Merck, Gilead wrestle in court over $3B-plus in hep C royalties

Merck & Co. isn't just battling Gilead Sciences for market share with its brand-new hepatitis C drug. It's also fighting in court for a multibillion-dollar piece of Gilead's blockbuster franchise.

Merck ($MRK) claims that it's entitled to 10% royalties on Gilead's ($GILD) sofosbuvir meds, including Sovaldi and the combo drug Harvoni, citing two patents registered in 2002. Gilead, on the other hand, claims that its Pharmasset scientists were already working on sofosbuvir before the patents were filed.

Merck's royalty claim, first made in 2013, would be worth more than $3 billion, based on the $31.7 billion Gilead has brought in from the breakthrough hepatitis C drug since its 2014 launch. And it's not baseless; last month, a federal judge decided that Sovaldi and Harvoni had infringed on Merck's patents.

Still, as Bloomberg reports, Gilead's lawyers told a San Jose, CA, jury Monday that Merck didn't invent the drug. Pharmasset, which Gilead bought for $11 billion in 2011, was working on it as early as 2001, before Merck won its patent rights, Gilead attorney Juanita Brooks said in court.

"It's clear whose invention this is," Brooks told the jury (as quoted by Bloomberg). "It's clear this is Pharmasset's invention and Gilead's acquisition. So why are we here?"

Merck disputes that, of course, contending that Pharmasset jumped on its 2002 patents to develop sofosbuvir. Its lawyer told the jury that sofosbuvir was ultimately derived from work done at Merck "before it was ever even a figment of the imagination at Pharmasset."

Hefty royalties would be a nice boost for Merck's hep C business, which is off to a late start in a market overwhelmingly dominated by Gilead's next-gen meds. Merck's Zepatier was approved earlier this year, joining Gilead's Sovaldi and Harvoni, and AbbVie's ($ABBV) Viekira Pak in a pitch for patients.

The current court fight is just one piece of the patent litigation over Gilead's hepatitis C drugs. Idenix, which Merck bought last year, had already sued Gilead--in France, Germany and the U.K., in addition to the U.S.--claiming that Gilead infringed one of its nucleoside patents. And AbbVie sued Gilead claiming that the company's two-in-one drug Harvoni stepped on one of its method patents for treating hep C.

- see the Bloomberg story

Special Reports: The top 15 pharma companies by 2014 revenue - Gilead Sciences | New drug approvals of 2014 - Harvoni

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