Case 1:22-cv-00252-MSG Document 66 Filed 03/10/23 Page 1 of 9 PageID #: 1325
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`600 N. King Street ● Suite 400
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`P.O. Box 25130 ● Wilmington, DE 19899
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` Writer’s Direct Access:
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` (302) 429-4232
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` Email: sbrauerman@bayardlaw.com
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`March 10, 2023
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`VIA CM/ECF
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`The Honorable Mitchell S. Goldberg
`United States District Court
`Eastern District of Pennsylvania
`United States Courthouse, Room 7614
`601 Market Street
`Philadelphia, PA 19106
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`Dear Judge Goldberg:
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`Below is a letter brief from Amici curiae Law Professors, Scholars, and Former
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`Government Officials in response to the Statement of Interest filed by the United States of
`America (the “Government”) (D.I. 49) and the Court’s February 16, 2023 Order requesting
`briefing on the impact of the Government’s Statement of Interest (D.I. 51).
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`RE: Arbutus Biopharma Corp., et al.. v. Moderna, Inc., et al.
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`C.A. No. 22-252-MSG
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`Interest of Amicus Curiae
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`Amici curiae are law professors, scholars, and former government officials who have
`researched and published in patent law, takings law, or both. They have an interest in ensuring
`the integrity of the patent system and the proper application of the federal government’s eminent
`domain power to patented inventions. Amici have no stake in the parties or in the outcome of this
`case. A full list of signatories to this brief is set forth in Addendum A.1
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`Summary of Argument
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`This Court correctly decided that 28 U.S.C. § 1498(a) is inapplicable to a private
`company that enters into a purchase contract with the federal government for vaccine doses
`distributed in the healthcare market by other private companies for use by private individuals.
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`1 Pursuant to Fed. R. App. P. 29(a)(4)(E), amici state that no counsel for a party authored this
`brief in whole or in part, and that no person other than amici, their members, or their counsel
`contributed money that was intended to fund preparing or submitting the brief.
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`www.bayardlaw.com
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` Phone: (302) 655-5000
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` Fax: (302) 658-6395
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`

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`Case 1:22-cv-00252-MSG Document 66 Filed 03/10/23 Page 2 of 9 PageID #: 1326
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`March 10, 2023
`Page 2
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`See Arbutus Biopharma Corp. v. Moderna, Inc., No. CV 22-252, 2022 WL 16635341 (D. Del.
`Nov. 2, 2022). Amici offer supporting legal analysis beyond that provided by the parties that is
`necessary for this Court to reissue its prior decision, if it decides that some action is necessary
`given the Statement of Interest by the U.S. Government: The express text, legislative history, and
`judicial interpretation of § 1498(a) establish that this is an eminent domain statute that has no
`applicability to the purchase contract between Moderna and the federal government.
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`The purchase contract between Moderna and the federal government does not meet the
`express statutory requirement that the patented invention is made or used “by or for the United
`States,” 28 U.S.C. § 1498(a), or that a contractor uses a patented invention “for the
`Government.” Id. Section 1498(a) is an eminent domain statute, authorizing the U.S. Court of
`Federal Claims to adjudicate a claim by a patent owner for “reasonable and entire compensation”
`when its patented invention is “used or manufactured by or for the United States without license
`of the owner.” Id. (emphasis added). This is confirmed by the express text and legislative history
`of § 1498(a) and the consistent interpretation of this statutory provision by courts. Thus, if this
`Court deems some action is necessary in response to the Statement of Interest of the United
`States, it should reissue its earlier decision that § 1498(a) is inapposite to the patent infringement
`claim by Arbutus Biopharma Corporation against Moderna, Inc.
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`Argument
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`I.
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`Section 1498(a) is an Eminent Domain Statute
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`A. The Provenance of § 1498(a)
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`The provenance of § 1498(a) is found in nineteenth-century court decisions that patents
`are private property rights secured under the Takings Clause of the U.S. Constitution. In these
`decisions, the Supreme Court and lower federal courts consistently held that patents are private
`property secured under the Constitution. They include, for example:
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` (cid:129)
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`“[T]he government cannot, after the patent is issued, make use of the improvement
`any more than a private individual, without license of the inventor or making
`compensation to him.” United States v. Burns, 79 U.S. 246, 252 (1870).
