Case 1:22-cv-00252-MSG Document 49 Filed 02/14/23 Page 1 of 18 PageID #: 885
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`IN THE UNITED STATES DISTRICT COURT FOR THE
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`DISTRICT OF DELAWARE
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`ARBUTUS BIOPHARMA CORPORATION
`AND GENEVANT SCIENCES GMBH,
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` Plaintiffs,
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`MODERNA, INC. and MODERNATX, INC.
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`Defendants.
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`v.
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` C.A. No. 22-252 (MSG)
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`STATEMENT OF INTEREST OF THE UNITED STATES
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`February 14, 2023
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`DAVID C. WEISS
`United States Attorney
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`MICHAEL GRANSTON
`Deputy Assistant Attorney General
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`GARY L. HAUSKEN
`Director
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`PHILIP CHARLES STERNHELL
`Assistant Director
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`HAYLEY A. DUNN
`KAVYASRI NAGUMOTU
`Trial Attorneys
`Commercial Litigation Branch
`Civil Division
`U.S. Department of Justice
`Washington, DC 20530
`Telephone:
`(202) 307-0342
`Facsimile:
`(202) 307-0345
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`Case 1:22-cv-00252-MSG Document 49 Filed 02/14/23 Page 2 of 18 PageID #: 886
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`TABLE OF CONTENTS
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`I. THE INTEREST OF THE UNITED STATES................................................................... 1
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`II. BACKGROUND.............................................................................................................. 3
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`III. ANALYSIS...................................................................................................................... 5
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`Case 1:22-cv-00252-MSG Document 49 Filed 02/14/23 Page 3 of 18 PageID #: 887
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`TABLE OF AUTHORITIES
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`Cases
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`Adv. Software Design Corp. v. Fed. Rsrv. Bank of St. Louis,
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`583 F.3d 1371 (Fed. Cir. 2009) ................................................................................ passim
`
`Bereslavsky v. Esso Stand. Oil Co.,
`175 F.2d 148 (4th Cir. 1949) ............................................................................................. 7
`
`
`Carrier Corp. v. United States,
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`534 F.2d 244 (Ct. Cl. 1976) .......................................................................................... 8, 9
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`Cramp & Sons Ship & Engine Bldg. Co. v. Int’l Curtis Marine Turbine Co.,
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`246 U.S. 28 (1918) ........................................................................................................... 5
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`Croll-Reynolds Co. v. Perini-Leavell-Jones-Vinell,
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`399 F.2d 913 (5th Cir. 1968) ............................................................................................. 9
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`Hughes Aircraft Co. v. United States,
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`534 F.2d 889 (Ct. Cl. 1976) .....................................................................................7, 8, 10
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`IRIS Corp. v. Japan Airlines Corp.,
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`769 F.3d 1359 (Fed. Cir. 2014) ................................................................................... 7, 11
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`Larson v. United States,
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`26 Cl. Ct. 365 (1992) ................................................................................................ 11, 12
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`Leesona Corp. v. United States,
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`599 F.2d 958 (Ct. Cl. 1979) .............................................................................................. 6
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`Madey v. Duke Univ.,
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`307 F.3d 1351 (Fed. Cir. 2002) ......................................................................................... 5
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`Madey v. Duke Univ.,
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`413 F. Supp. 2d 601 (M.D.N.C. 2006) ............................................................................... 8
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`Manville Sales Corp. v. Paramount Sys., Inc.,
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`917 F.2d 544 (Fed. Cir. 1990) ........................................................................................... 5
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`Richmond Screw Anchor Co. v. United States,
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`275 U.S. 331 (1928) ......................................................................................................... 6
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`Riles v. Amerada Hess Corp.,
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`999 F. Supp. 938 (S.D. Tex. 1998) .................................................................................... 8
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`
`
`i
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`

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`Case 1:22-cv-00252-MSG Document 49 Filed 02/14/23 Page 4 of 18 PageID #: 888
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`S.Corp. v. United States,
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`690 F.2d 1368 (Fed. Cir. 1982) ......................................................................................... 6
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`Saint-Gobain Ceramics & Plastics, Inc. v. II-VI Inc.,
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`369 F. Supp. 3d 963 (C.D. Cal. 2019).....................................................................9, 10, 11
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`Sevenson Env’t Servs., Inc. v. Shaw Env’t, Inc.,
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`477 F.3d 1361 (Fed. Cir. 2007) ..................................................................................... 7, 9
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`Sperry Gyroscope Co. v. Arma Eng’g Co.,
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`271 U.S. 232 (1926) ......................................................................................................... 5
