Episode 705: The Muscle Patents : Planet Money Two bodybuilders go at it over a Stanford University patent. And we dive in to make sense of it.
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Episode 705: The Muscle Patents

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Episode 705: The Muscle Patents

Episode 705: The Muscle Patents

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DAVID KESTENBAUM, HOST:

Here are a few facts about the Jared Wheat - regular churchgoer, drives an old Lamborghini and used to be a professional bodybuilder.

JARED WHEAT: At one time had a good muscular physique - you know, not quite as muscular anymore - got a little layer over my six pack but short of that, still have a little bit of muscle left.

KESTENBAUM: Jared Wheat spends most of his time these days running his company which makes dietary supplements. They sell pre-workout products, fat burners, vitamins. Some of his products contain this one special substance, something called arginine. Some people say arginine. It's a basic amino acid, one of the building blocks of life, been on this Earth long before humans. Arginine supplements are supposed to improve blood flow so you can do whatever you're doing longer.

WHEAT: We have Stamina-Rx, which is a men's virility product - uses arginine. We have a pre-workout product that uses arginine and a couple others.

KESTENBAUM: One day a few years ago, someone got in touch with Jared Wheat about arginine. The person did not want bigger muscles or to be better in bed. The person wanted to be paid, said he had patents on arginine. And Jared Wheat thought, who has a patent on arginine? This is a naturally occurring substance. It was discovered in the 1800s. Bodybuilders have been using it for decades, and now someone was suing him for selling it.

(SOUNDBITE OF MUSIC)

KESTENBAUM: Hello, and welcome to PLANET MONEY. I'm David Kestenbaum. We have a special guest host today. Say hello.

LAURA SYDELL, HOST:

I'm Laura Sydell, correspondent for NPR.

KESTENBAUM: You brought us this story. How long you been working on it?

SYDELL: Eight months.

KESTENBAUM: Today on the show, two bodybuilders go mano a mano over some patents.

SYDELL: Patents that began at one of the most prestigious universities in the world.

KESTENBAUM: The company that was suing Jared Wheat for selling Stamina-Rx and the other products with arginine in them was a rival supplement company called ThermoLife.

SYDELL: Jared knew the owner, a man named Ron Kramer, and he did not like him.

WHEAT: My mom said if you don't have something nice to say, don't say it at all. But my opinion of him is he's kind of like the schoolyard bully.

SYDELL: Ron Kramer did not want to talk to us. I reached out to him several times.

KESTENBAUM: But we did find some videos on him online.

(SOUNDBITE OF ARCHIVED RECORDING)

UNIDENTIFIED MAN: ThermoLife is going to be in the house.

KESTENBAUM: This one is shot at a bodybuilding competition at Muscle Beach. You see these men and women with superhero-like bodies posing. There are women in bright orange wigs and silver bikinis. And then there he is, looking a little bit like Hulk Hogan wearing camouflage cargo pants, bright bandanna and sunglasses, the CEO of ThermoLife, Ron Kramer.

(SOUNDBITE OF ARCHIVED RECORDING)

RON KRAMER: I feel really much love here today at the Muscle Beach because I was just asked to present the overall trophy to the men's overall winner in the open division. There's no greater honor having once been a bodybuilder myself. I have chills now. I'm feeling so humble. With honor and respect, I'm going to be able to hand the award to the winner.

KESTENBAUM: This video, by the way, had only 359 views, and 10 of them are mine.

SYDELL: There's another video, though. This one has been viewed thousands of times. It shows another side of Ron Kramer. It's at what looks like another bodybuilding competition, but in this one, Kramer's not handing out an award. He's delivering the paperwork for a lawsuit to a competitor. Actually, he's kind of ambushing him with it.

(SOUNDBITE OF ARCHIVED RECORDING)

KRAMER: Right now, right now, right now, right now, right now, right now.

KESTENBAUM: The camera follows Ron Kramer as he moves through the crowd until he gets to this buff guy wearing sunglasses and a polo shirt.

SYDELL: The man in the sunglasses is Rich Gaspari, founder of Gaspari Nutrition, former bodybuilder - nicknames the Itch and the Dragon Slayer. Kramer hands him a lawsuit. Here's a present for you.

(SOUNDBITE OF ARCHIVED RECORDING)

KRAMER: Here's a present for you.

RICH GASPARI: I'm not taking it.

KRAMER: You're served, Bro - served on video.

KESTENBAUM: Served on video. I should say we could not confirm that the paperwork in that video is for a patent lawsuit, but Ron Kramer did sue Rich Gaspari, the Itch, the Dragon Slayer, for patent infringement at some point.

SYDELL: Jared Wheat, the guy who used to have six-pack abs, told me that Ron Kramer had actually sued him several times.

WHEAT: The first one I got I believe was for D-aspartic acid. And I looked at it and said, surely this guy has lost his mind. And so I picked up the phone and called the guy and told him I got the papers and, you know, let's talk about it.

