No. IN THE Supreme Court of the United States ———— MERCK & CO., INC., MERCK SHARP & DOHME CORP., AND IONIS PHARMACEUTICALS, INC., Petitioners, v. GILEAD SCIENCES, INC., Respondent. ———— On Petition for a Writ of Certiorari to the United States Court of Appeals for the Federal Circuit ———— PETITION FOR A WRIT OF CERTIORARI ———— BRUCE R. GENDERSON JEFFREY A. LAMKEN JESSAMYN S. BERNIKER Counsel of Record STANLEY E. FISHER MICHAEL G. PATTILLO, JR. JESSICA PALMER RYEN SARAH J. NEWMAN WILLIAMS & CONNOLLY LLP MOLOLAMKEN LLP 725 Twelfth Street, NW The Watergate, Suite 660 Washington, D.C. 20005 600 New Hampshire Ave., NW (202) 434-5000 Washington, D.C. 20037 [email protected] (202) 556-2000 [email protected] Counsel for Petitioners (Additional Counsel Listed on Inside Cover) :,/621(3(635,17,1*&2,1&± ±:$6+,1*721'& MICHELLE J. PARTHUM MOLOLAMKEN LLP 300 North LaSalle Street Chicago, IL 60654 (312) 450-6700 [email protected] QUESTION PRESENTED Whether the equitable defense of unclean hands pre- cludes legal relief in the form of damages. (i) ii PARTIES TO THE PROCEEDINGS BELOW Petitioners Merck & Co., Inc., Merck Sharp & Dohme Corp., and Isis Pharmaceuticals, Inc. (now known as Io- nis Pharmaceuticals, Inc.) were defendants/counter-claim- ants in the district court and appellants/cross-appellees in the court of appeals. Respondent Gilead Sciences, Inc., was plaintiff/ counter-defendant in the district court and appellee/ cross-appellant in the court of appeals. iii CORPORATE DISCLOSURE STATEMENT Pursuant to this Court’s Rule 29.6, petitioner Merck & Co., Inc., states that it has no parent corporation and that no publicly held company owns 10% or more of its stock. Merck & Co., Inc., is the parent corporation and owns 10% or more of the stock of petitioner Merck Sharp & Dohme Corp. Petitioner Isis Pharmaceuticals, Inc. (now known as Ionis Pharmaceuticals, Inc.) further states that it has no parent corporation and that no publicly held company owns 10% or more of its stock. TABLE OF CONTENTS Page Opinions Below ............................................................. 1 Statement of Jurisdiction ........................................... 2 Constitutional and Statutory Provisions Involved ......................................................................... 2 Preliminary Statement ............................................... 2 Statement ...................................................................... 3 I. Legal Framework ............................................ 3 A. The Equitable Defense of Unclean Hands .......................................................... 3 B. The Law-Equity Distinction .................... 5 C. The 1952 Patent Act .................................. 6 II. The Patents at Issue ....................................... 7 A. Merck Invents and Patents a Revolutionary Class of Compounds for Treating Hepatitis C ........................... 7 B. Pharmasset Attempts To License Merck a Compound Covered by Merck’s Patents ......................................... 8 C. Merck’s Patents Are Amended and Then Issue .................................................. 9 III. Proceedings Below ......................................... 11 A. Proceedings Before the District Court ........................................................... 11 1. After a Trial, the Jury Awards Merck $200 Million for Infringement ........................................ 11 2. The District Court Overturns the Jury Verdict After a Bench Trial on Equitable Defenses ........................ 13 (iv) v TABLE OF CONTENTS—Continued Page B. Proceedings Before the Federal Circuit ......................................................... 15 Reasons for Granting the Petition ............................ 16 I. The Federal Circuit’s Approach Disregards This Court’s Precedent and Historical Practice ........................................... 17 A. This Court Has Long Held That Unclean Hands Applies Only to Equitable Claims ....................................... 17 B. Entrenched Federal Circuit Precedent Departs from This Court’s Decisions and Historical Tradition ..................................................... 19 II. The Courts Are Divided on This Important and Recurring Issue .................... 21 A. The Courts of Appeals Disagree on Whether Unclean Hands May Bar Damages Claims ........................................ 22 B. Other Courts Are in Disarray ................. 23 III. The Federal Circuit’s Approach Is Wrong—and Implicates Separation-of- Powers Issues ................................................. 24 A. The Substantive Distinction Between Equitable and Legal Defenses Has Not Been Abolished ......... 24 B. The Federal Circuit Has Long Misconstrued This Court’s Precedents .................................................. 