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Prior to the World Trade Center tragedy, embryonic stem cells were the subject of much controversy, largely due to President George W. Bush’s Aug. 9, 2001 announcement that federal funds would support limited embryonic stem cell research using only those embryonic stem cell lines that have already been isolated, a total of 60 cell lines. Sheryl Gay Stolberg, “Disappointed by Limits, Scientists Doubt Estimate of Available Cell Lines,” 8/10/01 NYT-ABS 17. Because embryonic stem cells must be obtained from embryos and fetuses, the source of which is generally from abortions, and because they hold great therapeutic promise, this decision was controversial, especially due to the ethical and moral considerations weighed against the potential benefits. WHAT IS A STEM CELL? A stem cell is a special kind of cell that has a unique capacity to renew itself and to give rise to specialized cell types. “Stem Cells: Scientific Progress and Future Research Directions,” National Institutes of Health Report, page ES-1 (2001). Stem cells are not committed to conduct a special function, as are most cells of the body (e.g., a heart cell, skin cell or retina cell), until a signal is received to develop into a specialized cell. Due to stem cells’ unique proliferative capabilities and ability to become specialized, they have the potential to be useful therapeutically to replace cells and tissues that are damaged or diseased and to treat ailments including cancer, Parkinson’s and Alzheimer’s disease, spinal cord injury, stroke, burns, heart disease, diabetes and arthritis. Id. at ES-4-6. Stem cells that can develop into any type of cell in the body are called pluripotent stem cells, which means they have the potential to develop almost all of the more than 200 different known cell types. Id. at ES-1. As noted above, stem cells with this unique property come from embryos and fetal tissue. It is this class of stem cells, the pluripotent stem cells that hold the promise of being able to repair or replace any cell or tissue in the body that is damaged, diseased or destroyed. Id. In addition, adult stem cells exist that are capable of developing into different cell types. Id. at ES-6-7. However, there are differences in adult and embryonic stem cells and it is not clear whether these differences will affect the therapeutic promise these cells hold, making it ill-advised to focus only on adult stem cell research. Id. EMBRYONIC STEM CELL PATENTS There are only a few entities that currently hold patents on the compositions (embryonic stem cell lines) and methods underlying stem cell research. These patents all cover the stem cell lines themselves and methods for isolating the stem cell lines. The Wisconsin Alumni Research Foundation (WARF) owns patents relating to embryonic stem cells, including U.S. Patent Nos. 5,843,780 and 6,200,806 (the ’780 patent and the ’806 patent, respectively). The ’780 patent claims “a purified preparation of primate embryonic stem cells” that is capable of in vitro proliferation for more than one year, maintains a chromosome characteristic that is not noticeably altered through prolonged culture, maintains the potential to differentiate into endoderm, mesoderm and ectoderm tissues and which will not differentiate when cultured on a fibroblast feeder layer. The ’780 patent also claims a method for isolating the primate embryonic stem cells. WARF’s ’806 patent, which is one of the most controversial embryonic stem cell patents, claims “a purified preparation of pluripotent human embryonic stem cells” that will proliferate for more than one year in an in vitro culture, maintain a karyotype with euploid chromosomes that is not altered through prolonged culture, maintains the potential to differentiate to derivatives of endoderm, mesoderm and ectoderm tissues throughout the culture, and which will not differentiate when cultured on a fibroblast feeder layer. The National Jewish Center for Immunology and Respiratory Medicine also holds two patents relating to embryonic cell populations, including U.S. Patent Nos. 5,874,301 and 5,914,268 of Keller et al. (the ’301 patent and ’268 patent, respectively). The ’268 patent claims “a pluripotent cell population that is pluripotent for development into [lymphoid and hematopoetic cells],” the cell population is derived from a embryoid body cell population under conditions comprising an embryonic blast cell medium. The method for producing the stem cells is also claimed. The ’301 patent is directed to an embryonic stem cell culture transformed with a HOX11 gene, which is an immortalizing gene, and methods for producing the cultures. In addition, Vanderbilt University holds at least one patent relating to embryonic stem cells, U.S. Patent Nos. 5,453,357 (the ’357 patent). The ’357 patent claims a composition comprising a pluripotent embryonic stem cell, a fibroblast growth factor, a leukemia inhibitory factor, membrane associated steel factor and soluble steel factor in amounts capable of enhancing the growth and proliferation of the cells, as well as a method for producing the embryonic stem cells. THE ISSUES Controversy Surrounding Embryonic Stem Cell Patents. After President Bush’s announcement that the federal government will fund limited embryonic stem cell research, Health and Human Services Secretary Tommy Thompson held a press conference to answer questions about the patent implications relating to the embryonic stem cell issue. Edwin S. Flores Troy, “Keeping Tabs on Labs,” 8/24/2001 Daily Rep. (Fulton Country) 8. One issue raised was the implications of the breadth of WARF’s ’806 patent. The ’806 patent has been interpreted or argued to be so broad that no matter how one derives a stem cell line, WARF has the power to block the use of it. Evan P. Shultz, “Promoting the Progress of Science?” 