StemCells Inc announced that the US Patent and Trademark Office (PTO) has upheld the validity of the remaining two neural stem cell patents which were subjected to re-examination proceedings commenced by Neuralstem Inc. The upheld patents are the subject of two related lawsuits initiated by StemCells against Neuralstem, which allege infringement of a total of six patents. These six patents collectively claim the manufacture and use of human neural stem and progenitor cells as tools for drug discovery and as therapeutic agents. The PTO's decision to uphold the two patents is final and cannot be appealed. Consequently, StemCells is asking the federal district court in Maryland to resume the infringement lawsuits against Neuralstem.

"The PTO's latest action is a reaffirmation of the validity of the patents asserted against Neuralstem. Each of our re-examined patents has now been twice tested and twice granted by the Patent Office," said Martin McGlynn, president and CEO of StemCells, Inc. "We now look forward to our day in court. Litigation can be a slow and meticulous process, but we plan to ensure that those who wish to commercialize neural stem cells for drug discovery or therapeutic uses, recognize the validity and value of our patents."

The two most recently upheld patents are US Patent Number 6,294,346 and US Patent Number 7,101,709, which claim, respectively, methods for using neural stem and progenitor cells for the screening of drugs and biological agents. In its latest communications, the PTO has issued Notices of Intent to Issue Ex Parte Re-examination Certificates for both the '346 and '709 patents. During the re-examination proceedings, the Company submitted minor amendments to certain, but not all, of the claims. With these notices of allowance, the PTO has affirmed all of the previously issued claims, as amended, and so all of the re-examinations initiated by Neuralstem have been resolved to StemCells' satisfaction. There are a total of 173 patent claims going forward from the six patents involved in the two suits against Neuralstem.

StemCells initiated its first lawsuit against Neuralstem in July 2006 in federal court in Maryland, alleging that Neuralstem's activities violate claims in four patents exclusively licensed to StemCells. In late 2006, Neuralstem petitioned the PTO to re-examine two of the patents in the case, namely US Patent No. 6,294,346 (claiming the use of human neural stem cells for drug screening) and US Patent No. 7,101,709 (claiming the use of human neural stem cells for screening biological agents). Then, in April 2007, Neuralstem petitioned the PTO to re-examine the remaining two patents in the case, namely US Patent No. 5,851,832 (claiming methods for proliferating human neural stem cells) and US Patent No. 6,497,872 (claiming methods for transplanting human neural stem cells). In June 2007, the Company agreed to a voluntary stay of the first lawsuit while the re-examination proceedings were ongoing. In April 2008, the PTO reaffirmed the '832 and '872 patents.

In May 2008, StemCells filed a second patent infringement lawsuit in federal court in Northern California against both Neuralstem and its two founders, alleging that Neuralstem's activities infringe claims in two additional patents exclusively licensed to the company, specifically US Patent No. 7,361,505 (claiming composition of matter of human neural stem cells derived from any source material) and US Patent No. 7,115,418 (claiming methods for proliferating human neural stem cells). In addition, the second suit alleges various state law causes of action against Neuralstem arising out of its repeated derogatory statements to the public about our patent portfolio. In July 2008, the California court denied Neuralstem's motion to dismiss the second lawsuit and then, in August 2008, it transferred the suit to Maryland for resolution.

StemCells is a clinical-stage biotechnology company focused on the research, development and commercialization of products derived from stem and progenitor cell technologies.