*Rebekah Garrett
- Introduction
In August 2020, the federal government purchased 500 million doses of Moderna’s COVID-19 vaccine as part of a national emergency response.[1] In 2022, Arbutus Biopharma Corporation (Arbutus) sued Moderna, alleging that the vaccine infringed its patent on lipid nanoparticle technology.[2] In response, Moderna attempted to shift patent liability to the government under 28 U.S.C. § 1498(a).[3] Section 1498(a) allows the government to “shield a patent-infringing contractor” when a patented invention is manufactured “for the government.”[4]
While the government purchased 500 million vaccine doses, only six million were distributed to federal employees, raising the question whether the other 494 million doses were “for the government.”[5] In February 2026, the United States District Court for the District of Delaware interpreted Section 1498(a) to require that the government, rather than the public, be the intended recipient of an infringing product.[6] Thus, the district court held that Section 1498(a) did not shield Moderna from liability for the public doses.[7] Arbutus and Moderna subsequently reached a conditional settlement resolving the patent infringement dispute while preserving the Section 1498(a) dispute for appeal.[8] The Federal Circuit’s conclusion could have broader implications for future government contracts involving patent infringement claims, especially in times of emergency.[9]
- Shifting Liability for Patent Infringement Through Government Contracts: Understanding the Statute
Section 1498(a) operates like eminent domain.[10] Eminent domain permits the government to take private property for public use, provided that the property owner receives just compensation.[11] Section 1498(a) applies a similar principle to patented inventions because it allows the government to infringe on a patent as long as the patent holder is “fairly compensated.”[12]
Government contractors have immunity from patent infringement litigation when they act (1) for the government and (2) “with the authorization or consent of the [g]overnment.”[13] Ordinarily, a patent owner may seek monetary damages against the patent infringer and, when appropriate, an injunction against continued infringement.[14] However, under Section 1498(a), the patent owner must seek compensation from the United States in the United States Court of Federal Claims—rather than from the government contractor.[15]
- The Tension Between Government Purpose and Public Possession
The competing interpretations of Section 1498(a) hinge on whether the “for the government” requirement primarily focuses on the purpose behind the government’s procurement or who ultimately possesses and uses the patented product.[16] One consideration in determining if the infringement was “for the government” is whether the product was for the government’s benefit in furtherance and fulfillment of government policies.[17] However, there are limits to this inquiry, because “incidental benefit[s]” to the government are insufficient to trigger liability under Section 1498(a).[18] This section first examines Arbutus’s recipient-focused argument and the district court’s adoption of that interpretation.[19] Then, this section turns to Moderna’s purpose-based arguments on appeal and the related arguments advanced by amici in support of Moderna.[20]
- Arbutus and the District Court’s Position: Possession
Arbutus contended that the patent infringement was for the sole benefit of the individual vaccine recipients and should not be shielded under Section 1498(a).[21] The district court adopted Arbutus’s recipient-focused interpretation of Section 1498(a), holding that “the [g]overnment, as an entity, must be the intended recipient of the infringing product, as opposed to the public that the [g]overnment represents.”[22] The district court reasoned that the present case is indistinguishable from Larson v. United States.[23] In Larson, the claims court held that Section 1498(a) did not cover Medicare providers’ use of patented splints because the providers’ care benefited patients—not the government.[24] Thus, the government’s interest in the program was too remote to make the government the true beneficiary.[25] The district court analogized the Moderna vaccine to the splints in Larson, finding that the patients were the beneficiaries in both scenarios.[26]
