Key Takeaways: The Federal Circuit is considering whether § 1498(a) shields a government contractor from patent infringement liability when products manufactured under a federal procurement contract are ultimately provided to members of the public. The court may also clarify whether a patent owner can pursue an induced-infringement claim based on conduct that allegedly extends beyond the contractor’s obligations under the government contract.
On November 5, 2026, the Federal Circuit heard oral argument in Arbutus v. Moderna—a case that tests the scope of federal contractors’ statutory shield against patent infringement liability.[1] The appeal could have broad implications for patent owners and federal contractors when government-procured products are provided to members of the public.
The parties’ dispute arose out of the COVID-19 pandemic. Moderna developed a COVID-19 vaccine and ultimately manufactured more than 500 million doses under a federal procurement contract.[2] The federal government purchased those doses for distribution to the public through its nationwide vaccination program. The contract included an express authorization-and-consent clause for patented inventions used in performing the contract.[3] In 2022, Arbutus sued Moderna for patent infringement, alleging Moderna’s vaccine directly infringed its patents covering lipid nanoparticle technology used to deliver nucleic acids into cells.[4] Arbutus also alleged that Moderna indirectly infringed by “intentionally encourag[ing] doctors and other healthcare professionals to administer the COVID-19 vaccine . . . .”[5] Moderna moved to dismiss, arguing that 28 U.S.C. § 1498(a)[6] bars Arbutus’s claims, because Moderna made the vaccine “for the United States.”[7] By operation of § 1498(a), Moderna argued, Arbutus’s exclusive remedy was “by action against the United States in the United States Court of Federal Claims.” [8] The parties eventually entered a consent judgment that Arbutus’s patents were infringed and not invalid.[9] The court also entered judgment that § 1498 does not shield Moderna against patent infringement liability for the doses not administered to government employees—which Moderna appealed.[10]
As is typical, the parties have framed the issues on appeal differently. According to Moderna, the issue is whether § 1498(a) applies to Arbutus’s direct infringement claim and indirect infringement claim based on all of the vaccine doses Moderna manufactured under its federal procurement. As framed by Arbutus, however, the issue is whether the district court correctly held that § 1498(a) does not bar Arbutus’s patent infringement claims against Moderna for doses sold under the federal procurement contract that were provided for the benefit of the public, and not the federal government.[11]
The parties also interpret the word “for” in “for the Government” of § 1498(a) differently. Moderna argues that an appropriate dictionary definition of “for” would be “in place of, instead.” That definition, Moderna, argues, reflects “precisely how Congress used the word in 1918, adding ‘for’ to cover prime contractors for the Government just as if the Government were doing the work itself.” Therefore, Moderna argues that § 1498(a) applies when a contractor manufactures the accused product to perform a federal procurement contract with the government’s authorization and consent—the Government’s subsequent disposition of the accused product is not relevant.
By contrast, Arbutus argues that, in the context of § 1498(a), “for” is used to “introduce the intended recipient.” Under that definition, “for” would indicate “the Government” is the intended recipient—not members of the public.[12] As a result, Arbutus argues that the government must be the immediate beneficiary of the accused use or manufacture for § 1498(a) to apply.[13]
At oral argument, the panel seemed concerned about the effect Moderna’s broader interpretation of “for the Government” would have on § 1498’s applicability in the future. At one point, the panel asked Moderna’s counsel whether, under Moderna’s view, § 1498 would apply anytime the federal government purchases something. Moderna’s counsel responded that it would—so long as the contract is valid, and the accused activity falls within the scope of the government’s authorization and consent.
When it was Arbutus’s turn, its counsel stressed that Arbutus was alleging indirect infringement based on Moderna’s encouragement of private parties to use Moderna’s vaccine. That encouragement, Arbutus’s counsel argued, was not required by Moderna’s contract with or otherwise authorized by the federal government; thus, it was not “for the Government.” The Federal Circuit panel responded to that line of argument with some skepticism, asking, for example: “If you are alleging inducement of which manufacturing is a part, then why should that not come within the ambit of 1498?” and “Why wasn’t that marketing conducted on behalf of the government?”
Now that the oral argument has concluded, those following this case await the Federal Circuit’s decision. While a broader reading of § 1498(a) would likely shield federal contractors from patent claims when the procured products are distributed to the public, a narrower reading would not. It is also possible that the Federal Circuit will find a way to decide the case without rendering a statutory interpretation, for example, if it decides that § 1498(a) does not apply to Arbutus’s inducement claim under either party’s proposed statutory interpretation.
Co-author: Khoa Dang (Pending California Bar Admission)
Editor: Brenden S. Gingrich, Ph.D.
[1] Oral Argument, Arbutus Biopharma Corp. et al. v. Moderna, Inc. et al., No. 26-1581 (Fed. Cir. Nov. 5, 2026).
[2] Moderna’s Opening Brief, Arbutus Biopharma Corp. et al. v. Moderna, Inc. et al., No. 26-1581, Dkt. 13 at 14 (Fed. Cir. May 29, 2026) [“Moderna Opening”].
[3] Moderna Opening at 12–13.
[4] Moderna Opening at 17.
[5] Arbutus’s Response Brief, Arbutus Biopharma Corp. et al. v. Moderna, Inc. et al., No. 26-1581, Dkt. 33 at 63 (Fed. Cir. July 8, 2026) [“Arbutus Response”].
[6] 28 U.S.C. § 1498(a) reads in relevant part: “Whenever an invention … is used or manufactured by or for the United States without license … the owner’s remedy shall be by action against the United States in the United States Court of Federal Claims… [T]he use or manufacture of an invention … by a contractor … for the Government and with the authorization or consent of the Government, shall be construed as use or manufacture for the United States.” (emphasis added).
[7] Moderna Opening at 17–19.
[8] 28 U.S.C. § 1498(a); Moderna Opening at 2, 28.
[9] Moderna Opening at 20; Arbutus Response at 16.
[10] Moderna Opening at 19–20; Arbutus Response at 15–16.
[11] Moderna Opening at 5; Arbutus Response at 4.
[12] Moderna Opening at 27–32, 35–40; Arbutus Response at 4–5, 22–29, 38–42.
[13] Moderna Opening at 27–35, 44–49; Arbutus Response at 22–4113–19, 22–29.
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