What are the takeaways from Moderna’s patent suit against Pfizer/BioNTech?
On August 26, Moderna issued a press release announcing it will be filing suit against Pfizer and BioNTech for patent infringement. Both Moderna and Pfizer/BioNTech sell Covid-19 vaccines that is based upon mRNA technology. Moderna is accusing Pfizer/BioNTech’s Covid-19 vaccine, Comrinaty®, of infringing Moderna’s patents covering certain features of Moderna’s mRNA technology. (At the time of publishing this post, Moderna’s complaint had not yet been filed.)
What are the major takeaways from Moderna’s patent suit against Pfizer/BioNTech?
First, Moderna is not seeking an injunction. Rather, Moderna is only seeking monetary damages. Typically, when a patent-holder sues for infringement of a patent, the patent-holder can seek two forms of relief: injunctive relief and damages. To be entitled to an injunction, the patent holder must typically show that it practices the patent which it is asserting. Moderna likely practices the mRNA patents that it is asserting against Pfizer/BioNTech. Accordingly, Moderna would very likely have grounds to seek an injunction knocking Pfizer’s vaccine off the market. Despite that, Moderna’s press release indicates that it is “not seeking to remove Comirnaty® from the market and is not asking for an injunction to prevent its future sale.”
Second, Moderna is only seeking damages from March 8, 2022. Moderna previously issued an informal patent pledge. It stated that, while the pandemic lasts, it will not be enforcing any of its patents against competitor vaccine makers. On March 7, 2022, it updated that patent pledge. At the time, I wrote that Moderna appeared to be telegraphing that it believed the pandemic was over, and its pledge not to sue certain competitors for patent infringement no longer applied.
Apparently true to its word, Moderna is only seeking damages against Pfizer/BioNTech from the date it updated its original patent pledge—namely, March 8, 2022. That means, Moderna is essentially foregoing potentially billions in prospective damages based upon Pfizer/BioNTech’s sales in 2021 and early 2022. That period likely covers when the bulk of Americans were initially vaccinated.
Third, Moderna does not appear to be starting a warpath to tax or shut down every Covid-19 vaccine competitor around the world. Rather, Moderna’s August 26 press release reasserts its promise never to enforce its patents in numerous low- and middle-income countries. Further, Moderna is only filing two suits—one in America and another in Germany. In the U.S. suit, Moderna can most likely only claim damages for Pfizer’s vaccine distributed to Americans. (Although, that technically remains to be seen based upon where Pfizer/BioNTech manufactures Comirnaty®, and whether Moderna will attempt to seek damages against vaccine units that may be manufactured in the U.S., but distributed abroad.)
Fourth, Moderna’s press release states that it is “not seeking damages for Pfizer’s sales where the U.S. Government would be responsible for any damages.” This sentence, which is buried in its press release, could significantly circumscribe the scope of damages Moderna seeks to recover. It also shows that Moderna is attempting to thread a needle between pursuing damages from Pfizer, while simultaneously defending itself from other patent suits filed against Moderna.
Moderna is currently being sued by two separate companies, Arbutus and Alnylam Pharmaceuticals, for patent infringement related to Moderna’s Covid-19 vaccine. Both companies claim that they each hold patents covering different aspects of the mRNA technology used by Moderna’s vaccine. In response to those suits, Moderna has pushed a creative defense. It argues that most, but not all, of its vaccine was sold pursuant to a contract with the U.S. government, and under that contract, the U.S. government purportedly agreed to be liable for any claims of patent infringement against Moderna’s vaccine.
I previously summarized Moderna’s argument here. Essentially, Moderna claims that its vaccine contract with the government was made pursuant to a specific statute (28 U.S.C. § 1498) that, in the case of certain national emergencies, permits the government to take on the risk of patent liability for the purpose of encouraging government contractors to meet expedited contracting needs.
The quirk here is that Pfizer has also been sued by Alnylam. In response to Alnylam’s suit, Moderna argued that the U.S. government agreed to bear the brunt of most of Moderna’s patent liability under § 1498. Yet, Pfizer did not make that argument. Thus, it’s not clear what Moderna is saying here. Is it saying that if Pfizer makes a § 1498 defense to Moderna’s suit, then Moderna will not challenge it? Indeed, if Moderna were to challenge Pfizer’s ability to make a § 1498 defense, it would potentially jeopardize its own defense in the suits brought by Arbutus and Alnylam. On the other hand, if Moderna capitulates to Pfizer’s § 1498 defense, it may be foregoing a substantial sum of recoverable damages.
Much of this will depend upon whether Pfizer’s sales of Comirnaty® from March 8, 2022 onward were made under its contract with the U.S. government, or if its current sales are outside of that contract. If Pfizer’s current sales are outside of that contract, then Moderna may not necessarily be giving up much by promising not to pursue damages for sales made under Pfizer’s contract with the U.S. government.
Fifth, despite all of the foregoing, Moderna’s damages could be substantial. Because Moderna sells a competing product to Pfizer’s vaccine, then Moderna could seek its lost profits. Generally, that means Moderna will argue that, from March 8 onward, every sale that Pfizer made would have been a sale that Moderna would have made but for Pfizer’s infringement. Moderna would have to account for the fact that there are other vaccines on the market in the U.S., such as that sold by J&J. Yet, damages will continue to accrue as the case proceeds, which could last for years.
Moderna could also seek a reasonable royalty. Here, the patents purport to cover key aspects of Moderna’s mRNA technology. To the extent these features were critical to the efficacy of Moderna’s vaccine, that will only drive up the royalty higher.
Sixth, Moderna’s suit is not without risk. The reason patent wars start is because both companies have their own patents. Pfizer and BioNTech presumably have their own patents cover specific features of their own vaccine. They may therefore have a claim that, even if they are infringing Moderna’s patents, Moderna is infringing Pfizer’s or BioNTech’s patents.
Patents do not cancel each other out. Rather, if both sides have claims for infringement of their own patents, then both sides could have claims for substantial damages from each other. And even if Pfizer or BioNTech do not have their own patents, they could theoretically acquire patents from third-parties that may cover Moderna’s vaccine—and then counterclaim with them against Moderna. It remains to be seen how aggressive Pfizer’s and BioNTech’s response to Moderna’s suit will be.