28 IV.Superimposing Equitable Defenses on Legal Claims Implicates Serious Seventh Amendment Concerns .................................... 30 vi TABLE OF CONTENTS—Continued Page A. Invoking Equity To Overturn Jury Verdicts Threatens Seventh Amendment Values ................................ 30 B. This Case Exemplifies the Problems .................................................. 31 Conclusion ..................................................................... 34 Nos. 2016-2302, 2016-2615 Appendix A – Court of Appeals Opinion (Apr. 25, 2018) .......................................................... 1a Appendix B – District Court Order on Non-Jury Legal Issues (June 6, 2016) ................. 32a Appendix C – District Court Final Judgment (Aug. 16, 2016) ...................................... 120a No. 2018-1017 Appendix D – Court of Appeals Order (July 6, 2018) ............................................................ 122a Appendix E – District Court Order on Gilead’s Entitlement to Attorneys’ Fees (Aug. 11, 2016) ............................................... 124a Appendix F – District Court Order on the Amount of Reasonable Attorneys’ Fees (July 14, 2017) ................................................ 129a Appendix G – Bill of Costs (July 24, 2017) ............... 152a Appendix H – District Court Order Awarding Total Amount of Attorneys’ Fees (Aug. 1, 2017) ................................................. 155a Appendix I – Relevant Constitutional and Statutory Provisions ............................................... 160a vii TABLE OF AUTHORITIES Page(s) CASES A.C. Aukerman Co. v. R.L. Chaides Constr. Co., 960 F.2d 1020 (Fed. Cir. 1992) (en banc), abrogated in part, SCA Hygiene Prods. Aktiebolag v. First Quality Baby Prods., 137 S. Ct. 954 (2017) .............................................................. passim Accuscan, Inc. v. Xerox Corp., No. 96 Civ. 2579, 1998 WL 273074 (S.D.N.Y. May 27, 1998) .................................... 21 Agfa Corp. v. Creo Prods. Inc., 451 F.3d 1366 (Fed. Cir. 2006) ......................... 20 Aptix Corp. v. Quickturn Design Sys., Inc., 269 F.3d 1369 (Fed. Cir. 2001) ............. 6, 20 Baker v. Gen. Motors Corp., 522 U.S. 222 (1998) ............................................. 6 Beacon Theatres, Inc. v. Westover, 359 U.S. 500 (1959) ............................................. 30 Bein v. Heath, 47 U.S. (6 How.) 228 (1848) ................................................................. 4, 18 Bell & Howell Co. v. Bliss, 262 F. 131 (7th Cir. 1919) .................................. 27 Buono v. Yankee Maid Dress Corp., 77 F.2d 274 (2d Cir. 1935) ................................. 27 Byron v. Clay, 867 F.2d 1049 (7th Cir. 1989) ..................................................... 23 Chauffeurs, Teamsters & Helpers, Local No. 391 v. Terry, 494 U.S. 558 (1990) .............. 30 Coats & Clark, Inc. v. Gay, 755 F.2d 1506 (11th Cir. 1985) .......................... 22 viii TABLE OF AUTHORITIES—Continued Page(s) Coca-Cola Co. v. Dixi-Cola Labs., 155 F.2d 59 (4th Cir. 1946) ................................ 25 Conn. Importing Co. v. Frankfort Distilleries, 101 F.2d 79 (2d Cir. 1939) ........... 22 Consol. Aluminum Corp. v. Foseco Int’l Ltd., 910 F.2d 804 (Fed. Cir. 1990) ............... 6, 20 County of Oneida v. Oneida Indian Nation of N.Y. State, 470 U.S. 226 (1985) .................................................................... 19 Dairy Queen, Inc. v. Wood, 369 U.S. 469 (1962) ............................................. 30 Dering v. Winchelsea (1787) Eng. Rep. 1184 (Exch.) ..................................... 4 Drone Techs., Inc. v. Parrot S.A., 838 F.3d 1283 (Fed. Cir. 2016) ......................... 34 F.E.L. Publ’ns, Ltd. v. Catholic Bishop of Chi., 506 F. Supp. 1127 (N.D. Ill. 1981), rev’d on other grounds, No. 81-1333, 1982 WL 19198 (7th Cir. Mar. 25, 1982) ......... 23 Fenn v. Holme, 62 U.S. (21 How.) 481 (1859) .................................................................... 5 Ferring B.V. v. Barr Labs., Inc., 437 F.3d 1181 (Fed. Cir. 2006) ......................... 20 Frazer v. Schlegel, 498 F.3d 1283 (Fed. Cir. 2007) ................................................... 12 Garcel, Inc. v. Hibernia Nat’l Bank, No. Civ. A. 01-772, 2002 WL 356307 (E.D. La. Mar. 5, 2002) ...................................... 24 Gen. Excavator Co. v. Keystone Driller Co., 62 F.2d 48 (6th Cir. 1932) .......................... 29 ix TABLE OF AUTHORITIES—Continued Page(s) Great-W. Life & Annuity Ins. Co. v. Knudson, 534 U.S. 204 (2002) .......................... 19 Grupo Mexicano de Desarrollo, S.A. v. All. Bond Fund, Inc., 527 U.S. 308 (1999) .................................................................... 25 Hazel-Atlas Glass Co. v. Hartford- Empire