By Jan Wolfe
WASHINGTON (Reuters) - The U.S. Supreme Court on Monday handed a defeat to Merck & Co (N:MRK) by refusing to hear its appeal of a ruling that it had dishonestly obtained patent rights and could not collect a $200 million verdict against rival drugmaker Gilead Sciences Inc (O:GILD) in a dispute involving blockbuster hepatitis C drugs.
A jury awarded Merck $200 million in 2016 after finding Gilead's Hepatitis C drugs Sovaldi and Harvoni infringed two of its patents, but a judge later ruled the patents unenforceable because of a pattern of misconduct by Merck including lying under oath by one of its in-house lawyers.
Merck had urged the Supreme Court to place limits on the doctrine of "unclean hands" that can prevent plaintiffs from winning lawsuits if they acted in bad faith.
Hepatitis C, estimated to infect about 3.2 million Americans, is a viral disease that causes inflammation of the liver that can lead to liver failure. Injection drug use is among the causes of the infection.
Direct-acting anti-viral medications like Gilead's Sovaldi and Harvoni have revolutionized treatment of hepatitis C, with cure rates of more than 90 percent. Merck holds patents that it has said cover a compound that is the foundation for all major antiviral treatments for chronic hepatitis C.
A federal court jury in San Jose, California awarded Merck $200 million in 2016 after finding Sovaldi and Harvoni infringed two of its patents.
A judge threw out the verdict later that year, ruling that in the process of applying for one of the patents, Merck used confidential information it obtained in 2004 while discussing a possible partnership with Pharmasset Inc, a company Gilead bought in 2011.
The judge also said a Merck in-house lawyer testified untruthfully in a deposition and at trial about his participation in a confidential call with Pharmasset personnel.
Merck's litigation against Gilead has included several reversals of fortune.
In 2016, a jury in Delaware said Gilead infringed a related patent and ordered it to pay Merck $2.54 billion in royalties, the largest verdict ever in a patent case. But a judge threw out the verdict in February 2018, ruling that Merck's patent was invalid because it was not sufficiently detailed in its wording.