Friday, March 24, 2006

WARF wants money from CIRM over stem cells, but will it happen?

I received some interesting feedback on an IPBiz post on March 22 about Proposition 71 in the form of cite to a post about
WARF threatening CIRM about patent royalties over stem cell patents.

First of all, the information in the post is worth consideration by people in California, and in New Jersey, Maryland, Connecticut, and Illinois, about state-financed funding of stem cell research.

In pertinent part, the post of March 14, 2006 (live from a stem cell meeting in California) stated:

Wisconsin wants a piece of the California stem cell pie.

That's because the California stem cell agency has decided to give its own state 25 percent royalties on any inventions created with CIRM-funded embryonic stem cell research.

Wisconsin is involved because the Wisconsin Alumni Research Foundation [WARF] has two patents that broadly cover the preparation of embryonic stem cells. Beth Donley, general counsel, Wisconsin Alumni Research Foundation, said that if CIRM stipulates 25 percent royalties for California that requirement amounts to commercialization. And that means WARF wants a payment from California.

My second point is, notwithstanding the significance of WARF's expressed position on March 14, it does not really constitute a threat to the other states. [There may be other things that do constitute a threat, but that's another story.]

Flashing back to Supreme Court briefing for the case Merck v. Integra, one recalls that the only "academic" entity to file an amicus brief was WARF, who supported the position of the patentee (Integra) and not the position of the researcher (Merck KGaA). WARF is consistent in its position, now and then.

However, one also recalls Integra lost the case at the Supreme Court. Among other things, that means WARF's assertion against CIRM is rather pointless in terms of the research exemption in 35 USC 271(e)(1), as currently viewed by the US Supreme Court. As an aside, I give details about how 271(e)(1) will play out in the context of stem cell research in my article in the March 2006 issue of JPTOS, "Lessons to be learned from the Hwang matter,..." Perhaps the folks at WARF should read it.

Moreover, there's another reason the folks at WARF ought to be careful. CIRM is a state agency. Accusations of patent infringement against states play out a bit differently than the garden variety suit against a garden variety defendant. Think of Florida Prepaid Postsecondary.

From a piece I wrote in the National Law Journal on January 17, 2000:

HEADLINE: 'Florida Prepaid': Now wait and see

By: Lawrence B. Ebert


Michael Mehrman's "IP decisions strip owners of claims against
states" [Oct. 25] paints too bleak a picture in asserting that "citizens have no
judicial remedies against states for the infringement of federal intellectual
property rights." Florida Prepaid Postsecondary Education Expense Board v.
College Savings Bank, 119 S. Ct. 1816 (1999) [sic: 527 U.S. 627; 119 S. Ct. 2199; 144 L. Ed. 2d 575; 51 U.S.P.Q.2D 1081], invalidated the 1992 amendment to
the patent law for failure to comply with City of Boerne v. Flores, 521
U.S. 507 (1997), as to the exercise of congressional authority under Sec. 5 of
the 14th Amendment.

Both Alden v. Maine, No. 98-436 (1999), and Florida Prepaid
Postsecondary acknowledge that Congress can authorize private suits against
nonconsenting states pursuant to its Sec. 5 enforcement power. If a state provided
no remedy to its patent infringement, Congress could rectify a deprivation of
property without due process. The majority in Florida Prepaid effectively said,
"Let's see if there are deprivations without due process."

If so, use Sec. 5 to fashion a proper federal remedy.

The next move may be to "wait and see," as to the actions of states
and the outcome of New Star Lasers v. Regents of the University of California
(E.D. Calif. 1999), which found that a state university had waived its 11th
Amendment immunity by acquiring a patent. (end NLJ material)

As a third point, although one finds some law review articles that suggest that state efforts in stem cell funding are "just like" federal Bayh-Dole funding, I hope that the discussion above shows that this simply is not the case. There are all kinds of traps for the unwary in state funding that do not exist in federal funding. The Bayh-Dole model is inappropriate for analysis of state funding.


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