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`(cid:129) A patent owner can seek compensation for the unauthorized use of his patented
`invention by federal officials because “[p]rivate property … shall not be taken for
`public use without just compensation.” Cammeyer v. Newton, 94 U.S. 225, 234
`(1876).
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`“Inventions secured by letters-patent are property in the holder of the patent, and as
`such are as much entitled to protection as any other property. . . . Private property, the
`constitution provides, shall not be taken for public use without just compensation . . .
`.” Brady v. Atlantic Works, 3 F. Cas. 1190, 1192 (C.C.D. Mass. 1876) (Clifford,
`Circuit Justice), rev’d on other grounds, 107 U.S. 192 (1883).
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` (cid:129)
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`Case 1:22-cv-00252-MSG Document 66 Filed 03/10/23 Page 3 of 9 PageID #: 1327
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`March 10, 2023
`Page 3
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`A patent is not a “grant” of special privilege; the text and structure of the
`Constitution, as well as court decisions, establish that patents are property rights
`secured under the Takings Clause). McKeever v. United States, 14 Ct. Cl. 396, 421
`(1878).
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` (cid:129)
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`Due to some unfortunate confusion at the turn of the twentieth century concerning the
`jurisdiction of a court to adjudicate a takings claim by a patent owner, Congress enacted in 1910
`the predecessor statute to § 1498(a) to resolve this constitutional confusion. See Act of June 26,
`1910, ch. 423, 36 Stat. 851, 851-52 (1910) (codified as amended in 28 U.S.C. § 1498(a)). The
`text and legislative history confirm that this is an eminent domain statute.
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`The modern Supreme Court has confirmed the long-standing rule that patents are
`property rights secured under the Takings Clause and Due Process Clauses. Roughly twenty
`years ago, the Supreme Court held that patents are “property” under the Due Process Clause of
`the Fourteenth Amendment. See Florida Prepaid Postsecondary Educ. Expense Bd. v. Coll. Sav.
`Bank, 527 U.S. 627, 642-43 (1999). In 2015, the Court approvingly quoted an 1882 decision
`stating that “[a patent] confers upon the patentee an exclusive property in the patented invention
`which cannot be appropriated or used by the government itself, without just compensation, any
`more than it can appropriate or use without compensation land which has been patented to a
`private purchaser.” Horne v. U.S. Dept. of Agriculture, 135 S. Ct. 2419, 2427 (2015) (quoting
`James v. Campbell, 104 U.S. 356, 358 (1882)).
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`B. The Legislative History of § 1498(a) Confirms it is an Eminent Domain Statute
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`The House committee report for the bill that became § 1498(a) expressly stated that the
`federal government was using patents without authorization “in flat violation of [the Takings
`Clause] and the decisions of the Supreme Court.” H.R. Rep. No. 61-1288, at 3 (1910). During
`the congressional debates leading up to the enactment of § 1498(a), the bill’s sponsor,
`Representative Currier, emphasized that the legislation “does not create any liability; it simply
`gives a remedy upon an existing liability.” 45 Cong. Rec. 8755, 8756 (1910). Throughout the
`congressional debates, legislators repeatedly referenced the earlier-cited court decisions that had
`already secured to patent owners their constitutional remedy under the Takings Clause. See H.R.
`Rep. No. 61-1288, at 1-4.
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`C. The Text of § 1498(a) Confirms it is an Eminent Domain Statute
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`The court precedents and legislative history explain the text of § 1498(a), which provides
`for claims of compensation arising from exercises of the government’s eminent domain power.
`Section 1498(a) states that a patent owner can sue the federal government in the Court of Federal
`Claims (originally the Court of Claims) for “recovery of his reasonable and entire compensation”
`when a patented invention is “used or manufactured by or for the United States without license
`of the owner.”
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`Case 1:22-cv-00252-MSG Document 66 Filed 03/10/23 Page 4 of 9 PageID #: 1328
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`March 10, 2023
`Page 4
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`In 1918, after extensive federal procurement efforts with contractors during World War
`One, Congress amended § 1498(a) for patent owners to sue the government for reasonable
`compensation when federal contractors infringe their patents. See Act of July 1, 1918, ch. 114,
`40 Stat. 704, 705 (1918) (codified as amended in 28 U.S.C. § 1498(a)). This amendment added
`the “used or manufactured by or for the United States” that currently exists in § 1498(a). Id.