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`TVI Energy Corp. v. Blane,
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`806 F.2d 1057 (Fed. Cir. 1986) ..................................................................................... 7, 8
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`Statutes & Regulations
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`28 U.S.C. § 1498 ............................................................................................................ passim
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`28 U.S.C. § 517 ....................................................................................................................... 1
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`48 C.F.R § 52.227-1, Alternate I ..................................................................................... passim
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`48 C.F.R. § 52.227-1 ...................................................................................................... passim
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`Act of June 25, 1910, 61st Cong., 2d Sess., 36 Stat. 851–52 .................................................. 5, 6
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`Act of October 31, 1942, Pub. L. 768, § 6, 77th Cong. 2d Sess., 56 Stat. 1013, 1014.................. 6
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`Naval Appropriations Act of July 1, 1918, 65 Cong. 2d Sess., 40 Stat. 704, 705 ........................ 6
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`Other Authorities
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` Bulletin of the Judge Advocate General of the Army, 75–76 (1943) ....................................... 7
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` Chisum on Patents § 16.06 (2019) ......................................................................................... 9
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` 2
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` 5
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`ii
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`Case 1:22-cv-00252-MSG Document 49 Filed 02/14/23 Page 5 of 18 PageID #: 889
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`The United States (the Government) appears on behalf of its Department of Health and
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`Human Services and Department of Defense pursuant to 28 U.S.C. § 517 1 to inform the Court of
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`its interest in this litigation. The Government is aware of the Court’s resolution of Moderna’s
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`motion to dismiss, D.I. 31 at 15–16, where the Court noted that the Government had not provided
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`a statement of interest. In light of the Court’s hesitance to find authorization and consent absent a
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`statement of interest from the United States, the United States appears to present its position.2
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`I.
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`THE INTEREST OF THE UNITED STATES
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`In accordance with 28 U.S.C. § 1498, the United States granted Moderna, Inc. and
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`ModernaTX, Inc. (“Moderna”)3 its “authorization and consent” to manufacture and use inventions
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`covered by United States patents under Contract No. W911QY-20-C-0100 (the ’-0100 Contract),
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`which is at issue in this litigation. The Government granted its authorization and consent by
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`inserting the Federal Acquisition Regulation (FAR) clauses 52.227-1 and 52.227-1, Alternate I, in
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`the contract. The Government’s acceptance of liability in this instance is limited to the ’-0100
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`Contract and does not extend to all of Moderna’s allegedly infringing activity as described in the
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`Complaint.
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`In pertinent part, section 1498 provides:
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`1 Section 517 provides, in pertinent part, that “any officer of the Department of Justice[]
`may be sent by the Attorney General to any … district to attend to the interests of the United States
`in a suit pending in a court of the United States…or to attend to any other interest of the United
`States.”
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`2 The United States is prepared to appear, should the Court have questions regarding this
`statement of interest or require other assistance with respect to this statement.
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`3 For the purposes of this statement of interest, the Government refers to Moderna, Inc. and
`ModernaTX, Inc. collectively as “Moderna.”
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`1
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`Case 1:22-cv-00252-MSG Document 49 Filed 02/14/23 Page 6 of 18 PageID #: 890
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`Whenever an invention described in and covered by a patent of the United
`States is used or manufactured by or for the United States without license of the
`owner thereof or lawful right to use or manufacture the same, the owner’s remedy
`shall be by action against the United States in the United States Court of Federal
`Claims for the recovery of his reasonable and entire compensation for such use and
`manufacture. . . .
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`. . . .
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`For the purposes of this section, the use or manufacture of an invention
`described in and covered by a patent of the United States by a contractor, a
`subcontractor, or any person, firm, or corporation for the Government and with
`the authorization or consent of the Government, shall be construed as use or
`manufacture for the United States. . . .
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`(emphasis added). As explained below, the effect of the Government’s “authorization and
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`consent” is to relieve Moderna of any liability for patent infringement resulting in performance of
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`the ’-0100 Contract and to transfer to the United States any liability for the manufacture or use of
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`the inventions claimed in the Patents-in-Suit resulting from the authorized and consented acts.4
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`Accordingly, and to the extent that liability exists for such acts, the patentee is limited to pursuing
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`a claim against the United States in the Court of Federal Claims pursuant to 28 U.S.C. § 1498.
