The court case between Merck and Gilead has taken the path that it appeared to be heading down after a Merck employee’s testimony was called into question: the judge has thrown out the $200 million dollar patent award to Merck. All that work for nothing, and all because the testimony of a key witness fell apart.
As mentioned in that earlier post, Phil Durette, a Merck scientist-turned-patent-attorney, testified that he was not in on a key meeting when Gilead revealed details of their compounds and research program to Merck. Gilead alleged that Durette altered Merck’s patent strategy in light of that confidential information, a contention that Merck (and Durette himself) denied in court. But it turned out that he was in on that meeting, and did have the information in question. It wasn’t just that he couldn’t remember – his detailed testimony about exactly what he was doing instead of attending that meeting was false. The judge, in this new ruling, pointed this out, as well as Merck’s backing him up all the way, and Durette’s eventual reversal of his testimony during the trial itself. He stated this multiple times during his deposition:
Q: How are you so sure 11 years later that you were never told what the structure was for the 6130 compound? A: The structure was not revealed to me by individuals at Merck or otherwise. I’m positive of that. I never saw a structure of the Pharmasset compounds until it published later on in time. . .
Q: How can you be so sure of that memory? A: Because I was not part of the patent due diligence for the structure, so I would not have been privy to any revelation of the structure to me as a patent attorney working on a related docket. So this was assigned to another person. So I would not have participated in a phone call wherein it was a potential for the revelation of the structure to Merck counsel. Q: Why would that have been inappropriate for you to have been told the structure of 6130? A: Because I was prosecuting a docket which had potential a conflict with Pharmasset’s IP positions on the subject matter.
Why yes, it would have indeed been a conflict. Durette also stated that had he known the structure, it would have tainted his judgment as to what claims to pursue in Merck’s own filings. So he definitely didn’t, and that definitely didn’t happen. Not at all. Until it turned out that it did (Pamela Demain is Merck’s Director of Corporate Licensing):
Having denied being on the March 17, 2004, due diligence call, Dr. Durette was shown Ms. Demain’s March 11, 2004 e-mail which said that he was specifically chosen by Merck to receive the structure of PSI-6130 on a March 17, 2004, patent due diligence call. . .He was asked if this refreshed his recollection. In the face of Ms. Demain’s e-mail, Dr. Durette still denied being on the call, contending “[t]hat was Pamela’s evaluation of the time, but I never participated in a due diligence meeting on March 17 because the due diligence component of this potential deal was assigned to another attorney, so there was – I did not participate in any meeting of due diligence on March 17.”
Dr. Durette was then shown a May 20, 2004, letter and asked if that letter refreshed his recollection about the March 17, 2004, call. The May 20, 2004, letter contained a list of things Pharmasset wanted returned, including “notes from a March 17, 2004, telephone conference regarding PSI-6130 patent due diligence with [Doug Pon] and Phil Durette.” Dr. Durette still denied being on the call, stating that it was his sworn testimony that he was not made aware of the structure of PSI-6130 on the March 17, 2004, call, and that he remembered that clearly.
At the time of his deposition, no one told Dr. Durette that Pharmasset’s Alan Roemer had taken contemporaneous notes of that March 17, 2004, patent due diligence phone call. . .At Mr. Roemer’s deposition, his notes were used as an exhibit, and Gilead’s counsel asked Mr. Roemer about the call that occurred on March 17, 2004. Mr. Roemer testified that Dr. Durette participated in the call and that Dr. Durette was provided the structure of PSI- 6130 on that call.
As the trial began, Merck’s counsel opened up by saying that Merck would not deny that Durette had been on the conference call, but that Durette did not know that Pharmasset’s disclosure was within the scope of what he had been working on. (And yes, that seems to blatantly contradict Durette’s own testimony). Interestingly, although Gilead could not subpoena Durette to appear at trial, Merck voluntarily brought him in to testify.
At trial, Dr. Durette said that his memory of the March 17, 2004, patent due diligence call became refreshed in January 2016 when he reviewed the deposition exhibits in preparation for trial. When confronted with his deposition testimony that he had not participated in the Pharmasset-Merck due diligence call, Dr. Durette said he was relying too much on his memory. Dr. Durette attempted to explain away his deposition testimony by stating that he had a lapse in memory and “over concluded” based on his memory. . .
