Patent Infringement: Defensive Strategies for IP Violators.

Author:Fitzpatrick, William M.
 
FREE EXCERPT

INTRODUCTION

The progressive development of man is vitally dependent on invention. It is the most important product of his creative brain. Its ultimate purpose is the complete mastery of mind over the material world, the harnessing of the forces of nature to human needs. (Tesla, 1919, p.2) In 2014, Merck & Company acquired ownership of Idenix Pharmaceuticals, LLC. With this acquisition, Merck assumed ownership over four Idenix patents related to the treatment of the Hepatitis C virus (Balkundi, 2018). Gilead Sciences, Inc. is a competitor of both Merck and Idenix in the pharmaceutical industry. In 2013, Gilead Sciences applied for a new drug application (NDA) with the Food and Drug Administration. This NDA was for a pharmaceutical medication containing the compound Sofosbuvir. In their experimentation, Gilead Sciences had discovered that this compound yielded higher cure rates and less side effects compared with alternative medications (Balkundi, 2018). Gilead utilized this compound to produce and market two treatments for Hepatitis C. These medications were respectively Solvadi and Harvoni (Balkundi, 2018).

The sale of these two medications by Gilead Sciences triggered the filing of multiple legal actions by Merck and Idenix for infringement of their Hepatitis C-related patents (Balkundi, 2018; Weiss, 2016; Yasiejko & Decker, 2016). In defense of these patent infringement suits, Gilead attempted to both (1) invalidate the Merck/Idenix patents; and (2) disqualify the Merck/Idenix patent claims through use of an equitable defense strategy of "unclean hands and waiver" [i.e., inequitable conduct] (Gilead Sciences., Inc. v. Merck & Co., 2016:2). In March 2016, a jury sought to evaluate whether two Merck/Idenix patents (#712 and #499) were invalid as claimed by Gilead. These two patents dealt respectively with chemical compounds and methodologies for administering these compounds in conjunction with other medications in order to treat Hepatitis C. Gilead also claimed ownership of these same chemical compounds through their Sofosbuvir and other methods patents involving the administration of the Sofosbuvir-based drugs Solvadi and Harvoni (Gilead Sciences., Inc. v. Merck & Co., 2016). After an eight day trial, a federal jury rejected the attempt by Gilead to invalidate the 712 and 499 patents. The jury rejected assertions by Gilead that the Merck patents were deficient by virtue of their lacking the characteristics of (a) enablement; (b) novelty; (c) use of adequate/specific language in patent claims; and (d) nonobviousness (Idenix Pharmaceuticals, LLC and Universita Degli Studi di Cagliari v. Gilead Sciences, Inc., 2017). The jury awarded Merck/Idenix record damages of $2.54 billion as compensation for patent infringement by Gilead (Weiss, 2016; Yasiejko & Decker, 2016). In another legal action, Merck/Idenix also sought compensation for lost revenues attributable to the sales of Slovadi and Harvoni by Gilead. In this litigation, the court awarded Merck/Idenix and additional $200 million in damages (Gilead Sciences., Inc. v. Merck & Co, 2016; Balkundi, 2018).

Subsequent to these judicial outcomes, Gilead implemented a defensive legal strategy in order to vacate these damage awards and re-visit the validity of the Merck/Idenix patents. In mounting these defensive strategies, Gilead challenged the descriptive character and terminology used to identify specific claims in the original Merck/Idenix patent filings (Idenix Pharmaceuticals, Inc. Universita Degli Studi Di Cagliari, Centre de la Recherche Scientifique and L'Universite Montpellier II v. Gilead Sciences, Inc. and Gilead Parmasset, LLC, 2015; Idenix Pharmaceuticals, Inc. Universita Degli Studi Di Cagliari v. Gilead Sciences, Inc.,.2015). In February 2016, the U.S. District Court for Delaware overturned the $2.5 billion patent award for violation of Merck/Idenix on the basis that the original patent lacked enablement (Idenix Pharmaceuticals, LLC and Universita Degli Studi Di Cagliari v. Gilead Sciences, Inc., 2018). Under this legal doctrine, the original patent claims of Merck/Idenix were invalidated because descriptive elements of the 712 and 499 patents were not specific enough to permit recreation of the formula by a scientist familiar with this field of research (Idenix Pharmaceuticals, LLC and Universita Degli Studi Di Cagliari v. Gilead Sciences, Inc., 2018; Green, 2018).

