Stanford’s Mark Lemley on the Moderna IP Dispute with US Government

Vaccines have been an invaluable tool in fighting COVID-19, offering protections to millions. It has also raised interesting questions about intellectual property. Development of the Moderna vaccine took years and included a four-year collaboration between the company and the NIH—the U.S. government investing both time from its scientists but also  an estimated $10 billion in taxpayer funding to develop the vaccine, test it, and provide doses to the federal government. But when Moderna applied for a patent, the company said it had “reached the good-faith determination” that three NIH scientist at its Vaccine Research Center who worked with Moderna  “did not co-invent” the component in question for the patent, and so were left off of the patent application. Here, IP law expert Professor Mark Lemley discusses why IP ownership is important, what the government’s next legal steps might be, and legal questions the situation raises.

What is the dispute between Moderna and the NIH about? I’ve read that the primary focus is on who should be named on the “principal patent application?”

Moderna filed a patent application based on its vaccines that did not name scientists at the NIH, even though by all accounts they worked together to identify the SARS-COV-2 virus and the vaccine.

Stanford Health Law Expert Michelle Mello on Biden's New Vaccine Mandates

Why is being named on the principal patent important?

It matters for two reasons.  First, the patent may be unenforceable if Moderna deliberately names the wrong inventors.  Second, absent an agreement between the parties, any inventor (or their employer) is free to exploit the patent.  So, if the US government is a co-inventor, it is also a co-owner, and is free to license the technology to others without Moderna’s permission.

Do we know what the government’s case is—how it can prove that it should share in ownership of the patent?

One thing worth noting is that how the patent system defines inventorship is different than how credit works in academic science.  The head of a lab, for instance, often ends up named as an author on a paper even though they didn’t do much of the actual work.  But they wouldn’t qualify as an inventor under patent law.  Someone is a joint inventor if they make a contribution to the inventive part of one or more claims in the patent.  Figuring out whether the government scientists did that requires delving into the facts of who did what, as well as a close look at the language of the claims.  I haven’t done that.

Who will make that determination—the US Patent Office or a court?

Mark A. Lemley
Stanford Law Professor Mark Lemley

The PTO isn’t really equipped to make that assessment, and they usually take whatever the applicant tells them as true.  But the government could sue for correction of inventorship, seeking to have their scientists added to the patent.  Or someone Moderna sues for patent infringement could defend on the ground that Moderna deliberately misrepresented who the inventors are.

Can the government claim any IP ownership in exchange for its funding of the project, which was millions of dollars?

The Bayh-Dole Act gives the government certain rights over patents obtained through government funding, including so-called “march-in rights” that allow the government to compel Moderna to license the patent to others.  That’s true whether or not they are co-inventors.  But the government has never used those march-in rights.  It would be in a much stronger position if it insisted on licensing the patent to others if it was actually a co-owner of the patent.

Is there a lesson here in how deals are structured by the NIH and its scientists?

It is always a good idea to sign contracts in advance specifying who owns what.

The government, through the NIH and other government agencies such as the US Army or NASA, does act as an early-stage investor, offering funding for medical and other innovations, often through universities. Do we know if those investments are paid back when IP is realized and companies formed and sold or made public? The universities that employ the faculty who do the research often own at least part of the IP and receive a return on investment.

The government usually doesn’t end up with a share of the company or a right to be paid back out of company proceeds.  Rather, the government tends to treat innovation as its own reward, because all Americans benefit from the patented technology.

Mark Lemley is the William H. Neukom Professor of Law at Stanford Law School and the director of the Stanford Program in Law, Science and Technology. He is also a senior fellow at the Stanford Institute for Economic Policy Research and affiliated faculty in the Symbolic Systems program. In addition to teaching, he also litigates and counsels clients in all areas of intellectual property, antitrust, and internet law as a founding partner of Durie Tangri LLP.