Preliminary decision against UW may set up years-long legal battle

Milwaukee Journal-Sentinel (Wisconsin)

The U.S. Patent and Trademark Office has issued a preliminary rejection of three key stem-cell patents owned by the University of Wisconsin-Madison, setting up a legal battle with potentially big economic and psychological ramifications for the state’s biotech economy.

The Wisconsin Alumni Research Foundation, the licensing arm of the university, vowed to appeal the ruling in every venue at its disposal, even if the dispute drags out in federal courts for years.

“The patents are still valid until this process is complete,” said Andy Cohn, a WARF spokesman and director of government affairs.

The Patent and Trademark Office, a division of the U.S. Department of Commerce, handed down the administrative ruling late Friday, but neither party publicized it until Monday.

The agency acted in response to complaints from two public-interest foundations, which alleged in July that the patents are so broadly written that they give WARF potential to reap royalties from a broad range of stem cell-related treatments. In their complaint, the Foundation for Taxpayer and Consumer Rights in Santa Monica, Calif., and the Public Patent Foundation in New York also argued that UW-Madison researcher James Thomson was not the first to isolate human embryonic stem cells, therefore diluting the propriety of his 1998 work.

The groups say WARF‘s control of the technology discourages potentially lifesaving research by imposing licensing costs and drives stem-cell work abroad to places where WARF‘s patents are not recognized.

All three patents involve high-profile laboratory breakthroughs, each covering methods of isolating embryonic stem cells. Although the patents currently lack significant commercial application, proponents say they herald nothing short of a paradigm shift in medicine.

Some say the work eventually could produce cures for diabetes, Alzheimer’s and other diseases.
Royalties at stake

At stake for WARF is a potential loss of royalty revenue if both the agency and courts uphold the preliminary rejection. A worst-case outcome – the repeal of all three patents – also could take some of the shine off Thomson’s reputation as an internationally recognized biotech researcher.

A repeal also could dampen the excitement associated with research that has drawn hundreds of millions of dollars of investment and research funding to Madison, elevating the university town to one of the world’s pre-eminent biotech hubs.

John Simpson, an official at the Santa Monica consumer rights group, was jubilant over the preliminary outcome.

“This is a great day for scientific research,” Simpson said in a statement released late Monday. “The patents should never have been issued in the first place.”

The final outcome is far from decided. The agency gave WARF two months to prepare a response.

“WARF has absolute confidence in the appropriateness and legitimacy of these patents,” WARF Managing Director Carl Gulbrandsen said.

The issues raised by the two groups already were considered in the original patent process and are not new, said Grady Frenchick, a patent attorney in Madison at the Whyte Hirschboeck Dudek law firm.

Frenchick, who has practiced patent law for 30 years, expects the final ruling to be in WARF‘s favor.

“There’s really nothing new here. The arguments and analysis are in the file history,” he said.

Taking another look

The two foundations that filed complaints managed to “reconfigure” the old arguments more forcefully and aggressively this time around, forcing the agency to initiate a process called patent “re-examination,” Frenchick said.

Frenchick does not do any stem-cell work for WARF and regards himself as an independent observer of the case.

Past case histories also work in WARF‘s favor.

According to Frenchick and the Patent and Trademark Office, 70% to 88% of all patents retain their patent status after a patent re-examination process.

“For this re-examination to take out all claims of all three patents would be extremely rare,” Frenchick said.

There’s no doubt the case will attract attention until it’s resolved.

Goaded by Gov. Jim Doyle, Madison has made biotech the center of its economic growth strategy, putting it in competition with biotech centers from Boston to Singapore. Californians voted in November to fund $3 billion of embryonic stem cell research in their state over the next decade.

And embryonic stem cells by their nature have become lightning rods of controversy. Research in many cases means destruction of human embryos, raising heated arguments over ethical issues.
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Contact the author JOHN SCHMID at [email protected]