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End this Stem Cell Racket

Once the Bush Administration policy is fixed, there's another problem that's at least as large.

By | November 1, 2006

The current administration's stance on stem cells is, rightly, the focus of frustration in stem cell circles within the United States. In particular, the misguided and convoluted policy announced in August 2001 has delayed progress in embryonic stem cell research.

But there's another stumbling block at least as important as the moralism of the 43rd president. That stumbling block is US Patent No. 6200806, which covers "a purified preparation of pluripotent human embryonic stem cells which (i) will proliferate in an in vitro culture for over one year, (ii) maintains a karyotype in which the chromosomes are euploid and not altered through prolonged culture, (iii) maintains the potential to differentiate to derivatives of endoderm, mesoderm, and ectoderm tissues throughout the culture, and (iv) is inhibited from differentiation when cultured on a fibroblast feeder layer."

The patent is held by the otherwise-laudable Wisconsin Alumni Research Foundation (WARF). As Glenn McGee writes on page 24 of this issue, WARF, "in this and two other patents, in essence owns virtually all imaginable characteristics of human embryonic stem cells."

Imagine for a moment that you run the WARF and you'll see the conundrum: You manage a portfolio of technology transfers and investments effectively, so much so that your organization contributes $65 million dollars to support research at the University of Wisconsin. A hefty chunk of that revenue comes from licenses on the stem cell patents: You can charge up to $400,000 a throw. The future looks even brighter because you can claim royalties from products produced using the patents. Unfortunately, you are a pariah. And the community is taking action. As we reported in The Scientist Daily News (www.the-scientist.com/news/display/25037/), this patent is being reviewed after complaints by a coalition of non-profit groups.

We first heard rumblings of this coalition's work last year as we probed California's Proposition 71, in which voters gave their nod to $3 billion in state bonds for stem cell research. Scientists and policy­makers realized at that point that much of the funding would end up in Wisconsin's coffers, and that didn't make them happy.

The USPTO's review is happening none too soon. The bad news is that it will likely take several years to conduct-the PTOs chronic underfunding is something else that needs attention. Further bad news is that WARF have deep pockets and look set to mount a vigorous defense.

It's possible to see things from WARF's point of view: They are following the rules and the income is plainly being put to good use. But WARF need to look at the bigger picture. Academics and companies should not be wasting valuable research dollars on licenses. And if WARF compound the insult by squandering millions of dollars on legal fees they will not be readily forgiven. We'll continue to follow this story in our daily news.

Patents are a good thing. In general, they promote progress by encouraging research and development with incentives. But sometimes, they over-reach, and they impede progress rather than help it. This is one of those cases. The WARF patents point up the sometimes uncomfortable conflict between intellectual property rights and scientific freedom that many of our readers often feel as they find their way in the funding environment of the 21st century.

Let's apply pressure to change the current policy on embryonic stem cells. November 7th's midterm elections may provide an opportunity to do that. But let's also look at supposed proponents of such research and see whether their intellectual property rights are holding things up. If they are, time to make that change too. Sometimes the enemy is us.

rgallagher@the-scientist.com

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Comments

Avatar of: Robert Jacklin

Robert Jacklin

Posts: 1

November 2, 2006

As was pointed out in the article the system of patents was created to encourage research with the potential for a protected financial return to recoop the cost of that research. Without this mechanism there would be very literal privately funded fundametal research.\n\nIn the case of Human Embryonic Stem Cell research there was a political decision to specifically\nnot fund such research. \n\nInto this vacuum came Geron Corporation who provided the basic funding for the researcher at the University of Wisconsin who successfully isolated the Human Embryonic Stem Cell, the basis for WARF's fundamental patent.\n\nGeron Corporation has over a period of 8-10 years spent an extraodinary amount of money to get to the stage where in the forseable future it could start to see some return on it's investment.\n\nTo try to snatch away at the last minute this reward for taking a great financial risk, in the face of an obstructionist Federal Government would send the wrong signal to the non governmental financial supporters of so much academic research.\n\nI am one of those investors who has held Geron stock for more than nine years. I have put a great deal of my net worth at risk. I have a right to see a fair return for taking this risk.

