American biopharmaceutical Gilead Sciences was hit with a $2.5 billion verdict in a patent jury trial against another pharmaceutical last year. But the company escaped another intellectual property case unharmed last week, avoiding what could have been a second $2.5 billion verdict.
U.S. District Judge Leonard Stark in Delaware recently ruled that biopharmaceutical company’s conduct concerning its blockbuster hepatitis C (HCV) medication sofosvubir didn’t merit enhanced damages for willful infringement. Just the opposite, the judge found Gilead’s conduct to be somewhat admirable, but for the evidence presented at trial.
“Here, without both parties’ contributions, humanity may well have been deprived of a cure for HCV,” Judge Stark wrote. “Under the totality of circumstances, society’s interest in deterrence of willful patent infringement does not justify enhancing damages here.”
Sofosbuvir, marketed under Sovaldi and other brand names, was developed by Pharmasett and later acquired by Gilead. Sofosbuvir is said to have saved millions of lives and at the same time resulting in tens of billions in sales for Gilead.
Idenix, owned by Merck & Co., and Universita Degli Studi di Cagliari brought the infringement suit claiming that Pharmasset had built Sovaldi based on their own patented discoveries. The jury awarded $2.54 billion, finding that the Pharmasett scientists had acted willfully. With that, Idenix had asked the judge to “at least double” the award to more than $5 billion.
Willful infringement is found when the conduct is done deliberately and intentionally, and with knowledge of the patent.
Federal statute (35 U.S.C. § 284) provides that when damages resulting from patent infringement are found, “the court may increase the damages up to three times the amount found or assessed.” In addition, in patent cases that are deemed “exceptional,” a court may award “reasonable attorney fees” to the “prevailing party.”
Judge Stark quoted the words of Chief Justice Roberts, who said “The sort of conduct warranting enhanced damages has been variously described in our cases as willful, wanton, malicious, bad-faith, deliberate, consciously wrongful, flagrant, or-indeed-characteristic of a pirate.”
Evidence Supported Willfulness
Judge Stark ruled that substantial evidence supported the jury’s finding of willfulness. However, he noted that even though jurors needed only two hours to reach their verdict, the judge appeared not to be personally convinced.
“If the only thing Pharmasset/Gilead did was to ‘deliberately copy’ Idenix’ s discovery that a 2′-methyl up modified nucleoside could be effective in treating HCV, that was not nearly enough to arrive at sofosbuvir,” Judge Stark wrote. “Pharmasset and Gilead engaged in a massive effort to arrive at the ultimate cure.”
The judge also found “nearly every aspect of this case was ‘close’ in the sense that it easily could have gone the other way.”
A Careful Balance
Judge Stark said that his claim construction ruling—which he acknowledged “may ultimately be shown to be wrong” on appeal—may have tipped what the Supreme Court called the “careful balance between the need to promote innovation through patent protection, and the importance of facilitating the imitation and refinement through imitation that are necessary to invention itself and the very lifeblood of a competitive economy.”
For those reasons, the judge declined to enhance damages under § 284 or find the case “exceptional” under § 285 of the Patent Act. Judge Stark did, however, impose the prime rate of 3.5% on prejudgment interest, which could add more than $200 million to the judgment.
Judge Stark is still reviewing Gilead’s motion for a new trial and said in a footnote to his opinion that his willfulness opinion was based on the assumption the motion will be denied. However, he emphasized that it shouldn’t be “misunderstood as a holding or indication of the court’s forthcoming ruling.”
Your startup needs to be aware of the importance of protecting intellectual property and guard against the infringement of others. Discuss your patent infringement questions and IP issues with an experienced intellectual property legal professional.
Attorney Michael Ahmadshahi focuses on patents, intellectual property, copyright, trademark, and trade secrets in Irvine, California. The Ahmadshahi Law Offices are also located in Beverly Hills and Sherman Oaks. Call us toll free at (800) 747-6081 or direct at (949) 260-4997 or email [email protected] and let us help you with your IP questions and the strategy for your startup.