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`The inclusion of FAR clauses 52.227-1 and 52.227-1, Alternate I in the ’-0100 Contract
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`constitutes the Government’s express authorization and consent. Section 1498(a), therefore,
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`provides the exclusive remedy for any infringement occurring in the course of Moderna’s
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`performance of the ’-0100 Contract. The Government is not aware of any other contract at issue
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`in this litigation where it granted authorization and consent, and therefore its authorization and
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`consent does not extend to any other procurement of vaccine in this litigation beyond what has
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`4 As used in this Statement, “liability” is defined as having legal responsibility for any acts
`that may constitute the alleged infringement; it is not an admission that the vaccine infringes. All
`issues relating to the merits of Arbutus’s claim and the Government’s defenses must be presented
`to, and addressed by, the Court of Federal Claims.
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`2
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`Case 1:22-cv-00252-MSG Document 49 Filed 02/14/23 Page 7 of 18 PageID #: 891
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`been procured under the ’-0100 Contract. Accordingly, claims for infringement in the course of
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`performance of the ’-0100 Contract should be dismissed.
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`II.
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`BACKGROUND
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`In response to the SARS-CoV-2 (COVID-19) pandemic, the United States engaged in a
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`multi-agency effort to ensure the availability of medical supplies needed to alleviate shortages and
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`to counteract the contagion; that effort was known as “Operation Warp Speed” (OWS). As part
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`of OWS, the Department of Health and Human Services (HHS) and the Department of Defense
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`(DOD) collaborated to coordinate the nation’s efforts to accelerate the development, acquisition,
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`and distribution of COVID-19 vaccines. Pursuant to a memorandum of understanding between
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`HHS and DOD, COVID-19 vaccines were to be procured through contracts issued by DOD, with
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`HHS providing subject-matter expertise and support in inspecting and accepting vaccine
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`deliveries.
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`On August 11, 2020, the U.S. Army, on behalf of HHS and DOD, executed the ’-0100
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`Contract5 with ModernaTX, Inc. to purchase production quantities of Moderna’s mRNA-1273
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`vaccine for prevention of COVID-19, which was then under development. See D.I. 17-1 at 2. The
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`’-0100 Contract incorporates by reference standardized “authorization and consent” clauses: FAR
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`clauses 52.227-1 (also referred to as the base or “narrow” clause) and 52.227-1, Alternate I (the
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`Alternate I or “broad” clause). D.I. 17-1 at 47. Although there were multiple modifications to that
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`contract, none removed or revised these FAR clauses.
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`5 The ’-0100 Contract contains information that Moderna considers proprietary and other
`information that may be sensitive government information. We understand that the Court has not
`issued a protective order in this case. The United States, however, is prepared to produce an
`unredacted copy of the ’-0100 Contract either for the Court’s inspection in camera or under a
`suitable protective order, should the Court find it useful.
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`3
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`Case 1:22-cv-00252-MSG Document 49 Filed 02/14/23 Page 8 of 18 PageID #: 892
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`The base version of FAR clause 52.227-1, 48 C.F.R. § 52.227-1, in pertinent part, provides
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`that “(a) [t]he Government authorizes and consents to all use and manufacture, in performing this
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`contract or any subcontract at any tier, of any invention described in and covered by a United
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`States patent – (1) [e]mbodied in the structure or composition of any article the delivery of which
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`is accepted by the Government under this contract; . . . .” The Alternate I version of FAR clause
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`52.227-1 is broader in scope than the base version by omitting the requirement that the patented
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`invention be “embodied” in the structure or composition of a delivered article. The Alternate I
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`version provides, in pertinent part: “(a) [t]he Government authorizes and consents to all use and
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`manufacture of any invention described in and covered by a United States patent in the
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`performance of this contract or any subcontract at any tier.”
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`The U.S. Army also entered into Contract No. W58P05-22-C-00176 (the ’-0017 Contract)
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`on July 28, 2022. This contract procures additional quantities of Moderna’s COVID-19 vaccine.
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`The ’-0017 Contract contains neither FAR clause 52.227-1 nor FAR clause 52.227-1, Alternate I.
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`The United States has not granted its authorization and consent, either explicitly or by implication,
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`for use of patented inventions in the performance of the ’-0017 Contract. To the contrary, the
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`’-0017 Contract contains a special provision, H.14, that states the contracting parties’ express
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`agreement that the terms of the contract do not constitute express or implied Government
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`authorization or consent under section 1498.
