Case 2:22-cv-00263-JRG-RSP Document 49-2 Filed 03/28/23 Page 1 of 12 PageID #: 1664
`Case 2:22-cv-00263-JRG-RSP Document 49-2 Filed 03/28/23 Page 1of12 PagelD #: 1664
`
`
`
`
`EXHIBIT B
`EXHIBIT B
`
`
`
`
`
`

`

`Case 2:22-cv-00263-JRG-RSP Document 49-2 Filed 03/28/23 Page 2 of 12 PageID #: 1665
`Arbutus Biopharma Corporation v. Moderna, Inc., --- F.Supp.3d ---- (2022)
`
`2022 WL 16635341
`Only the Westlaw citation is currently available.
`United States District Court, D. Delaware.
`
`[2]
`
`ARBUTUS BIOPHARMA CORPORATION
`and Genevant Sciences GmbH, Plaintiffs,
`v.
`MODERNA, INC. and ModernaTX, Inc.,
`
`CIVIL ACTION NO. 22-252
`|
`Signed November 2, 2022
`
`Synopsis
`Background: Owner of patents directed to lipid nanoparticle
`delivery platform brought
`infringement action against
`COVID-19 vaccine manufacturer. Manufacturer asserted
`affirmative defense pursuant to statute governing patent
`infringement actions against the United States.
`
`Holdings: The District Court, Goldberg, J., sitting by
`designation, held that:
`
`[1] issue of whether affirmative defense applied could
`not be resolved because of factual dispute as to whether
`development of vaccine was for the government, and
`
`Insufficiency in
`
`Federal Civil Procedure
`general
`Federal Civil Procedure
`Matters deemed
`admitted;  acceptance as true of allegations in
`complaint
`To determine whether a complaint meets the
`pleadings standard on a motion to dismiss for
`failure to state a claim, the court first outlines the
`elements a plaintiff must plead to state a claim
`for relief, next, the court must peel away those
`allegations that are no more than conclusions
`and thus not entitled to the assumption of truth,
`and finally, the court looks for well-pled factual
`allegations, assumes their veracity, and then
`determines whether they plausibly give rise to an
`entitlement to relief. Fed. R. Civ. P. 12(b)(6).
`
`[3]
`
`Insufficiency in
`
`Federal Civil Procedure
`general
`factual
`Determining whether well-pled
`allegations plausibly give rise to an entitlement
`to relief, as required to survive a motion to
`dismiss for failure to state a claim, is a context-
`specific task that requires the reviewing court
`to draw on its judicial experience and common
`sense. Fed. R. Civ. P. 12(b)(6).
`
`[2] issue of whether affirmative defense applied could not be
`resolved because of factual dispute as to whether government
`authorized or consented to any infringing use.
`
`[4]
`
`Motion denied.
`
`West Headnotes (23)
`
`Federal Courts
`Intellectual property
`Since
`the
`statute giving
`the Court of
`Federal Claims exclusive
`jurisdiction over
`patent infringement suits against the federal
`government is an affirmative defense rather than
`a jurisdictional bar, a court may not dismiss such
`an action for lack of subject matter jurisdiction.
`28 U.S.C.A. § 1498(a); Fed. R. Civ. P. 12(b)(1).
`
`[1]
`
`Insufficiency in
`
`Federal Civil Procedure
`general
`On a motion to dismiss for failure to state a claim,
`a complaint does not show an entitlement to
`relief when the well-pleaded facts do not permit
`the court to infer more than the mere possibility
`of misconduct. Fed. R. Civ. P. 12(b)(6).
`
`[5]
`
`In general;  remedy of patent
`
`United States
`owner
`The intention and purpose of Congress in
`enacting the statute providing a cause of action
`against the United States for its unauthorized
`use or manufacture of a patented invention
`
` © 2023 Thomson Reuters. No claim to original U.S. Government Works.
`
`1
`
`

