By Kevin E. Noonan --
On Friday, August 26th, Moderna Tx, Inc. and Moderna US, Inc. filed a complaint for patent infringement in Federal district court for the District of Massachusetts against Pfizer, Inc., BioNTech SE, BioNTech Manufacturing GmbH, and BioNTech US, Inc. (A parallel suit was filed in Germany asserting Moderna's corresponding German patents.) There are several interesting aspects to this complaint, and perhaps of even greater interest has been the reaction to the filing in light of Moderna's earlier "pledge" to refrain from asserting any of its patents "during the pandemic."
The complaint asserts three patents, identified herein in the context of the claims set forth in the complaint itself:
U.S. Patent No. 10,898,574
Claim 2. A pharmaceutical composition comprising:
a plurality of lipid nanoparticles comprising a cationic lipid, a sterol, and a PEG-lipid,
wherein the lipid nanoparticles comprise an mRNA encoding a polypeptide,
wherein the mRNA comprises one or more uridines, one or more cytidines, one or more adenosines, and one or more guanosines and wherein substantially all uridines are modified uridines.
Claim 9. The pharmaceutical composition of claim 2, wherein the modified uridine is 1-methyl-pseudouridine.
U.S. Patent No. 10,702,600
Claim 1. A composition, comprising:
a messenger ribonucleic acid (mRNA) comprising an open reading frame encoding a betacoronavirus (BetaCoV) S protein or S protein subunit formulated in a lipid nanoparticle.
U.S. Patent No. 10,933,127
Claim 1. A method comprising administering to a subject
a messenger ribonucleic acid (mRNA) comprising an open reading frame encoding a betacoronavirus (BetaCoV) S protein or S protein subunit formulated in a lipid nanoparticle
in an effective amount to induce in the subject an immune response to the BetaCoV S protein or S protein subunit
wherein the lipid nanoparticle comprises 20-60 mol% ionizable cationic lipid, 5-25 mol% neutral lipid, 25-55 mol% cholesterol, and 0.5-15 mol% PEG-modified lipid.
Of these three asserted patents, the '574 patent has the broadest claims, not being limited to a particular virus or antigenic protein thereof, while the '600 and '127 patents expressly recite mRNAs encoding a b-coronavirus Spike protein; these claims would encompass vaccines to SARS-CoV-1 (the original SARS pandemic vaccine) as well as MERS and SARS-CoV-2 (COVID19). These claims in particular form a basis for Moderna's allegations of infringement by the Pfizer/BioNTech Comirnaty® vaccine, as recited in several paragraphs in the complaint. In particular, Moderna alleges that the Comirnaty® vaccine was a direct copy of their vaccine (a path taken over three other competing candidate vaccines), citing public statements by Pfizer CEO Albert Bourla on June 9, 2020, at Goldman Sachs Virtual 41st Annual Global Healthcare Conference (¶20 of the complaint).
Perhaps in recognition of the post-pandemic patent zeitgeist, the complaint has two remarkable features. The first is a long expostulatory section explaining the long antecedents of the technology Moderna was able to apply towards making its Spike mRNA SARS-CoV-2 vaccine (and the skepticism those efforts elicited pre-pandemic). This portion of the complaint includes a history of Moderna's development of the underlying mRNA technology as well as its efforts to develop its vaccine (unnoted is that Moderna abjured participation in "Operation Warp Speed" with its attendant Federal government financial support) during the pandemic (and makes the point that their technology is not limited to vaccines against COVID infections). The complaint also makes the case that the company's IP was both the technical foundation for its successful and rapid development of the COVID vaccine and provided protection against the significant financial and investment risk occasioned by Moderna's development of its vaccine.
The second remarkable feature of the complaint, and Moderna's strategy in bringing suit, is in the Prayer for Relief (and certain sections explaining the limitations of the remedy Moderna asks the Court to grant). In addition to a judgment that Pfizer and BioNTech infringe by sales of its Comirnaty® vaccine (and that such infringement was willful), Moderna seeks money damages that expressly exclude damages it would be entitled to from "sales to the U.S. government that are subject to 28 U.S.C. § 1498 or to the 92 low- and middle-income countries in the Gavi COVAX Advance Market Commitment (AMC)." And in the litany of other remedies routinely requested in patent infringement cases (a finding that this is an exceptional case, with an award of attorneys' fees, costs, and expenses under 35 U.S.C. § 285, and treble damages for willful infringement under 35 U.S.C. § 284), expressly excluded is an injunction from "such other relief the Court may deem just and proper." Deigning to forego compensation for sales to the government under 28 U.S.C. § 1498 is likely done in an effort to avoid any attempt by Pfizer or BioNTech to have the case adjudicated under the statute in the Court of Federal Claims; disclaiming any interest in sales outside the U.S. to countries falling within the scope of the COMAX AMC avoids (or at least tries to) allegations that Moderna is putting its profits and patent rights over the health and lives of the citizens of those countries.