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`At this time, the Government is only aware of these two procurement contracts between
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`the Government and Moderna that relate to the purchase of Moderna’s mRNA-1273 vaccine at
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`6 The ’-0017 Contract will be administered by HHS pursuant to a modification recently
`executed by the parties.
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`4
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`Case 1:22-cv-00252-MSG Document 49 Filed 02/14/23 Page 9 of 18 PageID #: 893
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`issue here. And, as stated, only the ’-0100 Contract grants the Government’s authorization and
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`consent.
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`III. ANALYSIS
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`In a suit between private parties, the invocation of 28 U.S.C. § 1498 is an affirmative
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`defense. Sperry Gyroscope Co. v. Arma Eng’g Co., 271 U.S. 232, 235–36 (1926); Manville Sales
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`Corp. v. Paramount Sys., Inc., 917 F.2d 544, 554–55 (Fed. Cir. 1990). However, the Federal
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`Circuit has also recognized that section 1498 “relieves a third party from patent infringement
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`liability, and acts as a waiver of sovereign immunity and consent to liability” by the United States.
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`Madey v. Duke Univ., 307 F.3d 1351, 1359 (Fed. Cir. 2002). The Federal Circuit has noted that
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`these two views of the statute are not inconsistent:
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`Without deciding, we see no inconsistency between interpreting section 1498(a) as
`a jurisdictional statute (waiving sovereign immunity) in suits against the United
`States and as merely codifying a defense that private parties who are alleged
`infringers may raise on the merits. That two different effects occur depending on
`the party raising section 1498(a) is the clear implication of Sperry [271 U.S. 232],
`and the other cases [Trojan, Inc. v. Shat–R–Shield, Inc., 885 F.2d 854
`(Fed.Cir.1989), and W.L. Gore & Associates v. Garlock, Inc., 842 F.2d 1275,
`(Fed.Cir.1988)], read together.
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`Manville Sales, 917 F.2d at 555 n.6. In providing this statement of interest, the United States
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`defines the parameters of its waiver of sovereign immunity with respect to this litigation and the
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`liability that, if proven, the Government has consented to accept.
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`The origins of section 1498 began with the Act of June 25, 1910, 61st Cong., 2d Sess., 36
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`Stat. 851–52, which permitted a suit in the Court of Claims to recover for uses of the owner’s
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`patent by the Government. That statute was subsequently found to be limited to use of the
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`invention by the Government, but not government contractors. See Cramp & Sons Ship & Engine
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`Bldg. Co. v. Int’l Curtis Marine Turbine Co., 246 U.S. 28, 42, 45 (1918).
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`5
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`Case 1:22-cv-00252-MSG Document 49 Filed 02/14/23 Page 10 of 18 PageID #: 894
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`Faced with the prospect that patent suits against government contractors may prevent the
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`Government from procuring necessary war materials at the advent of this country’s entry into
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`World War I, Congress amended the 1910 Act to provide that the owner could sue to recover for
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`“use or manufacture by or for the United States without license of the owner.” Naval
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`Appropriations Act of July 1, 1918, 65 Cong. 2d Sess., 40 Stat. 704, 705. In reviewing the statutory
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`history, the Supreme Court concluded that,
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`[t]he purpose of the amendment was to relieve the contractor entirely from liability
`of every kind for the infringement of patents in manufacturing anything for the
`government, and to limit the owner of the patent and his assigns and all claiming
`through or under him to suit against the United States in the Court of Claims[7] for
`the recovery of his reasonable and entire compensation for such use and
`manufacture.
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`Richmond Screw Anchor Co. v. United States, 275 U.S. 331, 345 (1928); Leesona Corp. v. United
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`States, 599 F.2d 958, 967 (Ct. Cl. 1979) (en banc).8
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`The statute was further amended at the beginning of World War II by the Act of October
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`31, 1942, Pub. L. 768, § 6, 77th Cong. 2d Sess., 56 Stat. 1013, 1014 (The Royalty Renegotiation
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`Act). That Act provided, in pertinent part, that,
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`for the purposes of the Act of June 25, 1910, as amended [now section 1498] . . .,
`the use or manufacture of an invention described in or covered by a patent of the
`United States by a contractor, a subcontractor, or any person, firm, or corporation
`for the Government and with the authorization or consent of the Government, shall
`be construed as use or manufacture for the United States.