Dr. Durette also asserted at trial that before the due diligence call, while he knew PSI-6130 was a nucleoside, he did not know that PSI-6130 was an inhibitor of the NS5B polymerase. Contrary to that testimony, Ms. Demain credibly testified that Merck and Dr. Durette did know that PSI-6130 was a nucleoside NS5B polymerase inhibitor. Dr. Durette stated at trial that he went into the March 17, 2004, call knowing that he would receive the structure of PSI-6130 but he “did not think it was going to be likely that it would be on the subject matter that was related to the – my HCV docket.” Contrary to that testimony, Dr. Durette was prosecuting patents directed to nucleoside NS5B polymerase inhibitors, and he knew going into the call that PSI-6130 was a nucleoside NS5B polymerase inhibitor.
What a mess. It goes on and on like this, by the way – I’m only including some of the problems. And the quickest way to resolve all these conflicting statements is to conclude that Durette was giving false testimony. And Judge Beth Labson Freeman is clearly not happy about that:
In this case, numerous unconscionable acts lead the Court to conclude that the doctrine of unclean hands bars Merck’s recovery against Gilead for infringement of the ’499 and ’712 Patents. Merck’s misconduct includes lying to Pharmasset, misusing Pharmasset’s confidential information, breaching confidentiality and firewall agreements, and lying under oath at deposition and trial. Any one of these acts—lying, unethical business conduct, or litigation misconduct— would be sufficient to invoke the doctrine of unclean hands; but together, these acts unmistakably constitute egregious misconduct that equals or exceeds the misconduct previously found by other courts to constitute unclean hands. Merck’s acts are even more egregious because the main perpetuator of its misconduct was its attorney.
The judge goes on to excoriate Durette, Merck, and Merck’s counsel during this case for the flagrant contradictions between Durette’s deposition and what eventually happened during the trial, and the way that Merck tried to act as if nothing was wrong. That opening statement mentioned above was not, the judge said, an appropriate time to disclose to Gilead that Durette was recanting all the major points of his prior testimony (there had been no warning beforehand).
. . .the record shows that Dr. Durette presented inconsistent, contradictory, and untruthful testimony, and that testimony was sponsored by Merck. Throughout the prosecution of this case, Dr. Durette continued to deceive Gilead and this Court. . .It is overwhelmingly clear to the Court that Dr. Durette sought at every turn to create the false impression that Merck’s conduct was above board.
So although Merck has claimed that Durette did not have an intent to deceive, the judge isn’t buying that (nor their other lines of argument in the “unclean hands” issue at stake here), and it’s hard to see how they have many arguments left after a ruling like this one. This is one of the more ticked-off court orders I’ve ever read – here, try this part out:
As explained throughout this order, Merck’s fabricated testimony was more than just an isolated incident, but happened repeatedly during Dr. Durette’s deposition. At trial, Dr. Durette continued to be evasive and told a story that was not credible. Moreover, while perhaps a common and convenient post-fabrication excuse, a memory lapse does not explain Dr. Durette’s confident and sanctimonious deposition testimony, nor does it explain Dr. Durette’s sudden moments of purported clarity at trial, when for example, he magically recalled meeting with a supervisor prior to attending the 2004 phone call with Pharmasset. As such, the present facts are significantly more disturbing than those in any of the cases cited by Merck. The evidence in this case fully supports a finding of intent to deceive.
This is a black eye for Merck and for its legal counsel. They didn’t just lose on this issue – they lost comprehensively and in several directions at once, and it’s hard to see how they shouldn’t have. A lawyer, I was once told, will do anything for you that can be done while wearing a nice suit. This does nothing to dispel that image.
The judge’s opinion was unusually blunt and outspoken:
“Here, Merck’s patent attorney, responsible for prosecuting the patents-in-suit, was dishonest and duplicitous in his actions with Pharmasset, with Gilead and with this Court, thus crossing the line to egregious misconduct. Merck is guilty of unclean hands and forfeits its right to prosecute this action against Gilead.”