However, the American Intellectual Property Law Association (the AIPLA), appearing as amicus curiae in support of Moderna, argues that the present case is not like Larson because the government directly contracted for the vaccine doses whereas in Larson the government approved a passive reimbursement scheme for the splints.[27] The Federal Circuit’s interpretation of whether Larson is analogous could impact the scope of the government’s patent liability when the government directly contracts for patented products, potentially affecting how Section 1498(a) is applied in the future.[28]
- The Government and Moderna’s Position: Procurement and Purpose
The United States has a vested interest in the interpretation of Section 1498(a) to protect government procurement efforts.[29] Appearing as amicus curiae in support of Moderna, the United States criticizes the district court’s narrow reading of “for the government” as creating an “unworkable ultimate-recipient rule.”[30] The Government argues that the proper interpretation of Section 1498(a) considers the benefits arising from the procurement contract, not the ultimate recipients of the infringing product. [31] The United States views the analysis here as straightforward because of the express authorization-and-consent clause of the contract.[32] The government directly procured and distributed the patent-infringing vaccine to meet the goals of Operation Warp Speed, providing benefits for the government’s emergency response that were not merely incidental.[33]
The AIPLA, however, does not consider the authorization-and-consent clause sufficient on its own to establish a governmental benefit.[34] The AIPLA focuses its argument on the direct benefits of the procurement of the vaccine, like Moderna does on appeal.[35] Moderna contends that the patent infringement was for the government’s benefit because the government’s nationwide vaccination effort was supported.[36] Moderna also argues that the vaccination distribution benefited the government financially.[37] To support its purpose-based argument, Moderna relies on Hughes Aircraft Company v. United States, a case where the court found that a procured product not in United States’s direct possession satisfied Section 1498(a) because of the product’s national security benefits.[38]
- Implications for Future Government Patent Liability
National emergencies, like COVID-19, often require the government to act quickly, leaving little time to negotiate with patent owners before using products necessary to protect the public.[39] The pending appeal before the Federal Circuit requires the court to determine whether the government’s benefit from procuring vaccines for public distribution satisfies Section 1498(a) or whether the public’s use of vaccines makes that benefit merely incidental.[40] Making this determination will involve balancing competing interests between protecting patent holders’ rights and preserving the government’s ability to procure patented products to address urgent public needs.[41] The Federal Circuit’s decision could establish an important boundary for future interpretations of Section 1498(a).[42]
*Rebekah Garrett is a second-year student at the University of Baltimore School of Law and a Staff Editor of the University of Baltimore Law Review. She serves as a member of the Honor Board, a UB Leads mentor, a Law Scholar for Torts and Contracts, and the Communications Director of Students Supporting the Women’s Law Center. She is also a member of the Royal Graham Shannonhouse III Honor Society as a distinguished scholar. Before attending law school, Rebekah earned her bachelor’s degree in Sociology from McDaniel College. In her free time, she enjoys singing, songwriting, and scrapbooking.
[1] See Arbutus Biopharma Corp. v. Moderna, Inc., No. 1:22-cv-00252-JDW, 2026 WL 266389, at *3 (D. Del. Feb. 2, 2026).
[2] See id. at *1, 4; Arbutus Biopharma Corp. v. Moderna, Inc., 638 F. Supp. 3d 397, 400–02 (D. Del. 2022).
[3] 28 U.S.C. § 1498(a).
[4] Michael Shapiro, Moderna Vaccine Appeal Poised to Set Patent Liability Benchmark, Bloomberg L. (Aug. 13, 2026, at 05:00 ET), https://www.bloomberglaw.com/product/blaw/bloomberglawnews/bloomberg-law-news/XBBDFJVS2H87889MBHNO09NOBL?criteria_id=f4104a6b5bc7ad075957aa02fa760e02 [https://perma.cc/GCX9-Z2KF].
[5] Id.
[6] Arbutus, 2026 WL 266389, at *5.
[7] Id. at *13.
[8] See Genevant Sciences and Arbutus Biopharma Announce $2.25 Billion Global Settlement With Moderna, Arbutus Biopharma (Mar. 3, 2026), https://investor.arbutusbio.com/news-releases/news-release-details/genevant-sciences-and-arbutus-biopharma-announce-225-billion; Brief for United States as Amicus Curiae Supporting Appellants, Arbutus Biopharma Corp. v. Moderna, Inc., No. 26-1581, at 9–10 (Fed. Cir. June 19, 2026).
[9] See Shapiro, supra note 4.