The complaint also addresses Moderna's promises regarding assertion of its IP, specifically quoting its October 8, 2020 press release stating that "while the pandemic continues, Moderna will not enforce our COVID-19 related patents against those making vaccines intended to combat the pandemic" (italics in original) (¶22). The complaint also provides Moderna's rationale and justification for filing this complaint at this time:
By early 2022, however, the collective fight against COVID-19 had entered a new endemic phase and vaccine supply was no longer a barrier to access in many parts of the world, including the United States. In view of these developments, Moderna announced on March 7, 2022, that it expected companies such as Pfizer and BioNTech to respect Moderna's intellectual property and would consider a commercially-reasonable license should they request one. This announcement was widely publicized, including through coverage in The Wall Street Journal. Critically, however, and to further its belief that intellectual property should never be a barrier to access, as part of this announcement, Moderna committed to never enforce its patents for any COVID-19 vaccine used in the 92 low- and middle-income countries in the Gavi COVAX Advance Market Commitment ("AMC"). This includes any product manufactured outside the AMC countries, such as the World Health Organization's project in South Africa, with respect to COVID-19 vaccines destined for and used in the AMC-92 countries. Although they have continued to use Moderna's intellectual property, Pfizer and BioNTech have not reached out to Moderna to discuss a license. (¶23)
The complaint has nonetheless raised the issue of the status of Moderna's promise in the context of patent pledges in other industries, notably for standard-essential patents (SEP) and FRAND ("fair, reasonable, and non-discriminatory") agreements. Academics (in particular, Jacob Sherkow from the University of Illinois Law School and Jorge Contreras, S.J. Quinney College of Law, University of Utah Law School) have raised the specter of successful suit by Moderna in the face of its earlier promise as creating a challenge threatening the substantial edifice of patent pledges used in these other contexts. Some distinctions immediately come to mind, however. One is that the patent pledges in the SEP/FRAND context are associated with consideration for the pledging party, that consideration consisting of, inter alia, compliance by companies licensing SEPs owned by the pledging patentee that provide stability and consistency in licensing regimes and create impediments against non-compliant companies. Moderna received no such consideration for its pledge (and the effects of any "good will" it might have hoped to gain was ephemeral; after all, all the pledges in the world did not deter the WTO from adopting a patent waiver agreement at the behest of India, South Africa, and other countries who could expect to benefit and did benefit from agreements like the one in Moderna's complaint exempting sales to the COVAX AMC countries from any damages claims sought by Moderna). Another distinction is that a fair reading of Moderna's promise-by-press-release was its essentially contingent nature; forgoing (or postponing exercise of) its patent rights was always limited to during the pandemic (although it is a fair question to ask who decides when the pandemic is over). Finally it is not unfair to say that the SEP/FRAND situation is vastly different from patenting vaccines against a pandemic virus; there is, after all, no analogous risk to global health and welfare arising from patent pledges relating to such patents.
On the other hand, if a court does hold Moderna's patent promise to be enforceable (under the doctrine of promissory estoppel, for example), it most likely will be the last time any biotechnology or pharmaceutical company makes such a promise.
There is one other consideration here that may explain Moderna's willingness to file suit at this time that abjures the lion's share of any damages it could reasonably have expected to receive. Moderna has achieved something of a Holy Grail of patenting: true platform patents that can be and will be used for the next vaccine, and the one after that, etc. Bringing a successful suit might result in a healthy damages award but these may pale compared with what could happen during the ~10 -15 years of patent life remaining. Of course, any suit brings risks and it is not unlikely that Pfizer/BioNTech will petition for inter partes review; indeed, at least one patent owned by the University of Pennsylvania, U.S. Patent No. 8,691,966 (naming BioNTech principal Katalin Kariko as an inventor), discloses and claims mRNA modifications comprising 1-methylpseudouridine (albeit outside the SARS context); this patent has an earliest priority date about 4 years prior to Moderna's patents asserted in the litigation.
