The recent demand by the University of Wisconsin's patent arm [WARF] to California's stem cell body [CIRM] for patent royalties motivated an interesting article in the Los Angeles Times on April 12, 2006.

Entitled "The legal lock on stem cells; Two patents that cover key research areas are setting back science," the piece by Jennifer Washburn argued that two patents on stem cell science to James A. Thomson were a more serious threat to research on stem cells than was President Bush's limitation in federal funding in 2001: "But it appears that these two patents [U.S. 5,843,780 and U.S. 6,200,806], held by a foundation affiliated with the University of Wisconsin [WARF], may exert a dangerous monopoly over all future research in the field -- one that may pose an even greater long-term threat to stem cell science than the Bush administration's federal funding ban."

As to the specific patents, Washburn obliquely suggested that California should challenge them: "The Foundation for Taxpayer and Consumer Rights, based in Santa Monica, has urged California's stem cell agency to challenge the Wisconsin patents." There is some irony here. Proposition 71 in California, which led to the creation of CIRM, was marketed to voters with the promise that there would be a return to the state in the form of patent royalties created by patents generated by California's funding of research. However, faced with the possibility of having to pay patent royalties to someone else, the state is to challenge the patents of others? There is a separate irony. A legal opinion prepared for California State Treasurer Angelides suggested that there might be problems with the use of state tax-exempt bonds to fund enterprises who gained patents the royalties from which were shared with California. That problem is still being sorted out. However, there is no problem with WARF getting royalties from patents which were generated through federal funding (Thomson's patents came through NIH funding).

As to more general patent policy, Washburn suggested that the Thomson patents were part of a bigger problem at the Patent Office: "Should the U.S. Patent Office allow the basic building blocks of science to be patented? This question goes to the heart of a recent U.S. Supreme Court case." The case in question is Laboratory Corporation of America Holdings v. Metabolite Laboratories Inc., et al., No. 04-607, which is most likely going to be sent back by the Supreme Court to lower courts, because the patentable subject matter issue had not been properly argued previously. Washburn did not mention Merck v. Integra, 125 S. Ct. 2372; 74 USPQ2d 1801 (2005). The expansive interpretation of 35 USC 271(e)(1) in Merck may play a significant role in allowing research in stem cell areas within the scope of patent claims.

Washburn suggested that both Congress and the courts were to blame for present patent problems: "The problem is twofold. First, Congress and the courts have continually expanded the range of inventions that are eligible for intellectual property protection, as well as the duration of that protection. Second, the Patent office encourages examiners to approve patents, not reject them, so many that don't really meet the eligibility criteria slip through. If one examiner rejects an application, the applicant can file a continuation" with another until it gets approved." Washburn suggested that Thomson/Wisconsin had abused the continuation process, although the two patents in question were a continuation-in-part and a divisional, claiming priority to one abandoned parent. This practice would be allowed even under the new rules proposed by the USPTO in January 2006. Other aspects of the abuse of the continuation process have proved more ephemeral than real, especially as to the patent grant rate issue. See 86 JPTOS 568 (2004), 4 CHI-KENT J. INTELL. PROP. 104 (2004), and 4 CHI.-KENT J. INTELL. PROP. 186 (2005). Whether the changes to continuation practice will have a significant impact on application backlog is discussed in the April 2006 issue of Intellectual Property Today in "Edison=s light bulb, and the future of stem cell research."

A discussion of the demand from WARF to CIRM appears on the IPBiz blog. A discussion of the Hwang stem cell fraud (LESSONS TO BE LEARNED FROM THE HWANG MATTER: ANALYZING INNOVATION THE RIGHT WAY) appears at 88 JPTOS 239 (March 2006).