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Court Determines that University of Pittsburgh and Artecel Have Sole Rights to Adipose-Derived Stem Cell Patent

Cytori and UC lose rights to Adipose-Derived Stem Cells; business

agreements and activity under other patents likely affected.

SUNNYVALE, Calif., June 19 /PRNewswire/ -- Artecel, Inc., announced today that the patent inventorship litigation concerning the foundational, composition-of-matter patent covering stem cells isolated from adipose (fat) tissue has been decided in favor of Artecel's licensor, the University of Pittsburgh ('Pittsburgh') and against Cytori Therapeutics' licensor, the University of California ('UC'). Such stem cells are one of the most promising kinds of adult stem cells, easily obtained from patients and able to develop into many different tissue types. The Court determined that only the two scientists at Pittsburgh, Dr. Adam Katz and Dr. Ramon Llull, were inventors, and that Dr. Marc Hedrick and other UC scientists were not inventors. As a result of this decision, UC and Cytori have lost their rights to the patent covering adipose-derived stem cells. Any commercial activities involving these stem cells in the United States -- either under existing business agreements or under other patents relating to the uses or applications of these stem cells -- will likely be affected by this decision.

The Court's decision caps a litigation that has lasted more than three years, involving extensive discovery and a lengthy trial, and follows two important interim court rulings in February 2007 and August 2007, both decided in favor of Artecel's licensor (Pittsburgh) and against Cytori's licensor (UC). Artecel believes the Court's decision was correct, thoroughly considered, and based upon an extensive supporting record of both fact and law. The case was heard in the United States District Court for the Central District of California, and was entitled University of Pittsburgh of the Commonwealth System of Higher Education v. Marc Hedrick, et al (No. CV04-9014 CBM (AJWx)). The litigation was to determine who the inventors were in regard to stem cells isolated from adipose tissue: Drs. Katz and Llull, the Pittsburgh scientists, or Dr. Hedrick and the UC scientists, or both groups.

The Court's decision was that only the Pittsburgh scientists were the inventors, and that Dr. Hedrick and the other UC scientists were not inventors. As a result, only Pittsburgh and its exclusive worldwide licensee, Artecel, have rights in the composition-of-matter patent covering stem cells isolated from adipose tissue. Existing business agreements of Cytori or others relating to the US and involving the stem cells derived from adipose tissue are likely to be affected by the Court's decision. In addition, activities by Cytori or others to commercialize uses or applications of these adipose stem cells in the US under other patents are also likely to be affected. Other patents that relate to uses or applications of the adipose-derived stem cells cannot be practiced or used commercially without rights to the stem cells themselves. The stem cells themselves are covered by the patent in which the Court has ruled that only Pittsburgh and Artecel have rights.

Adipose stem cells are a particularly valuable and useful category of adult stem cells that are easily sourced from a small amount of a patient's adipose (fat) tissue. This sourcing is simple, and can be done from the fat tissue removed in a liposuction procedure, or done by simply taking a small sample of a patient's fat tissue. Sourcing of adipose stem cells is not invasive and painful like the sourcing of a patient's bone marrow for stem cells. The adipose stem cells have been shown, in a rapidly growing body of peer reviewed scientific literature, to be quite versatile and able to differentiate into many different tissue types, including tissues from all three "germ layers" (the three broad categories of tissues that comprise the whole human body). The adipose stem cells expand well in culture and are relatively easy to manufacture and store.

The adipose stem cells were discovered and worked on extensively by Drs. Katz and Llull at Pittsburgh. Dr. Hedrick and the other UC scientists subsequently followed their work.

The inventorship litigation was filed by Pittsburgh in September, 2004, following and as a result of two petitions filed in the Patent and Trademark Office ("PTO"). Prior to these petitions to the PTO, both the Pittsburgh inventors (Drs. Katz and Llull) and Dr. Hedrick and the UC scientists had initially been listed on the patent application. Then, despite the seminal and prior work done by Drs. Katz and Llull, Dr. Hedrick and UC filed petitions to the PTO both before the issuance of this important composition-of-matter patent, and again after its issuance, seeking to have Drs. Katz and Llull removed as inventors, and to have only Dr. Hedrick and other UC scientists listed as inventors on the patent. Following these petitions to the PTO, Pittsburgh filed the inventorship litigation to defend against and reject the ongoing efforts to have Drs. Katz and Llull stripped from the patent, and to have an inventorship determination made removing Dr. Hedrick and the other UC scientists from the patent.

The inventorship litigation involved extensive documentary discovery and deposition testimony, expert witnesses, and documentary evidence and testimony at trial by Drs. Katz and Llull, by Dr. Hedrick and all of the other UC researchers listed on the patent, as well as other witnesses. In February 2007, the Court issued an important interim ruling construing the disputed patent claim terms in accordance with the definitions proposed by Artecel's licensor, Pittsburgh, and not Cytori's licensor UC. In March, 2007, Pittsburgh then filed a Motion for Summary Judgment on the inventorship issue of the case. During the summer of 2007, while the Motion was pending, UC sought again, for the third time, to have the PTO remove the Pittsburgh scientists Drs. Katz and Llull as inventors, without any notice and without the knowledge of Drs. Katz and Llull, the California Court, Pittsburgh or Artecel. The PTO initially issued the decision sought by UC. However, after reviewing the situation, the PTO revoked its decision and restored Drs. Katz and Llull as inventors. In August 2007, the Court granted Pittsburgh Summary Judgment on the key issue that Pittsburgh's inventors, Drs. Katz and Llull, were properly named inventors on the patent. The Court's decision reserved for trial only the question of whether Dr. Hedrick and the other UC scientists were properly named as additional inventors or not. On June 9, 2008, the Court issued its decision on this last key issue in favor of Artecel's licensor Pittsburgh, and against Dr. Hedrick and the other UC scientists.

"We are extremely pleased that the Court has ruled comprehensively in favor of the Pittsburgh inventors' position," said Linda Powers, Chairperson of Artecel's Board. "The work by Drs. Katz and Llull opened up the important category of adipose-derived adult stem cells, and they deserve to receive proper inventorship recognition. We are also happy to have the inventorship issue clearly resolved so that confusing business reports and public announcements by other parties can cease, and the development of useful medical treatments from these cells can proceed more smoothly from here."

About ARTECEL. Artecel is a privately held biotech company developing cell banking of adipose stem cells, therapeutics using adipose stem cells (for example, for soft tissue and cosmetic applications), and research tools for drug discovery and toxicity testing. Artecel is owned by Toucan Capital, an investment fund based in Bethesda, Maryland. Toucan is the leading US investor in stem cells and regenerative medicine. For more information about Artecel, please visit the company's website at

SOURCE Artecel
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