`Consistent with its function as an eminent domain statute, the statute was amended again shortly
`after the U.S. entered World War Two, requiring suits against the government for compensation
`for patent infringement by federal contractors, but again this amendment is limited to only when
`contractors make or use a patented invention “for the Government.” Act of October 31, 1942,
`Pub. L. 768, § 6, 77th Cong. 2d Sess., 56 Stat. 1013, 1014 (1942) (codified as amended in 28
`U.S.C.
`§ 1498(a)).
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`As this Court recognized, Moderna’s contract is not an example of a contractor making
`and using a patented invention “for the United States,” as Moderna vaccine doses were
`distributed by private companies for use by private healthcare patients. The “by and for the
`United States” text in § 1498(a) limits its applicability to manufacture or use of patent inventions
`by the federal government, or by federal contractors acting “for the Government,” such as the
`unauthorized use of patented inventions for the U.S. military in the nineteenth century. See
`Burns, 79 U.S. at 251-54 (1870) (unauthorized use of patented tent by U.S. military); McKeever,
`14 Ct. Cl. At 417 (unauthorized use of a patented cartridge by U.S. military).
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`The twentieth-century lawsuits brought by patent owners under § 1498(a) are no
`different. See, e.g., Hughes Aircraft Co. v. Messerschmitt-Boelkow-Blohm, 625 F.2d 580 (5th
`Cir. 1980); Hughes Aircraft Co. v. United States, 534 F.2d 889 (Ct. Cl. 1976); Croll-Reynolds
`Co. v. Perini-Leavell-Jones-Vinell, 399 F.2d 913 (5th Cir. 1968), cert. denied, 393 U.S. 1050
`(1969). One famous § 1498(a) case arose from the U.S. military’s unauthorized use of a patented
`battery during World War Two. See United States v. Adams, 383 U.S. 39 (1966).
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`In sum, the plain text of § 1498(a) and its legislative history makes clear that it does not
`apply to products and services, which may be paid for by the public fisc, but are ultimately made
`for private companies to distribute for use by private parties. Although the government
`emphasizes in its Statement of Interest its “authorization or consent of the Government,” 23
`U.S.C. § 1498(a), in its purchase agreement with Moderna to manufacture its vaccine doses, such
`consent triggers this statute only when such manufacture or use is “for the Government.” Id. For
`example, this authorization and consent clearly applies to the use of the vaccine doses for U.S.
`military personnel and federal employees. Beyond this, § 1498(a) is inapplicable to Moderna’s
`manufacture of its vaccine doses pursuant to its purchase agreement with the federal government
`for use by private patients in the U.S. healthcare market.
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`This Court correctly denied Moderna’s motion to dismiss by recognizing that § 1498(a)
`applies only when a contractor makes or uses a patented invention “for the Government.”
`Arbutus Biopharma Corp., 2022 WL 16635341, at *7. The federal government may have derived
`an incidental benefit from resolution of the COVID-19 public health emergency through the
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`Case 1:22-cv-00252-MSG Document 66 Filed 03/10/23 Page 5 of 9 PageID #: 1329
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`March 10, 2023
`Page 5
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`II.
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`private distribution and use of vaccines by private patients, but this Court rightly recognized,
`“[i]ncidental benefit to the government is insufficient” to trigger § 1498(a) as an affirmative
`defense in a patent infringement lawsuit. Id. at *5 (quoting IRIS Corp. v. Japan Airlines Corp.,
`769 F.3d 1359, 1361 (Fed. Cir. 2014)).
