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UPitt Calls on California Courts to Clear Patent Inventorship, Infringement Spats

June has been a litigious month for the University of Pittsburgh as it chews through intellectual property issues in California.
A couple of weeks after winning a patent inventorship lawsuit it filed against the University of California, Pitt last week sued Varian Medical Systems for patent infringement in a California federal court on the same day it found out that a Pittsburgh district court dismissed an earlier suit Pitt had filed against the company.
Earlier this month, the United States District Court for the Central District of California put an end to litigation that had lasted more than three years when it ruled that only a pair of researchers from Pitt were inventors on a patent on which scientists from both Pitt and UC had originally been co-inventors.
The patent, US No. 6,777,231, relates to stem cells isolated from adipose tissue. Such cells are valuable because they can be easily sourced from a patient’s fat tissue, and have been shown in vitro to be able to differentiate into many different tissue types, including tissues from all three germ layers.
These properties make the cells useful for a wide variety of medical applications, but particularly for cosmetic applications, soft-tissue regeneration, organ regeneration, and drug screening.
Inventors on the patent originally included Adam Katz and Ramon Llull, researchers from the University of Pittsburgh; and UC-Los Angeles scientists Marc Hedrick, Prosper Benhaim, Hermann Lorenz, and Min Zhu.
But on June 9, the court determined that only Katz and Llull, and not the UC scientists, were inventors. Thus, patent ownership will now belong to the University of Pittsburgh, and not UC.
The victory was announced last week by Artecel, a Sunnyvale, Calif.-based biotech that obtained an exclusive, worldwide license to the patent from Pitt, and is leveraging it to develop a number of the aforementioned applications using adipose-derived stem cells.
On the other side of the coin, Cytori Therapeutics, which owns an exclusive, worldwide license to the patent from UC, will now lose rights to the patent along with its academic licensee.
It is unclear how the decision might financially impact Cytori or the two universities; calls to all three were not returned in time for this publication.
However, according to Linda Powers, chair of Artecel’s board of directors, Pitt has “a really important stake” in the technology.
“I can’t tell you specific numbers or details, but I can tell you that it is a typical arrangement under which the university receives ongoing returns such as milestones and royalties if a product is commercialized,” Powers told BTW this week.
Artecel currently provides adipose-derived stem cell banking services and is developing both therapeutic products and, on a case-by-case basis, drug discovery and research tools based on the cells.
“We want to start with the low-hanging fruit, which is cosmetics and soft-tissue applications,” Powers said, adding that the company has ongoing scientific collaborations in these areas with undisclosed partners.
“We also have longer-term development programs that have been under sponsored research and development programs,” Powers added. “[These] include a number of key tissues. People [are] already doing work in the cardiovascular space. Our view is that the cells are applicable for other kinds of organs, which is a key category for regenerative medicine.
“In a similar vein, [there has] already [been] work in the field in orthopedic areas,” Powers said. “We have work underway in that area as well – cartilage, connective tissue, bone, spine, et cetera.”

“Now we’re all going to have to look case-by-case at each situation and ask, ‘Is this particular device using these cells, producing these cells, or separating out these cells?’”

Now the dispute over inventorship may shift to what is exactly covered by the patent in question. For its part, Cytori is somewhat distancing its business from the ‘231 patent. In a statement, the company said that the court’s decision does not impact Cytori’s primary ongoing business activities or product development pipeline because its products do not use the ‘231 patent.
The company claims that its flagship product, the Celution System, processes adipose tissue to obtain “a diverse and mixed population of cells,” whereas the ‘231 patent “covers a narrowly defined population of adipose-derived adult stem cells in an environment substantially free of other cellular materials found in adipose tissue.”
In addition, the company announced it had been awarded US Patent No. 7,390,484 by the US Patent and Trademark Office this month, which Cytori said provides “critical market protection for its commercialization of the Celution Systems in the [US], where the company is seeking regulatory approval” for the device, and protecting its rights to manufacture the systems in the US for commercialization into all markets, including Europe and Asia-Pacific, where the device is currently being sold.
According to Powers, however, Cytori’s implication that the ‘231 patent covers only a narrowly defined cell population is misleading.
“This is a new description of these cells,” Powers said. “If you look back at older statements of these cells you would not find them described as anything like a narrow population.
“Any stem cell that you work with has been taken out of the tissue that it came from,” she added. “Trying to make it sound like it is narrow because you take it out of the tissue is … really revisionism.”
Asked whether Cytori’s business practices constitute infringement now that Artecel and Pitt are the sole assignees of the ‘231 patent, Powers remarked, “I can clearly say that anybody … that makes use of the stem cells that are taken out of adipose tissue is affected by this decision on the composition-of-matter patent.
“Now we’re all going to have to look case-by-case at each situation and ask, ‘Is this particular device using these cells, producing these cells, or separating out these cells?’” Powers said. “Somebody else who is using the cells in the clinic — are these the cells they are using?’ Now we’ll have to get to the implementation stage, so stay tuned.”
In its statement, Cytori also said that the impact on its business notwithstanding, it believes the decision on the ‘231 patent is a mistake and that the patent “may have value in the long term in areas unrelated” to its existing product line. Consequently, Cytori and UC are reviewing their legal alternatives to the ruling, including appealing the decision to the Federal circuit, Cytori said.
“It is Cytori’s intention to aggressively protect its business, its intellectual property, and its investors,” the company said.
California Revisited
In its case against Varian Medical Systems, Pitt claims that the company infringes a pair of US patents, Nos. 5,727,554 and 5,781,431, which relate to an imaging apparatus that is responsive to a patient’s movements during radiological treatment and an apparatus for matching X-ray images with reference images, respectively.
Inventors on the patent are or were employed by both Pitt and Carnegie Mellon University; however, according to Pitt’s court filing, CMU has assigned it the IP.
According to the complaint, submitted to the US District Court for the Northern District of California, Pitt claims that Varian has infringed and continues to infringe the patents by “importing, making, using, offering for sale, and/or selling products in the US that embody or otherwise practice” one or more of the claims in the patents.
“Varian’s infringement has injured and damaged [Pitt],” the complaint states. “[Pitt] is entitled to recover damages adequate to compensate [it] for Varian’s infringing activities in an amount to be determined at trial, but in no event less than a reasonable royalty, together with interests and costs.”
Though Varian is incorporated in Delaware, Pitt believes that the fact it is headquartered in California and conducts a large portion of its business in the state is reason enough to sue it in California.
The choice of venue could also be the result of the fact that on the same day Pitt filed its suit against Varian, US District Judge Arthur Schwab of the United States District Court for the Western District of Pennsylvania dismissed a similar patent-infringement lawsuit that Pitt had filed against the company in April 2007.
Varian, whose headquarters are in Palo Alto, is one of the world's largest manufacturers of medical devices and software for treating cancer and other medical conditions with radiotherapy, radiosurgery, proton therapy, and brachytherapy, according to the company’s website.
In its most recent fiscal year, which ended September 2007, Varian reported sales of $1.8 billion, almost half of which were outside North America.
It is unclear which of Varian’s products are alleged to have infringed upon the Pitt patents. Calls to the Pitt office of public affairs were not returned.
A Varian spokesperson told BTW that Varian “does not believe the suit has merit, and will fight it vigorously. This is the same case that was dismissed in Pittsburgh.”

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