By Kevin Stawicki

Law360 (August 31, 2020, 9:56 PM EDT ) The U.S. Department of Defense's research arm said Monday that it's investigating whether Moderna Therapeutics — which is developing a closely watched COVID-19 vaccine — failed to disclose federal funds it received in its patent applications, following recent calls from an activist group.

A spokesperson for Defense Advanced Research Projects Agency said it is engaged in an ongoing investigation into the Massachusetts-based company's compliance with federal law that requires companies to disclose any government funding to the U.S. Patent and Trademark Office. 

"DARPA is actively researching agency awards to Moderna to identify which patents and pending patents, if any at all, may be associated with DARPA support," Jared B. Adams, a DARPA spokesperson, said in an emailed statement. "It appears that all past and present DARPA awards to Moderna include the requirement to report the role of government-funding for related inventions."  

The announcement comes after Knowledge Ecology International asked the DOD last week to investigate Moderna's "apparent failures" to disclose that DARPA was funding its efforts to develop mRNA vaccines for viral infections, including its COVID-19 vaccine candidate.

"One of the reasons why this is important to us is that we want the broad platform patents to be as liberally licensed as possible," KEI director James Love said in an email. "The U.S. government might have sufficient rights to bring in additional manufacturers, if that is useful, for the current mRNA vaccine, although that is not our only interest in the disclosure issue."

Love said the nonprofit will be sending another letter to the Biomedical Advanced Research and Development Authority later this week seeking a similar investigation by the U.S. Department of Health and Human Services into Moderna's vaccine patents.

"We thought the DARPA story was interesting and should have gone first, and DARPA seems to be taking it seriously," Love said.

In its report investigating Moderna's government funding sources, KEI said that DARPA has been funneling cash into the company since as early as 2013 to help build its mRNA platform to develop vaccines for viral infections like Chikungunya and Zika.

The DARPA-backed company then started filing patents for inventions related to methods involving the mRNA vaccine without disclosing those funds, the report said. Through an analysis of its U.S. Securities and Exchange Commission filings and academic papers, KEI said there is "clear evidence" that the company proceeded with its Chikungunya vaccine and antibodies programs without disclosing its primary funding source.

The federal money was also secretly used by the company to develop its COVID-19 vaccine candidate, the report said, citing DARPA's own website stating that "[t]he first coronavirus vaccine to start human testing is from DARPA investment in the Moderna company."

"To protect taxpayer investments, the funding agency should remedy the failure to disclose by at a minimum requiring a correction to the patent and more appropriately by taking title to the patents themselves, as the sanction for the failure to disclose," the advocacy group said in the letter.

The DOD can demand ownership of the patents under the Bayh-Dole Act because most of the DARPA funds resulted in patented inventions for which their government funding was never disclosed, as required under the 1980 law, the report said. The law requires companies to disclose when government-funded research played a role in a patented invention, and any violation could lead to the government taking over the patent's rights, KEI said.

A representative for Moderna did not respond to requests for comment. 

--Editing by Steven Edelstone.

For a reprint of this article, please contact reprints@law360.com.