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Anticipating Lengthy USPTO Re-Exam Process, ACT Expands License to WARF hESC Patents

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In an effort to obtain “total freedom to operate” to develop regenerative medical treatments based on embryonic stem cells, biotech firm Advanced Cell Technology last week said that it has expanded its human ESC licensing agreement with the Wisconsin Alumni Research Foundation.
 
The expanded commercialization agreement comes just one month after the United States Patent and Trademark Office handed down an initial ruling that WARF’s core hESC patents were invalid, a decision that several licensees of the IP welcomed — including ACT’s own president and CSO Michael West, who was reported as declaring it a “good day” for his company.
 
Last week, following announcement of the new licensing agreement, William Caldwell, chairman and CEO of ACT, told BTW that West’s comment “was more from the standpoint that there was an expectation that maybe this [ruling] had more meaning than it really did.
 
“It’s our opinion after looking at the situation that the initial response by the patent office is just that: an initial response,” West said.
 
Now it appears as if ACT is hedging its bets by licensing all of the patents it needs to further its hESC-based therapeutic pipeline and settling in for what promises to be a long and drawn-out battle over the patents’ validity.
 
Under the terms of the expanded licensing agreement, WARF has granted ACT rights to the commercial use of hESCs to develop human therapies, with the exception of neuronal, pancreatic beta cells and cardiac applications; as well as the ability to market “a broad array of research products,” ACT said in a statement.
 
The agreement bolsters ACT’s existing patent estate, which includes more than 380 owned or licensed patents and patent applications worldwide, by enveloping an additional 150 stem cell technology patents and patent applications from WARF.
 
“We’ve included all new patents in the field, plus whatever WARF had before,” Caldwell told BTW. “So it includes everything that WARF has. There are a couple of indications that are licensed to Geron exclusively so obviously that would not be included, but everything else is.”
 
Financial terms of the agreement were not disclosed.
 
“The combination of these technologies and … rapidly-growing pipeline … lead us to believe that other clinical applications, in addition to our current target indications, are feasible,” West said in the statement. “These additional therapies include treatment for disorders of the endocrine, craniofacial, muscle, bone, cartilage, liver, kidney, and respiratory systems.”
 
According to its website, ACT is currently focusing on three product areas: a retinal pigment epithelium program to discover therapies for diseases such as age-related macular degeneration; a hemangioblast cell program which is in the preclinical research phase as a possible treatment for cardiovascular disease, stroke, and cancer; and a dermal program for skin repair.
 
“We are in a very aggressive position in terms of moving our programs into the clinic,” Caldwell told BTW. “We have a research license with WARF, and we have some ability to operate without infringing on the WARF patents, but it’s our position that we want total freedom to do what we want to do.
 
“So in our opinion, this is a very sound decision to make sure we have total freedom to operate going forward,” Caldwell added. “We’re doing what we think is in the best interest of our shareholders.”
 
In early April, the USPTO determined in a preliminary ruling that three core patents — US patent Nos. 5,843,780; 6,200,806; and 7,029,913 — held by the Wisconsin Alumni Research Foundation describing techniques for isolating and propagating embryonic stem cells are invalid because the methods were obvious, based on prior publications and patents (see BTW, 4/9/07).
 

“This is a very sound decision to make sure we have total freedom to operate going forward. We’re doing what we think is in the best interest of our shareholders.”

The organizations and scientist that originally challenged the patents last year, as well as several licensees of the patent — including ACT — applauded the decision, noting that the decision was a big win. However, several other companies and industry insiders warned that the decision was merely preliminary, and didn’t mean much in the short term.
 
Now, ACT is eyeing the WARF hESC patent dispute with the same low expectations for a quick and easy resolution.
 
“This is a very long process,” Caldwell said. “WARF and the people that are involved with that technology have yet to have their day in court. Basically the first indication was just a response to the original allegations that were presented to the patent office.”
 
The process has been very well-articulated, Caldwell said, in that WARF will now have an opportunity to sit down with USPTO adjudicators and plead its case for the patents to be upheld. “That process does take time,” Caldwell said.
 
During this process, WARF’s patents remain fully enforceable, “and people that operate with those patents in existence need to deal with those patents,” Caldwell said. Furthermore, he said, the possibility remains that even if the patents are not upheld, there may be only a partial reversal.
 
“The WARF patents overlap one another, and there is every reason to believe that if one of the [patents] prevails, [WARF] still will have a significant position within the industry,” he said. “It’s almost like all three of the [core] patents need to be overturned; otherwise, WARF will still prevail.”
 
Then, even if all three of the patents were found to be invalid in a final USPTO decision, a lengthy court process would likely be the next step, during which time the patents would still be enforceable. A legal appeal of the case by WARF, according to Caldwell, could happen via either the patent court system or the US Court of Appeals.
 
“That again takes an extreme amount of time — not months, but years,” he said. “So we’re now talking about several years at the least, and that’s assuming everything goes against WARF. Then, if they lose at that level, they still get to take it to the Supreme Court, which generally hears things on policy matters, and something like this clearly would qualify.
 
“So it’s our opinion that these patents today are in effect, and for the foreseeable future will be in effect,” Caldwell said.

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