MIT Technology Review Concern Over WARF Patent Royalty Demand To CIRM Over Stem Cells Is Misguided

On April 24, an article in the MIT Technology Review portrayed the immediate concern over the Wisconsin/WARF/Thomson patents on stem cells as how the patents will affect basic academic research, which, in turn, could affect the development of stem cell-based tools and therapies.

The article mentioned a possible gambit by the state of California to ensure cooperation among researchers of different states. The oversight committee of California’s CIRM recently announced that any California researchers who develop patented discoveries using California state funds must share their patents with other state researchers. Ed Penhoet of CIRM was quoted: “We hope WARF will reciprocate.” Of course, one issue is that WARF presently has patents related to embyronic stem cells, and CIRM does not. Further, one would need to know details of what is shared. Does the sharing only pertain to the use by researchers in academic institutions, or does it extend to companies created by such researchers? One of the prime selling points to voters of states such as California and New Jersey was that the state funding research would recover expended money through patent royalties. If everyone gets a free license, such a recovery is unlikely to happen.

The article goes through the world of patent usage as among different patent-holding universities. Universities generally allow other institutions to use patented technologies without special permission. The litigated case of Madey v. Duke University is an exception to this general rule, although it was a patent-holding professor who sued a university. Furthermore, WARF requires universities to get a license to do embryonic stem cell research. “None of us understand why we need a license…Why is this technology any different?” says one technology-transfer official. The license of WARF to the University of California, for example, permits scientists to use only a small number of embryonic stem cell lines. And the license granted to the Howard Hughes Medical Institute, a nonprofit medical research organization that funds scientists across the nation, prohibits scientists from accepting funding from or collaborating with commercial companies unless the company has a commercial license from WARF.

The article presents an interesting quote by Jeanne Loring, who herself is an author of an article criticizing the WARF patent royalty demand [311 Science 1716 (2006)]: Jeanne Loring, a scientist at the Burnham Institute for Medical Research in La Jolla, CA, started a short-lived embryonic stem cell company several years ago. “I learned from venture capital investors that these patents existed and that it would be impossible to obtain funding from them,” she says. This quote is significant for at least two reasons. First, one sees that venture capitalists were aware of the Thomson/WARF patents and saw them as a show-stopper as to VC investment in the field. Thus, as to small research entities spurning money from CIRM over disputes about patent royalty rights, one suspects such small entities do NOT have VC funding as a viable alternative. I suspect the length of time before payout is separately a showstopper as to VC funding; nothing here looks ready for commercialization within seven years, a typical VC benchmark. Second, in the world of Bayh-Dole, it’s kind of scary that one professor/entrepreneur would not know of relevant patents of a Bayh-Dole grantee. Further, it’s also scary that CIRM apparently had not anticipated the WARF play, which failure is somewhat hard to fathom since the basic patent issued years ago.

The basic WARF/Thomson patent is US 5,843,780 (issued 1 Dec 1998 to James A. Thomson, based on application 591246 filed 18 Jan 1996; the application was a continuation-in-part of U.S. application Ser. No. 08/376,327 filed Jan. 20, 1995. It was obtained with funding from the federal NIH, and thus represents a patent obtainted through the auspices of the Bayh-Dole Act. It is separately true that Thomson, a few days after filing his basic patent application, submitted a paper to the Proceedings of the National Academy of Sciences, which appeared as 92 PNAS 7844 (1995). His effort at patenting did not impede his efforts at rapid public disclosure.

Kenneth Taymor, an attorney with the Stanford Program on Stem Cells in Society, is quoted in the article: “The more that WARF presses its rights, the more research will be impinged and the more likely it will move offshore.” This boogeyman won’t hunt. In a different variant, research was going to move offshore after Bush’s restriction in 2001.

Taymor and the article author Emily Singer simply neglect to mention the role that 35 USC 271(e)(1) is going to play in research on embryonic stem cells. Therapies arising from embryonic stem cells are going to need FDA approval. Work done to meet FDA requirements is insulated from infringement liability through the safe harbor of 271(e)(1), as expansively interpreted by the U.S. Supreme Court in the case Merck v. Integra.

Issues discussed in the present article are related to those mentioned in Ebert, Lawrence. (2006, April 13). Will Wisconsin’s Patents Block Embryonic Stem Cell Research?. EzineArticles. Retrieved April 24, 2006, from and Ebert, Lawrence. (2006, April 12). Los Angeles Times Article Way Off Base on Stem Cell Issues. EzineArticles. Retrieved April 24, 2006, from