`

`Case 2:22-cv-00263-JRG-RSP Document 49-2 Filed 03/28/23 Page 3 of 12 PageID #: 1666
`Arbutus Biopharma Corporation v. Moderna, Inc., --- F.Supp.3d ---- (2022)
`
`[6]
`
`[7]
`
`[8]
`
`[9]
`
`is to stimulate contractors to furnish what is
`needed by the government, without fear of
`becoming liable themselves for infringements to
`inventors or the owners or assignees of patents.
`28 U.S.C.A. § 1498(a).
`
`Liability of government
`Liability of government
`
`United States
`United States
`contractor
`The statute providing a cause of action
`against the United States for its unauthorized
`use or manufacture of a patented invention
`creates an independent cause of action for
`direct infringement by the government or its
`contractors that is not dependent on the statute
`governing patent infringement. 28 U.S.C.A. §
`1498(a); 35 U.S.C.A. § 271(a).
`
`In general;  remedy of patent
`
`United States
`owner
`For claims that fall within the ambit of the statute
`providing a cause of action against the United
`States for its unauthorized use or manufacture
`of a patented invention, the remedy against
`the United States is exclusive. 28 U.S.C.A. §
`1498(a).
`
`Particular questions or subject
`
`Courts
`matter
`law applies
`Federal Circuit
`substantive patent law.
`
`to
`
`issues of
`
`Patents
`Affirmative defenses
`United States
`Evidence
`A patent infringement defendant asserting an
`affirmative defense pursuant to the statute
`providing that when a patented invention is
`used or manufactured by or for the United
`States without a license, the remedy shall be
`by an action against the United States in the
`Court of Federal Claims bears the burden of
`establishing that (1) the infringing use is for the
`government, and (2) the infringing use is with the
`
`authorization and consent of the government. 28
`U.S.C.A. § 1498(a).
`
`Liability of government
`
`[10] United States
`contractor
`An infringing use by a contractor is “for the
`Government,” within the meaning of the statute
`governing patent infringement actions against
`the United States, if it is in furtherance and
`fulfillment of a stated government policy which
`serves the government's interests and which is for
`the government's benefit. 28 U.S.C.A. § 1498(a).
`
`Liability of government
`
`[11] United States
`contractor
`To satisfy the requirement under the statute
`governing patent infringement actions against
`the United States
`that an
`infringing use
`by a contractor be for the government, the
`government's benefit from an infringing use need
`not be the primary purpose of a government
`contract. 28 U.S.C.A. § 1498(a).
`
`Liability of government
`
`[12] United States
`contractor
`To satisfy the requirement under the statute
`governing patent infringement actions against
`the United States
`that an
`infringing use
`by a contractor be for the government, the
`government need not be the sole beneficiary of
`the infringing use. 28 U.S.C.A. § 1498(a).
`
`Liability of government
`
`[13] United States
`contractor
`The requirement under the statute governing
`patent infringement actions against the United
`States that an infringing use by a contractor be
`for the government must be applied on a case-by-
`case basis. 28 U.S.C.A. § 1498(a).
`
`[14] United States
`contractor
`
`Liability of government
`
` © 2023 Thomson Reuters. No claim to original U.S. Government Works.
`
`2
`
`

