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Gilead Sciences, Inc v. Merck & Co., Inc.

United States Court of Appeals, Federal Circuit

April 25, 2018

GILEAD SCIENCES, INC., Plaintiff-Cross-Appellant
v.
MERCK & CO., INC., MERCK SHARP & DOHME CORP., IONIS PHARMACEUTICALS, INC., Defendants-Appellants

          Appeals from the United States District Court for the Northern District of California in No. 5:13-cv-04057-BLF, Judge Beth Labson Freeman.

          Juanita Rose Brooks, Fish & Richardson, PC, San Diego, CA, argued for plaintiff-cross-appellant. Also represented by Craig E. Countryman, Jonathan Elliot Singer; Elizabeth M. Flanagan, Deanna Jean Reichel, Minneapolis, MN; Robert M. Oakes, Wilmington, DE; Edmund Hirschfeld, E. Joshua Rosenkranz, Orrick, Herrington & Sutcliffe LLP, New York, NY.

          Jeffrey A. Lamken, MoloLamken LLP, Washington, DC, argued for defendants-appellants. Also represented by James A. Barta, Sarah Justine Newman, Michael Gregory Pattillo, Jr.; Sara Margolis, New York, NY; Jessamyn Sheli Berniker, Stanley E. Fisher, Bruce Genderson, Jessica Palmer Ryen, Williams & Connolly LLP, Washington, DC; Mitchell Epner, Stephen S. Rabinowitz, Hughes Hubbard & Reed LLP, New York, NY.

          Before Taranto, Clevenger, and Chen, Circuit Judges.

          TARANTO, Circuit Judge.

         This case involves two patents relating to treatments for Hepatitis C. Merck & Co., Inc. and Ionis Pharmaceuticals, Inc. (formerly Isis Pharmaceuticals, Inc.) collaborated on research in the area and eventually obtained U.S. Patent Nos. 7, 105, 499 and 8, 481, 712. The patents, whose specifications are materially the same for present purposes, describe and claim classes of compounds, identified by structural formulas, and the administration of therapeutically effective amounts of such compounds. Gilead Sciences, Inc., developed its own Hepatitis C treatments-marketed now as Solvadi® and Harvoni®, both based on the compound sofosbuvir.

         Gilead filed this action against Merck & Co., its subsidiary Merck Sharp & Dohme Corp., and Ionis (collectively, "Merck" unless the context indicates reference just to Merck & Co. and/or Merck Sharp). Gilead sought a declaratory judgment that Merck's '499 and '712 patents are invalid and that Gilead is not infringing by its activities involving its sofosbuvir products. Merck counter-claimed for infringement.

         Gilead eventually stipulated to infringement based on the district court's claim construction, which is not challenged on appeal. A jury trial was held on Gilead's challenges to the patents as invalid for lack of both an adequate written description and enablement of the asserted claims (claims 1-2 of the '499 patent and claims 1-3, 5, 7, and 9-11 of the '712 patent) as well as Gilead's closely related defense that Merck did not actually invent the subject matter but derived it from another inventor, employed by Gilead's predecessor. The jury ruled for Merck and awarded damages.

         The district court then held a bench trial on Gilead's equitable defenses, including unenforceability against Gilead based on the allegation that Merck had unclean hands regarding the patents. The district court ruled for Gilead, finding both pre-litigation business misconduct and litigation misconduct attributable to Merck, and it barred Merck from asserting the patents against Gilead. Gilead Scis., Inc. v. Merck & Co., No. 13-cv-04057-BLF, 2016 WL 3143943, at *39 (N.D. Cal. June 6, 2016). Having so concluded, the district court subsequently deemed moot Gilead's motion for judgment as a matter of law of invalidity for lack of adequate written description and enablement. The court also awarded attorney's fees, relying on the finding of unclean hands.

