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Competitors may have scratched their heads in wonder when San Francisco-based Heller Ehrman White & McAuliffe opened an office in Madison, Wis., two months ago. But the move may turn out to be one of the smartest it’s ever made. With the new outpost, Heller Ehrman was able to lure litigator John Skilton from Milwaukee-based Foley & Lardner’s Madison office. A few weeks later, Skilton snagged one of the hottest biotech cases in the nation, becoming counsel for the Wisconsin Alumni Research Foundation (WARF) in its suit against Menlo Park, Calif.-based Geron Corp. over rights to embryonic stem cell lines. The case puts Heller Ehrman in the center of an ongoing controversy over the scientific community’s access to patented research tools. While universities and their commercial sponsors seek to protect these tools as their intellectual property, scientists chafe at restrictions placed on their use. Patent attorneys expect additional litigation in this arena as commercial products are developed with these tools. WARF’s suit against Geron arose over the terms of a 1999 agreement in which Geron licensed rights to six stem cell lineages with the option to license additional cell types. WARF claims the option expired at the end of July. When Geron disagreed, WARF filed suit asking a Wisconsin federal court to uphold its interpretation of the contract. The dispute has generated widespread publicity, coming four days after President George W. Bush announced that federally funded research on embryonic stem cells would be limited to 60 existing stem cell lines. WARF owns the rights to five of those lines. WARF spokesman Andrew Cohn said Bush’s announcement was “totally unrelated” to the suit. But Skilton said that by narrowing the field of research Bush “increased the importance of existing lines” and brought WARF to the forefront. It’s also helping Heller Ehrman establish itself as the go-to firm on biotech issues. While the firm has long had a strong biotech practice, in the last year it has sought to establish a national presence. In February 2000, it set up shop in Maryland’s Montgomery County, home to the National Institutes of Health, the Food and Drug Administration and Johns Hopkins University. And in June the firm launched its office in Madison. The city has a large biotech community, but “people didn’t understand how much of one,” Skilton said. “At the moment it is the center of the universe.” Heller Ehrman had noticed Madison, however, and set up an office there chiefly to attract a group of litigators from Foley to build a biotech and IP presence. “Skilton is the best-known trial lawyer in Madison,” Heller Ehrman Chairman Barry Levin said. Skilton got the WARF case as a result of his previous work with Carl Gulbrandsen, WARF’s managing director. A few years ago Skilton won a patent infringement dispute for Lunar Corp. involving baggage-scanning technology. Gulbrandsen was general counsel of Lunar at the time. When WARF’s dispute arose with Geron, he called Skilton to handle the matter. Skilton has had a number of high-profile biotech patent cases, including an infringement suit brought against Gene Logic Inc. by Incyte Genomics Inc. The case recently settled. As for the WARF case, Skilton says it’s a “narrow lawsuit” over a contract clause. But, he added that the case “as a matter of public interest and consequence is unique.” COMPANIES VERSUS RESEARCHERS Embryonic stem cells, which come from the inner cell mass of a human embryo, have the potential to develop into all or nearly all of the tissues in the body. They are thus potentially valuable in the treatment of various medical conditions, such as Parkinson’s and Alzheimer’s disease. University of Wisconsin scientists led by James Thomson developed embryonic stem cell lines in 1998 with funding from Geron. The current clash between the university and company highlights the contradictory and at times contentious ties between academia and business. “The general issue of patents over research tools has become a very controversial issue,” said Fenwick & West partner Lynn Pasahow. The Geron-WARF case “is another one of the outbreaks of this problem.” Pasahow said DuPont squared off against the university community several years ago over access to transgenic mice it licensed from Harvard University. He said NIH, the federal body that funds biomedical research, ultimately stepped in and negotiated terms for DuPont to license the mice. NIH may be playing a similar role in the controversy between Geron and WARF. This week it is holding a series of individual meetings with the producers of the 60 stem cell lines to discuss “issues of patents and how to make lines available to researchers,” said NIH spokesman Don Ralbovsky. WARF’s Cohn declined Tuesday to comment on the details of the group’s meeting with NIH. It appears clear, however, that WARF would like to prevent Geron from gaining exclusive rights to its stem cell lines. The group said in a press release announcing its suit that more than 100 academic researchers and numerous companies had asked WARF about licensing the stem cell technology. If WARF prevails in the current dispute “we may license additional cell types to other for-profit entities,” Cohn said. Pasahow said researchers believe that the number of stem cell lines that could be used for research is closer to 10 to 12 rather than 60. Geron’s control of one-third of these lines could thus pose a problem for researchers. For its part Geron seems to be focused on resolving the matter out of court. “They’re approaching this as a business matter at this point,” said Alan Mendelson, a partner at Latham & Watkins’ Menlo Park office who is Geron’s principal outside lawyer. “I don’t know if they’ve engaged a litigation counsel or if they ever will.” Geron declined to comment on the matter beyond its press releases. The company and WARF recently announced jointly that they are engaged in discussions over the license option and “expect to resolve the matter in the near future.”

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