`

`Case 2:22-cv-00263-JRG-RSP Document 49-2 Filed 03/28/23 Page 4 of 12 PageID #: 1667
`Arbutus Biopharma Corporation v. Moderna, Inc., --- F.Supp.3d ---- (2022)
`
`is
`the government
`to
`Incidental benefit
`insufficient to satisfy the requirement under the
`statute governing patent infringement actions
`against the United States that an infringing use by
`a contractor be for the government. 28 U.S.C.A.
`§ 1498(a).
`
`Under the statute governing patent infringement
`actions
`against
`the United States,
`the
`authorization and consent of the government to
`an infringing use by a contractor may be express
`or implied. 28 U.S.C.A. § 1498(a).
`
`Liability of government
`
`[15] United States
`contractor
`A governmental grant of authorization or
`consent, standing alone, does not satisfy the
`requirement under the statute governing patent
`infringement actions against the United States
`that an infringing use by a contractor be for the
`government. 28 U.S.C.A. § 1498(a).
`
`[16]
`
`[17]
`
`Patents
`Fact questions
`Issue of whether affirmative defense pursuant
`to statute governing patent infringement actions
`against the United States applied in infringement
`action by owner of patents directed
`to
`lipid nanoparticle delivery platform against
`COVID-19 vaccine manufacturer could not be
`resolved at motion to dismiss phase because of
`factual dispute as to whether development of
`vaccine was for the government. 28 U.S.C.A. §
`1498(a).
`
`Evidence
`Public or government websites
`District court would
`take
`judicial notice
`of contract between
`federal government
`and COVID-19 vaccine manufacturer
`in
`determining, on manufacturer's motion
`to
`dismiss patent infringement claims by owner of
`patents directed to lipid nanoparticle delivery
`platform, whether affirmative defense pursuant
`to statute governing patent infringement actions
`against the United States applied; contract was
`public document published on the internet. 28
`U.S.C.A. § 1498(a).
`
`[18] United States
`contractor
`
`Liability of government
`
`Liability of government
`
`[19] United States
`contractor
`When the government provides express consent
`to infringement by a contractor, within the
`meaning of
`the statute governing patent
`infringement actions against the United States,
`that consent may be very broad, extending to
`any patented invention and any infringing use,
`or may be limited to only certain patented
`inventions or to only those uses that are
`necessary or are specifically consented to by the
`government. 28 U.S.C.A. § 1498(a).
`
`Liability of government
`
`[20] United States
`contractor
`Under the statute governing patent infringement
`actions against the United States, an implied
`authorization to infringe may be found where (1)
`the government expressly contracted for work to
`meet certain specifications, (2) the specifications
`cannot be met without infringing on a patent, and
`(3) the government had some knowledge of the
`infringement. 28 U.S.C.A. § 1498(a).
`
`Liability of government
`
`[21] United States
`contractor
`Even when the government expressly consents to
`infringement in order to perform a government
`contract, a government contractor's use of a
`patented device does not constitute authorization
`or consent, within the meaning of the statute
`governing patent infringement actions against
`the United States, where the choice of the device
`was the contractor's and where there was nothing
`in the contract that could not be performed
`without using the device. 28 U.S.C.A. § 1498(a).
`
`[22]
`
`Patents
`
`Fact questions
`
` © 2023 Thomson Reuters. No claim to original U.S. Government Works.
`
`3
`
`

