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Stem CellsFrom: Dr. Ainsworth (ainsron@sbcglobal.net)Mon Sep 20 11:03:41 2004
M E M O R A N D U M TO: ACOG Fellows FROM: Legal Affairs Department DATE: September 17, 2004 Subject: PharmaStem Therapeutics, Inc ACOG has learned that Fellows have received letters from PharmaStem Therapeutics, Inc. and have been asked to sign an "Amnesty Agreement" not to collect cord blood from five cord blood banks that have not obtained a license with PharmaStem. The following is an informational summary of the current situation. PharmaStem Therapeutics, Inc PharmaStem Therapeutics, Inc., formerly Biocyte Corporation, holds several U.S. patents covering the collection, cryopreservation and storage and therapeutic use of umbilical cord and placental blood. PharmaStem has filed multiple lawsuits alleging patent infringement against unlicensed cord blood banks and other health care providers to protect its intellectual property. The unlicensed cord blood banks listed in the amnesty agreement are as follows: ViaCord, Cryo-Cell, Cord Blood Registry (CBR), Corcell and CureSource. Currently, the following cord blood banks have signed licensing agreements with PharmaStem: Alpha Cord California Cryobank Stem Cell Services New England Cord Blood Bank Stembanc Cord Partners Cord Blood Family Trust Securacell Cryobanks International Newborn Blood Banking LifeBank USA CORD Hemastem Therapeutics Norton Hospitals/Family Link Lifestor GeneAngel Patent Infringement Litigation in Delaware and PharmaStem Correspondence In October 2003, a Federal jury in the U.S. Federal Court, District of Delaware unanimously found that certain cord blood banks infringed PharmaStem's patents, PharmaStem Therapeutics, Inc v. ViaCell, Inc., et al., Civil Action No. 02-148-GMS. On June 1, 2004, PharmaStem mailed letters to approximately 25,000 obstetricians informing them of this Court decision. Furthermore, the letter indicated that PharmaStem had been asked by obstetricians to clarify the legal implications for obstetricians arising out of patent infringement in the collection of cord blood of their patients. It is PharmaStem's position that obstetricians are liable for patent infringement if they collect cord blood or market services for unlicensed cord blood banks. The defendant cord blood banks have appealed the October 2003 Delaware jury verdict in the patent infringement case and a decision is still pending on that appeal. The defendants also filed a motion with the Court objecting to the PharmaStem letter of June 1, 2004 sent to obstetricians. On July 2, 2004, the Delaware Court found that PharmaStem's June 1, 2004 letter to obstetricians contained false and misleading statements concerning the Court's October 2003 ruling and prohibited PharmaStem from making any further false or misleading communications to obstetricians. Specifically the court found that the misleading statements contained in the June letter pertained to an inaccurate definition of patent infringement, an incomplete definition of contributory infringement, and the references to a non-existing ruling on the conduct by a third party, such as obstetricians, to collect cord blood would constitute patent infringement. Additional Correspondence from PharmaStem On August 2, 2004, PharmaStem issued a press release to obstetricians announcing that it filed lawsuits against obstetricians and other healthcare providers for collecting cord blood from unlicensed cord blood banks. To our knowledge these lawsuits are still pending in Boston, Philadelphia, Tampa, and San Francisco. On August 20, 2004, PharmaStem followed-up with a letter offering obstetricians an Amnesty Agreement. The Amnesty Agreement states that if, "the obstetrician agrees to stop collecting cord blood or marketing services, including distribution of literature, for unlicensed cord blood banks" then, "PharmaStem in exchange covenants not to sue and agrees to release the obstetrician in full from further legal action for past activities." The Amnesty Agreement, as with all legal agreements, has broad implications. ACOG is not able to provide legal advice to its more than 47,000 members. Fellows are encouraged to consult their personal counsel. What is the College doing to address this situation? ACOG will continue to monitor this situation and update Fellows with any developments on the ACOG website. Fellows are also reminded of Committee Opinion No. 183, Routine Storage of Umbilical Cord Blood for Potential Future Transplantation, reaffirmed 2004.
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