Federal Appeals Court Examines Moderna’s Patent Defense

Moderna is facing renewed legal scrutiny over its COVID-19 vaccine technology as a US appeals court considers whether the company can invoke federal protections for products manufactured for the government.

On Thursday, a three-judge panel of the US Court of Appeals for the Federal Circuit questioned Moderna, Arbutus Biopharma and Genevant Sciences about whether a lower court ruling rejecting Moderna’s government-supplier defense should be overturned.

The dispute centers on a federal law designed to protect companies from patent infringement claims involving products manufactured for government use. Moderna argued that its COVID-19 vaccines were produced as part of the federal government’s nationwide vaccination effort, Operation Warp Speed, and that the United States should therefore have been the defendant in the case.

The government supported Moderna’s position, arguing that the company should not be held liable for vaccine doses supplied through the federal initiative.

$1.3 Billion Settlement Payment at Stake

Arbutus Biopharma and Genevant Sciences sued Moderna in 2022, alleging infringement of patents related to the technology used in its Spikevax COVID-19 vaccine.

Genevant is a joint venture between Arbutus and Roivant Sciences. The companies sought a share of royalties generated by Moderna’s multibillion-dollar vaccine business.

Moderna paid the companies $950 million in July as part of a settlement reached in March. However, the agreement includes an additional $1.3 billion payment if the Federal Circuit rejects Moderna’s government-supplier defense.

The potential payment makes the appeals court’s decision financially significant for Moderna, particularly given the scale of the settlement already reached.

The dispute was also expected to become the first case to proceed to trial within a broader group of high-value US patent lawsuits involving COVID-19 vaccine technology. Those legal disputes have also involved Pfizer, BioNTech and other biotechnology and pharmaceutical companies.

Legal Dispute Centers on Government-Supplier Protection

Moderna relied on a federal law historically used to prevent patent disputes from interfering with the supply of materials for government purposes, including military requirements during World War I.

The company argued that its vaccine production was undertaken for the federal government’s vaccination program and should therefore qualify for the law’s protections.

However, US District Judge Joshua Wolson largely rejected that argument in February. He determined that the vaccines were primarily manufactured for the residents of the United States rather than directly for the government under the relevant legal standard.

During Thursday’s hearing, US Circuit Judge Richard Taranto questioned whether accepting Moderna’s interpretation could extend the defense too broadly.

He raised a hypothetical scenario in which the government purchased all pharmaceuticals in the United States, potentially allowing generic drug manufacturers to avoid patent claims as part of efforts to reduce drug prices.

Taranto said this was the type of broad application the district court had sought to avoid.

Circuit Judge Jimmie Reyna also questioned Arbutus attorney David Berl about why Moderna’s vaccine production would not qualify as manufacturing for the government. Berl responded that Moderna’s direct infringement benefited the American public rather than the government itself.

Government Warns of Wider Contracting Consequences

The Department of Justice defended Moderna’s position during the hearing.

DOJ attorney McKaye Neumeister argued that a ruling against the company would be “devastating” to the government’s contracting efforts.

The government’s position reflects concern that limiting the protection could affect how companies participate in federal procurement programs, particularly when their products are supplied as part of large-scale government initiatives.

The appeals court’s questions indicate that the case involves broader legal considerations beyond the specific patent dispute between Moderna and the two biotechnology companies.

What Investors Should Watch Next

The Federal Circuit’s decision will determine whether Moderna can retain its government-supplier defense and avoid the additional $1.3 billion settlement payment. The outcome may also influence how federal procurement protections are interpreted in future patent disputes involving government-supported programs.

For investors, the financial implications extend beyond the immediate settlement exposure. The case highlights the continuing intellectual property risks surrounding COVID-19 vaccine technology and the potential consequences of legal challenges involving products developed or supplied through government initiatives.