A patent ruling has delivered a serious blow to one US state’s hopes of a biotechnology boom

Nature

A preliminary decision by the US Patent and Trademark Office to revoke three stem-cell patents is being viewed as a victory for stem-cell researchers — except in Wisconsin, the state that held the patents.

The researcher and advocacy groups that challenged the patents say they hope their success will spark a wider debate on whether too many sub-quality biotechnology patents are being issued in the United States.

“A serious, public policy discussion needs to be had about what researchers can patent,” says John Simpson of the Foundation for Taxpayer and Consumer Rights in Santa Monica, California, and one of two non-profit organizations that challenged the patents.

The patents in question covered methods for making embryonic stem cells from primates, including humans, developed by James Thomson of the University of Wisconsin-Madison. They are held by the Wisconsin Alumni Research Foundation (WARF), a charity that helps scientists to exploit their inventions commercially.

The patents have been a linchpin of efforts, led by state governor Jim Doyle, to promote Madison as a biotechnology hub. But government efforts to attract biotechnology investment are notoriously unreliable, and the patents offered no guarantee that Wisconsin would succeed.

After the patent office published its decision last month, Doyle sought to play down its probable effect. “Wisconsin is and will remain at the forefront of stem-cell research for many years to come,” he said.

The WARF patents have long irked stem-cell researchers, who asserted that the terms of the licences have stifled academic and entrepreneurial innovation (see Nature 435, 272’273; 2005). But it was a simmering conflict with the California Institute for Regenerative Medicine (CIRM) that got the patents into trouble. Last March, a WARF official told a conference of biotechnology entrepreneurs that WARF expected the CIRM to pay it licence fees and royalties. This January, the foundation backtracked from that statement, saying that the CIRM wouldn’t have to pay the fees. But the issue had already stirred up a hornet’s nest in California.

Researchers such as Jeanne Loring, a biologist at the Burnham Institute for Medical Research in La Jolla, took exception to WARF‘s stance. Last July, Loring joined forces with two pressure groups, the Foundation for Taxpayer and Consumer Rights and the Public Patent Foundation in New York, to ask the patent office to re-examine the patents. The challengers argued that human embryonic stem cells had been isolated before, and that Thomson had not acknowledged this in his applications.

In its 2 April statement, the patent office said that it accepted these arguments, and intended to revoke the patents. WARF has until June to respond to the decision, and if it is unhappy with the outcome, it can then initiate an appeal. The patents will be treated as valid until the re-examination process is complete — that is, until WARF‘s response and the possible appeal have concluded. That could take years.

In the meantime, WARF holds three unchallenged patents on embryonic stem cells and has applied for dozens more. And Tom Still, president of the Wisconsin Technology Council, points out that stem-cell money constitutes less than 1% of WARF‘s total licensing revenues. “Life will go on,” says Still.

But Wisconsin’s image has undoubtedly taken a hit. Some in the state see the episode as an unfair assault on its achievements, launched on shaky ground. “These patents are not stifling innovation,” Still argues. “WARF has done a lot to make stem-cell lines available to researchers at a very reasonable price.”

The challenge is putting renewed pressure on Governor Doyle’s drive to establish a biotech industry in Wisconsin. At last year’s Biotechnology Industry Organization conference in Chicago, for instance, the state spent $270,000 on a booth to sell itself to potential investors. The booth touted Thomson’s work, as well as a programme of tax credits for innovative businesses and a $375-million Institutes for Discovery at Madison as the centrepiece of a $750-million plan for stem-cell research that he announced in 2004.

Critics of the patents have sought to assure Wisconsinites that they have no ill intentions towards the state. “I’m sorry to see people taking it that way, and that’s not what’s at stake here,” says Simpson.

Early success

And, the critics argue, the patent office’s announcement is already benefiting researchers. “WARF was asserting its case in an aggressive way, and it has had its wrist slapped. That’s a benefit to all researchers in the United States,” Simpson says.

Jeanne Loring adds that researchers are now thinking about entering a field that they may have shied away from before because of the aggressive management of the patents. “The scientists I have spoken to feel like some weight has been lifted from them,” Loring says. “It’s not so much the amount of a fee — it’s the uneasy feeling that you are going to be violating some law at some point if you continue in this field.”

Simpson and his co-challengers have been emboldened by their early success. They suggest that what’s really at stake is a larger question about the quality of patents granted in the United States. In an effort to glean money from licensing fees, they argue that university technology transfer offices are aggressively patenting researchers’ work, even though it may not be as novel as they claim.

Those challenging the patents hope that this case will have an effect on technology transfer offices across the country. “Those technology transfer officers that are sitting on a bunch of bogus patents are shaking in their boots, and they should be,” claims the Public Patent Foundation’s Dan Ravicher.

Simpson adds that there is a broader movement underway to tighten the patent office’s standards. A crucial Supreme Court case on the question of ‘obviousness’ — the yardstick used to judge patentability — was argued before the court last November. A decision in that closely watched case, between KSR International and Teleflex, has not yet been handed down.

Simpson says that the case is a sign that the larger public discussion about patents is slowly gathering steam. And its effects could ripple across the country — especially in the biotechnology industry, which depends on patents for its very existence.