`

`Case 2:22-cv-00263-JRG-RSP Document 49-2 Filed 03/28/23 Page 5 of 12 PageID #: 1668
`Arbutus Biopharma Corporation v. Moderna, Inc., --- F.Supp.3d ---- (2022)
`
`Issue of whether affirmative defense pursuant
`to statute governing patent infringement actions
`against the United States applied in infringement
`action by owner of patents directed
`to
`lipid nanoparticle delivery platform against
`COVID-19 vaccine manufacturer could not be
`resolved at motion to dismiss phase because
`of factual dispute as to whether government
`authorized or consented to any infringing use. 28
`U.S.C.A. § 1498(a).
`
`Liability of government
`
`[23] United States
`contractor
`Under the statute governing patent infringement
`actions against the United States, even express
`authorization and consent by the government
`to a contractor's use of patented invention may
`be limited by other clauses in a contract. 28
`U.S.C.A. § 1498(a).
`
`Attorneys and Law Firms
`
`John W. Shaw, Nathan Roger Hoeschen, Karen Elizabeth
`Keller, Shaw Keller LLP, Wilmington, DE, Kira A. Davis,
`Pro Hac Vice, San Francisco, CA, for Plaintiff Arbutus
`Biopharma Corporation.
`
`John W. Shaw, Karen Elizabeth Keller, Shaw Keller LLP,
`Wilmington, DE, Adam D. Harber, Pro Hac Vice, David
`I. Berl, Pro Hac Vice, Jessica Palmer Ryen, Pro Hac Vice,
`Shaun P. Mahaffy, Pro Hac Vice, Thomas S. Fletcher, Pro Hac
`Vice, Washington, DC, Daralyn J. Durie, Pro Hac Vice, San
`Francisco, CA, Denis R. Hurley, Pro Hac Vice, Latham, NY,
`Eric C. Wiener, Pro Hac Vice, Durham, NC, Lydia B. Cash,
`Pro Hac Vice, for Plaintiff Genevant Sciences GmbH.
`
`Brian P. Egan, Jack B. Blumenfeld, Morris, Nichols, Arsht
`& Tunnell LLP, Wilmington, DE, James F. Hurst, Pro Hac
`Vice, Chicago, IL, Jeanna M. Wacker, Pro Hac Vice, Mark C.
`McLennan, Pro Hac Vice, Patricia A. Carson, Pro Hac Vice,
`New York, NY, for Moderna, Inc., Modernatx, Inc.
`
`MEMORANDUM
`
`Goldberg, District Judge
`
`*1 During the course of the COVID-19 pandemic,
`Defendants Moderna, Inc. and ModernaTX, Inc. (collectively,
`“Moderna”) brought to market an mRNA-based vaccine in an
`effort to combat the effect of the COVID-19 virus. Plaintiffs
`Arbutus Biopharma Corporation (“Arbutus”) and Genevant
`Sciences GmbH (“Genevant”) (collectively “Plaintiffs”)
`claim that, in order for the vaccine to succeed, Moderna used a
`revolutionary lipid nanoparticule (“LNP”) delivery platform
`—created and patented by Plaintiffs—without paying for it or
`requesting a license.
`
`On February 28, 2022, Plaintiffs filed suit seeking
`compensation for the use of the patented technology they
`claim to have developed. On May 6, 2022, Moderna filed a
`partial Motion to Dismiss, arguing that to the extent Plaintiffs
`seek royalties on the sale and provision of COVID-19 Vaccine
`doses to the United States Government, such claims can
`only proceed in the Court of Federal Claims and must be
`dismissed from this Court. For the following reasons, I will
`deny Moderna's Motion.1
`
`I. FACTUAL BACKGROUND
`The following facts are taken from Plaintiff's Complaint.2
`
`A. General Background Regarding Virus Vaccines
`As explained in the Complaint, viruses are typically described
`as small packets of deoxyribonucleic acid (“DNA”) or
`ribonucleic acid (“RNA”). If a virus enters a living host cell,
`the virus's DNA or RNA can hijack the cell's machinery and
`instruct the cell to make copies of the virus. These copies,
`often numbering into the millions, leave the infected cell
`and enter other cells where the process repeats. Infected
`cells can be damaged or die while hosting the virus, and,
`left unchecked, the host organism itself can die. Vaccines
`traditionally work by injecting into the body a weakened or
`inactive form of the virus that is unable to cause infection,
`but nonetheless retains features of the infectious virus and
`can teach the immune system to recognize and attack the
`infectious virus it if it invades in the future. (Id. ¶¶ 19–20.)
`
`Moderna's COVID-19 vaccine belongs to a new class of
`medicines that deliver nucleic acids into the cells of the body
`to treat diseases or trigger an immune response to protect
`a person from future infection. Nucleic acids are molecules
`that encode the genetic information essential to sustain life.
`
` © 2023 Thomson Reuters. No claim to original U.S. Government Works.
`
`4
`
`

