Did Moderna Sink its Own Ship by Making A “Patent Pledge”?
October 13, 2022
Quick Take, Modernatx, Inc. et ano. v. Pfizer, Inc., et al.
Moderna famously pioneered a successful mRNA COVID-19 vaccine in 2020 while the U.S. and the world were in the throes of the COVID pandemic. Moderna’s vaccine was built on mRNA technology that it had patented via applications filed in 2018 and 2020. In October 2020, Moderna publicly made a so-called “patent pledge” by stating that, “while the COVID pandemic continues, Moderna will not enforce our COVID-19 related patents against those making vaccines intended to combat the pandemic” (Moderna’s “Pledge”)¹.
As the pandemic raged on, Pfizer and BioNTech also rolled out mRNA COVID-19 vaccines. According to Moderna, Pfizer’s and BioNTech’s vaccines use Moderna’s patented technology used in its own COVID-19 vaccine. Moderna held to its Pledge; it did not enforce its patents against Pfizer and BioNTech when they brought their vaccines to market.
The Updated Pledge
But on March 7, 2022, Moderna updated its Pledge (the “Updated Pledge”). It publicly announced that “vaccine supply is no longer a barrier to access” in all but 92 low- and middle-income countries, and that in all but those 92 countries, Moderna “expects those using Moderna-patented technologies will respect [Moderna’s] intellectual property.” Finally, the Updated Pledge publicly clarified that Moderna is willing to license its intellectual property on commercially reasonable terms.
One could fairly assume that Moderna contacted both Pfizer and BioNTech after the Updated Pledge, and that those parties attempted to negotiate a royalty-bearing patent license. Neither Pfizer nor BioNTech withdrew their COVID-19 vaccines from the U.S. or other high-income markets. Nor did they enter a license agreement with Moderna to use the patented technology.
The Law Suit
Then, on August 26, 2022, Moderna filed a patent infringement lawsuit against Pfizer and BioNTech for infringing three Moderna patents with their COVID-19 vaccines. Observers were quick to begin questioning what effect Moderna’s Patent Pledge will have on its claims. Caldwell partner, Katherine Rubino and I spoke with Law 360’s Dani Kass the same day the suit was filed—a conversation that also touched on Moderna’s Pledge. The salient question is: will Moderna’s October 2020 patent Pledge provide Pfizer and BioNTech a defense to the infringement claims? In other words, how can Moderna successfully sue the two COVID-19 vaccine producers for infringing Moderna patents that it said it would not enforce?
Some have addressed several ways in which the Pledge could be used against Moderna to prevent it from now enforcing its rights under patents-in-suit. One path to enforcing the Pledge is under contract theory, treating the Pledge as a public license. In that case, the Pledge would operate as an offer to accept a royalty-free license; the offer could then be accepted by performance (undertaking the licensed activity), forming the contract. Another path to enforcement is the doctrine of promissory estoppel (often called “quasi contract”), under which a court could find an implied contract based on the Pledge and the two defendants’ action in reliance on that Pledge². At least one commentator has taken the position that Moderna should not be permitted to sue until the WHO officially downgrades the COVID-19 situation from pandemic to endemic.
The Aftermath of Moderna’s Pledge
Under either theory, the fact that the “promise” was expressly for a limited time (only as long as the pandemic continues) has a profound impact. For a contract, it sets the end date of the license (when the pandemic no longer continues). But it does not do so concretely; it leaves an open question of how one determines when the pandemic ends. A court will have to determine how the discontinuance of the pandemic is to be determined for the purposes of the contract. To do that, the court will evaluate the plain text in the entire pledge’s context and apply an arsenal of construction canons—including aiming for the parties’ probable intentions. It may well find that one ordinarily expects a pandemic to be determined by a governmental agency. Or it may find that the parties intended that it would only abate enforcement for as long as Moderna thought the pandemic continued; after all, if they intended the “license” to end only when, e.g., the WHO or CDC or any other group declared the COVID pandemic “over”, then they would have specified so—and that their failure to so specify left the determination in the offeror’s hands. It could avoid that question by finding that, notwithstanding a CDC or WHO or other proclamation, the pandemic was in fact over in March 2022 because it was no longer in a phase of sudden rapid spread, growth, or development—Merriam-Webster’s second definition for “pandemic”—which is the patently relevant characteristic of the pandemic to the Pledge. Perhaps it may find that any reasonable “promisee” of the Pledge would understand that its end date was subjective, given that the precise date when a pandemic no longer continues is hardly objectively measurable—particularly when the “promise” did not specify the objective metric for that event. It think it is more likely that the court would let the determination of whether the pandemic had ended as of March 2022 to be a fact question (for which a want of CDC and WHO decrees could be evidence), rather than read some more specific term into the Pledge (interpreting the Pledge as meaning that it ends when, e.g., the CDC declares the COVID pandemic over).
Under promissory estoppel—an equitable theory—the Pledge’s definite-but-squishy end date has arguably an even greater impact. Consider the following equitable arguments. If the defendants undertook such enormous financial commitments in reliance on a Pledge that very clearly presented a termination event, but the means of determining the exact date of that event is obviously unclear from the Pledge, then how unjust is it for the defendants to have reaped huge profits until March 2022, but then have to pay the piper thereafter? Does the Pledge need to be enforce at all in or after March 2022 to avoid injustice? That does not seem very unjust. And what would the defendants have done without the Pledge? Would they have developed and marketed the products for the profit they would make even paying Moderna royalties on the patents? Perhaps so.
After all, the pandemic created a huge global market with completely inelastic demand for an effective vaccine. So did the defendants really act in reliance on the Pledge (affecting both the first and second elements of promissory estoppel), or was the Pledge merely a convenient profit booster for the defendants over the short term? Or how might promissory estoppel affect damages, even if the Pledge were an enforceable promise but it was okay to terminate it subjectively via the Updated Pledge? Would it be unjust to begin assessing damages (awarding royalties to Moderna) the day following notice of termination via the Updated Pledge? Perhaps so because the defendants could not really know the actual end date of the license beforehand. But that cuts both ways because they knew from the outset that they wouldn’t know when the purported license would end—and the Pledge did not say that there would be any notice announcement or notice period of when the Pledge would terminate.
It would be very interesting to see how the above arguments (and those that the parties would actually advance) play out in court. You can bet the parties have considered those arguments and will continue to do so between now and defendants’ responsive filing deadline of December 5, 2022. The parties may resolve the matter before then with licenses, so the court may not get to entertain these issues.
1. Dan Shores, “Breaking Down Moderna’s COVID-19 Patent Pledge: Why Did They Do It?” (IP Watchdog 2020), available at https://www.ipwatchdog.com/2020/11/11/breaking-modernas-covid-19-patent-pledge/id=127224/. Moderna’s October 2020 patent Pledge is no longer available on its own website.
2. See, e.g., Loranger Construction Corp. v. E.F. Hauserman Co., 374 N.E.2d 306, 311 (Mass. Ct. App. 1978) (the elements of promissory estoppel are: (1) a promise that the promisor should reasonably expect to induce the promisee’s action or forbearance of a definite and substantial character; (2) the promise does induce such action or forbearance; and (3) only enforcing the promise can avoid injustice.).