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`Judicial Interpretation of § 1498(a) Confirms it is an Eminent Domain Statute
`Inapposite to Private Transactions in the Marketplace
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`This Court correctly recognized and applied the precedents that have construed § 1498(a)
`as an eminent domain statute. This explains why the federal government must use a patented
`invention, or at least be a direct beneficiary of a contractor making or using a patented invention
`for the government, to trigger its requirement of payment of “reasonable and entire
`compensation” by the government. 28 U.S.C. § 1498(a). In addition to the cases discussed by
`this Court in its earlier order, see Arbutus Biopharma Corp., 2022 WL 16635341, at *4-*7,
`courts have consistently recognized for well over half a century that § 1498 is an eminent domain
`statute. See Decca Ltd. v. United States, 544 F.2d 1070, 1082 (Ct. Cl. 1976) (“It is [the
`government’s] taking of a license, without compensation, that is, under an eminent domain
`theory, the basis for a suit under § 1498.”); Carter-Wallace, Inc. v. United States, 449 F.2d 1374,
`1390 (Ct. Cl. 1971) (Nichols, J., concurring) (stating that § 1498(a) authorizes a claim in court
`“to recover just compensation for a taking under the power of Eminent Domain”); Irving Air
`Chute Co. v. United States, 93 F. Supp. 633, 635 (Ct. Cl. 1950) (stating
`that
`§ 1498(a) is “an eminent domain statute”).
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`This Court acknowledged in its earlier decision that courts have recognized that the
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`federal government need not be a primary or sole beneficiary, as first stated in Advanced
`Software Design Corp. v. Federal Reserve Bank of St. Louis, 583 F.3d 1371, 1373-74 (Fed. Cir.
`2009). In Advanced Software, the Federal Circuit held that a regional Federal Reserve bank
`acted “for the government” when it used a process for detecting fraudulent Treasury checks that
`infringed a patent on this process. The court concluded that “the benefits to the government of
`using the [infringing fraud-detection] technology on Treasury checks are not incidental effects of
`private interests.” Id. at 1379. Thus, the Advanced Software court concluded that the patent
`owner had to proceed in a lawsuit against the federal government under § 1498(a), and not in a
`lawsuit against the specific Federal Reserve bank that infringed its patent. Given the formal
`relationship between the federal government and the Federal Reserve System in managing the
`official currency printed by the U.S. Bureau of Engraving and Printing in the U.S. Department of
`Treasury, this decision makes sense, both legally and commonsensically.
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`The Federal Reserve System is not the same legal or commercial entity as a private
`company that manufactures and sells a drug to other companies or distributes a drug for use by
`private patients in the marketplace. The Advanced Software court expressly distinguished the
`Federal Reserve System as a patent infringer acting “for the Government” from patent
`infringement by a private company that was paid by Medicare in providing a medical device to a
`private patient in Larson v. United States, 26 Cl. Ct. 365, 369 (1992). Larson is more similar in
`its facts to the purchase contract between Moderna and the federal government than the facts of
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`Advanced Software, as recognized by this Court. Arbutus Biopharma Corp., 2022 WL 16635341,
`at *7 (“I find this case more akin to Larson than Advanced Software Design”).
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`In Larson, a patent owner sued a private medical company for infringing its patent on a
`medical device (a splint); the splints were paid through government programs such as Medicaid
`or Medicare, or at least the purchase price was reimbursed. Id. at 367-68. Given that “the
`government reimbursed the cost [of the infringing splint] through Medicare and other federal
`programs,” id., the defendant argued that the patent owner’s lawsuit must proceed against the
`government under § 1498(a). The Larson court rejected this argument, stating that “government
`reimbursement of medical care expenses did not constitute a use of a medical patent for
`government purposes,” as required by the text of § 1498(a) in authorizing lawsuits against the
`federal government for compensation. Id. at 369. Similarly in this case, the federal government’s
`payment to Moderna for its vaccine doses to be distributed in the healthcare market for use by
`private individuals is not a use of a patent “for the Government.” 23 U.S.C. § 1498(a).
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`In fact, the Advanced Software court reaffirmed the precedential import of Larson, stating
`that “[t]he fact that the government has an interest in the [healthcare] program generally, or funds
`or reimburses all or part of its costs, is too remote to make the government the program’s
`beneficiary for the purposes underlying § 1498.” Advanced Software, 583 F.3d at 1379 (quoting
`Larson, 26 Ct. Cl. at 369). This has long been recognized by scholars as well. One prominent
`monograph acknowledges that § 1498(a) must be “modified” if it is “to apply to governmental
`payment for drugs prescribed for beneficiaries of such federal health programs as Medicare and
`Medicaid.” Milton Silverman & Philip R. Lee, Pills, Profits, and Politics 187 (1974).2 A federal
`health program funding the manufacture of vaccine doses for use by private patients is no
`different from the federal health programs of Medicare or Medicaid funding drugs for use by
`private patients. In either case, there is no basis to conclude that this is “use or manufacture . . .
