Moderna pressed by US judges on billion-dollar COVID patent defense

By Reuters News15 hours ago Updated

By Blake Brittain

WASHINGTON, Nov 5 (Reuters) - A US appeals court on Thursday grappled with how a federal law shielding companies from patent claims over products made for the government applies to a dispute over Moderna's MRNA.O COVID-19 vaccines that could cost the company more than $1 billion.

A three-judge panel of the Washington-based US Court of Appeals for the Federal Circuit pressed Moderna, Arbutus Biopharma ABUS.O and Genevant Sciences over whether to overturn a Delaware federal court ruling that Moderna was not immune from the companies' patent infringement claims under the law.

Arbutus and Genevant — a joint venture between Arbutus and Roivant Sciences ROIV.O — sued Moderna for patent infringement in 2022, seeking a share of royalties from Moderna's multi-billion-dollar COVID vaccine Spikevax. Moderna paid the companies $950 million in July as part of a March settlement of the case, and must pay an additional $1.3 billion under the settlement's terms if the Federal Circuit rejects its government-supplier defense.

The companies' dispute would have been the first to go to trial from a web of high-stakes US patent lawsuits over COVID vaccine technology that has also ensnared Pfizer, its German partner BioNTech and other major biotechnology and pharmaceutical companies.

Moderna argued that the United States should have been the defendant in the case because it made the vaccine for the federal government's nationwide vaccination effort Operation Warp Speed, citing a law previously used to keep patent disputes from interfering with the supply of war materials during World War One. The government supported Moderna's position, arguing that the company should not be liable for shots it provided as part of that operation.

US Department of Justice attorney McKaye Neumeister argued at the hearing on Thursday that a ruling against Moderna would be "devastating" to the government's contracting efforts.

US District Judge Joshua Wolson mostly rejected Moderna's defense in February, finding that the vaccines were largely made "for residents of the United States" and not "for the government" under the relevant law.

US Circuit Judge Richard Taranto asked on Thursday if accepting Moderna's argument would require courts to apply the defense any time the government agrees to buy something, which could allow it to be used in "an incredibly wide range" of cases. He raised a hypothetical where the government buys "all the pharmaceuticals in the United States" and immunizes generic drugmakers from patent claims in order to lower drug prices.

"That was, I think, the specter that the district court thought needed to be avoided," Taranto said.

Circuit Judge Jimmie Reyna questioned Arbutus attorney David Berl on why Moderna would not be considered to have made the shots "for the government" under the law.

"Moderna's direct infringement was not for the government, it was for the benefit of the American people," Berl said.

"Who delivers it to the American people?" Reyna said. "Why can't we look at that as the government?"

The case is Arbutus Biopharma Corp v. Moderna Inc, US Court of Appeals for the Federal Circuit, No. 26-1581.

For Arbutus: David Berl of Williams & Connolly

For Moderna: William Jay of Paul, Weiss, Rifkind, Wharton & Garrison

For DOJ: McKaye Neumeister of the US Department of Justice

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