19 May California group says ruling weakens WARF's stem cell patent
Madison, Wis. – A California taxpayer and consumer rights group believes the U.S. Supreme Court’s recent eBay ruling weakens the position of the Wisconsin Alumni Research Foundation regarding its stem cell patent, but a spokesman for the Wisconsin foundation said its recent $1 million jury reward in the Xenon Pharmaceuticals case demonstrates its ability to defend patents.
Representatives of the Foundation for Taxpayer and Consumer Rights, based in Santa Monica, Calif., have argued that WARF’s stem cell patent is overly broad and is impeding stem cell research in California and elsewhere. The Supreme Court ruling, however, means that WARF, a patenting and licensing organization serving the University of Wisconsin-Madison, has less power to assert what the foundation calls “dubious patent claims to control all human embryonic stem cells in the United States.”
On May 15, in the case of eBay versus Merc Exchange, the Supreme Court ruled that an injunction is not mandatory in cases of patent infringement, reversing a ruling by the U.S. Court of Appeals for the Federal Circuit Court requiring that an injunction be issued in the case. The high court said other courts may impose an injunction, but other remedies such as financial damages and royalties also are possible.
John M. Simpson, FTCR’s stem cell project director, said the Supreme Court ruling means that patent holders like WARF will find it more difficult to prove that an injunction is necessary. “Anything that weakens WARF’s stranglehold on research is a good thing,” said Simpson, FTCR’s stem cell project director. “But these over-reaching patents really need to be broken.”
Andrew Cohn, government and public relations manager for WARF, said the ruling clearly does not apply to universities and characterized the foundation’s claims are “much ado about nothing.”
“If they actually read the decision, they would see the specific mention of how this doesn’t apply to universities because they clearly aren’t going to be the ones who are going to commercialize the invention,” Cohn said. “This decision will have absolutely no impact on our patent whatsoever.”
WARF has $1.5 billion at its disposal to defend its patents. Earlier this week, a jury awarded WARF $1 million in its case against Xenon Pharmaceuticals, a Canadian biotechnology company. The lawsuit, brought by WARF last spring, charged Xenon with breach of contract and other contract violations under federal law. In 2001, WARF had licensed to Xenon a compound to control cholesterol, obesity, and diabetes.
“WARF has proven over and over again that it will enforce its patents and its contracts,” Cohn said. “This company [Xenon] made a very, very bad tactical decision by trying to get out of, or trying to ignore the contract they made with us. They are now paying for it dearly.”
Dr. Simon Pimstone, president and CEO of Xenon, could not be reached for comment.
The FTCR’s assertion is the latest salvo in what promises to be an intense fight with WARF, whose stem cell patent is written to cover both human embryonic stem cells and the method stem cell researcher James Thomson used to derive and grow them. In addition, the patent includes a provision that requires researchers interested in commercializing discoveries made with WARF stem cells to negotiate another license and share profits derived from the enterprise.
The foundation has said the WARF patents are jeopardizing California’s Proposition 71 stem cell research program and should be challenged. The California Institute of Regenerative Medicine, the state’s stem cell institute, will finance $3 billion in stem cell research. When bond financing is factored in, a total of $6 billion in taxpayer funds are at stake.
Earlier this year, WARF General Counsel Elizabeth Donley, speaking at a stem cell conference in San Francisco, indicated that WARF would defend its patent rights. She said because the State of California expects a payback if any cures are developed with Prop 71 public money, WARF is entitled to a share of the revenue.
The FTCR isn’t alone in viewing WARF’s stem cell patent as restrictive. Simpson noted that Dr. Robert Goldstein, chief scientific officer for the Juvenile Diabetes Research Foundation, recently told the California Institute of Regenerative Medicine’s intellectual property committee that WARF’s patents are “a major inhibition to productive scientific research.”
According to Simpson, Goldstein added that WARF’s claims have forced the research foundation to concentrate its efforts outside the United States “to create new and better stem cell lines, and that process has occurred and is currently flourishing.”
Simpson noted the United States is the only nation in the world to recognize WARF’s patent claims. WARF has applied for a stem cell patent before the European Union, but it was disallowed at the first stage of approval. That decision has been appealed, and the application now is in a second approval stage.
Simpson also called for patent reform in Congress. “This [eBay ruling] helps level the playing field in patent law, which sorely needs Congressional reform,” he said. “However, it doesn’t get to the heart of the matter with WARF. These are patents that simply never should have issued.”
WARF has consistently rejected claims that its patents limit research, and recently noted that it has distributed stem cells to 350 academic researchers, and has entered into license agreements with 12 private research labs. Cohn reiterated that position in the wake of the FTCR’s statement on the eBay ruling. “These folks are absolutely going off the deep end,” Cohn said. “If it wasn’t for WiCell and for the University of Wisconsin, they wouldn’t have anything to spend the $3 billion on in the first place.”
Cohn also took issue with the need for patent reform, saying the American patent system works. “It has fueled a biotech revolution in this country, and to destroy what works and has made us the world leader in these scientific endeavors makes no sense to me whatsoever,” he stated.