All these considerations make for a compelling story that will almost certainly be the subject of future posts.
More Misinformation Regarding the Patent System and Non-Practicing Entities
By Michael Borella and Andrew Williams --
The need for patent reform has arguably diminished. Three decisions handed down by the Supreme Court last year, Alice, Octane Fitness, LLC v. Icon Health & Fitness, Inc., and Nautilus, Inc. v. Biosig Instruments, Inc., each addressed one of the alleged weakness in the patent system that so-called trolls are thought to exploit. These cases have been credited for the drop in patent litigation seen since the end of the Court's last term. Moreover, the Patent Trial and Appeals Board ("PTAB") has been accused of becoming a patent "death squad" because of the large number of inventions that it has recently found to be unpatentable.
These articles, therefore, appear to be desperate attempts to flame the anti-patent fervor that existed last year. As we have come to expect, both articles present only one side of the story, and do not consider the negative consequences that further anti-NPE legislation could bring about, and that the Alice decision has already produced. Further, the authors make unsupported assertions, draw questionable conclusions, and exhibit a profoundly flawed understanding of patent law.
For example, as with similar articles, the Potter and Samuels's article starts from the presupposition that "our patent system is out of balance," citing the Alice decision for support. The unsuspecting reader will assume that this is a forgone conclusion. Nevertheless, it is through their explanation of how this decision and proposed legislation are meant to "solve" the supposed crisis, the authors reveal a lack of understanding of the historical and philosophical basis of the patent system.
To that point, the authors equate "trolls" with NPEs (non-practicing entities). The term NPE, however, encompasses all entities that do not manufacture products, including most universities, research institutions, and individual inventors. Interestingly, Ms. Samuels's previous organization, the EFF, accused universities of fueling the patent troll problem. Patent asserting organizations have been acknowledged by most, including the White House, to serve an important role as mediator between such NPEs and operating companies often necessary to commercialize inventions. In fact, the United States' patent system purposefully encourages such actions by making patent property rights freely assignable and eschewing a "working" requirement. This philosophy goes back to the framers of the Constitution, and allows the patent system to be accessible to everyone, not just those with abundant resources.
Potter and Samuels go on to assert, without citing any support, that NPEs "grievously injure innovators, bankrupt small companies, and waste judicial resources." Yet, the current functioning patent system is essential to the business models of these same innovators and small companies. Without patents, the innovations of a small software company can be easily reverse engineered and copied by larger players with more market clout, or foreign companies with lower overheads. Trademarks, copyrights, and trade secrets do little to help in these situations.
In addition, the authors fail to consider the fact that these "innovators" and "small companies" (or any defendant in a patent litigation case for that matter), might actually infringe a valid patent. If so, should they be allowed to freeload off the labor of others without penalty just because the patent at issue encompasses a business method or software, or happens to be owned by an NPE?
Bessen states that a recent the Government Accountability Office ("GAO") report "attributed 89 percent of the increase in patent litigation [in the 2007-2011 time frame] to software patents." This report, however, conflated actual software patents and business method patents, collectively referring to both as "software patents." In fact, the GAO found that "operating companies brought most of the patent infringement lawsuits from 2007 to 2011." Additionally, the report indicated that the number of defendants in software and business method patent litigation increased 89 percent, but the number of lawsuits increased more modestly. According to the report, the increase in the number of patent lawsuits in 2011 "was most likely influenced by the anticipation of changes in the 2011 Leahy-Smith America Invents Act (AIA), which made several significant changes to the U.S. patent system, including limiting the number of defendants in a lawsuit, causing some plaintiffs that would have previously filed a single lawsuit with multiple defendants to break the lawsuit into multiple lawsuits."
Of course, even if there was an increase in software patent litigation, it would have likely been a reflection of the increased importance of software in our everyday lives. The 2007-2011 time frame tracks the rise of the smartphone and always-on computing, dramatic growth in social media, and a multimedia streaming revolution led by Netflix and YouTube, among other factors. Like it or not, software is now an integral part of our personal and professional lives, as we carry our laptops, tablets, phones, e-readers, and digital fitness trackers with us whether we are going to work or on vacation. An increase in the number of software patents granted, as well as an increase in software patent litigation, is a natural consequence of the ubiquity of software.
