Thursday, April 16, 2009

New Stem Cell Patent Ruckus in California

The delicate interface between science and business has come a cropper again.

The latest set-to involves the National Human Neural Stem Cell Resource of Children's Hospital of Orange County Research Institute and Stem Cells Inc. of Palo Alto, Ca.

John M. Simpson, stem cell project director of Consumer Watchdog of Santa Monica, Ca., Wednesday provided a summary of the dispute. He reported that Philip Schwartz, head of the Resource, said his organization's efforts to promote research with human neural stem cells has been effectively blocked by patents held by Stem Cells Inc.

The entire story can be read on Simpson's organization's blog along with a response from Stem Cells, which said it did not control actions by the Resource.

The situation reminds us of a book, "Science Business," by Harvard business professor Gary Pisano, published a couple of years ago. He has studied and consulted with the biotech industry for decades and has written about its consistent lack of profits. He suggests that part of the problem lies in the "monetization of IP" and inappropriate application of high tech industry IP principles in the biotech industry.

In 2006, he said in an interview on the Harvard Business School web site:

"Science and business work differently. They have different cultures, values, and norms. For instance, science holds methods sacred; business cherishes results. Science should be about openness; business is about secrecy. Science demands validity; business requires utility. So, the tensions are deep.

"What has happened is that we have tried to mash these two worlds together in biotech and may not be doing either very well. Science could be suffering and business certainly is suffering. If you try to take something that is science, and then jam it into normal business institutions, it just doesn't work that well for either science or business."

Stem Cells Inc. was founded by scientists Irv Weissman of Stanford, Fred Gage of the Salk Institute and David Anderson of Caltech.

Simpson wrote,

"You would have thought that with academic heavyweights like these involved with the company it would have been a no-brainer to figure out a way for Schwartz to distribute cells he has derived from CHOC patients to qualified researchers.

"The root of the problem is the Bayh-Dole act governing federally funded research. It has turned our universities into commercial entities where scientists rush to patent their discoveries rather than rush to publish and explain them."

We are querying Weissman, Gage and Anderson about their thoughts on the general issues raised by Schwartz along with the specifics.

Simpson's piece was the result of a notice by Schwartz to about 2,700 persons, mostly academics, about the patent issue. Simpson sent out a note to about 75 journalists nationwide about his item.


  1. Anonymous9:44 PM

    Mr. Simpson over stated the issues and misrepresented the facts. StemCells Inc. is not stopping CHOC from distributing the cells. They did not ask them to stop. They did not file a lawsuit. They did not send a warning letter. All they asked was a meeting to discuss a license. If StemCells' patents cover the cells being distributed by CHOC, then they should get a license. You immediately assume the license is going to be a high price. If you use somebody's property, you should pay for its use. If you want to live in an apartment that someone else owns, you must pay the rent. Are you suggesting that no one should own property and everything can be used by anybody for free? The patent system was deemed so important by the Founding Fathers that it was included in the U.S. Constitution. Article I, Section 8 'To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries'. The simple fact that you and Mr. Simpson have overlooked is that the patent system enables people and companies to risk great sums of money in the hope that one day they may have a chance to get a return on their investment. America is based on the principle that people who work hard and take risks can be rewarded for their hard work by earning a living. Everybody is able to have a better life and live comfortably because other people have decided to disclose to the public their secrets. In exchange for this gift to the public, these people are given the opportunity for a short period of time to earn money from their discovery. You cannot have it both ways. You either appreciate the benefit given to you by other people's work or you decide it is better to live without the many life saving and life improving discoveries that people will keep secret. The patent system in a quid pro quo between society and the individual. If you want the benefits, then you also must be willing to pay the person who made the discoveries that allow the benefits.

  2. When one sees text -- Science should be about openness; business is about secrecy. --, one wonders if the author (or the person citing) understand what the word "patent" (as distinct from latent) means. Patents are about public disclosure, not about secrecy.
    Patents co-exist with, and do not impede, scientific
    publication. See
    published in 8 JMRIPL 80 (2008). Journals like the Harvard Business Review teach things like "plagiarize with pride," a Hobbsian view of the world. From the April 2004 issue: Softball competitors like to think that their bright ideas are sacred. But hardball players know better. They're willing to steal any good idea Simpson's credibility on Bayh-Dole is suspect, because he has manifested a lack of understanding of facts in the area.

  3. Dave,

    I suggest anonymous re-read my original post at .

    I did not say StemCells Inc. threatened CHOC or wrote them a letter. I said they "told CHOC the company holds patents covering the cells and said they wanted to discuss a license."

    I wrote that it was CHOC's legal department that told the Resource not to distribute the cells.

    I also quoted Ken Stratton, StemCells Inc. general counsel, as saying talks about the possibility of a license were "ongoing" and that a memo from a CHOC executive in Stratton's view "misstated the situation."

    I also quoted Stratton as saying, "We don't control them one bit."

    I got all the facts correct.

