Did Moderna just say the pandemic is over? And it’s ready to enforce its patents?
Zachary Silbersher
On March 7, Moderna updated its patent-pledge with respect to enforcement of its IP rights for its Covid vaccine. In short, Moderna pledged that it will never enforce its patents against Covid vaccines manufactured within certain middle and low-income countries, but may enforce them against vaccines in other countries, such as the US. What are the take-aways from the pledge?
The first takeaway is that Moderna’s patent pledge suggests that it may believe the Covid pandemic is over, that is if we compare Moderna’s latest patent pledge to its earlier pledge. In October 2020, Moderna pledged that “while the pandemic continues, Moderna will not enforce our COVID-19 related patents against those making vaccines intended to combat the pandemic.” In its latest patent pledge, Moderna stated that it was “updating” its earlier pledge, and was pledging “never to enforce its patents for COVID-19 vaccines against” certain low- and middle-income countries. Outside of those countries, Modera stated that it “remains willing to license its technology for COVID-19 vaccine to manufacturers in these countries on commercially reasonable terms.” A willingness to license often also means a willingness to sue.
In an interview with The Wall Street Journal, Moderna’s CEO, Stéphane Bancel stated, “If people have used, or are using our technology to make a vaccine, I don’t understand why, once we’re in an endemic setting when there’s plenty of vaccine and there’s no issue to supply vaccines, why we should not get rewarded for the things we invented.”
Bancel’s suggestion that we are now in an “endemic” setting would presumably alleviate the company of its earlier pledge not to enforce its patents “while the pandemic continues.” Indeed, even if the earlier pledge itself may not have been contractually-binding, updating it publicly was presumably necessary to the extent Moderna was prepared to move forward with licensing (and suing over) its intellectual-property now that the pandemic is not “continuing”.
At the time of Moderna’s initial patent pledge, there was some speculation for why Moderna bothered with such a pledge in the first place. Although we can only speculate about Moderna’s tactics, the pledge may have been a preemptive response to the proposed mandate that vaccine makers waiver all intellectual property rights around their vaccines. The goal of the IP waiver may have been noble, namely, to boost vaccine availability by removing all potential obstacles. Yet, for a company such as Moderna, which is built upon its novel mRNA medication platform, such an IP waiver may have risked future negative effects for the company long after the Covid pandemic expired.
To understand this, it is important to understand that when a company such as Moderna says that it has patents for its Covid-19 vaccine, there is not a single patent that covers the entirety of Moderna’s vaccine. On the contrary, Moderna has listed at least eight patents that purportedly cover its vaccine. Each of these patents may cover different features of the vaccine—such as a specific ingredient, or a method of manufacture, or even just a part of a method of manufacture. The other important point is that each of Moderna’s patents may apply to its Covid vaccine, but may equally apply to other vaccines manufactured by Moderna, and they may also cover mRNA medicines other than vaccines.
To take one example, one of the patents Moderna has identified as covering its vaccine is U.S. Patent No. 9,868,692. This patent purports to cover a proprietary ionizable lipid. Historically, a principle engineering obstacle towards development of successful mRNA medications has been a delivery system for the mRNA payload. Moderna’s vaccine uses a lipid nanoparticle (LNP) that includes at least four ingredients, one of which is an ionizable lipid. That LNP delivery system can likely be used for other vaccines as well as other mRNA medications. Thus, to the extent Moderna has invented its own features of its LNP delivery system, waiving the IP rights to that patent could impact the license rights to many other drugs within the company’s pipeline—including future drugs not yet under development. (In fact, the recent lawsuit by Arbutus and Genevant against Moderna’s vaccine asserts patents covering the LNP delivery system. Arbutus and Genevant do not purport to own patents covering Moderna’s mRNA vaccine itself.)
The Wall Street Journal interview also indicates that Moderna declined to say if and when it intends to begin enforcement of its patents. This is not unexpected. If Moderna is truly teeing up a lawsuit against Covid-vaccine competitors, announcing them publicly could unnecessarily hobble those suits. Such a public announcement could, for instance, confer jurisdiction against a vaccine competitor to beat Moderna to court by commencing a declaratory judgment action. That could give the competitor the upper-hand by allowing it to choose a more favorable venue for the lawsuit. It could also give Moderna’s competitors a jump-start on preparing and filing petitions at the Patent Office to invalidate the patents through proceedings for inter partes review.
On the other hand, Moderna has not made a secret about which patents it believes cover its vaccine. It has publicly-listed them on its website. There is no doubt that other major manufacturers of Covid-vaccines have already studied these patents and developed non-infringement and/or invalidity positions if and when Moderna comes knocking on their doors looking for a royalty.
The most obvious potential target for a patent lawsuit from Moderna is likely Pfizer/BioNTech. (That is, if Pfizer is not already licensed.). Like Moderna, Pfizer’s vaccine also uses mRNA technology. Even if two companies’ vaccines are very different, and even if both companies independently developed their vaccines, it is not impossible that some featureof Pfizer’s vaccine may infringe one or more of Moderna’s patents.
Nonetheless, even if Moderna has a strong patent infringement case against Pfizer, or another major vaccine supplier, the principle issue it would have to consider is the likelihood of mutual assured destruction. Vaccine competitors likely have their own patents, and if sued by Moderna, they would counterclaim with assertions of those patents against Moderna. (In July 2020, I did a preliminary analysis of patents potentially covering some of the existing vaccine candidates at the time.) And if one of those companies doesn’t have its own patents, it could always acquire patents and then use them against Moderna. This factor is what typically deters large competitors from going to the mat over patent infringement.
Given the billions of dollars earned by both companies in such a short period of time for their vaccines, a patent lawsuit by Moderna against Pfizer would be monstrous, high-profile affair. One of the collateral messages from Moderna’s first patent pledge was that, if taken at its word, it did not intend to use its patent to seek an injunction against any competing vaccines while the pandemic was raging. In other words, it would not use its patent to knock Pfizer’s vaccine off the market. Now that the pandemic may be endemic, Moderna’s most recent patent pledge may have walked back that suggestion. If the pandemic is over and vaccine supplies are relatively plentiful in the US, then Moderna may be suggesting that it will not rule out seeking an injunction against competing vaccines. And even if it doesn’t get an injunction, the threat of an injunction always drives up the royalty rate.
The panedmic may be over, but we still don’t know how long people will be taking Covid-vaccine boosters. For any vaccine maker that has patented even a small but necessary feature for Covid vaccines, the royalty rate on forever may be worth fighting over. (Obviously, patents have expiration dates, but twenty years is still a long time.)