November 4, 2006

Of the text --But WARF need to look at the bigger picture. Academics and companies should not be wasting valuable research dollars on licenses-- one notes that, if CIRM were directing efforts purely to RESEARCH activities\n\n#1. WARF would not be bothering with them, and\n#2. Even if WARF did seek licenses from research entities, it would be a futile gesture, as the Supreme Court's interpretation of 35 USC 271(e)(1) in Merck v. Integra insulates activities related to obtaining information for the FDA, which would be the case here, and \n#3. Even if WARF tested the waters against CIRM, the case against CIRM (a California state agency) would be held, pursuant to Florida Prepaid Postsecondary, in a California forum.\n\nThis issue is NOT about "freedom to do research" but about "how much money" will go to WARF, and "how much money" will go to CIRM.\n\nMore details of the assertions made by PubPat / FTCR in the re-examination request may be found at IPBiz.blogspot, including \nhttp://ipbiz.blogspot.com/2006/08/on-obviousness-challenge-to-warfs-780.html
Avatar of: Bill Lang

Bill Lang

Posts: 4

November 8, 2006

Robert, you have as much right to an ROI as anyone else does ? no more. If you?ve not diversified your investment enough to keep from suffering losses as the market turns, you?ve only yourself to blame. In the market, anything can happen.\n\nPeople say that government and government institutions should be run like a business and then when one hits the jackpot they want to undo what they proposed. What a bunch of?.\n\nThe 100+ year old patent office clearly has enough experience to issue a proper patent, so this is all just a bunch of spoiled sport whiners who were beaten to the punch by WARF. Shouldn?t the people who earned the money and are best able to use the money get the money? \n\nIf WARF wants to reduce its patent fees, that?s one thing, but giving up the rights to something you?ve worked hard for, and earned the right to, for the betterment of all is socialist doctrine. We?ve seen how far that went.\n\nWisconsinites like me are some of the highest taxed citizens in the country just to support this kind of research and the expected ROI. Now, everyone who feels entitled wants to lift our wallets. Hands off!!!\n
Avatar of: Ben Prickril

Ben Prickril

Posts: 4

November 22, 2006

Richard Gallagher's piece hits wide of the mark. His comments appear to be based on how much it costs to license the WARF patents, and not at all on how these patents fit into the bigger picture of innovation, competitiveness, and the modern university's role therein. I have the following to add:\n\n- The WARF patents are not exceptional in terms of the subject matter claimed, and follow much precedent established since the seminal US Supreme Court ruling in Diamond v. Chakrabarty (see overview at http://en.wikipedia.org/wiki/Diamond_v._Chakrabarty).\n\nIt is disingenuous, at best, to infer that the WARF patents are part of a "racket". In addition to doing nothing to further the author's argument, this inflammatory terminology suggests that the WARF patents may be illegal. They are not.\n\n- The challenge to the patents by a consortium of NGOs (who, after all, have interests of their own to protect) must be balanced with consideration of the risks taken and innovation resulting from the efforts/investments of Geron, the UW scientist, and WARF. It is impossible to say whether the innovation represented within WARF's claimed subject matter would have happened as soon as it did absent the patent incentives, but I doubt it. It is common to mount legal challenges to successful patents, and the fact that the WARF patents have survived intact suggests that the claims are in fact novel, non-obvious and useful.\n\n- Finally, human embryonic stem-cell research is exceptional from a bioethical standpoint, but is not so from a legal one. When compared to claims and licensing fees for other innovative biomedical patents, the WARF patents appear rather ordinary. Confusion between these two aspects of stem cell research may be the reason that WARF and its patents are the "villains du mois" in this issue of The Scientist.

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