Dr. Philip H. Schwartz spent six years providing university researchers with neural stem cells cultured by a method he had helped invent at the Salk Institute in La Jolla.
He figured this was a win-win. His technique provided biomedical scientists with live tissue, an improvement over the dead cells, harvested from the brains of deceased patients, that had been the standard fare. Science marched ahead, bringing novel neurological applications closer to reality. The principles of wide dissemination of knowledge and scientific collaboration were served.
Then his employer, Children's Hospital of Orange County, got a letter from Palo Alto-based StemCells Inc. The firm warned that Schwartz's program infringed its patents in the neural stem cell field and it wished to, er, discuss a licensing arrangement.
The hospital's lawyers advised Schwartz to stop sending out cells until they could make a deal with the company.
That was two years ago. There's still no licensing deal, and there haven't even been talks for more than a year.
"The long and the short of it," Schwartz told me last week, "is that I'm dead in the water."
On the surface, there shouldn't be a huge obstacle to a deal between StemCells and CHOC.
Both say they're open to an agreement. There isn't much overlap among their core clienteles: The company "is not in the business of selling cells to researchers" in basic science, according to its general counsel, Ken Stratton. Conversely, CHOC's Children's Research Institute is interested in supporting only "academic noncommercial researchers," says its director, Brent A. Dethlefs.
But in the biotech world, where millions or even billions of dollars in profits beckon to those who can assert ownership of important discoveries, good intentions and purely scientific goals don't matter like they used to. Access by basic researchers to the essential building blocks of biomedical advances has been shrinking for years, thanks to a land rush by entrepreneurs wielding patent portfolios.
As the conflict between CHOC and StemCells suggests, the penetration of private investment concerns into what used to be largely academic pastures threatens to hobble, rather than hasten, the march of science. The harvest may be secrecy, delay and the directing of research only toward developments that promise quick financial returns.
In the stem cell field, "the pendulum may have swung too far" toward private enterprise and away from open research, says Gregory D. Graff, a patent expert at Colorado State University.
As it happens, StemCells has good reason to support the needs of academic researchers. For one thing, progress in fundamental stem cell research is likely to "improve the value of their [patent] portfolio," Schwartz observes.
For another, the company's founders include three leading academic stem cell scientists: Irving L. Weissman of Stanford University, David J. Anderson of Caltech and Fred Gage of Salk -- in whose very lab Schwartz developed his method.
None of the three appears to have gotten directly involved in the discussions, although one might think they would be especially sensitive to the need to balance the interests of private enterprise and academia. (None answered my requests for comment.)
So there has been no progress. The company says it did not explicitly threaten a lawsuit or even demand that CHOC cease distributing neural stem cells. But considering the firm's access to litigation firepower -- it's been waging a patent battle in court with another firm, Neuralstem Inc., since 2006 -- Dethlefs is probably wise to see its letter as a "veiled threat" and CHOC's lawyers prudent in suspending Schwartz's program.
Each side says it's waiting for the other to make an offer, but things may be moving backward. On Jan. 23, Dethlefs sent out a memo explaining to researchers that because of the "unresolved legal issue," it wouldn't be distributing cell lines that might come under the StemCells patents for the foreseeable future. The memo was posted last month by John Simpson, a stem cell policy advocate, on his blog at consumerwatchdog.org.
The problem affects more than just biotech. This month, former Intel Corp. Chief Executive Andrew Grove told a Silicon Valley audience that the evolution of patents into investment assets controlled by speculators threatens to stifle innovation in many industries.
AT&T's decision to license the transistor for a nominal $25,000 fee after its invention at Bell Labs, Grove maintained, helped launch the electronics industry and led, eventually, to the invention of the microprocessor. Today, the transistor would be tied up in a web of patent claims and its license priced for short-term profits.
The corralling of scientific discoveries behind patent walls is connected to the trend of major universities viewing their own labs as potential profit centers.