Saturday, January 27, 2007

A note to californiastemcellreport

There is a Jan. 26 post on californiastemcellreport entitled Ebert on WARF and the Patent Challenge. I've made two comments. The second comment is as follows:

As a follow-up, the remarks of FTCR to the effect that WARF's patents will impede research and innovation sound in deja vu. The same arguments were made about the patent of the Wright Brothers. At that time, the arguments resonated because of World War I, and, (as in the tv commercial) the Wrights got hosed, in that a patent pool was created. Curiously, the pool deterred small inventors, didn't produce a single American fighter plane used in WWI, but did create a huge surplus of planes after the war. [See, for example, Patent Thickets and the Wright Brothers.]

As noted, it is encouraging that californiastemcellreport did discuss the work of Gilbert. However, Gilbert did not get into many of the more scientific issues in embryonic stem cells, such as how the reality of the Hwang fraud is going to impact the therapeutic stem cell time line. Putting aside the "bad apple" issue, one notes 1) that none of Hwang's international scientific peers recognized the bad work (Korean co-workers led the way) and 2) a year has passed but no one has reproduced the work in the first paper, much less the second paper. There are no human SCNT-derived stem cell lines at this time.

The Baker study may well become a poster child for long existent arguments about economists and intellectual property. "George Priest went so far in 1986 as to say that economists could tell lawyers virtually nothing about the appropriate scope of intellectual property rights...." See What have non-technically trained lawyers contributed to IP law?

Both FTCR and californiastemcellreport have linked patent invalidity arguments and licensing policy. A patent is not invalid because of licensing policy of the patentee. FTCR has stated that the WARF patents are somehow bad patents because they are broad. There is currently much discussion about the impact of bad patents on innovation. See
Bad Patents, or Bad Copyists?

As one footnote, although Laurence Baker is in the Stanford School of Medicine, he is a health economist who holds a Ph.D. in economics from Princeton.

As a separate note, the Nov. 18-24, 2006 issue of the journal New Scientist features discovery and invention.

The californiastemcellreport frequently includes mention of the circulation of newspapers.

--> On 3 Dec. 06: The Los Angeles Times, California's largest newspaper with nearly one million circulation, Sunday published an overview of the state's stem cell agency, headlined "Reality Check for Stem Cell Optimism."

--> On 6 Dec. 06: But some of that is what irritates its critics. Perhaps the harshest view came from Investors Business Daily, a financial newspaper with about 211,000 national circulation. In an editorial headlined "Fool's Gold Rush," the newspaper said,
"Californians were promised wonder cures if they passed Proposition 71 to fund stem-cell research in 2004. Turns out they have bought a $3 billion jug of snake oil."

The Sacramento Bee, which has not said much recently about CIRM, published an editorial today that pressed for more public disclosure from the agency, a theme the paper was early to emphasize. The Bee, which has about 331,000 circulation in California's capital, said ...

--> On 22 April 06: Coverage of the decision was straight-forward with few surprises. Here is how the largest circulation paper in the state, the Los Angeles Times, ...

IPBiz isn't sure if californiastemcellreport has quoted circulation numbers for CapitolWeekly, which has been cited from time to time on the report. On 22 Sept 2005, there was an article Stem cell’s shell game? which alluded to the Baker / Deal report, disclosed prior to the vote on Proposition 71, which suggested California would received between $537 million and $1.1 billion from royalties and licensing from intellectual property. The CapitolWeekly article included the text:

"I know enough about federal funding of scientific research at universities
to know that these claims of big financial windfalls to the state were
ludicrous," said Jennifer Washburn, author of the book University, Inc.: The
Corporate Corruption of American Higher Education.

Stem cell research is still in the very basic research stage, she said, when
investments are unlikely to reap short-term payoffs.

"Basic research usually has broad-sweeping applications so it is difficult
for any one company or any one state to capture all the financial benefits
locally," Washburn added. "That’s why, traditionally, the federal
government has always played a vital role in subsidizing basic research, not
the states."

IPBiz notes Jennifer Washburn wrote an article in the April 12, 2006 issue of the Los Angeles Times entitled "The legal lock on stem cells; Two patents that cover key research areas are setting back science," wherein she warned of the dangers of the WARF patents, presumably an example of one company capturing all (some?) of the financial benefits in the embryonic stem cell area.

The CapitolWeekly article also had the text:

It concluded that it is unrealistic for the state to expect a huge payback
on Proposition 71. The report examined federal policy over the last 25 years
since the passage of the federal Bayh-Dole Act, which governs the use of
federal funds at research at research universities. Bayh-Dole has been
extremely good at pushing basic research, DeCillis said, but has established
little track record for financial payoffs to the government. Numerous
people, including scientists affiliated with the funding bodies created by
Proposition 71, have cited Bayh-Dole as the proper model for stem cell
research in California.

IPBiz notes that the Bayh-Dole Act isn't supposed to create "payoffs to the government." The Bayh-Dole Act allows non-profits (e.g., universities) to take title in patents AND to license the patents for the benefit of the non-profit (and the licensee). Although the federal government has certain march-in rights (when the patentee is not taking action) and can use inventions for the federal government, the plan of the Bayh-Dole Act is not to create payoffs to the federal government. Anyone who cited the Bayh-Dole Act as a model for California never intended California to get any money from the patents.

IPBiz notes that the CapitolWeekly report of September 22, 2005 did not mention the symposium at Princeton on April 15, 2005, at which both Laurence Baker and Roger Noll spoke. Also, a Monday, November 07, 2005 post on californiastemcellreport entitled Klein Says He Knew about Federal Tax Problem Prior to Election includes the text:

Klein also told Leavenworth that he did not disclose the problem with tax-exempt bonds to analysts who prepared an economic study touting the economic benefits of Prop. 71.

"Why didn't he?" Leavenworth wrote in a column. "Klein equivocated when asked that question. 'I'd want to go back and review this area,' he said, unable to provide more information."
"Laurence Baker, a Stanford University professor who helped write the economic study, said he now wishes he had known that IRS rules could limit the receipt of royalties. Baker's study projected that stem cell research could bring in $537 million to $1.1 billion in royalties over 20 years.

"Now, says Baker, it appears that any royalties might be partly or completely offset by higher interest rate costs(which could run to $700 million).

The Baker / Deal paper at Princeton mentions economic benefits for the funding state.

On page 69 of the report, one finds the text: "Some state stem cell policies contemplate potential intellectual property issues... Policies that provide for states to share in the intellectual property associated with funded discoveries could potentially generate revenues for the states in the form of royalties for marketable therapies.

Page 70 does indeed have an error about patent life: "While patents typically have a 17 year life..."

Curiously, one will NOT find discussion of $537 million to $1.1 billion in royalties over 20 years (or even a reference thereto) in the Princeton paper by Laurence Baker.

Of the re-exam of the WARF patents by FTCR and PubPat, note the post at setiathome:

"WARF was not the first to do human embryonic stem cell research," said Dan Ravicher, of the Public Patent Foundation. "They were just the first to run to the patent office and try to get such a broad patent."

The nonprofit Public Patent Foundation, made up of patent lawyers and scientists, will handle all the legal wrangling for the requested re-examination, Ravicher said.

At the time Thompson's first patent request was filed, "it was obvious to one of ordinary skill in the art of embryonic stem cell derivation that the process taught by (the earlier patent and published articles) could be used to isolate embryonic stem cells of other mammals, including humans," said Burnham Institute researcher Jeanne Loring, who filed a declaration to support the re-exam request.


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