U.S. Taxpayers Should Not Be Paying for Private Patent Infringement

“The recent imposition of the Justice Department into a private infringement lawsuit likely will not be the last effort of this Administration to misuse Section 1498 (a) to advance a policy agenda undermining property rights in patents, particularly in the pharmaceutical industry.”

https://depositphotos.com/6496641/stock-photo-looking-at-the-opinion-section.htmlFor well over a year, Senator Elizabeth Warren (D-MA) and some members of Congress have engaged in a campaign to urge the Health and Human Services Secretary Xavier Becerra to break patents on pharmaceuticals to lower drug prices by invoking a century-old statute, Title 28 of the U.S. Code 1498. This is their “game plan”: HHS should contract with generic drug companies willfully to infringe pharmaceutical patents, thereby requiring any damages to be paid from public funds.

This strategy took a new tack in early March 2023, when the Biden Administration’s Justice Department filed a surprise “Statement of Interest” in a private lawsuit on behalf  “the Government and its Department of Health and Human Services and the Department of Defense.” The case, filed in Delaware federal court, was initiated by Arbutus Biopharma and Genevant Sciences, which allege that that patents they own were infringed by Moderna in producing its version of the COVID-19 vaccine. Strangely, the Justice Department did not move to intervene but instead simply decided to “inform” the trial judge that he did not have jurisdiction to decide infringement claims against Moderna that arose from a 2020 Army contract to purchase Moderna’s vaccine because the Government consented to any liability under Section 1498.

Dangerous Implications

Although the Justice Department proclaimed its “Statement of Interest” should resolve the applicability of Section 1498, the federal trial judge was not persuaded. He reminded the Government that Congress enacted this law in 1910 to clarify that the Government could be responsible for paying the owner “reasonable compensation” if it infringed a patent in exercising eminent domain authority. And, in 1949, Section 1498 was amended to immunize contractors who worked in the WWII effort, but only if any infringement was “for the Government” and “with the authorization and consent of the Government.”

Significantly, precedential appellate law holds: “The fact that the government has an interest in [a] 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.” Larson v. United States (Cl. Ct. 1992). Therefore, in the Arbutus case, the federal trial judge pointed out that Section 1498 was inapplicable because, although the Government may have paid for the Moderna vaccine, it was not produced “for the Government,” but “for the use” and the benefit of private citizens. More importantly, he recognized the dangerous implication of the Justice Department’s position, which “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.”

Notably, the Government also did not concede that Moderna engaged in patent infringement; instead, it wanted an Article I court to make that decision, where many of the judges are former federal lawyers, and have the public pay for any damages—even though that amount could well be in the billions.

The timing of the Justice Department’s “Statement of Interest” is also curious. Within a week, Moderna paid a $400 million “catch up” payment to the National Institutes of Health for rights to use a chemical technique that Moderna had hotly disputed was not patentable. Moderna has offered no explanation for the reversal of its prior position.

Just the Beginning

The recent imposition of the Justice Department into a private infringement lawsuit likely will not be the last effort of this Administration to misuse Section 1498 (a) to advance a policy agenda undermining property rights in patents, particularly in the pharmaceutical industry. All American industries where patents are central to their business, however, should be concerned. Continued diligence will be required to prevent other efforts to expand the scope of Section 1498(a) well beyond that which Congress intended and transfer the cost to U.S. taxpayers.

 

Image Source: Deposit Photos
Image ID: 6496641
Copyright: stuartmiles 

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8 comments so far. Add my comment.

  • [Avatar for sarah mcpherson]
    sarah mcpherson
    March 23, 2023 02:00 am

    When Sarah Elizabeth asked me over and over for donations, I gave. Thrn I told her no more. I told her the USPTO was a disgrace. And if she refused to help me, ditto. She continued to ask me for months after. This is why I know my son removed my mailing to her.
    I also contacted an Attv Ainley who on public record seems to gave gone a bit to far. Ehrn I emailed him,, HE too swore I never contacted Him. I know he is old and maybe he forgot. But, I mailed him at least 3 or 4 times. So this is the reason Jimmy Burroughs the Postmaster told me I was never to get a mailbox. He said I could only have a PO BOX. Funny thing while in FINGER TN they even chsngrd the legal name of my street after I contacted the USPTO,, and LLO. As soon as we moved they put the legal postal address back with the buyer. I have proof of all of this. Good luck to all of the attys who aren’t connected to the underworld of IP. You have wasted your education. GOOGLE AND THE USPTO will make sure of it. Lol AI, DABUS what a joke.

  • [Avatar for Mike Decker]
    Mike Decker
    March 22, 2023 02:35 pm

    Yes, thanks for bringing this to light.

  • [Avatar for sarah mcpherson]
    sarah mcpherson
    March 22, 2023 08:59 am

    Sarah Elizabeth asked me again for a donation. Instead I sent her apiece of my Itty bitty mind. She obviously never got it. It was stolen before it was received. NOW, who pray tell would have committed such a crime.

  • [Avatar for Anon]
    Anon
    March 22, 2023 07:14 am

    The actions here merely happen to affect patents, as the infection at heart has been raging for quite some time in the political weaponization of the 4th Branch.

  • [Avatar for Addy]
    Addy
    March 21, 2023 08:55 am

    The political Left wants to set aside the law so they can dictate “for the public good”? Color me shocked.

    If the Left follows its standard pattern, Becerra will OK setting aside these patent rights, requiring PhArma to litigate (and ultimately win) over the next 5-7 years, all the while having their hard-won research IP willfully infringed. The taxpayer, as always, will be paying the damages.

  • [Avatar for Marc Ehrlich]
    Marc Ehrlich
    March 21, 2023 06:49 am

    How is it that the govt plan is not simply inducing willful infringement by the generics and how would they not be liable for treble damages and fees? More to the point how would their plan not simply be deemed an impermissible taking? I feel like maybe you guys are overstating the govt plan a bit? Is it really payment to willfully infringe or is it more like an indemnity in case sales by the generic co infringe patents?

  • [Avatar for Pro Say]
    Pro Say
    March 20, 2023 11:22 pm

    . . . and yet another example of a sitting, president entering senility with dementia.

    Anyone who believes Biden actually knows what the h.e.l.l. he’s doing in the IP realm (much less what this case is about and what’s at stake) please raise their hand.

    America — and indeed the world (except our enemies, of course) — needs new blood come 2024.

    Regardless of one’s political leaning, both Biden and Trump are too old to be president again.

    Too d.a.m.n. old.

  • [Avatar for Tom Bolen]
    Tom Bolen
    March 20, 2023 07:22 pm

    Thanks for standing up for American ingenuity and integrity of our laws! The political and corporate arrogance here needs to be exposed and stopped in its tracks.
    Thanks again

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