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`The purpose of the “authorization and consent” provision “was to broaden the scope of the act of
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`June 25, 1910, as amended, so to remove any further doubt that subcontractors and other suppliers
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`7 The trial division of the Court of Claims became the Court of Federal Claims.
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`8 Upon its creation, the Court of Appeals for the Federal Circuit adopted “the holdings of
`the Court of Claims and the Court of Customs and Patent Appeals announced before the close of
`business on September 30, 1982 . . . within the substantive jurisdiction” of the court as its
`precedent. S. Corp. v. United States, 690 F.2d 1368, 1370 (Fed. Cir. 1982).
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`6
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`

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`Case 1:22-cv-00252-MSG Document 49 Filed 02/14/23 Page 11 of 18 PageID #: 895
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`of goods and materials to the government were included within the terms of that act to the same
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`extent as prime contractors to the government were . . . .” Bereslavsky v. Esso Stand. Oil Co., 175
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`F.2d 148, 150–51 (4th Cir. 1949) (quoting 2 Bulletin of the Judge Advocate General of the Army,
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`75–76 (1943) (internal quotation marks omitted)).
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`The Federal Circuit reads section 1498 broadly “so as not to limit the Government’s
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`freedom in procurement by considerations of private patent infringement.” TVI Energy Corp. v.
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`Blane, 806 F.2d 1057, 1060 (Fed. Cir. 1986). The structure of the statute describes the conditions
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`that must be met for its invocation. Where the use or manufacture of the invention is “by the
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`Government”—which is not the case here—the application of the statute is automatic and no
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`further inquiry is required. Hughes Aircraft Co. v. United States, 534 F.2d 889, 902 (Ct. Cl. 1976)
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`(direct and exclusive control of British satellite for launch in Florida was sufficient to meet “use
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`by the Government”).
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`Where the use or manufacture is “by a contractor, a subcontractor, or any person, firm, or
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`corporation for the Government,” a two-part inquiry is employed: whether “(1) the [allegedly
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`infringing] use is ‘for the Government’ and (2) the [allegedly infringing] use is ‘with the
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`authorization and consent of the Government.’” Sevenson Env’t Servs., Inc. v. Shaw Env’t Inc.,
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`477 F.3d 1361, 1365 (Fed. Cir. 2007).
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`The “for the Government” requirement is met if the allegedly infringing manufacture or
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`use is “for the benefit of the Government,” and not merely an incidental benefit from private
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`activity. IRIS Corp. v. Japan Airlines Corp., 769 F.3d 1359, 1362 (Fed. Cir. 2014); see also
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`Hughes Aircraft, 534 F.2d at 897 (equating “for the Government” with “for the Government’s
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`benefit”). The Federal Circuit has cautioned against attempting to fathom the “primary purpose”
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`of a contract. Sevenson Env’t, 477 F.3d at 1365. Rather, the inquiry is focused on whether the
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`7
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`Case 1:22-cv-00252-MSG Document 49 Filed 02/14/23 Page 12 of 18 PageID #: 896
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`alleged infringing activity is addressed to a policy interest or objective of the United States. See
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`generally Adv. Software Design Corp. v. Fed. Rsrv. Bank of St. Louis, 583 F.3d 1371, 1379 (Fed.
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`Cir. 2009) (“benefits to the government of using the seal encoding technology on Treasury checks
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`are not incidental effects” of private activity where the Government participated in providing the
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`Treasury checks with the required technology); Hughes Aircraft, 534 F.2d at 898–99, 901 (stating
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`the broad policy objectives of interoperability and common defense of Great Britain and United
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`States were sufficient to meet “for the Government” standard); cf. Riles v. Amerada Hess Corp.,
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`999 F. Supp. 938, 940 (S.D. Tex. 1998) (finding that, while the oil lease may have satisfied
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`“Congressional statements of national policy” of making the offshore oil field available for public
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`use, the oil drilling activities carried out under the lease served only the interests of the lessee).
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`Under section 1498(a), authorization and consent may be either express or implied. TVI
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`Energy Corp., 806 F.2d at 1060. And “it is plain that the Government can limit its authorization
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`and consent” in its contracts. Carrier Corp. v. United States, 534 F.2d 244, 249 (Ct. Cl. 1976).
