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 /CNW/ -- 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

For further information:

For further information: Susan O'Brien for Artecel, +1-240-497-9038 Web

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