         Merck appeals the unenforceability judgment based on unclean hands. Gilead cross-appeals the denial of judgment as a matter of law of invalidity, but it asks us to reach that issue only if we set aside the unenforceability judgment. We have jurisdiction under 28 U.S.C. § 1295(a)(1). We affirm the judgment based on unclean hands, concluding that it is sufficiently supported by findings that withstand review for clear error. We therefore do not reach the issues raised by Gilead's conditional cross-appeal.

         I

         A

         In 1998, Merck and Isis began collaborating on finding a way to block propagation of the Hepatitis C virus (HCV) by impeding the synthesis of its RNA. J.A. 20291. The collaborators sought a molecule that would have two properties. First, an enzyme involved in RNA assembly (NS5B polymerase) would recognize the molecule as a building block and add it to the growing RNA chain during replication of the virus's RNA. Second, the addition of this molecule would effectively stop further RNA assembly before completion and, hence, end RNA replication and prevent viral propagation.

         Starting in 2001, the two collaborators filed a series of patent applications related to antiviral agents for Hepatitis C. Dr. Phillipe Durette, a Merck chemist who had become a patent attorney, was central to their initial patenting efforts. J.A. 20301. A provisional patent application dated January 22, 2001, summarizes the invention as "a method for inhibiting hepatitis C virus (HCV) NS5B polymerase, a method for inhibiting HCV replication, and/or a method for treating HIV infection" by administering a "therapeutically effective amount of a compound of structural formula I." J.A. 25808. It sets forth and claims large families of possible structures in Markush format: it displays a number of configurations of nucleic acid derivatives and shows variables at a number of locations in the structures (e.g., different bases, different molecules attached to the sugar ring), the variables each stated to represent any of a substantial number of possible constituents. J.A. 25803-980.

         The same is true of Merck's two January 2002 applications under the Patent Cooperation Treaty (PCT applications). J.A. 24832, 26913. One of those became Merck's July 2003 U.S. application 10/250, 873, which issued as the '499 patent. J.A. 150, 27227. A non-provisional U.S. application filed in January 2002 led to the 2007 application that issued as the '712 patent. J.A. 223. The number of possible combinations within the Markush groups is very large.

         One instance of the formulas in the written description, from the 2003 application that issued as the '499 patent, is:

         structural formula III which is of the stereochemi-cal configuration:

         (Image Omitted)

D is N, CH, C-CN, C-NO2, C-C1-3 alkyl, C- NHCONH2, C-CONR11R11, C-CSNR11R11, C-COOR11, C-hydroxy, C-C1-3 alkoxy, C-amino, C-C1-4 alkylamino, C-di(C1-4 al-kyl)amino, C-halogen, C-(1, 3-6oxazol-2-yl), C-(1, 3-thiazol-2-yl), or C-(imidazol-2-yl); wherein alkyl is unsubstituted or substituted with one to three groups independently selected from halogen, amino, hydroxy, carboxy, and
C1-3 alkoxy;
W is O or S;
Y is H, C1-10 alkylcarbonyl, P3O9 H4, P2O6H3, or P(O)R9 R10;
R1 is hydrogen, CF3, or C1-4 alkyl and one of R2 and R3 is OH or C1-4 alkoxy and the other of R2 and R3 is selected from the group consisting of
hydrogen,
hydroxy,
fluoro,
C1-3 alkyl, trifluoromethyl,
C1-8 alkylcarbonyloxy,
C1-3 alkoxy, and
amino; or
R2 is hydrogen, CF3, or C1-4 alkyl and one of R1 and
R3 is OH or C1-4 alkoxy and the other of R1 and R3 is selected from the group consisting of
hydrogen,
hydroxy,
fluoro,
C1-3 alkyl, trifluoromethyl,
C1-8 alkylcarbonyloxy,
C1-3 alkoxy, and
amino; or
R1 and R2 together with the carbon atom to which they are attached form a 3- to 6-membered saturated monocyclic ring system optionally containing a heteroatom selected from O, S, and NC0-4 alkyl;
R 6 is H, OH, SH, NH 2, C1-4 alkylamino, di(C1-4 al-kyl)amino, C3-6 cycloalkylamino, halogen, C1-4 ...

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