Background
Gilead Sciences is the manufacturer of two widely prescribed HIV medications: Biktarvy (bictegravir/emtricitabine/tenofovir alafenamide) and Descovy (emtricitabine/tenofovir alafenamide), which are protected by registered trademarks covering their packaging, pedigrees, and tablet markings. In June 2024, Gilead filed suit in the Eastern District of New York alleging that Peter Khaim and more than thirty co-defendants operated a sophisticated counterfeiting conspiracy, flooding the U.S. pharmaceutical supply chain with more than 100,000 bottles of fake Gilead HIV medications that generated millions in illicit proceeds. The defendants allegedly obtained genuine empty bottles from patients, stripped identifying information, refilled and resealed them with either counterfeit or genuine-but-diverted medication, forged the supply-chain pedigrees required by federal law, and sold the counterfeit products to distributors and pharmacies.
Twenty-six of the defendants defaulted — they never answered Gilead’s complaint — and Gilead moved for a default judgment seeking statutory and enhanced damages under the Lanham Act.
The Court’s Holding
Magistrate Judge Joseph Marutollo issued a Report and Recommendation on July 1, 2026, recommending that the district court enter a default judgment against all 26 non-answering defendants and award Gilead $68 million in damages — a figure that reflects trebling of Gilead’s proven losses under the Lanham Act’s enhanced damages provision for willful trademark counterfeiting.
The magistrate found all elements of federal trademark infringement (Lanham Act § 32) and false designation of origin (§ 43(a)) established by Gilead’s well-pleaded allegations, which were deemed admitted by the defendants’ default. The defendants’ use of Gilead’s registered trademarks on counterfeit packaging and fake pedigrees constituted counterfeiting within the meaning of 15 U.S.C. § 1116(d) and § 1117(b), triggering the mandatory enhanced damages framework for willful counterfeiting. Under that framework, a court may award up to three times actual damages or profits. The magistrate concluded that trebling was appropriate given the deliberate, large-scale nature of the counterfeiting operation and the public health risks posed by adulterated or unknown-provenance medication entering the HIV treatment supply chain.
Key Takeaways
- Pharmaceutical counterfeiting triggers the Lanham Act’s toughest damages tools. Trademark counterfeiting — not just ordinary infringement — allows trebled actual damages and mandatory attorney’s fees under § 1117(b). Companies whose marks appear on counterfeit products should pursue counterfeiting claims, not just ordinary infringement claims, to access the full range of enhanced remedies.
- Default judgment is a powerful tool against counterfeiting networks. When defendants fail to appear, their silence is taken as an admission. Magistrate default-judgment R&Rs in counterfeiting cases can move quickly and deliver large awards without trial.
- Pharmaceutical supply chain counterfeiting has significant Lanham Act exposure. Forging drug pedigrees — the chain-of-custody records required by the Drug Supply Chain Security Act — is both a federal crime and a trademark violation when the forged documents bear registered pharmaceutical trademarks.
Why It Matters
Counterfeit prescription drug cases have been a growing concern for pharmaceutical companies since the COVID-19 pandemic exposed vulnerabilities in the secondary drug distribution market. Gilead has been a particularly aggressive enforcer against HIV drug counterfeiting — it has obtained criminal convictions against Safe Chain Solutions’ owners (sentenced to decades in federal prison in 2026) and pursued multiple civil cases simultaneously. The $68 million default judgment recommendation is one of the larger single-case trademark damages awards in the pharmaceutical counterfeiting space.
The case also illustrates how the Lanham Act supplements criminal enforcement under the FDCA: while the DOJ pursues criminal counterfeiting charges, pharmaceutical companies pursue simultaneous civil actions that can yield large civil judgments independent of the criminal process. The R&R is subject to review by District Judge Merle before becoming final.
Surfaced via Law360 IP.