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`Thus, where the Government expressly states the limits of its authorization and consent in the
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`contract, those limits will generally control. Id.; see also Madey v. Duke Univ., 413 F. Supp. 2d
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`601, 608 (M.D.N.C. 2006) (“When the Government provides express consent, that consent may
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`be very broad, extending to any patented invention and any infringing use, or may be limited to
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`only certain patented inventions or to only those uses that are necessary or are specifically
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`consented to by the Government.”).
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`The ’-0100 Contract contains express “authorization and consent” in the form of the well-
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`established FAR clauses 52.227-1 and 52.227-1, Alternate I. Where, pursuant to a contract
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`containing these FAR clauses, the Government accepts goods that allegedly infringe on a patent,
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`those clauses typically “bring[ ] the matter within Section 1498 even if the contract could be
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`8
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`

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`Case 1:22-cv-00252-MSG Document 49 Filed 02/14/23 Page 13 of 18 PageID #: 897
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`fulfilled with other noninfringing products.” Saint-Gobain Ceramics & Plastics, Inc. v. II-VI Inc.,
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`369 F. Supp. 3d 963, 980 (C.D. Cal. 2019) (quoting 5 Chisum on Patents § 16.06 (2019)).9
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`As Sevenson Environmental further explains, the “for the Government” inquiry collapses
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`into the “authorization and consent” inquiry where the Government directly contracts for goods or
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`services and that contract provides the Government’s authorization and consent. 477 F.3d at 1365
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`(“where infringing activity has been performed by a government contractor pursuant to a
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`government contract and for the benefit of the government, courts have all but bypassed a separate
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`inquiry into whether infringing activity was performed ‘for the Government.’”). Accordingly,
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`where the Government elects to include a contract provision expressly providing its authorization
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`and consent, as it has done here, that decision is appropriately viewed as reflecting the
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`Government's determination that the contract is for the Government's benefit.
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`In this instance, the United States submits that the truncated inquiry is appropriate. The
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`Army procured substantial quantities of mRNA-1273 vaccine during the COVID-19 pandemic.
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`The vehicle for purchasing that vaccine was the ’-0100 Contract which contains the broad FAR
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`clause 52.227-1, Alternate I, as well as the narrower base clause 52.227-1. And there is no question
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`here that the Government paid for the vaccine as required by the contract and that the vaccine was
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`delivered in accordance with the contract (indeed, Arbutus’s claim of patent infringement
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`presumes that vaccine was manufactured and distributed, and therefore it claims to be damaged).
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`No further “for the Government” inquiry is required under these circumstances: the contract’s
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`9 Where the Government has granted express authorization and consent, the limits of that
`grant will generally control. Carrier, 534 F.2d at 249. To the extent that implied authorization
`and consent could be found, it would generally act to broaden the scope of the Government’s
`liability, not to restrict it. See id. (discussing how the decision in Croll-Reynolds Co. v. Perini-
`Leavell-Jones-Vinell, 399 F.2d 913 (5th Cir. 1968), could be read to expand a “narrow” express
`authorization and consent clause through implied consent where equipment was specially
`assembled to comply with contractual provision to cool concrete).
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`9
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`

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`Case 1:22-cv-00252-MSG Document 49 Filed 02/14/23 Page 14 of 18 PageID #: 898
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`provisions demonstrate that the contract was “for the Government” and therefore “for the benefit
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`of the Government.”
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`Where, as here, the Government directly contracts to procure the allegedly infringing goods
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`or services in a contract that grants authorization and consent, the “benefit to the Government” is
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`inherent. Indeed, the contractor’s compliance with the contract’s obligations alone demonstrate
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`the benefit: that the Government obtains goods and services for which it pays is alone sufficient
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`to demonstrate the procurement is “for the Government” and “for the benefit of the Government.”
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`Consequently, even if the Court chooses to examine the “benefit to the Government” prong, the
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`Government has received the benefit of its contract, namely, procuring the vaccine that it then
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`offered for free public distribution in an effort to thwart the COVID-19 pandemic. See Hughes
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`Aircraft, 534 F.2d at 901 (finding benefit in meeting governmental objectives or interests).
