The US Court of Appeals for the Federal Circuit found, in the context of an appeal from an inter partes review (IPR) decision, that the appellant had Article III standing and affirmed a Patent Trial & Appeal Board (Board) decision, holding the challenged claims unpatentable as obvious. ModernaTX, Inc. v. Arbutus Biopharma Corporation, Case No. 20-2329 (Fed. Cir. Dec 2, 2021) (Lourie, J.)

Arbutus owns a patent pertaining to “stable nucleic acid-lipid particles (SNALP) comprising a nucleic acid (such as one or more interfering RNA), methods of making the SNALP, and methods of delivering and/or administering the SNALP.” Moderna petitioned for IPR of the patent, asserting three grounds:

1. Moderna alleged that all claims of the challenged patent would have been anticipated and/or obvious in light of International Pat. Publ. WO 2005/007196 (‘196 PCT) or US Pat. Publ. 2006/0134189 (‘189 publication).

2. Moderna alleged that all claims of the challenged patent would have been obvious over a combination of the ‘196 PCT, the ‘189 publication, Lin and Ahmad.

3. Moderna alleged that all claims of the challenged patent were anticipated by US Pat. Publ. 2006/0240554 (‘554 publication), and alternatively that the claims would have been obvious over the ‘554 publication.

The Board rejected each of Moderna’s allegations, finding that the claims were not unpatentable as obvious. Moderna appealed.

Before addressing Moderna’s appeal on its merits, the Federal Circuit addressed whether Moderna had proper standing to challenge the Board’s decision. The Court stated that well-established precedent dictates that an appellant seeking review of a Board decision in an IPR must have suffered an injury in fact that is fairly traceable to the challenged conduct of the appellee and is likely to be redressed by a favorable judicial decision. The Court underscored that under IPR statute, there is no standing requirement for petitioners to request institution of IPR by the Board, meaning that a requester need not have a concrete stake in the outcome. Additionally, where the statue itself grants judicial review (such as in the case of an IPR), standing criteria of immediacy and redressability may be “relaxed.” Nonetheless, the Court explained that a party’s participation in the underlying IPR alone does not confer standing on that party to appeal the Board decision before an Article III court such as the Federal Circuit. The party seeking review (in this case Moderna) must show that it possesses requisite injury for standing to appeal.

Moderna asserted that substantial risk existed that Arbutus would bring an infringement suit against Moderna based on Moderna’s COVID-19 vaccine if the challenged patent was to remain valid. In support, Moderna submitted a declaration from its senior vice president and deputy general counsel that Moderna was working to harness proprietary mRNA technology and planned on releasing and applying for emergency use authorization for a COVID-19 vaccine in December 2020. The declaration also described how Arbutus’s conduct created a substantial risk that it would bring subsequent infringement action against Moderna. An example of such conduct was a series of public statements made by Arbutus in 2017 regarding the alleged extensive scope of its patent coverage over virtually all lipid nanoparticle delivery systems, a type of technology used in Moderna’s COVID-19 vaccine. Another example was Arbutus’s refusal to grant Moderna a covenant not to sue on the challenged patent.

As the Federal Circuit explained, an appellant need not face a specific threat of infringement litigation by the patentee to establish the requisite injury in an appeal from a final written decision in an IPR. A showing that the appellant has engaged in, is engaging in or will likely engage in activity that would give rise to a possible infringement suit is generally sufficient to give an appellant requisite standing to appeal. The Court concluded that Moderna had thus demonstrated sufficient risk that it would face an infringement suit from Arbutus over the challenged patent in connection with Moderna’s COVID-19 vaccine, and that therefore Moderna’s appeal of the Board decision was allowed.

Turning to the merits of Moderna’s obviousness arguments, the Federal Circuit found that the Board erred by failing to apply a presumption of obviousness based on overlapping ranges in the prior art. The Court also found that the Board erred in finding that Moderna had not shown a motivation to optimize the lipid components of the prior art nucleic acid-lipid particles and that the phospholipid was a result-effective variable. The Court stated that a presumption of obviousness typically exists “when the ranges of a claimed composition overlap the ranges disclosed in the prior art.” However, while it was undisputed that a range for the phospholipid was not expressly “disclosed” in the prior art, Moderna’s argument was that the Board should have applied the presumption because a phospholipid range can be derived or calculated from the disclosures of the prior art. The Court rejected this argument, noting that the Board correctly recognized that “we have never before applied the presumption of obviousness for overlapping ranges in a case in which the prior art does not contain an express disclosure of a range.” Rather, the Court explained that Moderna would have to show that, despite the lack of an express disclosure in the references, a person of ordinary skill would have understood that the ‘196 PCT and the ‘189 publication taught or suggested a range for the phospholipid component that overlaps with the claimed range. According to the Court, Moderna failed to make such showing.

The Federal Circuit also rejected Moderna’s second obviousness argument (i.e., that the ‘196 PCT and the ‘189 publication disclosed particles that contain all four of the lipid components recited in the claims of the challenged patent), and that the record included sufficient evidence that the disclosures in those references presented a starting point that would have allowed a person of ordinary skill in the art to arrive at the claimed invention through routine optimization. The Court explained that Moderna failed to show that the claimed ranges for the result-effective variables would have been achievable through routine optimization because of the unpredictable interactivity between the various lipid components at issue.

Practice Note: As demonstrated by this case, a party seeking to appeal an adverse Board decision should ensure that it has requisite standing to take an appeal before an Article III court.