Should the Federal Circuit Stand Down on Standing?

• Author: Welker, Avery J.

1. INTRODUCTION

   On March 11, 2020, the World Health Organization officially declared COVID-19 a pandemic, just ninety days after patients in Wuhan, China, began experiencing an unknown pneumonia-like illness. (1) States rapidly responded, beginning shutdowns just a few days later. (2) Amidst the early shutdown chaos, Moderna began human trials on its new COVID-19 vaccine. (3) Moderna's road to vaccine development was not without bumps, however, as the company launched a patent validity attack on another company's technology it used while developing its vaccine. The dispute made its way to the Court of Appeals for the Federal Circuit, where the question focused on whether Moderna could even contest the results of an Inter Partes Review ("IPR"), which could have invalidated the patent and given Moderna license to use the technology, in the first place--i.e., did Moderna have standing?

   The doctrine of standing is a fundamental building block of United States jurisprudence, (4) acting as a gatekeeper to federal court jurisdiction. (5) In ModernaTx, Inc. v. Arbutus Biopharma Corp., the Federal Circuit dismissed the appellant's appeal for lack of standing. (6) The Federal Circuit determined that the appellant failed to establish an injury-in-fact when it appealed merely the results of an IPR. (7) The IPR invalidated specific patent claims and validated the remaining ones. (8) The cross-appellant appealed the invalidated claims, (9) but the Federal Circuit held that the claims were invalid because another source had previously disclosed them before the patent was issued. (10) The decision followed previous Federal Circuit standing jurisprudence, showing the Federal Circuit's commitment to requiring a concrete injury-in-fact to present a case or controversy. (11)

   This Note analyzes the Federal Circuit's approach to the doctrine of standing arising from appeals from the Patent Trial and Appeal Board ("PTAB") in the United States Patent and Trademark Office. Part II describes the facts and holding of ModernaTX. Part III details the doctrines of standing and patent nonobviousness and novelty requirements. In addition, Part III describes previous Federal Circuit jurisprudence on appealing PTAB decisions. Part IV explains the Federal Circuit's decision in ModernaTX. Lastly, Part V comments on how the Federal Circuit's decision, while in harmony with its precedent, is in tension with and diverges from the congressional intent of the America Invents Act.

2. FACTS AND HOLDING

   Arbutus Biopharma Corporation is the owner of U.S. Patent No. 9,364,435 (the "'435 patent"), titled "Lipid Formulations for Nucleic Acid Delivery." (12) The '435 patent aims to address the process of RNA interference ("RNAi"). (13) RNAi involves identifying double-stranded RNA and using small interfering RNA ("siRNA") to posttranscriptionally suppress gene expression. (14) The interfering RNA is single or double-stranded RNA that can silence a gene by inhibiting mRNA translation when that mRNA is "complementary to the interfering RNA sequence." (15) The siRNA "induces specific degradation of mRNA through complementary base pairing" to suppress gene expression. (16)

   To be effective, interfering RNA must be successfully delivered to a therapeutic target. (17) The '435 patent is directed to facilitating the effective delivery of interfering RNA, which employs stable nucleic acid-lipid particles ("SNALP") containing "therapeutic agents" and the methods used to make and deliver the SNALP. (18) A SNALP is a lipid mixture made of: (1) cationic lipid(s), comprising about 50-85 mol % of the total lipid content; (2) non-cationic lipid(s), comprising about 13-49.5 mol % of the total lipid content; (3) a therapeutic agent, which may be a nucleic acid, such as the interfering RNA molecule (e.g., siRNA); and (4) conjugated lipid(s) "that inhibit aggregation of particles" and comprise about 0.5-2 mol % of the total lipid content. (19) The therapeutic agent is delivered to a cell by contacting the cell with the SNALP. (20)

   The '435 patent claims the SNALP composition in its sole independent claim. (21) Over half of the dependent claims add limitations to appeal," this Note uses only Arbutus Biopharma Corporation for the sake of simplicity. Id. The cross-appellant, Arbutus Biopharma Corporation, is referred to as "Arbutus" throughout this note. A patent, as used here, refers to a utility patent, which protects inventions that are categorized as: (1) a process; (2) a machine; (3) a manufacture; or (4) a composition of matter, or an improvement to an invention in one of those categories. 35 U.S.C. [section] 101. the SNALP composition in the independent claim. (22) The other dependent claims address the agent in the SNALP, the pharmaceutical composition of the SNALP, treatments employed using the SNALP, and delivery of the therapeutic agent. (23)