`

`Case 2:22-cv-00263-JRG-RSP Document 49-2 Filed 03/28/23 Page 6 of 12 PageID #: 1669
`Arbutus Biopharma Corporation v. Moderna, Inc., --- F.Supp.3d ---- (2022)
`
`One type of nucleic acid is DNA, which is found within
`chromosomes and contains genetic information. In order to
`make the protein encoded by a particular gene, the cell first
`converts the genetic code in the gene's DNA into another
`type of nucleic acid known as messenger ribonucleic acid, or
`“mRNA,” which is effectively a copy of the portion of DNA
`that the cell's protein-making machinery uses as a blueprint to
`assemble the protein encoded by the gene. (Id. ¶¶ 21–23.)
`
`*2 Vaccines using RNA technologies are an emerging
`frontier in medicine to address many previously intractable
`diseases and new viruses. RNA-based medicines, however,
`have been difficult to develop because RNA molecules are
`fragile and, without adequate protection, are susceptible to
`degradation in the body. For decades, the need for an effective
`delivery technology had been the most significant challenge
`in the development of RNA-based products since, without
`the means to protect the mRNA, mRNA-based vaccines have
`been ineffective. (Id. ¶¶ 24–25.)
`
`B. Plaintiffs’ Invention
`Plaintiffs allege that functional RNA-based medicines eluded
`researchers until the work by Plaintiffs’ scientists. After
`years of research, Plaintiffs developed lipid nano-particle
`(“LNP”) technology that relies on fat-like molecules called
`lipids to encapsulate and protect nucleic acids like mRNA
`from degradation in the body. Once inside, the LNP
`releases the nucleic acid so that it can express the
`protein it encodes. The lipid components of Plaintiffs’
`technology include structural lipids, such as phospholipids
`and cholesterol; “cationic” (positive charge-bearing) lipids,
`including “ionizable” lipids that are positive charge-bearing
`at certain pH levels; and conjugated lipids, which are lipids
`attached to a polymer such polyethyleneglycol (“PEG”). (Id.
`¶¶ 26–27.)
`
`Plaintiffs’ scientists’ efforts led to the first FDA-approved
`RNA-based therapeutic in the form of a drug called
`Onpattro®, used to treat a rare disease called amyloidosis.
`The company that developed Onpattro® did so under an
`LNP license from Plaintiffs. Building on this initial success,
`Plaintiffs have granted licenses for its LNP technology to
`other companies. From 2011 to 2021, the United States
`Patent and Trademark Office (“PTO”) issued to Plaintiffs six
`different patents for its LNP-based inventions. (Id. ¶ 28–29.)
`
`C. The Alleged Infringement and Related Litigation
`
`According to the Complaint, Moderna has been on actual
`notice of Plaintiffs’ patents before development of its
`COVID-19 vaccine, the “Accused Product” in this matter.
`Indeed, in May 2015, Moderna attempted to acquire rights
`to Plaintiffs’ LNP delivery technology for four specific viral
`targets through sublicense from a Canadian company called
`Acuitas Therapeutics (“Acuitas”). Although Acuitas had
`licensed the LNP technology in 2012, its license agreement
`limited its ability to grant sublicenses. Nonetheless, Acuitas
`granted Moderna the sublicense. In August 2016, after
`learning of the sublicense agreements, Plaintiffs notified
`Acuitas of material breach, and Acuitas filed suit in the
`Supreme Court of British Columbia seeking to prevent
`Plaintiffs from terminating the license. In February 2018,
`Plaintiffs and Acuitas settled their dispute and agreed that
`Acuitas could no longer use the LNP technology except
`for the specific sublicenses given to Moderna for vaccines
`targeting specific viruses remaining in effect. SARS-CoV-2,
`the virus that causes COVID-19, was not among the surviving
`sublicenses. (Id. ¶¶ 31–34.)
`
`Moderna then began filing inter partes review (“IPR”)
`petitions, requesting that the PTO cancel certain of Plaintiffs’
`patents, including some asserted here. Although the first IPR
`petition was successful, the remaining IPR petitions were not.
`(Id. ¶¶ 35–38.)
`
`On January 10, 2020, with the novel SARS-CoV-2 virus
`quickly spreading around the world, scientists identified the
`virus's complete genetic sequence and posted it for free
`on the internet, thus revealing the complete RNA sequence
`that encodes the virus's components, including its distinctive
`“spike protein.” With that information in the public domain,
`researchers around the world, including Moderna, begin
`designing vaccines to target the virus. (Id. ¶ 39.)
`
`*3 Relying on Plaintiffs’ LNP technology covered by the
`Asserted Patents, Moderna was able to begin producing its
`COVID-19 vaccine within just a few days of the genomic
`sequence entering the public domain. Moderna's success was
`unprecedented. On February 24, 2020, Moderna shipped
`clinical drug product, and, less than one month later, Phase
`I trials began. Plaintiffs contend that Moderna's COVID-19
`vaccine could not have been developed on such a short
`timeline without Plaintiffs’ proven and patented LNP delivery
`technology. Plaintiffs further allege that published articles and
`statements released by Moderna explicitly showed Moderna's
`use of Plaintiff's patents. (Id. ¶¶ 41–49.)
`
` © 2023 Thomson Reuters. No claim to original U.S. Government Works.
`
`5
`
`

