Merck sign

Already the largest patent infringement verdict in U.S. history, the $2.5 billion in damages awarded to Merck’s Idenix unit could grow by as much as three times the amount assessed by a federal jury in Wilmington on Thursday.

After a nearly two-week trial, the jury upheld the validity of a patent Merck acquired on hepatitis C treatments back in 2014, and said California-based Gilead Sciences Inc. owed 10 percent royalties on the $25.4 billion it had made on sales of its Sovaldi and Harvoni drugs through August.

The jury also found that the infringement was willful, meaning that U.S. District Chief Judge Leonard P. Stark of the District of Delaware could bump the award up to as much as $7.6 billion in enhanced damages.

Gilead said it plans to appeal and that the verdict does not affect its ability to sell the drugs.

In the meantime, however, it will fall to Stark to decide whether and how much to impose in enhanced damages.

The U.S. Supreme Court in July lowered the bar for finding enhanced damages in its decision in Halo Electronics v. Pulse Electronics. In Halo, the unanimous court removed the requirement that plaintiffs prove “objective recklessness” on the part of an alleged infringer and lowered the bar for seeking enhanced patent damages.

But while the decision invited juries to make more findings of willful infringement, it left discretion as to enhanced damages squarely with district court judges. It will be up to Stark to determine whether the basic tests in Halo were met and whether Gilead’s infringing activity was so egregious as to warrant enhanced damages.

Halo is the law of the land. It’s all up to the judge’s discretion,” said Michael P. Kelly, chairman of McCarter & English, who worked on Idenix’s legal team. “There’s no rigid formula.”

It is unclear exactly what behavior Stark will need to weigh because most of the briefing in the case has been redacted. However, there was some evidence, based on court documents, that Gilead knew about the Merck patent before bringing its products to market.

Stark could only reject the jury’s factual findings of willfulness if he finds they are not supported by substantial evidence.

Though Stark is free to increase Idenix’s damages award threefold, such a move would be rare. Still, even a smaller multiplier would have serious ramifications for Gilead, given the size of the jury verdict.

Interestingly, less than a month before the trial, the company moved to bifurcate the proceedings, fearing this exact outcome.

Gilead asked Stark to separate the trial into two phases—the first for validity and a second for damages and willful infringement. According to court documents, Gilead’s attorneys argued the amount of damages sought would be prejudicial to the company’s case.

“In this case, Idenix is seeking [redacted] would be the largest patent damages verdict in U.S. history—by a wide margin,” Gilead’s attorneys said. “The sheer magnitude of that number, alone, is enough to prevent the jury from viewing the evidence of liability from a neutral perspective.”

However, Stark ruled that the trial would proceed in the ordinary course.

In a statement, Merck praised the decision for upholding “patent protections that are essential to the development of new medical treatments.”

In March, Merck won a $200 million award in a separate patent infringement case against Gilead over hepatitis C drugs. However, a federal judge in California overturned the verdict in June after finding a pattern of unethical behavior that included Merck lying under oath. Merck has since appealed that ruling.

John Day, director of Ashby & Geddes’ intellectual property group, represented Idenix. He was not immediately available to comment.

Attorneys for Gilead did not immediately return calls seeking comment on the verdict.

The case is captioned Idenix Pharmaceuticals v. Gilead Sciences.

Tom McParland can be contacted at 215-557-2485 or at tmcparland@alm.com. Follow him on Twitter @TMcParlandTLI.