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Stem cells, undifferentiated cells which have the ability to turn into specific cell types, hold promise to beneficially impact health problems such as diabetes, Parkinson’s and Alzheimer’s diseases, stroke, heart attack and spinal cord injury. Before his death, Christopher Reeve was a strong advocate of research in stem cells.

There has been controversy about certain types of stem cells. There are three sources of stem cells, of which one type, cells derived from early stage human embryos, has caused political division, because the creation of an embryonic stem cell “line” requires the destruction of a human embryo. Because of this, President Bush in 2001, stated his intention to “allow federal funds to be used for research

on existing stem cell lines, where the life and death decision has already been made,” but no federal funds would be available for new stem cell lines. This choice has been debated. The television show “60 Minutes” reviewed the issue twice in the month of February 2006, on February 12 and on February 26.

In the state of New Jersey, the debate has been roughly on partisan lines, with Democrats favoring funding of stem reseach, and (some) Republicans opposed. However, there is a separate division as to “what kind” of stem cell research. Hedging its bets, New Jersey has proposed spending $150 million on cutting-edge research on stem cells, including the controversial embryonic stem cells, $50

million on research on less controversial research focused on stem cells from cord blood, placentas and other human tissue, and $50 million on a center directed to commercial applications and clinical trials of adult stem cells.

The area of commercial applications has created unanticipated problems in the brave new world of large-scale state-funding of research. A legal opinion in 2005 prepared for California State Treasurer Angelides suggested that tax-exempt bonds could not be used to fund research wherein the state would share in money generated by the research (specifically sharing in payments by people who used patents generated by the state-funded research). A meeting of stem cell people in March 2006 revealed a new problem. The holders of

patents which already exist in the area want future researchers (such as those in California) to pay them for doing research utilizing their patents. Ironically, the demand was made by one state (Wisconsin’s WARF) against another state (California’s CIRM). With the announcement that South Korea will proceed with patent applications of the disgraced researcher Woo Suk Hwang, one realizes that there are likely to be many patent holders in the field, all seeking to cash in on the large amounts of money being made available by states such as California, New Jersey, Maryland, Connecticut, and Illinois. An important message to appreciate is that money from state-funding of stem cell research intended to create new horizons in medical treatment may be directed to paying off holders of already-created rights.

Some of the problems may be resolved. A recent decision by the Supreme Court (Merck v. Integra) defines a large safe harbor for those conducting research needed to obtain federal regulatory approval (e.g., FDA approval). This research exemption may moderate the impact of claims such as those by Wisconsin against California. However, expectations of tangible results on a short time scale may be unrealistic. One may question whether state funding will produce any FDA approved embryonic stem cell therapy in ten years. Patents issued in the next few years may be “too soon” in time because commercialization of embryonic stem cell work is a long

way off. This is an exciting time in a promising area, but with the unknowns one must recognize that there will be bumps in the road.

Lawrence B. Ebert is a registered patent attorney located in central New Jersey. He holds a Ph.D. from Stanford, a J.D. from the University of Chicago, maintains a blog at IPBiz.blogspot.com, and is the author of LESSONS TO BE LEARNED FROM THE HWANG MATTER: ANALYZING INNOVATION THE RIGHT WAY, published in the Journal of the Patent & Trademark Office Society [JPTOS] in March 2006.