[10] The Editorial Board, How the Government Can Lower Drug Prices, N.Y. Times (June 20, 2018), https://www.nytimes.com/2018/06/20/opinion/prescription-drug-costs-naloxone-opioids.html; see Leesona Corp. v. United States, 599 F.2d 958, 966 (Ct. Cl. 1979) (describing Section 1498 as “essentially an Act to authorize the eminent domain taking of a patent license.”); Irving Air Chute Co. v. United States, 93 F. Supp. 633, 635 (Ct. Cl. 1950) (asserting that Section 1498 is “in effect, an eminent domain statute.”).
[11] See U.S. Const. amend. V (“[N]or shall private property be taken for public use, without just compensation.”).
[12] The Editorial Board, supra note 10.
[13] 28 U.S.C. § 1498(a); see Shweta Kumar, Formulating Public Pharma, 110 Cornell L. Rev. 1369, 1413–14 (2026).
[14] See Andrew C. Michaels, Benefits of the Invention and Social Value in Patent Law, 29 Geo. Mason L. Rev. 827, 849–51 (2022) (explaining how courts determine damages for patent infringement, with injunctions being possible but less frequently available).
[15] 28 U.S.C. § 1498(a).
[16] See discussion infra Sections III.A–B.
[17] See Arbutus Biopharma Corp. v. Moderna, Inc., 638 F. Supp. 3d 397, 405 (D. Del. 2022); Kumar, supra note 13, at 1414.
[18] See Advanced Software Design Corp. v. Fed. Rsrv. Bank of St. Louis, 583 F.3d 1371, 1378 (Fed. Cir. 2009).
[19] See infra Section III.A.
[20] See infra Section III.B.
[21] Arbutus, 638 F. Supp. 3d at 407–08.
[22] Arbutus Biopharma Corp. v. Moderna, Inc., No. 1:22-cv-00252-JDW, 2026 WL 266389, at *5 (D. Del. Feb. 2, 2026).
[23] Id. at *6; see Larson v. United States, 26 Cl. Ct. 365, 368–69 (1992).
[24] See Larson, 26 Cl. Ct. at 368–69.
[25] Id. at 369.
[26] See Arbutus, 2026 WL 266389, at *6; see Larson, 26 Cl. Ct. at 369 (“Medical care is provided for the benefit of the patient, not the government.”).
[27] Brief for American Intell. Prop. L. Ass’n as Amicus Curiae Supporting Appellants, Arbutus Biopharma Corp. v. Moderna, Inc., No. 26-1581, at 18 (Fed. Cir. June 5, 2026).
[28] See discussion infra Section IV.
[29] Brief for United States, supra note 8, at 1.
[30] Id. at 12.
[31] Id. at 13–14 (“The benefit to the government is thus inherent in the nature of the procurement contract.”).
[32] Id. at 17.
[33] Id. at 22–23.
[34] Brief for American Intell. Prop. L. Ass’n as Amicus Curiae Supporting Appellants, supra note 27, at 7.
[35] Id. at 8.
[36] See Appellants’ Opening Brief, Arbutus Biopharma Corp. v. Moderna, Inc., No. 26-1581, at 1 (Fed. Cir. May 29, 2026); see also Arbutus Biopharma Corp. v. Moderna, Inc., 638 F. Supp. 3d 397, 406 (D. Del. 2022) (describing Moderna’s substantially similar argument in the underlying district court proceeding).
[37] See Appellants’ Opening Brief, supra note 36, at 49; Shapiro, supra note 4.
[38] See generally Hughes Aircraft Co. v. United States, 534 F.2d 889 (Ct. Cl. 1976) (holding that satellites in the Skynet II satellite program, while ultimately owned by the United Kingdom, were sufficiently “for the government” because they were vital for the defense and security of the United States); see also Brief for American Intell. Prop. L. Ass’n as Amicus Curiae Supporting Appellants, supra note 27, at 17 (describing Hughes as an example of a case where the procured good did not go to government employees but served a national interest, satisfying the “for the government” requirement).
[39] See Christopher J. Morten & Charles Duan, Who’s Afraid of Section 1498? A Case for Government Patent Use in Pandemics and Other National Crises, 23 Yale J.L. & Tech 1, 51 (2020).
[40] See discussion supra Section III.
[41] See Morten & Duan, supra note 39, at 91.
[42] Shapiro, supra note 4.
