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Navigating the Evolving Regulation and Commercialization of Stem Cell Research

Interested parties that can successfully navigate the evolving regulation of stem cell research stand to gain significant scientific and commercial advantage.  Given that in the fall of 2011 the Court of Justice of the European Union issued a highly anticipated ruling regarding the patentability of human embryonic stem cells (hESCs) and many await the outcome to an appeal challenging the U.S. National Institutes of Health’s ability to fund hESC research, interested parties are encouraged to conduct a thorough assessment of their intellectual property portfolios and evaluate their current funding sources.

Researchers, academic centers, universities, private enterprises and other interested parties that can successfully navigate the evolving regulation of embryonic and adult stem cell research stand to gain significant scientific and commercial advantage and propel the science and the industry forward.  Given that the highly anticipated decision regarding the patentability of human embryonic stem cells (hESCs) has been decided in the European Union and while many stakeholders are awaiting the outcome of a lawsuit that will impact federal funding restrictions of hESC research in the United States, interested parties should conduct a thorough assessment of their intellectual property portfolio and evaluate their current funding sources to ensure research in the hESC field continues to move forward. 

EU Patentability of Stem Cells 

On October 18, 2011, the Court of Justice of the European Union (CJEU) held in Brüstle v. Greenpeace that a patent involving human embryonic stem cells as base material was invalid because it violated the 1998 EU directive (Directive 98/44/EC), which prohibits the patentability of inventions that would be contrary to ordre public, or morality, and provides, as an example of a prohibited invention, the commercial use of human embryos.  Germany’s Federal Court of Justice (Bundesgerichtshof) referred the case to the CJEU (the highest court in the EU) to interpret what constituted “uses of human embryos for industrial or commercial purposes” under Article 6(2)(c) of Directive 98/44/EC.

Accordingly, after review of the case material, the CJEU interpreted a “human embryo” widely to mean “any human ovum after fertilization, any non-fertilized human ovum into which the cell nucleus from a mature human cell has been transplanted, and any non-fertilized human ovum whose division and further development have been stimulated by parthenogenesis.”  Essentially, the CJEU’s interpretation defined a human embryo in three ways: (1) a fertilized human egg (inclusive of in vitro fertilization in which the egg and sperm are united in a laboratory instead of inside the female body), (2) an enucleated egg that is combined with a somatic cell to make an embryo (often generically referred to as cloning), and (3) any artificial activation of an egg in the absence of sperm in which the egg begins to divide, as if it has been fertilized, but with only half the necessary genetic material necessary for proper development (i.e., parthenogenesis).

The patent claim in question involved the use of stem cells, which themselves do not satisfy the definition of “human embryo.”  Therefore, the question arose as to whether such inventions involved the “use” of a human embryo.  It was evidence to the CJEU that to obtain hESCs, researchers must necessarily remove the fluid-filled cavity of the interior cell mass of a pre-implantation embryo, which contains about 150 cells produced by cell division after fertilization.  The process of removing the inner cell mass stops the embryo’s cell division and the embryo is no longer viable for transplantation.  In other words, the implementation of the invention involved (albeit historically) the destruction of a human embryo.  The CJEU concluded the exclusion to patentability must apply to such scenarios in order to prevent the avoidance of the provision by skilful drafting of patent claims, and followed the case law of the European Patent Office (G02/06) on this point.

A third question arose as to whether research can be considered as being “for commercial or industrial purposes.”  The CJEU noted the rights provided by a patent are fundamentally commercial in nature, and therefore the fact that the invention is for use in scientific research is not sufficient to avoid the exception to patentability.  In contrast, if the use of the human embryo is related to therapeutic or diagnostic purposes that would benefit the embryo itself (e.g., attempting to correct a malformation of an embryo to improve the chances that the embryo will continue to divide), then the use would be patentable. 

The reasoning of the Brüstle case applies not just to researchers based in Europe.  Accordingly, life science companies and other interested stakeholders, regardless of location, should re-evaluate their patent portfolio management strategy to ensure the intellectual property of novel inventions are protected, for example, and consider pursuing patent rights in other countries that allow for such protections, such as the United States.

In contrast to the EU’s patent law, the United States provides that methods of making or using stem cells are patentable and, indeed, several patents for such methods exist there.  A sampling of these patents include: hematopoietic differentiation of human pluripotent embryonic stem cells (U.S. Patent Number 628071), differentiation of human embryonic germ cells (U.S. Patent Number 6562619), embryonic stem cells (U.S. Patent Number 6875607) and directed differentiation of human embryonic cells (U.S. Patent Number 7045353).

