Patent foes get a break in fight;

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Breakthrough in stem-cell engineering may weaken group’s lock on research.

Sacramento Bee

Competition appears to be headed to the world of embryonic stem cell research — an unintended byproduct of a breakthrough from an Alameda-based firm that is likely to be cheered by many academics in the field.

The firm’s new technique to isolate the cells was heralded in news reports Thursday because it does not destroy embryos.

However, it also calls into question the standing of patents that now regulate use of the current — and only — method for establishing embryonic stem cell colonies, said Stanford University law professor Hank Greely.

The patents, held by a foundation affiliated with the University of Wisconsin, cover not only the method used to isolate embryonic stem cell lines but also the cells themselves. Greely said the new technique clearly avoids the first claim.

Academics and some biotech executives have bristled at the way that the Wisconsin foundation has enforced the patents, saying that it stifles innovation and violates academic tradition.

The Alameda firm, Advanced Cell Technology, has applied for patent protection for its work, as well. Still, as a rule, licensing fees should come down as the number of choices for researchers grows, said Ann Hanham, managing director for Burrill & Co., a San Francisco life sciences venture capital firm.

“Competition is always good,” she said.

Embryonic stem cells can mature into any kind of cell of the body. Because of that special characteristic, they are thought to hold a key to treating a wide variety of ailments, including AIDS and diabetes.

Following a 1998 discovery by a University of Wisconsin researcher, the Wisconsin Alumni Research Foundation has maintained patent claims on both the method used to isolate embryonic stem cell lines and the cells themselves.

As a result, any company or university wanting to do research on any embryonic stem cells must negotiate a license with the foundation, a requirement that has upset many individuals working in the field, particularly academics.

As a matter of academic courtesy, university researchers are almost never required to negotiate a license in order to use a patented method in an experiment.

The patents also have implications for California taxpayers. If voter-approved Proposition 71 survives legal challenges, the state will spend $3 billion in bond funds to support embryonic stem cell research in the next decade. Since the Wisconsin foundation generally negotiates “reach-through” royalty rights, it could claim a share of the proceeds from cures developed through the taxpayer-funded research.

Now, though, if the new method announced Thursday holds up under further testing, there may be a way around those patent restrictions, said Greely, an expert on legal issues related to stem cell research.

“The mere fact’ of having a new way to make embryonic stem cells weakens the WARF (Wisconsin Alumni Research Foundation) patents, which I think is a good thing,” he said.

The foundation did not respond to two requests for comment Thursday.

Greely said that the main complaint with the Wisconsin patents is how the foundation has chosen to enforce them.

“Stanford and UCSF have the seminal genetic engineering patent, and they’ quite cleverly, had very lenient license terms for non-universities — a relatively small cash amount and a small royalty,” Greely said. “And the result was, the technology went everywhere and those two universities made a lot of money.”

By contrast, he said, “WARF is making enemies.”

The matter could be decided in court. If the Wisconsin foundation felt that its patents were being infringed, it could sue, and the judge’s ruling would effectively establish the validity of the patents, Greely said.

Last month, the Foundation for Taxpayer and Consumer Rights, a Santa Monica-based consumer-advocacy group, requested that the U.S. Patent Office reconsider the patents, arguing that they are overly broad and contrary to the public interest.

“We still very much think that the WARF patents should never have been issued,” said John Simpson, the group’s spokesman, on Thursday.

If the new method does help to invalidate the Wisconsin patents, it would be an unintended byproduct of the research, said Advanced Cell Technology President Michael West.

“We work under license to the WARF patents, so I don’t have a motivation to engineer around them,” he said.

The firm’s new technique allows researchers to grow colonies by extracting a single cell from an embryo just two days after fertilization. The remaining cells in the embryo survive the procedure.

The standard method, by contrast, extracts a cell from the embryo once it has grown to 150 cells. At that stage, the process of removing a cell kills the embryo.

West had hoped that the new method would overcome President Bush‘s objections to embryonic stem cell research. The White House did not indicate initially that its position would change, though.

Widely available therapies employing embryonic stem cells are still years away. However, one biotech company — Menlo Park’s Geron Corp. — has announced plans to apply next year for federal approval to begin the first human clinical trials of an embryonic stem cell treatment, a method for healing spinal cord injuries.

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