`

`Case 2:22-cv-00263-JRG-RSP Document 49-2 Filed 03/28/23 Page 7 of 12 PageID #: 1670
`Arbutus Biopharma Corporation v. Moderna, Inc., --- F.Supp.3d ---- (2022)
`
`Moderna's distribution of its Accused Product and its
`administration to persons in the United States and worldwide
`commenced around December 18, 2020,
`immediately
`after the FDA granted Moderna's COVID-19 vaccine an
`Emergency Use Authorization (“EUA”). In 2021, Moderna
`shipped 807 million doses, and, as of February 2022,
`Moderna had signed advance purchase agreements worth
`approximately $19 billion for all of 2022. The Complaint
`alleges that the vaccine doses made and administered in
`the United States were distributed to hospitals, pharmacies,
`clinics, and numerous other entities for the benefit of
`individual vaccine recipients in the United States. (Id. ¶ 51.)
`
`On June 1, 2021, Moderna announced that it had initiated the
`FDA process for a Biologics License Application (“BLA”)
`—full-fledged licensure of its COVID-19 vaccine. The FDA
`approved the BLA on January 31, 2022. As of February
`24, 2022, the vaccine had received at least emergency
`authorization from more than seventy countries. Moderna has
`contracted with a number of companies around the world to
`manufacture its COVID-19 vaccine, including companies that
`employ facilities in the United States. (Id. ¶¶ 52–54.)
`
`Plaintiffs claim that they did not seek to inhibit development
`and distribution of the vaccine but only requested fair
`and reasonable compensation. As such, they proposed that
`Moderna pay for a mutually acceptable license, but Moderna
`has declined to engage meaningfully in licensing discussion,
`necessitating this lawsuit. (Id. ¶¶ 55–61.)
`
`On February 28, 2022, Plaintiffs filed suit alleging
`infringement of six different patents, prompting Modern to
`file the partial motion to dismiss currently pending before
`me.3
`
`II. STANDARD OF REVIEW
`[1] Under Federal Rule of Civil Procedure 12(b)(6), a
`defendant bears the burden of demonstrating that the plaintiff
`has not stated a claim upon which relief can be granted. Fed.
`R. Civ. P. 12(b)(6); see also Hedges v. United States, 404 F.3d
`744, 750 (3d Cir. 2005). The United States Supreme Court
`has recognized that “a plaintiff's obligation to provide the
`‘grounds’ of his ‘entitle[ment] to relief’ requires more than
`labels and conclusions.” Bell Atl. Corp. v. Twombly, 550 U.S.
`544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) (quotations
`omitted). “[T]hreadbare recitals of the elements of a cause
`of action, supported by mere conclusory statements, do not
`suffice” and “only a complaint that states a plausible claim
`
`for relief survives a motion to dismiss.” Ashcroft v. Iqbal, 556
`U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). “A
`claim has facial plausibility when the plaintiff pleads factual
`content that allows the court to draw the reasonable inference
`that the defendant is liable for the misconduct alleged.” Id.
`A complaint does not show an entitlement to relief when the
`well-pleaded facts do not permit the court to infer more than
`the mere possibility of misconduct. Id.
`
` [3] The United States Court of Appeals for the
`*4 [2]
`Third Circuit has detailed a three-step process to determine
`whether a complaint meets the pleadings standard.4 Bistrian
`v. Levi, 696 F.3d 352 (3d Cir. 2012). First, the court outlines
`the elements a plaintiff must plead to state a claim for relief.
`Id. at 365. Next, the court must “peel away those allegations
`that are no more than conclusions and thus not entitled to
`the assumption of truth.” Id. Finally, the court “look[s] for
`well-pled factual allegations, assume[s] their veracity, and
`then ‘determine[s] whether they plausibly give rise to an
`entitlement to relief.’ ” Id. (quoting Iqbal, 556 U.S. at 679,
`129 S.Ct. 1937). The last step is “a context-specific task that
`requires the reviewing court to draw on its judicial experience
`and common sense.” Id. (quoting Iqbal, 556 U.S. at 679, 129
`S.Ct. 1937).
`
`III. DISCUSSION
`[4] Moderna contends that it contracted with the Government
`for production and delivery of the vaccine for use in
`combatting the pandemic. It presses that, under 28 U.S.C. §
`1498(a), any infringement claims relating to a Government
`contract must be litigated exclusively in the Court of
`Federal Claims. Accordingly, Moderna seeks dismissal,
`under Federal Rule of Civil Procedure 12(b)(6),5 of any of
`Plaintiffs’ infringement claims premised on Moderna's sale
`and provision of COVID-19 vaccine doses to the United
`States Government.
`
`28 U.S.C § 1498(a) provides:
`
`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. Reasonable and entire compensation shall
`include the owner's reasonable costs, including reasonable
`
` © 2023 Thomson Reuters. No claim to original U.S. Government Works.
`
`6
`
`

