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California stem cell initiative sprouts concerns
May 2006
by Jeffrey Bouley  |  Email the author
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SAN FRANCISCO—In passing Proposition 71, California voters overwhelmingly approved a $3-billion state stem cell initiative, with the payoff for citizens being an expected $1.1 billion or more in royalties that the state would add to its coffers from stem cell-related scientific discoveries.
 
But a series of meetings that began this spring to determine what the state will require from private companies that receive Proposition 71 funds is raising a number of concerns—as have recent editorials and news stories in California publications—as to whether California will face a fight over royalties and patent rights.
 
At issue is a plan rolled out by the California Institute for Regenerative Medicine (CIRM), which is charged with disbursing that $3 billion over the next 10 years. That plan would require universities and non-profit research institutes that receive public grants under the Prop 71 initiative to channel a 25 percent return back to the state on discoveries yielding more than $500,000 in revenues.
 
But as the Wisconsin Alumni Research Foundation (WARF) of the University of Wisconsin has pointed out—as have others who follow stem cell developments—it owns two broad patents on embryonic stem cell lines in the United States.
 
This spurred a statement from Ed Penhoet, vice chairman of the CIRM's oversight committee saying, "Theoretically, could [WARF] close down research activity in California? Yes."
 
It also spurred an opinion piece in the Los Angeles Times in mid-April by Jennifer Washburn, a fellow at the New America Foundation and author of University, Inc.: The Corporate Corruption of Higher Education. In it, she claims those WARF patents will set back science and "exert a dangerous monopoly over all future research in the field." She also quotes a Stanford University attorney with the Program on Stem Cells in Society, Kenneth Taymor, as saying that WARF could step in at any point to claim a share of the commercial rights to new embryonic stem cell research tools, despite WARF's policy that it is "careful not to claim any commercial rights to inventions made by academic licensees."
 
WARF, for its part, expresses confusion over why it is being painted as a black knight in this picture. Nothing has been demanded from CIRM and WARF is already working with many California companies and academic researchers, says Andrew Cohn, government and public relations manager for WARF.
 
"We already have provided free licenses for 54 research groups in California and over 300 groups worldwide," he adds. "Our interest is in moving the science forward. CIRM is a long way from having to worry about royalties and so is WARF. We are much more interested in agreements with both academic and commercial entities interested in working in this important area of science."
 
"Clearly, what we do is the antithesis of a monopoly, except in the steadfast minds of people such as Washburn," asserts Carl E. Gulbrandsen, WARF's managing director. "WARF is happy to enter into a debate regarding its stewardship of the human embryonic stem cell program. We have had numerous discussions with researchers, including for example, the California Institute for Regenerative Medicine, and have every intention of assisting all researchers in their efforts to advance this science"
 
Gulbrandsen says that statements like those Washburn makes could actually impede science, saying, "This type of vitriol creates an atmosphere of fear that will discourage scientists from pursuing human embryonic stem cell research."
 
Speaking to CIRM during a meeting in late March, Brad Margus, CEO of Mountain View, Calif.-based Perlegen Sciences, echoed Cohen's thoughts that intellectual property (IP) concerns are perhaps being raised too early. He noted that in the late 1990s, there was a "land grab" for patent rights on "every gene in sight" but that those patents didn't always amount to anything.
 
"Today, even if you find the genes associated with the disease, a lot of pharmaceutical companies will tell you they don't really consider that IP or protectable-type information anymore," he notes. "They now consider it in a category that they call pre-competitive." The same may end up happening with stem cells, he suggests.
 
There is also a bit of double-talk in concerns raised against WARF's patent position, suggests Lawrence B. Ebert, a registered patent attorney in New Jersey who also maintains IPBiz.blogspot.com.
 
"It is ironic for Washburn to complain that WARF is asserting its patent rights while, at the same time, CIRM will be seeking to obtain patent rights to enforce against others," Ebert notes.
 
Code: E050605

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