005 he amended the application that became the '499 patent by replacing broad claims with narrower claims focused on features of PSI-6130. In discovery and at trial, Dr. Durette gave testimony the district court found intentionally false about his participation in the 2004 call and about the role of Pharmasset's work and the Clark Application in the February 2005 amendment.

Issue

Whether the district court abused its discretion in holding Merck's '499 and '712 patents unenforceable against Gilead under the doctrine of unclean hands. More specifically, the question was whether Merck's pre-litigation business misconduct and litigation misconduct had the required immediate and necessary relation to the patent-enforcement relief Merck sought.

Rule

Under the doctrine of unclean hands, a court of equity may deny relief when the claimant's misconduct has an immediate and necessary relation to the equity it seeks in the matter in litigation and reflects inequitableness or bad faith relative to the controversy in issue. In this case, that standard is generally satisfied when the misconduct normally would enhance the claimant's position regarding important legal rights in the litigation if the impropriety is not discovered and corrected, including misconduct that has sufficient objective potential to affect the litigation even if it ultimately does not bear fruit. Review is for abuse of discretion, with factual findings reviewed only for clear error.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

In San Diego, NovaCrest Therapeutics was negotiating with Arbor Lane Bio about a hepatitis-drug candidate. Arbor Lane agreed to reveal the compound’s structure only to a NovaCrest scientist who was screened off from NovaCrest’s related patent prosecution, but NovaCrest secretly included its patent prosecutor, Lena Ortiz, on the disclosure call and kept her on the pending applications afterward. Months later, Ortiz narrowed NovaCrest’s claims to a subgenus that more closely matched the disclosed structure, a change that could make examination easier and reduce invalidity risks in later litigation.

If NovaCrest later sues Arbor Lane’s successor for patent infringement, which is the strongest argument for barring enforcement under unclean hands?

Explanation. The majority held that unclean hands may bar patent enforcement where the claimant’s misconduct has an immediate and necessary relation to the relief sought. That standard is generally met when the misconduct normally would enhance the claimant’s position regarding important legal rights in the litigation if undiscovered and uncorrected. Here, the secret participation in the call and continued prosecution role could strengthen the patent position by enabling narrower claims that may expedite issuance and reduce invalidity risk. Actual success is not required, and the court did not require inequitable-conduct doctrine to be satisfied. (Derived from Gilead Sciences v. Merck & Co. (n.d.).)