A recent The Recorder story, “Merck on Hook for ‘Hefty’ Attorney Fees in Patent Row,” reports that Merck & Co. is going to have to pay Gilead Science's attorney fees from their knockdown-dragout fight over hepatitis C medicine patents.

U.S. District Judge Beth Labson Freeman of the Northern District of California isn't saying yet how much Merck will have to pay.  But in declaring the case exceptional, she implied that the tab will be "hefty."

Gilead and counsel Fish & Richardson are seeking $15.5 million in "exceptional case" fees under Section 285 of the Patent Act.  Fish acknowledges it didn't bill that much under its flat-fee arrangement, but says $15.5 million is a reasonable lodestar amount.

Merck originally won a $200 million patent infringement jury verdict following trial last March.  But Freeman threw out the verdict because of false testimony from Merck's former patent prosecutor.  Merck "directed, advised, guided and covered up misconduct," she found.

Merck, which is represented by Williams & Connolly and Hughes Hubbard & Reed, argues losing the $200 million is punishment enough.  But Freeman ruled Thursday that Section 285 is designed not only to punish misconduct, but also to compensate defendants for legal fees they shouldn't have to pay.  Because the misconduct is exceptional, "Gilead is entitled to relief from its hefty fee obligation incurred in defending this case," she wrote.

The same logic, she added, "leaves open the question of whether Gilead should be compensated at the lodestar amount or at the amount it actually spent on attorneys' fees."  She ordered the parties to submit briefing on the appropriate amount.

Freeman also acknowledged that Merck is appealing her unclean hands ruling to the U.S. Court of Appeals for the Federal Circuit, where a ruling for Merck could undercut the exceptionality decision.