Challenge points up state’s role in bringing technology to market
Milwaukee Journal-Sentinel
As Washington grappled last week with whether to ease restrictions on federal funding for embryonic stem cell research, two foundations launched an assault on Wisconsin’s embryonic stem cell patents.
Such a move, which was expected, is common when there are broad patents on a technology with so much potential, and it probably won’t be the last.
It also signaled increasing awareness among scientists and companies that the Wisconsin Alumni Research Foundation‘s patents make this state the biggest interchange through which all stem cell commercialization must travel.
“You can’t spend your way past the patents, and lo and behold, California is finding they’re going to have to pay standard royalties to WARF,” said Peter Balbus, managing director at Pragmaxis LLC, a company in Glen Ellyn, Ill., that helps commercialize technology.
The Foundation for Taxpayer and Consumer Rights in Santa Monica, Calif., and the Public Patent Foundation in New York filed a request Tuesday with the U.S. Patent and Trademark Office asking it to overturn three important patents on embryonic stem cells awarded to James A. Thomson. The University of Wisconsin-Madison scientist first isolated stem cells from human embryos in 1998.
WARF, the university’s patenting and licensing arm, holds the broadly worded patents. In its 80 years, the foundation has amassed a $1.5 billion endowment and guided discoveries such as vitamin D and the widely used blood-thinning drug known as coumadin to the market.
But the embryonic stem cell patents are impeding scientific progress and forcing companies to locate overseas to avoid WARF‘s “draconian” licensing terms, said Dan Ravicher, an attorney with the New York foundation, which he said was founded in 2003 to “remove the pollution from the patent system.”
Invitrogen Corp. of Carlsbad, Calif., said recently that it is locating its stem-cell research in Asia to avoid the WARF patents.
“Patents are like guns,” Ravicher said. “A gun in the hand of a police officer is a good thing; a gun in the hand of a madman is a bad thing.”
Although he wouldn’t call WARF a “madman,” he said, the technology transfer organization is harming science and California taxpayers and causing public harm by failing to “stand up and admit they got something they didn’t deserve.”
WARF spokesman Andrew Cohn said WARF created WiCell Research Institute to train scientists and others to work with embryonic stem cells, and that it has trained more than 350 people. The organization has provided licenses and cells to 324 research groups at no charge, he said.
It also provided licenses and cells to 12 commercial users. Those users pay fees ranging from $75,000 to more than $250,000, plus annual royalties.
Comparable fees
Stanford University also required upfront licensing fees on its recombinant DNA patents granted in 1980. Those fees were detailed in a paper that Maryann Feldman of the University of Toronto and two others published in November.
Recombinant DNA, a term that refers to cutting DNA from one organism and pasting it into the genome of another, is considered the first research tool for the biotech industry.
WARF‘s patents are so broad, though, that they essentially allow it to own all the stem cells any researcher is working with, said John Simpson, an officer at the California foundation.
Jeanne Loring, co-director of the Stem Cell Research Center at Burnham Institute for Medical Research in San Diego, said: “The main issue is that their patents give them ownership of embryonic stem cells themselves. So I have stuff in a Petri dish that belongs to WARF.”
But a 1980 Supreme Court decision made it possible to patent life forms. And Stanford’s recombinant DNA patents are just as broad as WARF‘s.
Stanford pulled in $254 million of revenue on the patents, which it licensed to 468 companies, including Amgen and Genentech, that developed therapeutic products such as human insulin, human growth hormone and interferons based on the technology, according to the Feldman paper.
WARF is under no obligation to let anyone use its patents, particularly because they are based on work that wasn’t funded with federal money, said Grady J. Frenchick, a patent lawyer in Whyte Hirschboeck Dudek’s Madison office who teaches a patent law class at UW-Madison.
At the heart of the patent challenge is the idea that what Thomson achieved was obvious to many of the scientists working in the field. He was using exactly the same methods, processes and materials outlined in a 1981 paper that described how to derive embryonic stem cells, said Loring, who is helping the challenge.
The patent office tends to look only at previous patents, Loring said, and examiners often “aren’t educated in the field they’re examining. They really don’t understand the science.”
Michael West, chairman of the board and chief scientific officer at Advanced Cell Technology Inc. in Alameda, Calif., said he is certain that Thomson was the first researcher in the world to derive human embryonic stem cells.
“It’s easy in retrospect to say something is obvious once it’s been done, but there were many people at the time who thought it was impossible to generate lines of human embryonic stem cells,” said West, who at his previous company, Geron Inc., helped fund research by Thomson and others trying to derive the cells.
The debate
Virtually all organs, cells and other body tissues arise from such embryonic stem cells. They have yielded no therapies so far, but many think they have the potential to cure conditions ranging from spinal cord injuries to Parkinson’s disease and Alzheimer’s disease.
Opponents of human embryonic stem cell research said scientists who use 4- or 5-day-old fertilized eggs to derive embryonic stem cells destroy human life.
President Bush on Wednesday issued the first veto of his presidency, rejecting the Stem Cell Research Enhancement Act. The bill, which the Senate approved Tuesday, would have loosened 5-year-old limitations that Bush set for the federal funding of human embryonic stem cell research.
Bush approved for federal funding the estimated 70 or more stem cell lines created before he set the limitations in August 2001. Only 22 actually panned out, including five derived at UW-Madison.
Loring said at the time that she had derived nine lines, but none turned out to be embryonic stem cells, according to the National Institutes of Health. She said her lines didn’t pan out because she was working on them only one day a week and had limited resources.
Researchers and others in California are getting more interested in the WARF patents as the money from Proposition 71 — the initiative that California voters passed in November to create the nation’s largest stem cell research fund — begins to get allocated. Proponents of the initiative have estimated that the resulting research could produce therapies that bring in $4 billion of yearly revenue within 10 years.
In the pharmaceutical arena, royalties on basic patents typically are 2% to 5% of product revenue, which would mean those estimates could translate into as much as $200 million a year in royalties for WARF, Balbus said.
Frenchick said the patent office will give WARF a chance to respond to the challenge, and that its patents will be presumed valid while the patent office evaluates the request.
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