In recent years, one of the most important breakthroughs in the sphere of biotechnology and life sciences took place in 1998, when researchers isolated human embryonic stem cells for the first time. Ever since, the promise of extraordinary possibilities presented by the use of stem cells has been a hot topic in biotechnology circles and beyond. Recognizing the potential for scientific advancement that stem cells present, President George W. Bush announced limited federal funding of stem cell research in August 2001.
Embryonic stem cells are derived from the cell mass of an early stage human embryo. Because embryonic stem cells are undifferentiated, they are capable of becoming any of the specialized cells making up the 200 or more different tissues in the human body. Such stem cells are referred to as "pluripotent" for their ability to become any of the various cell types.
Among the practical, currently contemplated, implications for the use of stem cells are advances ranging from increased knowledge and understanding of human development, to advances in the development of new pharmaceuticals, to therapeutic uses such as regenerating damaged tissues of various human organs and even growing entire human organs. However far the horizons lie, one thing is clear -- stem cells may hold many answers to the questions about how to improve health and how to prolong life.
Along with the optimism regarding the scientific advancements made possible by the stem cell isolation, there has been, and still exists, controversy surrounding stem cell research. Much of the controversy concerns the moral and ethical issues raised by the source of the stem cells. Such issues include abortion, the production of human embryos for the sole purpose of isolation of stem cells and the propriety of "harvesting" human organs.
Over the last year, the disputes over the intellectual property rights to stem cells have also made headlines. Among these disputes, the disagreement between Wisconsin Alumni Research Foundation and California biotechnology company Geron Corp. (Nasdaq: GERN) was especially troublesome for prospective licensees of stem cells, putting in doubt the ownership rights in, and the rights to use, stem cell lines for production of certain cell types.
The roots of the conflict between WARF and Geron can be traced to the mid-1990s, when the federal government decided not to fund embryonic stem cell research. It was during that time period that University of Wisconsin researcher Dr. James A. Thomson was in need of additional funds to continue his stem cell research studies that eventually resulted in the breakthrough in stem cell isolation.
Geron stepped in to provide Thomson with funding for his laboratory in exchange for an exclusive license to the production of six cell types generated from Thomson's stem cells and an option for an exclusive license to any of the other cell types. However, in August 2001, WARF -- the holder of the rights to Thomson's research -- went to federal court, attempting to take back the exclusive rights it granted to Geron, or at the very least to disable Geron's option to obtain an exclusive license to cell types other than the six subject to the original agreement.
Shortly thereafter, WiCell Research Institute Inc., an entity WARF spun off to manage stem cell dealings, entered into an agreement with the National Institutes of Health to make stem cells available for noncommercial scientific research. The current law simplified the federal government's task of negotiating such rights with WiCell. In the past the federal government has provided funding to Thomson. As a result, under the Bayh-Dole Act, the federal government was in a position of being able to assert some rights vis-à-vis certain inventions to further the public benefit (referred to as "march-in rights").
While the agreement between WiCell and the NIH cleared the way for nonprofit researchers to obtain nonexclusive licenses for stem cell lines and methods of use subject to the agreement between WARF and Geron, the pending dispute between WARF and Geron had created a dilemma for anyone interested in obtaining a license to use these stem cell lines in commercial endeavors.
On the one hand, on its Web site, WARF was inviting prospective licensees to obtain licenses to the Thomson stem cell lines without any mention of the fact that the rights were available only for scientific, nonprofit purposes. On the other hand, if the dispute between WARF and Geron were to proceed to litigation and Geron's exclusive rights were to be validated in court, commercial, for-profit licensees of stem cell lines may have been found to be infringing the Thomson patents and subject to a possible lawsuit by Geron. Therefore, a risk-averse prospective licensee was well-advised to await the outcome of the dispute between WARF and Geron to clarify the distribution of rights in stem cells for commercial purposes.
Until any resolution of this dispute, obtaining a license for the use of stem cells subject to the agreement between WARF and Geron, for other than scientific research purposes, remained an inherently risky proposition.
Providentially, the news of such resolution came on Jan. 9, 2002, when WARF and Geron announced that they had settled their dispute out of court. Under the terms of the settlement, WARF and Geron entered into an agreement, under which Geron continues to have exclusive rights to develop stem cells for three specific cell types -- neural, cardiomyocyte and pancreatic islet cells -- of the six originally licensed stem cell types. Geron will continue to have rights in the remaining three stem cell types on a nonexclusive basis.
The settlement between WARF and Geron is promising news for all prospective licensees of stem cells. Commercial entities seeking a license to the Thomson stem cell lines can now obtain a license for development of all but the three cell types exclusively licensed to Geron, directly from WARF, without any fear that such license would impact Geron's exclusive rights. In addition, such commercial entities may approach Geron for a sublicense to three stem cell types in which Geron maintains exclusive rights.
There is also positive news for nonprofit researchers seeking access to Thomson stem cell lines. Originally, under the agreement between WiCell and the NIH, recipients of NIH grants were able to contract with WiCell to receive stem cell lines for a low payment meant to cover WiCell's costs. Now, WARF and Geron have agreed that research rights to Thomson stem cell technology will be available, on a non-exclusive basis, to nonprofit researchers without the payment of such costs.
Thus, the landscape for intellectual property rights in stem cells is significantly clearer in 2002 than it had been in 2001. Now that this controversy surrounding intellectual property rights to stem cells is in the past, the scientific community is moving on with the task of fulfilling the promise provided by the study of stem cells, including development of new therapeutics and diagnostic products.
Vasilyuk and Carpenter are attorneys in the Intellectual Property section of the Life Sciences Group at Gray Cary Ware & Freidenrich LLP. Haile is head of the Life Sciences Patent section and co-chair of the firm's Life Sciences Group.
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