`

`Case 2:22-cv-00263-JRG-RSP Document 49-2 Filed 03/28/23 Page 8 of 12 PageID #: 1671
`Arbutus Biopharma Corporation v. Moderna, Inc., --- F.Supp.3d ---- (2022)
`
`‘for the Government’ and (2) the [infringing] use is ‘with the
`authorization and consent of the Government.’ ” Sevenson
`Envt'l Servs., Inc. v. Shaw Envt'l, Inc., 477 F.3d 1361, 1365
`(Fed. Cir. 2007).
`
`fees for expert witnesses and attorneys, in pursuing the
`action if the owner is an independent inventor, a nonprofit
`organization, or an entity that had no more than 500
`employees at any time during the 5-year period preceding
`the use or manufacture of the patented invention by or
`for the United States. Not[ ]withstanding the preceding
`sentences, unless the action has been pending for more
`than 10 years from the time of filing to the time that
`the owner applies for such costs and fees, reasonable and
`entire compensation shall not include such costs and fees
`if the court finds that the position of the United States was
`substantially justified or that special circumstances make
`an award unjust.
`
`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 of the consent of the Government, shall
`be construed as use or manufacture for the United States.
`Id. at § 1498(a).
`
`A. “For the Government”
`[10]
` [11]
` [12]
` [13] The first part of the test under §
`1498 is whether the infringing use was “for the Government.”
`“A use is ‘for the Government’ if it is ‘in furtherance and
`fulfillment of a stated Government policy’ which serves the
`Government's interests and which is ‘for the Government's
`benefit.’ ” BAE Sys. Info. & Elec. Sys. Integration Inc.
`v. Aeroflex Inc., No. 09-cv-769, 2011 WL 3474344, at *9
`(D. Del. Aug. 2, 2011) (quoting Madey v. Duke Univ.,
`413 F. Supp. 2d 601, 607 (M.D.N.C. 2006)). The Federal
`Circuit has remarked that this prong is satisfied where
`“the use or manufacture of a patented method or apparatus
`occur[s] pursuant to a contract with the government and
`for the benefit of the government.” Sevenson, 477 F.3d at
`1365. The Government's benefit need not be the “primary
`purpose” of a government contract. Id. at 1365. Likewise, the
` [8] The “intention and purpose of Congress”
` [7]
` [6]
`[5]
`Government need not be the sole beneficiary. IRIS Corp. v.
`in enacting this statute was “to stimulate contractors to furnish
`Japan Airlines Corp., 769 F.3d 1359, 1362 (Fed. Cir. 2014)
`what was needed” by the government, “without fear of
`(quoting Advanced Software Design Corp. v. Fed. Reserve
`becoming liable themselves for infringements to inventors or
`Bank of St. Louis, 583 F.3d 1371, 1378 (Fed. Cir. 2009)).
`the owners or assignees of patents.” Richmond Screw Anchor
`This provision must be applied on a “case-by-case basis
`Co. v. United States, 275 U.S. 331, 345, 48 S.Ct. 194, 72
`to determine whether a use meets the articulated statutory
`L.Ed. 303 (1928). “Th[is] provision provides a cause of action
`requirements.” Madey, 413 F. Supp. 2d at 607.
`against the United States (waiving sovereign immunity) for
`a patent owner to recover damages for the unauthorized use
`or manufacture of a patented invention ‘by or for the United
`States.” Astornet Techs. Inc. v. BAE Sys., Inc., 802 F.3d
`1271, 1277 (Fed. Cir. 2015) (internal quotations omitted)
`(emphasis in original). Section 1498 “creates an independent
`cause of action for direct infringement by the Government or
`its contractors that is not dependent on 35 U.S.C. § 271(a).”
`Zoltek Corp. v. United States, 672 F.3d 1309, 1326–27 (Fed.
`Cir. 2012). For claims that fall within the statute's ambit, the
`remedy against the United States is exclusive. Astornet, 802
`F.3d at 1277.6
`
`[15] Nonetheless, “[i]ncidental benefit
`[14]
`the
`to
`
`government is insufficient.” IRIS Corp. v. Japan Airlines
`Corp., 769 F.3d 1359, 1361 (Fed. Cir. 2014). Moreover,
`a governmental grant of authorization or consent, standing
`alone, does not mean that the alleged use or manufacture is
`done “for the United States” under § 1498(a). Id. at 1362.
`“Even where ‘the government has an interest in the program
`generally, or funds or reimburses all or part of [that program's]
`costs,’ the Government's interest is too remote ‘to make
`the government the program's beneficiary for the purposes
`underlying § 1498.’ ” Sheridan v. United States, 120 Fed. Cl.
`127, 131 (Fed. Cl. 2015) (quoting Larson v. United States, 26
`Cl. Ct. 365, 369 (1992)).
`
` [17] Here, Moderna alleges that, under its contract
`[16]
`with the United States Government, its supply of the
`COVID-19 vaccine is for the benefit of the Government
`and thus § 1498(a) is applicable. Moderna reasons that, in
`August 2020, the Government used its emergency powers
`to contract with Moderna to supply doses of the COVID-19
`
`*5 [9] Section 1498(a) establishes an affirmative defense,
`not a jurisdictional bar. Manville Sales Corp. v. Paramount
`Sys., Inc., 917 F.2d 544, 554 (Fed. Cir. 1990). A section
`1498 affirmative defense is a highly factual determination.
`Saint-Gobain Ceramics & Plastics, Inc. v. II-VI, Inc., 369
`F. Supp. 3d 963, 970 (C.D. Cal. 2019). A defendant bears
`the burden of establishing that “(1) the [infring]ing use is
`
` © 2023 Thomson Reuters. No claim to original U.S. Government Works.
`
`7
`
`

