[Ip-health] Bloomberg Law: Judges Appear Hung Up on Standing in Moderna Vaccine Appeals

Thiru Balasubramaniam thiru at keionline.org
Fri Oct 8 00:44:59 PDT 2021


Judges Appear Hung Up on Standing in Moderna Vaccine Appeals (1)

Oct. 7, 2021, 6:26 PM; Updated: Oct. 7, 2021, 8:31 PM

Patent tribunal upheld two Arbutus vaccine-related patents
Arbutus argued Moderna hasn’t suffered injury, no standing

The Federal Circuit grappled with whether Moderna’s arguments that the risk
of future infringement suits over its Covid vaccine gives it the right to
appeal agency decisions upholding two drug-delivery patents.

The Patent Trial and Appeals Board upheld Arbutus Biopharma Corp.'s U.S.
Patent No. 8,058,069 and parts of U.S. Patent No. 9,364,435 on lipid
nanoparticles that protect messenger RNA in vaccines. Arbutus argues
Moderna Inc. subsidiary ModernaTX has no standing to appeal those decisions
because Moderna hasn’t suffered any concrete injury related to the patents.

Judges Alan D. Lourie, Kathleen M. O’Malley, and Kara F. Stoll seemed more
willing to find standing in the latter appeal on the ‘069 patent, filed
while Moderna was seeking emergency authorization of the Covid vaccine. The
earlier appeal was filed before Moderna began development of the vaccine
because the Covid-19 outbreak had not yet begun.

Moderna says Arbutus could demand patent royalties on its Covid vaccines if
patents are affirmed.

Arbutus shares whipsawed as investors struggled to predict how the panel
would rule. Arbutus had been up as much as 10% before the hearing began,
only to drop 6.8% from yesterday’s close amid harsh questioning from the
judges on the first of two arguments and then recovered during the second
round of arguments. Shares were up 4.5% after the 75-minute hearings ended.

Pre-Covid Appeal

Standing for a petitioner to appeal a PTAB ruling requires active
infringement litigation or the substantial risk that such a suit is
imminent or other contractual rights will be affected.

Lourie made it clear he wanted to focus on standing. He joked with Moderna
attorney Amy Wigmore of Wilmer Cutler Pickering Hale and Dorr LLP at the
start of her first argument, “I don’t want to tell you how to argue your
case but I assume you’ll begin with standing, which you’re doing in front
of us right now.”

For the appeal filed before the pandemic broke out, Moderna relied on its
agreements with Arbutus to license the patents to develop other drugs.
Moderna’s contractual rights will be affected by a determination of whether
the patents are valid, Wigmore said.

“If you’re licensed, what’s the threat of infringement?” Lourie asked.

Wigmore answered that it’s enough for its royalty payment obligations to be

Arbutus attorney David I. Berl of Williams & Connolly LLP stressed that
Moderna hasn’t presented evidence that invalidation of the patents it was
challenging would change its royalty obligations under the license, which
covers numerous patents.

Wigmore also argued that even though Covid hadn’t hit when Moderna filed
this appeal, later development of the vaccine, which could lead to an
infringement suit, shows there is still a live controversy between the

The threat “can’t be so remote,” O’Malley said. “You can’t say that we had
a license to do a bicycle and then we later did a car and so therefore
we’re concerned about an infringement claim,” she said. “I understand what
you’re saying, but I think you’re taking it too far.”

Appeal During Pandemic

It seems more likely the judges might find standing on the appeal filed
after Covid broke out.

By that time Moderna’s vaccine was in clinical trials and the company had a
contract with the government to distribute it, Wigmore said. “This is more
than enough to establish a concrete injury,” she said. She also pointed to
statements by Arbutus that its patent portfolio covers virtually all lipid
particle delivery systems.

Burl called those statements “entirely stale” because they were made years
before Covid-19 even existed.

Stoll asked Burl why Arbutus didn’t agree to Moderna’s request for a
covenant not to sue over these patents. “I recognize it puts you in a
really awkward position, but I think we do have to take into account that
there isn’t a covenant not to sue here,” she said.

Burl said a refusal to grant a covenant not to sue isn’t enough to trigger
jurisdiction under the court’s precedents. “They point to no evidence at
all that we made any threat with respect to the COVID vaccine, which is the
only product on which they are relying for jurisdiction,” he said.

If the court determines Moderna didn’t have standing to appeal, it won’t
reach the merits of the board’s rulings.

On the issue of the validity of the patents, questions by the judges “were
fairly technical, suggesting to us the panel wants to understand the
details of the case, and they might take their time to come to a decision,”
Jefferies analyst Kelechi Chikere said in a note to clients.

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

(Updated with additional reporting throughout.)

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

To contact the editor responsible for this story: Renee Schoof at
rschoof at bloombergindustry.com

Thiru Balasubramaniam
Geneva Representative
Knowledge Ecology International
41 22 791 6727
thiru at keionline.org

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