Upcoming Challenge to NIH Guidelines on Human Embryonic Stem Cell Funding

Stakeholders in the United States—and abroad—will soon be assessing the impact of an appeal related to the federal funding of hESC research.  Specifically, in April 2012 the U.S. National Institutes of Health (NIH) will again defend an appeal in the Sherley v. Sebeliuscase (which started in 2009) arguing that NIH’s Guidelines on Human Stem Cell Research (Guidelines) are consistent with law.  Oral arguments are scheduled for April 23, 2012.  Opponents to the NIH Guidelines charge that funding stem cell research based on cell lines that were derived with private funds violates the Dickey-Wicker Amendment (discussed below) and that NIH violated the Administrative Procedures Act by issuing its Guidelines. 

The NIH Guidelines generally stipulate that the following criteria must be met before NIH will award federal dollars for hESC research projects:

  • The embryo(s) must not have been created for research purposes.  Rather, only embryos created for reproductive purposes at an in vitro fertilization clinic and no longer needed for those purposes are eligible for federal funding.  Thus, embryonic stem cell lines derived from embryos that were created via cloning, parthenogenesis or through other means are ineligible to receive federal funding. 
  • The donor’s informed consent must have been obtained and properly documented for the donation of the leftover embryos.
  • The donation of the leftover embryos must not have involved any financial inducement.

As background to the pending appeal, on March 9, 2009, President Barack Obama issued Executive Order 13505, Removing Barriers to Responsible Scientific Research Involving Human Stem Cells, which lifted President George W. Bush’s restrictions on federal funding of hESCs and allowed NIH to fund hESC research even if the embryonic stem cell line was derived after 9:00 pm EDT on August 9, 2001—a critical threshold of the Bush administration’s regulatory framework.  Under the Bush administration, NIH was able to fund research on 21 cell lines.  Pursuant to Executive Order 13505, NIH issued its Guidelines regarding hESC research on July 7, 2009.

In addition to the NIH Guidelines, federal funding of hESC research is governed by the Dickey-Wicker Amendment and the Department of Health and Human Services’ (HHS) 1999 legal opinion that concluded hESCs are not embryos, and thus are not subject to the Dickey-Wicker Amendment. 

Since 1996 Congress has attached language, known as the Dickey-Wicker Amendment, to each HHS appropriations bill prohibiting federal funding for research that “destroy[ed] or seriously endanger[ed] human embryos.”  In 1999, HHS’ General Counsel issued an opinion stating the Dickey-Wicker Amendment did not apply to hESC lines because hESC lines were not by definition an embryo.  As such, as long as private funds were used to derive a hESC line and the provisions of the NIH Guidelines are met, NIH may currently use federal funds to support hESC research.

If the U.S. Court of Appeals rules hESCs are equivalent to human embryos and subject to the Dickey-Wicker Amendment, then NIH’s federal funding of hESC research may be threatened, jeopardizing federal funding of this research. 


The legal and ethical questions to be addressed in Sherley v. Sebelius are obviously complex.  However, they bear at least some comparison with the questions raised in Brüstle v Greenpeace.  Thus, the CJEU determined hESCs do not meet the definition of a “human embryo,” which reflects the opinion of HHS’ General Counsel.  However, the CJEU did extend the exception to patentability to cover uses that involved the (prior) destruction of a human embryo, which in turn reflects the wording of the Dickey-Wicker Amendment. 

The underlying ethical, political and legal considerations surrounding the performance, funding and protection of stem cell research activities are universal and raise similar issues.  However, differences of culture and politics mean that even similarly worded regulations are subject to different interpretation and, moreover, these regulations are subject to rapid changes under different administrations. 

Scientific advances are dependent on collaborative, international research.  Accordingly, the international community must continually address the evolving regulatory framework which impacts the emerging complex scientific and social changes.  Researchers and companies in the life sciences and regenerative medicine fields will need to assess how they will approach conducting business in both the United States and the EU, among other countries, by developing robust patent portfolio management strategies and partnering with institutions in other countries that provide intellectual property protection for novel inventions that involve human embryos.

To plan for potential cutbacks of federal funding in this area, companies and other interested parties should evaluate their current funding sources and assess if seeking venture capital, state funding (if applicable) or international funding can complement or replace federal funding, if necessary. 

© 2023 McDermott Will & EmeryNational Law Review, Volume II, Number 82

About this Author

Jennifer S. Geetter, McDermott Will & Emery LLP, Attorney

Jennifer S. Geetter is a partner in the law firm of McDermott Will & Emery LLP and is based in the Firm's Washington, D.C., office.  She focuses her practice on emerging biotechnology and safety issues, advising hospital, industry, insurance and provider clients on matters relating to research, drug and device development, off-label use, personalized medicine, formulary compliance, privacy and security, electronic health records and data strategy initiatives, patient safety, conflicts of interest, scientific review and research misconduct, internal hospital disciplinary proceedings,...

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