SYDELL: Wheat says Kramer told him that he had patents and Wheat needed to either pay for a license or stop making the product.

WHEAT: I told him that I'd see him in court

SYDELL: And how did he respond?

WHEAT: He basically laughed and said, you know, well, you know, you'll be paying me eventually. And I told him I didn't think so, and I'd say the words went downhill from there.

SYDELL: How bad did they go downhill?

WHEAT: Being a Christian man, I'm not proud of myself how bad they went downhill.

SYDELL: What kind of words were said?

WHEAT: Many four-letter words I wouldn't repeat on air - said that, you know, we would squish him like a bug, I mean is basically in nice terms. And you know, I'm a very competitive guy, and my competitive juices started flowing and basically let him know we would beat him in court.

KESTENBAUM: There is a five-letter word that Jared Wheat uses to describe Ron Kramer. It's a word he says describes exactly what he is - a troll, a patent troll.

SYDELL: Maybe you've heard the term patent troll. One definition is a company that makes most of its money not by selling actual products but by buying up patents and using them to sue other companies that do make products.

WHEAT: We've tried to buy a product off his site. We've tried to find retailers that sell his product, and as of probably six months ago, we were unsuccessful at even being able to find a place to buy his product.

SYDELL: We did to try to buy something off the ThermoLife site. Seven out of the 9 products were out of stock. Of the two available, one did contain arginine. So I ordered it, and it came.

KESTENBAUM: Jared Wheat had won that previous patent fight with Ron Kramer, and his lawyers told him they thought they could win this one, too, get the arginine patents invalidated. Bodybuilders have been using arginine for decades. So Jared Wheat decided he did not want to stop making his product. He was going to fight Ron Kramer in court again.

SYDELL: He was going to fight because arginine was big business for him. It was big business for everyone.

WHEAT: If I dared to guess, I would say probably 500 million to a billion dollars a year in our industry.

SYDELL: Really.

WHEAT: Yes, Ma'am.

SYDELL: Half a billion to a billion dollars a year in products that use arginine.

WHEAT: Yes, Ma'am.

KESTENBAUM: We checked with an industry analyst who said those numbers seemed reasonable.

SYDELL: But here's where the story becomes something more than just two former bodybuilders going at it with lawyers. Wheat started looking at the patents, and he found something kind of odd. That patents he was being sued with were owned by Stanford University. Somehow Stanford was wrapped up in all of this.

WHEAT: Which I thought was very odd.

SYDELL: Why did you think it was odd?

WHEAT: It just seemed odd to me that Stanford University, who's one of the top ten prestigious universities in America would get in bed, for lack of a better word, with someone like ThermoLife.

SYDELL: It seemed curious to me, too, so I started looking into it. These arginine patents did start out with Stanford University, and they had a really noble beginning.

KESTENBAUM: They started with this man.

JOHN COOKE: Hi, Laura. This is John Cooke. I'm the professor and chair in the Center for Cardiovascular Regeneration here at Houston Methodist Research Institute.

SYDELL: Cooke told me that these patents came out of research he did while he was a professor at Stanford, and the work was funded by the National Institutes of Health.

KESTENBAUM: Cooke says he was trying to help people with heart disease.

COOKE: The blood vessels produce a factor that is protective.

KESTENBAUM: And here's where you go from the world of, Bro, you have been served, to the world of endothelial function and vasoprotective factors. Basically Cooke's work showed at a molecular how extra arginine in people's diets might help prevent hardening of the arteries.

SYDELL: There was a time when Stanford might have just put this out there in the public domain for anyone to use.

KESTENBAUM: It was, after all, funded with federal money.

SYDELL: But in the 1980s, Congress passed this law called Bayh-Dole It allowed universities to file for patents based on publicly funded research.

KESTENBAUM: The whole point of Bayh-Dole the whole point of universities getting patents, was to try to provide some financial incentive for somebody to take all these basic discoveries that are happening at Stanford and universities all over the country and turn these discoveries into stuff that people could actually use, into real products.

SYDELL: So Stanford patented Cooke's work. It got what are sometimes called used patents. You have a naturally occurring substance like arginine, and the patent is on a way of using it.

KESTENBAUM: And John Cooke, the researcher who did all this work, decided he would license those patents and try to make an actual product. He was so excited by his discovery. He thought it might help people be healthier, live longer. So he got a license to use the patents. He found investors, and he made a sort of arginine granola bar called the HeartBar.

SYDELL: What did it taste like?

COOKE: It was OK. Arginine is - does not taste good. Arginine actually is pretty bad tasting, so we had to do some work to generate something that was - that tasted reasonably good. Some people loved it. I think there was a heterogeneity of opinion regarding its - how good it was.

SYDELL: What did it taste like to you?

COOKE: I liked it. I ate it regularly.