Secondly, the U.S. Court of Appeals also affirmed a lower court ruling that negated patent infringement claims and prior judicial verdicts based on business misconduct and litigation misconduct by Merck/Idenix (Gilead Sciences, Inc. v Merck & Co., Inc., Merck, Sharp & Dohme, and Ionis Pharmaceuticals, Inc. 2018). In this appellate case, the court found that under the doctrine of unclean hands, Merck had abrogated its rights to enforce patent infringement claims against Gilead. Merck's unclean hands or misconduct began in the early 2000s with a proposed business alliance with another firm (Pharmasset) which was later acquired by Gilead. The information sharing alliance between the two firms permitted Merck to test compounds invented by Pharmasset for purposes of treating Hepatitis C. The alliance agreement stipulated that while Merck was permitted to test Pharmasset formulations, it could not engage in any activity that would attempt to reverse engineer or disseminate information related to the chemical compounds underlying these experimental discoveries. Additionally, the agreement also required Merck to erect an informational "firewall" that was intended to restrict the distribution of experimental data to any personnel directly involved in the creation of the company's own research and commercialization of Hepatitis C medications. A Merck chemist and patent attorney, Dr. Phillipe Durette, was a participant in information exchanges with Pharmasset regarding the latter firm's research activities into Hepatitis C. Dr. Durette was also in charge of assisting Merck in developing their own patent applications for Hepatitis C drugs and treatment modalities. During discussions with Pharmasset, he did not disclose these work responsibilities which were a clear violation of the informational "firewall" requirement associated with the business alliance. After acquiring Pharmasset, Gilead alleged that Durete's access to experimental research communicated in these exchanges permitted him to submit revised/narrowed patent applications on behalf of Merck that had a higher probability of being granted by the U.S. Patent and Trademark Office [USPTO] (Gilead Sciences, Inc. v Merck & Co., Inc., Merck, Sharp & Dohme, and Ionis Pharmaceuticals, Inc. 2018).

In subsequent litigation, both the trial and appellate courts found evidence that Dr. Durette had provided false testimony regarding his access to Pharmasset experimental activities. Citing prior precedents (Keystone Driller Co. v. General Excavator Co., 1933; Precision Instrument Manufacturing Co. v. Automotive maintenance machinery Co., 1945), the trial and appellate courts concluded that this misconduct by Dr. Durette served to negate the legal rights of Merck to enforce their patent infringement claims against Gilead (Gilead Sciences, Inc. v Merck & Co., Inc., Merck, Sharp & Dohme, and Ionis Pharmaceuticals, Inc. 2018). Thus, the trial court vacated the prior jury award of $200 million to Merck for lost revenues associated with sales of Slovadi/Harvoni by Gilead (Mehrotra & Maclean, 2016).

The legal disputes between Gilead and Merck & Company demonstrate a number of important issues associated with patent infringement litigation. The jury award for damages against Gilead demonstrates the high level of financial risk that firms may experience when attempting to engage in product development activities which infringe on the protected IPs/patents of other innovative companies. Secondly, this pattern of litigation also suggests that firms can deploy effective defensive strategies in order to circumvent the dire legal consequences of patent infringement.

The purpose of this present paper is to explore the range of defensive strategies available to firms/individuals accused of patent infringement. Pursuant to this objective, the paper will undertake a review of the evolution of patent protection and the legal mechanisms for combatting patent infringement litigation in the United States. Through a comprehensive analysis of statutory and case law, the paper will examine how product substitute developers can defend themselves from alleged patent infringement through the defensive strategies of (1) noninfringement (Ford, 2013; Kasdan, 2013; Schwartz, 2008; Warner-Jenkinson v. Hilton Davis Chemical Co., 1995; Brooktree Corporation v. Advanced Micro Devices, Inc., 1993); (2) patent invalidation (Kasdan, 2013; Ford, 2013; Toprani, Maher, & Oliner, 2018; Gugliuzza & Lemley, 2018; Milleman, 2008; Bilski v. Kappos, 2010; Beer Barrel, LLC v. Deep Wood Brew Prods., LLC, 2016; KSR Int'l Co. v Teleflex, Inc., 2007); (3) patent misuse (Belvis, 2008; Quinn, 2011; 2017; Impression Prods. v. Lexmark Int'l, Inc., 2017; Kimble v. Marvel Entertainment, 2015; Boston Store of Chicago v. American Graphophone Co., 1918); and (4) inequitable conduct (Mark & Anenson, 2014; U.S.P.T.O., 2017c; Lex Machina, 2011; Precision Instruments Manufacturing Co. v. Automotive Maintenance Machinery Co., 1945). Finally, based upon a review of associated statutory/case law and other scholarly literature, the paper will highlight the legal requirements and limitations associated with these defensive strategies.

THE EVOLUTION OF PATENTS AS INTELLECTUAL PROPERTIES

A country without a patent office and good patent laws was just a crab, and couldn't travel any way but sideways or backways. (Twain, 1889, p. 64) Patents represent a class of intellectual properties which seek to stimulate innovation, provide competitive advantages and enhance the overall economic performance of firms (Mann...

To continue reading

FREE SIGN UP