`

`Case 2:22-cv-00263-JRG-RSP Document 49-2 Filed 03/28/23 Page 9 of 12 PageID #: 1672
`Arbutus Biopharma Corporation v. Moderna, Inc., --- F.Supp.3d ---- (2022)
`
`vaccine. (Def.’s Ex. A.)7 The Contract notes that the novel
`coronavirus had spread globally resulting in an outbreak in the
`United States, which constituted a national emergency. (Id. §
`C.1.1.) The Contract further provides that, “[t]he Department
`of Defense and Health and Human Services (HHS) require
`large scale manufacturing of vaccine doses in support of the
`national emergency response to the Coronavirus Disease 2019
`(COVID-19) for the United States Government (USG) and
`the US population.” (Id. § C.1.) Specifically, the Contract
`states:
`
`*6 Under Operation Warp Speed (OWS), the Department
`of Defense and HHS are leading a whole of nation
`effort to ensure development of promising vaccine,
`diagnostic and therapeutic candidates and ensure that
`these medical countermeasures are available in the
`quantities required to reduce SARS-CoV-2 transmission,
`identify prior and/or current infection, and improve patient
`care, thereby mitigating the impact of COVID-19 on
`the nation and its people. The DoD Joint Program
`Executive Office for Chemical, Biological, Radiological
`and Nuclear Defense (JPEO-CBRD) is providing expertise
`and contracting support to HHS, in compliance with PL
`115-92 Authorization Letter for DoD Medical Priorities,
`through an Interagency Agreement, signed April 23, 2020.
`As OWS products progress to clinical trials to evaluate
`the safety and efficacy of vaccines and therapeutics,
`it is critical that, in parallel, the USG supports large
`scale manufacturing so that vaccine doses or therapeutic
`treatment courses are immediately available for nationwide
`access as soon as a positive efficacy signal is obtained and
`the medical countermeasures are authorized for widespread
`use.
`(Id. § C.1.1.1.)
`
`Moderna contends that this contract language unequivocally
`demonstrates that its production of the COVID-19 vaccine
`was “for the Government.” It claims that it supplied,
`and continues to supply, COVID-19 vaccine doses to
`the U.S. Government for the Government to achieve a
`specific government objective, i.e., supporting a nationwide
`vaccination effort.
`
`Plaintiffs respond that for the infringing acts to be “for the
`Government,” the Government benefit must be direct and
`not merely incidental. Thus, when the Government authorizes
`third-party action, it is not liable for any infringement caused
`by the third party, but rather only for the infringement
`actual