[Ip-health] Moderna Wants Fed. Cir. Help to Avoid Covid Vaccine Patent Suits

James Love james.love at keionline.org
Thu Oct 7 06:21:05 PDT 2021

h/t to Matthew Rimmer.


Moderna Inc. subsidiary ModernaTX will ask the Federal Circuit at oral
arguments Thursday to invalidate two patents it says could make its
Covid-19 vaccine vulnerable to infringement suits.

The Patent Trial and Appeals Board upheld parts of Arbutus Biopharma
Corp.'s U.S. Patent Nos. 9,364,435 and 8,058,069, on drug-delivery
technology. Arbutus argues Moderna has no standing to appeal those
decisions because Moderna hasn’t suffered any injury related to the patents.

Moderna will tell the U.S. Court of Appeals for the Federal Circuit that
there is a substantial risk that Arbutus will sue, accusing various Moderna
products of infringing the patents.

Moderna’s future is tied to the Covid vaccine. The company reported $60.2
million in revenue in 2019, a figure that jumped to $803.4 million last
year thanks to federal grant dollars. The Cambridge, Mass.-based company
has projected about $20 billion in sales this year, almost all of it from
the Covid vaccine.

Warminster, Pa.-based Arbutus is “heavily favored” to win the appeals,
which could lead to an infringement suit against Moderna, Jefferies
analysts Kelechi Chikere and Michael Yee said in a note to clients. The
“most likely outcome” is some sort of agreement that would bring in
royalties in the “low single digits,” they said. Still, the analysts
maintained their “hold” rating on Arbutus shares because it’s so hard to
determine timing.

“A case of this nature could take years to litigate through various
courts,” they said.

Lipid Nanoparticles

The patents cover lipid nanoparticles—tiny balls of fat that protect
genetic material as it travels through the body to enter specific cells to
deliver drugs. Messenger RNA, the genetic material at the heart of the
Covid vaccines, needs the lipid nanoparticles as a protective shell.

Royalties from nerve-function drug Onpattro—the first Food and Drug
Administration-approved medicine that used Arbtutus’ technology—form the
only source of revenue for Arbutus, which reported just $6.9 million in
licensing fees last year.

Investors are speculating that the Arbutus patents, directed to a more
stable lipid nanoparticle, will entitle the company to royalties from the
mRNA-based vaccines by Moderna and Pfizer Inc. Moderna has a license to the
Arbutus patents, but it’s limited to the areas of a respiratory virus known
as RSV, Influenza A, and the mosquito-transmitted viruses Chikungunya and

Arbutus continues to receive patents on its lipid nanoparticle technology,
including one approved last month that analysts say closely hews to the
technology used by Moderna.

Moderna preemptively challenged three Arbutus patents on the technology at
the PTAB, with mixed results. The board invalidated U.S. Patent No.
9,404,127, upheld all of the ‘069 patent, and upheld some claims of the
‘435 patent but invalidated others.

Moderna appealed, challenging the board’s findings that it didn’t show
parts of the patents were obvious and anticipated.

Moderna contends the patents are for ideas already covered by other
patents, with only trivial differences in an effort to extend Arbutus’
patent protection. Arbutus said its inventions overcame technical
difficulties in improving the effectiveness of the drug delivery while
limiting toxicity.

Competitor Standing?
But the Federal Circuit may not reach the merits of the board’s decisions
if it accepts Arbutus’ standing arguments. A line of Federal Circuit
opinions holds that petitioners who lose at the board don’t have standing
to appeal unless they can show they are being actively sued for
infringement or that such a suit is imminent.

Moderna argues there is a real risk that Arbutus will assert the patents
against its Covid-19 vaccine. “Arbutus has long proclaimed that its patent
estate covers virtually all lipid particle delivery systems,” it said in
its opening brief in one of the appeals.

“Furthermore, this risk of being accused of infringement and the
uncertainty created by Arbutus’s aggressive stance regarding the scope of
its patents is already harming Moderna in the eyes of its investors,”
Moderna said. It said its stock price fell 10% in one day when the board’s
decision in one of these cases was issued, even though there was no actual
infringement suit.

Arbutus counters in its response brief that the relevant inquiry is whether
Moderna showed there was a substantial risk of an infringement lawsuit when
it appealed in September 2020, before the vaccine had even received FDA
emergency use authorization.

“Whatever a market fluctuation may prove, it certainly does not establish
an imminent lawsuit, nor does it establish standing,” Arbutus said.

Amy Wigmore of Wilmer Cutler Pickering Hale and Dorr LLP in Washington will
argue both cases for Moderna. David I. Berl of Williams & Connolly LLP in
Washington will argue both cases for Arbutus.

The cases are ModernaTX, Inc. v. Arbutus Biopharma Corp., Fed. Cir., No.
20-1184, argument 10/7/21 and ModernaTX, Inc. v. Arbutus Biopharma Corp.,
Fed. Cir., No. 20-2329, argument 10/7/21.

To contact the reporter on this story: Perry Cooper in Washington at
pcooper at bloomberglaw.com

To contact the editors responsible for this story: Renee Schoof at
rschoof at bloombergindustry.com; Kibkabe Araya at karaya at bloombergindustry.com

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