PharmaStem License

A PharmaStem license cannot be considered as a medical Accreditation as it strictly refers to patent Law. It is least concerned about the quality of any medical procedures that is performed by any umbilical Cord Blood bank.

However, the umbilical Cord Blood bank, though indirectly, can be affected financially due to the possession of a PharmaStem license or lacking of it. The royalties must be paid to PharmaStem if the banks hold PharmaStem license and those that do not hold any license should spare their budget especially for the attorney to protest against PharmaStem.

History of PharmaStem:
It was in the year of 1985, the Stem Cell researchers and some investors who were involved in the first successful Cord Blood transplant thought of establishing something that would be very beneficial to the mankind founded a company called ‘Biocyte’. The scientists submitted patent applications through this company in the year of 1987 and 1988 and then the company started commercial umbilical cord blood banking in the year of 1993 but unfortunately they just last long for about 2 years and then stopped dealing in 1995. They again raise themselves in the year of 1999 during which, they changed their name and adopted ‘PharmaStem’.

In the month of April 2001, the US PTO reissued patent number 5,004,681 and this was held up for about seven years for reexamination. Based on this patent and another patent (number 5,192,553), the investors who were backing PharmaStem started approaching the private umbilical cord blood banks collecting royalties. The only employee of PharmaStem is Nicholas Didier.

On 25 February 2002, PharmaStem Therapeutics Inc. filed a lawsuit for patent infringement against 8 private umbilical cord blood banking companies namely; StemCyte, ViaCell, Birthcells, Corcell, NuStem, Cord Blood Registry, CryoCell and BioCell. On 7 April 2003, the European Patent Office revoked PharmaStem’s European patent on the preservation of the umbilical cord blood (EPO released this, which is in German). The EPO made it clear that the methodology that was claimed by PharmaStem patents had been already discovered by some others who had published their results earlier and hence, the PharmaStem patents must not have been published in the first place. The international consortium of public cord blood banks Netcord and the private corporation called Thermogenesis lead the opposition to PharmaStem. The decision of the EPO had to be final and hence was followed throughout Europe.

On other hand, in USA, there were four private cord blood banks namely ViaCell, CryoCell, CBR and CorCell lost USA lawsuit for patent infringement against PharmaStem Therapeutics Inc. on 3 November in the year of 2003. Although the suit was basically filed on 25 February 2002 against 8 companies and some of them just lost their identities in the business and others got settled. The judgment said that the banks need to pay PharmaStem about 6.125% of their future revenues and about $7 million for the past damage. However, all those banks then appealed.

On 12 February 2004, PharmaStem Therapeutics Inc. filed for patent infringement against all the umbilical cord blood private banks that were not named under their original lawsuits. On 2 July 2004, PharmaStem filed for patent infringement against all the for-profit umbilical cord blood banks in the US and then on PharmaStem started trying to collect royalties from nonprofit cord blood banks that collected donations serving the public good. This motivated both; Thermogenesis (a manuFACTurer of cryogenic freezers) and the NETCORD (an international consortium of public cord blood banks) requesting the United States Patent and Trademark Office (PTO) to reexamine the PharmaStem patents.

PharmaStem also published a warning letter to all the OB/Gyn’s throughout the USA and to the all legal departments in many hospitals stating that obstetricians will be defaulters if they collect umbilical cord blood for any company that is not licensed by PharmaStem. However, on 2 July, Judge Sleet of Del. District Court published a restraining order forbidding PharmaStem to distribute false statements of OB/Gyn’s. To this, PharmaStem reacted by offering OB/Gyn’s an ‘Amnesty Agreement’.

The United States patent and Trademark Office (U.S. PTO) agreed to reexamine the patents that were issued to PharmaStem (numbers 5,004,681 and 5,192,553) on 7 September in the year of 2004. This reexamination would consider that the patents’ claims are distinct over ‘prior art’ or not. Any of such medical publications that narrate similar techniques that predated the filling date of the original patents may constitute prior art.

The Delaware District Court, on 15 September 2004, overturned a jury verdict of infringement on the US Patent of PharmaStem (number 5,004,681) and the court found that the jury verdict was against the great weight of the evidence and therefore, a new trial was awarded to the codefendants all those four banks namely; CorCell, ViaCell, CBR and CryoCell. Furthermore, the court had ruled out that any private cord blood bank is not liable for contributory infringement of the US Patent number 5,192,553 of PharmaStem since they simply offer the service for preservations and are not dealing with any kind of selling the samples. In a same way, OB/Gyn’s are not liable for any contributory infringement of the 5,192,553 patent.

All those four private cord blood banks that fought against PharmaStem won in Delaware District Court on 14 December in the year of 2004. They were ViaCell, CyroCell, CorCell and CBR. On the same day, Judge Sleet revealed that they had not infringed on the patent 5,192,553 and hence, granted a new trial to find out the damages for infringement of the 5,004,681 patent. Again, the judge ruled that there has been no infringement of 5,004,681 either! Both the patents are still in action though the PTO is reexamining them. This means only one thing that till the patents are valid the banks that signed licensing agreements with PharmaStem should pay royalties as they are bounded with the terms in their contracts. Here, one thing is to be noted that the patent for 5,004,681 is getting expired in the year of 2008 and patent 5,192,553 in the year of 2010. The statistics say that as on 30 September 2004, PharmaStem has collected about $1.5 million as royalties from the banks that signed licensing agreements in the past.

Not keeping mum, PharmaStem filed a new round of preliminary injunctions on 11 January 2005 that was based on patents 6,461,645 and 6,569,427 that had not been maintained as legal proceedings in the past and PharmaStem then started filling in the home states of the umbilical cord blood banks. A panel of judges would rule by 31 March 2005 on whether to merge the ‘multi-district litigation’ and shift them all to Delaware District Court.

Under Judge Sleet, on 16 February 2005, the judicial panel on Multi-District Litigation reveals to merge all PharmaStem lawsuits to Delaware District Court about the patents 6,461,645 and 6,569,427. In addition, as third party defendant, Stembanc was named. This was further supported since ViaCell went against PharmaStem reporting that it had ‘unfair competition’ action that was also pending in Delaware. There was a big blow on 1 March 2005 when U.S. Patent and Trademark Office rejected pharmaStem patent 5,192,553.

The damaged was continued since the reexamination that was pending got finalized on 27 April 2006 when the US Patent and Trademark Office (PTO) published a couple of new office actions declining all the claims of PharmaStem Therapeutics Inc.’s U.S. Patent number 5,192,553 and U.S. Patent No. 6,569,427 as being not patented due to over prior art. The PTO, antecedently, published initial office actions that rejected all the PharmaStem’s claims (patent numbers 5,004,681 and 6,461,645).

However, PharmaStem has all the rights to appeal the validity of the patents since POT office actions are not considered as final decision. In case, there is an appeal, the process can continue for quite a longer period.

ViaCord, CryoCell, CBR and Corcell are four private cord blood banks that have been battling PharmaStem in court over the enforcement of those patents and all of those lawsuits are held and the outcome of the appeals whether the patents are valid is yet to be declared. In the meantime, those cord blood banks that purchased PharmaStem license agreements shall continue paying royalties until PharmaStem has depleted all the appeals.

Bookmark at:
StumbleUpon | Digg | Del.icio.us | Dzone | Newsvine | Spurl | Reddit | Yahoo! MyWeb