    Anonymous may disagree with my analysis of the situation, which is this:

    The patents are effectively blocking the distribution of neural stem cells derived from CHOC patients for research purposes. That's been the case for two years. It would be in everyone's best interest, particularly the interest of the scientific founders of StemCells Inc., to figure out a way to distribute these cells for noncommercial research. Since the Resource stopped making neural stem cells available, it has turned down 25 requests.

    I wrote the post on Consumer Watchdog's blog because two years to reach a solution is a long time. I thought that by shinning a light on the situation it might speed up the "ongoing discussions." I hope it has had that effect and that 25 researchers will soon have access to the cells they need.

    As always, I enjoyed reading Lawrence B. Ebert's analysis. I follow is blog, IPBiz I just disagree with his conclusions.

    John M. Simpson
    Stem Cell Project Director
    Consumer Watchdog

  4. Anonymous9:41 PM

    Mr. Simpson did not answer the fundamental question. Why does he think CHOC should be able to give away or sell at cost something that they do not own? These cells are not 'from the patients'. They have been isolated, purified and transformed into a composition that is owned by StemCells. Also, if you look at Mr. Simpson's organization's web site, you will notice that they are strong believers in the ownership of their Intellectual Property and require their permission before someone uses their property. Therefore, another question may be: Why does Mr. Simpson believe 'Consumer Watchdog' should be able to control the use of their Intellectual Property, but StemCells should not have the same right?

    Mr. Simpson's organization's web site states: TERMS OF USE All materials posted on this site are subject to copyrights owned by Consumer Watchdog (formerly the Foundation for Taxpayer and Consumer Rights) and other individuals or entities. Any reproduction, retransmission, or republication of all or part of any document found on this site is expressly prohibited, unless Consumer Watchdog or the copyright owner of the material has expressly granted its prior written consent to so reproduce, retransmit, or republish the material. All other rights reserved. The names, trademarks, service marks and logos of Consumer Watchdog and FTCR appearing on this site may not be used in any advertising or publicity, or otherwise to indicate Consumer Watchdog's sponsorship of or affiliation with any product or service, without Consumer Watchdog's prior express written permission.

  5. Anonymous11:19 AM

    “Anonymous” appears to have detailed inside information about what StemCells Inc. did or did not do with regard to its dealings with CHOC, so one can only assume that Anonymous does, in fact, represent SCI. That being said, it would be of great interest to know whether or not SCI ever presented CHOC with a licensing agreement. From the letter posted by CHOC, it would seem that SCI has done no such thing. If that is the case, how can SCI claim anything in good faith if they have not allowed CHOC to even enter into a licensing agreement? Ranting about constitutional patent rights is one thing but disingenuously presenting SCI as the injured party is quite another and ragging on John Simpson’s position on IP is obfuscation pure and simple.

    As far as I can tell, CHOC is the only institution to make human neural stem cells widely available for scientific research. SCI, although it has such cells, does not. So one is left to wonder then: why would SCI make such a stink about having human neural stem cells widely available for research? Even WARF, who was well known for draconian restrictions on use of its embryonic stem cells, distributed cells and allowed others to do so as well. If SCI truly represents a company that not only is very interested in making money, as Anonymous so clearly pointed out, but also a company interested in the public good and the patients likely to benefit from the therapeutic potential of neural stem cells, then they should be facilitating not obstructing an enterprise such as Schwartz’. Whatever comes from the research done on the cells that Schwartz distributes should, it seems to me, only increase the value of SCI’s IP portfolio, unless SCI has something to hide. - Anonymous2

  6. Anonymous6:25 PM

    It should also be pointed out that the isolation methods which SCI has published differs significantly from that published by Schwartz. The Schwartz method basically amounts to disassociating brain tissue and out growing cells, while the Uchinda/Weissman method, to which i assume anonymous 1 is referring, uses "cell surface markers" to isolate a subpopulation enriched for progenitors.

    In fact i just searched the patent office. There is only one patent assigned to STI for neural stem cell isolation and it is exactly as i suspected: see patent #7,217,565.
    Or just search for Irving Weissman patents.

    If Dr. Schwartz has not isolated his NSCs using the cell surface markers, then STI has no claim.

    However, if Schwartz did use the cell surface markers found in the Weissman patent then they should be required to acquire a license to distribute the NSCs for academic investigators.

    So my understanding is that Schwartz is NOT using the trick covered by the Weissman patent and that STI is basically using the implied threat of legal action to prevent distribution of cells not covered under their patent. If true, neat trick - but doing it to a Children's Hospital is bad form, even for STI.

    I am someone who was denied a request to receive NSCs from CHOC and prevented from collaborating with Dr. Schwartz. I've now obtained cells from a european collaborator (who will remain anonymous but who also did NOT use the Weissman method).

  7. Attention IP buffs: The comment noted in the teaser below is worth reading. The anonymous writer/researcher presents interesting details and nuances on the matter.


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