   ModernaTx, Inc. ("Moderna") challenged all claims of the '435 patent in an Inter Partes Review proceeding. (24) Moderna asserted three grounds under 35 U.S.C. [section][section] 102 (anticipation) and 103 (obviousness), which purported to invalidate all independent and dependent claims of the '435 patent. (25) First, Moderna argued that the '435 patent's claims would be obvious over International Patent Publication WO 2005/007196 (the "'196 PCT") and U.S. Patent Publication 2006/0134189 (the "'189 publication"). (26) Second, Moderna contended that the '435 patent's claims would be obvious over the combination of the '196 PCT, the '189 publication, and two articles, the Lin and Ahmad articles. (27) Finally, it argued that the claims in the '435 patent were anticipated by U.S. Patent Publication 2006/0240554 (the "'554 publication") or that the claims would be obvious under the '554 publication. (28)

   In each of its various obviousness arguments, Moderna focused on the SNALP composition--claiming that some of the composition ranges claimed in the '435 patent overlapped with the ranges disclosed by the prior art. (29) In its anticipation claim, Moderna claimed that the "L054 formulation" found in the '554 publication contained all claimed components in its claimed ranges in the '435 patent. (30) The PTAB agreed with Moderna that claims 1-6, 9, 12, and 14-15 were previously disclosed and anticipated in the '554 publication. (31) However, the PTAB did not cancel the rest of the claims, noting that Moderna did not prove anticipation or obviousness on the remaining claims. (32)

   Moderna appealed the PTAB's decision to not cancel some of the '435 patent claims, contending that the claims were either anticipated or

   AWH Corp., 415 F.3d 1303, 1312 (Fed. Cir. 2005) (quoting Innova/Pure Water, Inc. v. Safari Water Filtration Sys., Inc., 381 F.3d 1111, 1115 (Fed. Cir. 2004)). obvious. (33) Arbutus cross-appealed the PTAB's decision that the canceled claims were anticipated. (34) The Federal Circuit heard the case under the jurisdiction conveyed by 28 U.S.C. [section] 1295(a)(4). (35) However, as a threshold matter, Arbutus contended that Moderna lacked standing to challenge the patents. (36) Arbutus filed a motion to dismiss for lack of standing after Moderna filed its appeal in November 2019. (37) Arbutus argued that Moderna lacked standing because it suffered no injury in fact, as Arbutus never accused Moderna of infringing the '435 patent. (38) In Arbutus's view, the only way for Moderna to show standing would be to prove that Moderna was using or definitively planned to use the technology in the '435 patent, and, Arbutus claimed, Moderna did neither of these. (39)

   To rebut the motion to dismiss, Moderna, relying on Federal Circuit precedent, argued that it had standing as a licensee of the '435 patent and that its "actual monetary obligations" change with the PTAB's IPR decision for the '435 patent. (40) Moderna's Senior Vice President and Deputy General Counsel, Shaun Ryan, declared that Arbutus licensed patents (including the '435 patent) to Acuitas Biotherapeutics ("Acuitas"), who then sublicensed the technology to Moderna for use with four viral targets, including Respiratory Syncytial Virus ("RSV"). (41) During the RSV viral target development, Moderna made one milestone payment to Acuitas and could have more milestone payments and future royalty obligations. (42) Moderna claimed that these payment obligations from the '435 patent constituted its injury because the payments would increase financial burdens on Moderna's RSV program. (43) The Federal Circuit denied Arbutus's motion without prejudice to allow Arbutus to argue standing in its merits brief. (44)

   Both sides filed their merits briefs and asserted the same arguments from the original motion to dismiss. (45) Arbutus added that licensing does not confer standing and Moderna's financial burdens from the '435 patent were too speculative. (46) Moderna filed a supplemental brief, adding more information from Ryan, which detailed that the RSV program and other programs covered under the Acuitas sublicenses, which were active during the start of the appeal, terminated--the exact termination date unknown--with no further plans to develop the viral targets. (47) Ryan added that Moderna was not abandoning the viral targets even though there were no plans to pursue further development. (48) Further, Ryan added that Moderna planned to develop a new COVID-19 vaccine and believed that Arbutus's insistence that Moderna needed to license the '435 patent for the COVID-19 vaccine, combined with Arbutus's refusal to agree to a covenant not to sue, brought a risk of Arbutus filing a patent infringement suit. (49)

   Thus, there are two competing timeline views for Moderna's standing. In Moderna's view, standing existed at the beginning of the appeal from its active RSV development program and milestone payment and continued because of the potential milestone and royalty payments for future development. (50) Even though the RSV program stopped, Moderna argued that the COVID-19 vaccine...