Lisa A. Haile
Lisa A. Haile, JD, PhD

At the end of March, the U.S. Patent and Trademark Office (USPTO) issued rejections in three broad patents relating to embryonic stem cells (ESC) that have been the center of attention for the scientific and legal communities. The patents, owned by the Wisconsin Alumni Research Foundation (WARF), were challenged in July 2006 by the Foundation for Taxpayer and Consumer Rights and the Public Patent Foundation, with supporting declarations from a leading stem cell research scientist. Petitioners contend that the methods for deriving ESC were essentially taught in papers published prior to the filing of applications for the WARF patents.

Stacy Taylor, JD

Last year, the European Patent Office (EPO) also rejected WARF’s European patent claims, which are now on appeal. Unlike the rejections made by the USPTO, the EPO’s rejection was made on “moral grounds,” reflecting a divide among EU countries that support hESC research and those which do not. A final decision by the EPO isn’t expected for several years.

In the U.S., the WARF patents were issued in 1998, 2001, and 2006 for studies done by University of Wisconsin scientist James Thomson, Ph.D. The patent claims cover not only methods for obtaining stem cells from fertilized embryos but also the ESC themselves. Based on these three patents, all researchers working with hESC for “commercial purposes” in the U.S.must pay a license fee to WARF.

Royalty-bearing Licensing Issues

WARF has come under extensive criticism from the stem cell community for its insistence on license terms that many see as sufficiently onerous to slow the progress of ESC research. In response, WARF has established a reduced royalty rate for nonprofit organizations and offers licensees training in ESC techniques. Even so, a number of organizations have chosen to conduct research programs outside of the U.S., a decision attributed by some as a desire to avoid the reach of the WARF patents.

Part of the concern relates to license limitations requiring any work done for a commercial purpose, including sponsored research by a nonprofit entity, be done under a royalty-bearing license. While such agreements are not unusual, WARF’s definition of commercial purpose has drawn fire from the scientific community. For example, at a conference in late 2006, a WARF representative remarked that it might consider distribution of research funds by the California Institute for Regenerative Medicine (CIRM) to be commercial activity requiring a license.

Although CIRM does not conduct or directly control ESC research, WARF pointed to its status as an independent agency of the state as making it more than a mere conduit for California’s $3 billion in stem cell research funds.

Other states with stem cell research funds became alarmed that funds intended to support their local research communities could be diverted to WARF from grants with commercial potential. Critics characterized the move against CIRM as double dipping, deriving license revenues from the initial research funding stream and from the commercialization of research products.

By January, WARF had withdrawn its claim to CIRM grant funds, but to many WARF’s asserted status as an entity that uses its patents primarily for the public good had been tarnished.


Petitioners filed their reexamination request as public comment on WARF’s U.S. patent position became increasingly negative. Reexamination at the USPTO is a procedure by which it considers whether patent claims should have been granted in view of prior art not considered before the claims were initially granted or prior art already on the record that was not considered fully.

Reexamination of the WARF ESC patents was requested on the basis of three papers published between 1982 and 1990 that detailed a process for deriving embryonic stem cells from nonprimate mammals. Two of the papers were not considered at all by the examiner who first allowed WARF’s patent claims, while the third was only considered during prosecution of one of the patents.

In addition, Jeanne Loring, Ph.D., of the Burnham Institute, a well-respected and world-renowned stem cell research scientist, submitted a statement that she and others in the field regarded the nonprimate ESC derivation papers as making derivation of primate ESC possible. She also provided laboratory records to the USPTO evidencing efforts to derive primate ESC using the methods described in the nonprimate papers before the WARF patent applications claiming those methods as applied to primate cells were filed.

At least initially, the USPTO appears to have agreed with the petitioners’ argument that the prior art, including the nonprimate ESC derivation papers, suggested a method that could, as demonstrated by Dr. Loring’s research, be so readily applied to primate cells as to render WARF’s patent claims obviously unpatentable.

While an initial rejection of the claims by the USPTO in any patent application is not uncommon, a situation where the examiner is clearly second guessing the original decision to issue a patent does not bode well. WARF will have an opportunity to submit a response to the USPTO in the coming months and following that, it will also have an opportunity to appeal any final ruling. In the meantime, the hESC research community is cautiously optimistic that one of the highest perceived barriers to progress in this field may ultimately be removed and investors may be more willing to support stem cell companies and research in the U.S.

Lisa A. Haile ([email protected]) is co-chair of the life sciences practice group, and Stacy Taylor ([email protected]) is partner at DLA Piper U.S.

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