`for the Government” under § 1498(a).
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`Applying both Advanced Software and Larson, this Court rightly recognized that
`“Moderna’s argument . . . could mean that every government-funded product used to advance
`any policy goal articulated by the U.S. Government—such as IV needles to fight HIV to cancer
`drugs to fight the war on cancer—would be subject to a § 1498(a) defense.” Arbutus Biopharma
`Corp., 2022 WL 16635341, at *7. Given the widespread activities of the federal government in
`funding healthcare products and services today, Moderna’s argument would convert every patent
`infringement lawsuit arising from patents covering drugs or other healthcare treatments into a
`suit for compensation against the federal government for the exercise of its eminent domain
`power. The absence of any limiting principle in Moderna’s argument that § 1498(a) applies in
`this case reveals how divorced its argument is from the text, function, and policy of § 1498(a) as
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`2 For more recent scholarship analyzing the text and judicial construction of § 1498(a) and
`reaching the same conclusion, see Susan G. Braden & Joshua A. Kresh, Section 1498(a) is Not a
`Rx to Reduce Drug Prices, 77 FOOD & DRUG L.J. 274 (2022); Adam Mossoff, The False
`Prices
`(Feb.
`8,
`2023),
`Promise
`of
`Breaking
`Patents
`to
`Lower Drug
`https://papers.ssrn.com/abstract=4348499.
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`March 10, 2023
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`an eminent domain statute. Section 1498(a) does not apply to a situation in which a drug is
`produced by a private company for use by private citizens in the healthcare market, even if the
`federal government has an incidental interest in the results of this transaction and contributes
`public funds.
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`Conclusion
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`If this Court concludes that a response to the Statement of Interest of the United States is
`necessary, it should reissue its earlier decision that the purchase agreement between Moderna
`and the federal government does not qualify for use of a patented invention “for the
`Government.” This Court rightly recognized that the text, function, and judicial interpretation of
`§ 1498(a) necessitates the conclusion that it is inapplicable to private transactions between
`private parties in the marketplace, even if the federal government has an incidental interest in
`these transactions through payments from the public fisc in a public health emergency. As an
`eminent domain statute, § 1498(a) applies only to unauthorized uses of patented inventions by or
`for the federal government, such as use of patented inventions by the military or by federal
`agencies, or by contractors providing products and services for use by these agencies and
`departments in the federal government.
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`All Counsel
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`cc:
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`Respectfully submitted,
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`/s/ Stephen B. Brauerman
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`Stephen B. Brauerman (#4952)
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`March 10, 2023
`Page 8
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`APPENDIX OF AMICI
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`Full List of Amici Curiae*3
`
`The Honorable Susan G. Braden
`Jurist in Residence
`Center for Intellectual Property x Innovation Policy
`Antonin Scalia Law School, George Mason University
`Chief Judge (Retired)
`U.S. Court of Federal Claims
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`Daniel R. Cahoy
`Robert G. & Caroline Schwartz Professor of Business Law
`Smeal College of Business
`Penn State University
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`The Honorable Ronald A. Cass
`Dean Emeritus
`Boston University School of Law
`Former Vice-Chairman
`U.S. International Trade Commission
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`Richard A. Epstein
`Laurence A. Tisch Professor of Law
`New York University School of Law
`James Parker Hall Distinguished Service Professor of Law Emeritus
`University of Chicago Law School
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`The Honorable Paul Michel
`Chief Judge (Retired)
`U.S. Court of Appeals for the Federal Circuit
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`Adam J. MacLeod
`Professor of Law
`Thomas Goode Jones School of Law
`Faulkner University
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`* Institutions of all signatories are for identification purposes only. The undersigned do not
`purport to speak for their institutions, and the views of amici should not be attributed to these
`institutions.
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`March 10, 2023
`Page 9
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`Emily Michiko Morris
`David L. Brennan Endowed Chair and Associate Professor
`The University of Akron School of Law
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`Adam Mossoff
`Professor of Law
`Antonin Scalia Law School
`George Mason University
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`Kristen Jakobsen Osenga
`Austin E. Owen Research Scholar & Professor of Law
`University of Richmond School of Law
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