165 NYLJ 1003 (2001). The breadth of the ’806 patent purportedly makes it difficult to design around the patent. In addition, because federal funding has been limited to the use of existing cell lines, the possibility that the subject matter of the ’806 patent will be designed around is further limited. Geron Corp. funded much of the research relating to the ’806 patent and now shares with WARF patent rights regarding the technology. Edwin S. Flores Troy, “Keeping Tabs on Labs,” 8/24/2001 Daily Rep. (Fulton Country) 8. Therefore, WARF and Geron potentially have a significant amount of control over the research done in this country. Julia Brunts, “Now Embryonic Stem Cell Research Faces Tests in Legal Sphere,” 8/20/01 Chi. Daily L. Bull. 1. Furthermore, even if American inventors are utilizing stem cell lines developed abroad, they may still be infringing the ’806 patent under the patent statute. As a result, the federal funding obtained by researchers for stem cell research may, in part, go towards licensing fees for the ’806 patent and, although WARF has indicated that it will make the stem cells broadly available for research purposes, to further complicate the issue, WARF and Geron reportedly are disputing their rights to the cell lines developed using the technology disclosed and covered by the ’806 patent. PATENTABLE? Another controversial issue is whether embryonic stem cells and related technology should be patentable subject matter. Rapid advancements in the areas of cloning and embryonic stem cell research have given rise to corresponding attempts by universities and companies to gain broad patent protection for the technology relating to such research. Antonio Regaldo, “Ethical Concerns Block Widespread Patenting of Embryonic Advances,” 08/20/01 Wall Street Journal 1. The filing of U.S. patent applications in this area has increased 300 percent in the past year alone even though certain subject matter (including medical uses of human cloning technology) is being objected to by the United States Patent and Trademark Office (USPTO). Id. Indeed, the European Patent Office has held in abeyance any consideration of patent applications relating to embryonic stem cell research until the European Commission ethics committee issues recommendations on topics that include the definition of a human. Id. Similarly, the USPTO has denied allowance of patents relating to tissue from cloned embryos. Id. The USPTO has, however, indicated that embryonic stem cell lines are patentable subject matter as evidenced by the issuance of the patents discussed above. The U.S. Supreme Court has explained that there are three categories of subject matter for which one may not obtain patent protection, namely “laws of nature, natural phenomena, and abstract ideas.” Diamond v. Diehr, 450 U.S. 175, 185 (1981). Notwithstanding moral and ethical considerations, it has been asserted that cells are not patentable subject matter because they constitute natural phenomenon. Courts, however, have indicated otherwise. In fact, that a patent may be obtained covering cell cultures was made clear by the Court of Customs and Patent Appeals in In re Bergy, 586 F.2d 1031 (CCPA 1977). In Bergy, the claimed subject matter was a purified culture of microorganism cells. The court stated the culture was not a “product of nature” since it did not exist in nature in pure form and could be produced only under carefully controlled laboratory conditions. Id. This notion was reconfirmed by the Supreme Court in Diamond v. Chakrabarty, 447 U.S. 303 (1980). In Chakrabarty, the Supreme Court held that Congress intended statutory subject matter to “include anything under the sun that is made by man.” Id. at 309. The subject matter in Chakrabarty related to a purified culture of a genetically engineered bacteria and the court concluded that it was patentable. Similarly, a purified embryonic stem cell line, which can only be produced under carefully controlled laboratory conditions, seemingly should be considered patentable subject matter under the patent statute and according to the case law. MORE CASE LAW Although the courts have never addressed whether embryonic stem cell cultures should be patentable subject matter, patents owned by the Johns Hopkins University relating to human stem cells derived from bone marrow have been the subject of several patent infringement cases. See, e.g., Nexell Therapeutics, Inc. v. Amcell Corp., 143 F. Supp.2d 407 (D. Del. 2001) and Johns Hopkins Univ. v. CellPro, Inc., 152 F.3d 1342 (Fed. Cir. 1998). Of particular interest is U.S. Patent No. 4,714,680, which claims “a suspension of human cells comprising pluripotent lympho-hematopoetic stem cells substantially free of mature lymphoid and myeloid cells.” The stem cells are not derived from human embryos, but rather from bone marrow isolated from human patients and therefore do not raise the same ethical and moral issues as embryonic stem cells and are not as controversial. Despite being the subject of multiple patent infringement cases, the validity of the John Hopkins University patents was never challenged in a published opinion under 35 U.S.C. 101 as relating to nonpatentable subject matter. Based on In re Bergy, discussed above, the courts are likely to conclude that such cell cultures are patentable subject matter, unless an exception is made for human cell cultures. The Legislature, however, seems to be the best forum for such a decision. Robert C. Scheinfeld is a partner in the Intellectual Property Group and New York office of Baker Botts, and Parker H. Bagley is a partner in the Intellectual Property Group and New York office of Milbank, Tweed, Hadley & McCloy. The assistance of Alicia A. Russo, a Baker Botts associate, in the preparation of this article is greatly appreciated.

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