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`Finally, we turn to the authorities and argument presented by the parties and addressed by
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`the Court in its Order, D.I. 31. The Court noted that, given the early stage of this litigation and
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`based on the allegations in the Complaint (which must be taken as true at the motion to dismiss
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`stage), the case before it was more akin to Larson, where no authorization and consent was found
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`and any benefit to the Government was merely incidental, rather than Advanced Software Design
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`or Saint-Gobain, where the Government’s authorization and consent was found to be implied or
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`express, and the Government received a benefit. D.I. 31 at 12–13. As explained below, the
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`Government submits that of the three cases discussed, Saint-Gobain is on point here and Advanced
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`Software Design’s discussion of authorization and consent guides the present inquiry.
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`Like the present case, Saint-Gobain involved express contractual authorization and
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`consent. 369 F. Supp. 3d at 969–70 (stating that contracts by which II-VI Inc. sold products to
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`Lockheed contained an authorization and consent clause, and that Lockheed’s prime contracts also
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`Case 1:22-cv-00252-MSG Document 49 Filed 02/14/23 Page 15 of 18 PageID #: 899
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`contained an authorization and consent clause). The court found the benefit to the Government
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`was clear because the Government contracted with Lockheed for aircraft, while granting its
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`authorization to Lockheed and its subcontractors. Id. The benefit in Saint-Gobain was the
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`production of the aircraft that the Government contracted to buy. Indeed, the present case is even
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`clearer in that the Government directly contracted with Moderna to procure a specific vaccine, and
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`there is no intermediate contractor.
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`On the other hand, in both Advanced Software Design and Larson, the party claiming the
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`benefit of section 1498 could not point to a contract with the Government. Adv. Software Design
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`Corp., 583 F.3d at 1374 (no contract between Government and Federal Reserve Bank); Larson v.
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`United States, 26 Cl. Ct. 365, 367–68 (1992) (government contracts were with carriers and fiscal
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`intermediaries, not doctors). As a result, the courts in those cases had to engage in a more detailed
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`inquiry into whether the Government had granted authorization and consent. Cf. IRIS Corp, 769
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`F.3d at 1362 (providing that “a governmental grant of authorization or consent does not mean that
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`the alleged use or manufacture is done ‘for the United States’ under § 1498(a)” where the court
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`determined that a regulatory statute, rather than a direct procurement contract, provided
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`authorization and consent).
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`In Larson, plaintiff owned patents for plastic medical splints. 26 Cl. Ct. at 367. Health
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`care providers participating in government programs including Medicare, Medicaid, and the
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`medical health plan for military families provided medical treatment to patients using splints that
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`allegedly infringed plaintiffs’ patents. Id. The healthcare providers submitted claims for
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`reimbursement, and the programs “through their carriers and fiscal intermediaries, determine the
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`rates and amounts of payments to providers, and reimburse health care providers for the procedure
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`rendered to the patient.” Id.
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`Case 1:22-cv-00252-MSG Document 49 Filed 02/14/23 Page 16 of 18 PageID #: 900
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`The Larson court began by addressing the “authorization and consent” prong. Id. at 369.
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`Plaintiffs conceded that the Government had not expressly granted authorization and consent, but
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`asserted implied authorization and consent based on the provision of “reasonable and necessary”
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`medical services to patients that government health plans reimbursed. Id. at 370. Based on that
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`record, the trial court found that the Government did not grant its authorization and consent by
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`implication. Id. at 371. While the health plans reimbursed “reasonable and necessary” medical
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`services, only “code numbers” were provided to the government programs, the “details of the
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`treatment . . . remain[ed] with the patient and his or her provider.” Id. In rejecting Larson’s
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`argument that the reimbursement of these medical devices was “for the Government” under section
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`1498, the court noted that the Government “has no interest in the particular medical products used
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`in treatment . . . [and] [t]he fact that the Government has an interest in the program generally, or
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`funds or reimburses all or part of its costs, is too remote to make the Government the program’s
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`beneficiary for the purposes underlying § 1498.” Id. at 369. Moreover, the court noted that “mere
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`reimbursement is not authorization to infringe on patent rights.” Id. Nor could such authorization
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`to infringe “be reasonably inferred” from the public health statutes at issue in that case. Id. at 370.
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`Further, the facts demonstrated that the doctor—not the Government—determined the type of
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`splinting material to be used from a variety of available types. Id. at 370–71 (stating that 16 types
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`of splints and casts were available and describing reimbursement of medical expenses as a “billing
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`arrangement”). And, importantly, in Larson the Government affirmatively denied the existence
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`of authorization and consent in the litigation.
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`Advanced Software Design also presents a factually different scenario because no contract