Certainly, no one is denying that there are bad actors that abuse the litigation system both with regard to intellectual property rights and otherwise. However, elevating this minority of cases to be representative of the norm is not a reason to dispense with the entire system. In fact, Bessen's methodologies for assessing the cost of so-called patent trolls have been called into question. See, e.g., Schwartz & Kesan, Analyzing the Role of Non-Practicing Entities in the Patent System, Cornell Law Review, Vol. 99:2, pp. 425-56 (2014). As a result, the implications that can be drawn from the data with regard to the impact of NPEs on the system are dubious at best.
With respect to the Alice decision, both sets of authors ignore the damage that this case has already caused to the patent system. Under Alice, when determining whether a patent claim meets the statutory requirements for patent-eligibility, one must determine whether the claim is directed to a patent-ineligible law of nature, natural phenomenon, or abstract idea. If so, then one determines whether any additional claim elements transform the claim into a patent-eligible application that amounts to significantly more than the ineligible concept itself.
This two-prong test has been widely criticized for its vagueness and subjectivity. The Supreme Court refused to define what it meant by the term "abstract idea," leading to consternation among patentees, patent attorneys, and even federal judges. For instance, Judge Wu of the United States District Court for the Central District of California criticized Alice for setting forth an "I know it when I see it" test. Judge Pfaelzer, a colleague of Judge Wu, wrote that the Supreme Court's patent-eligibility cases "often confuse more than they clarify [and] appear to contradict each other on important issues."
The Supreme Court also blurred the lines between the assessment of patent-eligibility and other patentability requirements. The patent law requires that, among other things, claims must be novel and non-obvious, as well as encompassing patent-eligible subject matter. In 1981, the Supreme Court clarified that each of these inquiries were separate and distinct, and that it was "inappropriate to dissect the claims into old and new elements and then to ignore the presence of the old elements in the analysis." Alice, as well as its 2012 predecessor case Mayo Collaborative Servs. v. Prometheus Labs., Inc., turned this notion around. Now, when conducting a patentable subject matter review, claims can be analyzed element by element and compared to prior art.
As many commentators have articulated since the Mayo opinion was handed down, determining whether the breadth of a claim is appropriate is better served by conducting the well-understood and more objective and established analyses of novelty and obviousness. Despite the lack of any suggestion from Congress that patent-eligibility is to be used for these purposes, the Supreme Court, now followed by the Federal Circuit, has made patentable subject matter a perverse weapon for the unsupported rejection and invalidation of claims.
The well-understood obviousness analysis asks whether the differences between the claimed invention and the prior art would have been obvious to one of ordinary skill in the art. The Alice test, for a claim that incorporates a preexisting algorithm or a longstanding practice, inquires if the claim adds "significantly more" to that algorithm or practice. The substantive difference between the two is that the obviousness test is grounded using prior art as a reference point for what is known, while the Alice test is not. This eliminates much of the objectivity from the Alice analysis, putting thousands of patents in a state of legal uncertainty. The "validity" of such patents may depend on which judge or panel conducts the test.
Bessen goes as far as to suggest that while the Alice decision is limiting the number of granted business method patents, it hasn't gone far enough to similarly limit software patents. But why should we view patents in such sweeping terms, with the connotation that business method and software patents are inherently bad? Patents are either valid or invalid, regardless of the technology claimed therein.
Furthermore, the implication that software should not warrant patent protection unfairly singles out one of the greatest drivers of the U.S. economy over the last forty years. A major aspect of innovation is to make products and services faster, cheaper, and better. The patent system is intended to incentivize individuals and organizations to publicly disclose such inventions, and as a result receive a limited exclusive-use property right thereover. Despite contentions of the deleterious impact of a "broken" patent system on the software industry, the computer and information industry as a whole continues to grow, as evidenced by recent record-breaking stock values, billion-dollar acquisitions, and successful initial public offerings. A broad exclusion of computer-implemented inventions is illogical and disregards the fundamental tradeoff on which the system is based.
Graphic of troll (above) by JNL was modified (cropped) from a graphic available at the Wikipedia Commons, pursuant to the Free Art License. Any use of the modified graphic is subject to the same license.
Posted at 11:47 PM in Media Commentary, Patent Litigation | Permalink | Comments (8)