KESTENBAUM: Initially things looked promising. In this one study they did, people with cardiovascular disease who ate HeartBars felt better, and they could walk further.

SYDELL: But then something happened that made Cooke's arginine patents and of those HeartBars that he was selling seem a lot less interesting.

KESTENBAUM: Cooke got funding from the National Institutes of Health to do a long-term study on people with a condition called peripheral artery disease, and here, the findings were very different.

COOKE: I couldn't believe the results. Everything went the wrong way

SYDELL: Arginine in these patients, when taken over long period of time, seemed like it was actually doing harm. It was making blood flow worse, not better.

COOKE: I was devastated, you know? It was a hypothesis that I had really, you know - become part of my life, and it was like mourning the death of a friend because it was such a big part of my life. But I had a scientific obligation. I had an obligation as a physician to, you know, make these results known, and I did.

KESTENBAUM: Cooke published the results, and he stopped selling HeartBars.

COOKE: To this day, you know, people ask me if they should be using arginine, and I think long-term use is - you know, the only data that we have is negative.

KESTENBAUM: HeartBars were gone, but the patents were still there, and the patents weren't wrong, Cooke says. They were based on solid work about arginine's effects in the body at the molecular level. It was still possible arginine might be helpful to some people, but as they say, more research is needed.

SYDELL: These patents sat unused for years in an office that wasn't far away from Cooke's laboratory. It's Stanford's Office of Technology Licensing. I went to visit. It's just this little office in a building on the corner of Stanford's campus.

KATHERINE KU: I'm Katherine Ku. I'm the executive director of the Stanford Office of Technology Licensing.

SYDELL: Ku's been running this office for 25 years, and the way it works is that when a professor or a student does research, Stanford owns any patents that come out of the work. And I asked Ku if she would explain what exactly this office is supposed to do with the patents.

KU: The mandate of this office and most technology transfer offices is to transfer the technology from the university to the commercial sector. We want our inventions to be developed by companies and then sold to the public.

KESTENBAUM: A few of the patents in this building have earned Stanford a ton of money. Like, there are the Google patents here. Those are the ones that ended up being the basis for Google Search. But most of the patents just sit here unless somebody is interested in using them

SYDELL: In 2013, Stanford gets a call from somebody who's representing Ron Kramer and ThermoLife offering to pay Stanford money in exchange for an exclusive license on Dr. Cooke's arginine patents. Stanford said yes.

KESTENBAUM: Ku says she does not have a problem with the lawsuits.

KU: We don't consider them a troll at all. They're making a product, so they're suing other companies who are infringing the patent that we granted them an exclusive license for.

SYDELL: I pointed out that Ron Kramer and ThermoLife seem to be doing an awful lot of suing and not so much selling of product. The conversation got tense.

KU: You have an angle on this one that is not legit to me.

SYDELL: Really, you don't think so?

KU: I mean, they are a company. They sell product.

SYDELL: Some people have argued they don't, really.

KU: I know.

SYDELL: That's why I was asking how much, you know, investigation into somebody you're about to license something to are your people going to do.

KU: I don't think we're going to look into their personal backgrounds.

SYDELL: Or the, you know - how much of the history of his company, for example.

KU: We probably wouldn't.

SYDELL: I asked John Cooke, the researcher, how he felt about this. He said he was fine with it if it brought in money for the university.

KESTENBAUM: But not everybody is fine with this. Robin Feldman is a lawyer and academic at the University of California, Hastings. She says this is not what Congress had in mind when it passed the Bayh-Dole Act giving universities the power to patent federally funded research.

ROBIN FELDMAN: Congress's policy in the early 80s is being turned on its head. So rather than bringing forth new products, some universities are going after existing ones, hoping that they can hit a gold mine in the process. The lure of money is very strong.

SYDELL: She says most of the universities are basically playing the lottery with their licensing offices, hoping to get a big, Google-like payday, but most of the time, they're just losing money.

KESTENBAUM: According to a recent study from Bloomberg, something like 90 percent of university licensing offices either lose money or just break even. It costs a lot of money to get patents. There are legal fees. There are salaries to pay, and a lot of the patents just end up sitting there.

SYDELL: Feldman says university patent offices are under pressure to bring in money however they can.

KESTENBAUM: And sure, you could say patent trolls are just protecting intellectual property, but Feldman says a lot of the time, it looks pretty ugly.

FELDMAN: We know that a lot of patents are of low quality, and we know that fighting off a patent lawsuit is expensive. So a lot of companies are willing to give a settlement payment even if the patent's invalid or the company is not infringing it. It's too expensive to fight it off.

So this is a great money making game for patent holders. But do we really want universities playing that game, and do we really want taxpayer money funding that activity?

SYDELL: Stanford wouldn't tell me how much money they got from the arginine licensing deals. Stanford does get a percentage of the lawsuit revenues, but Kathy at the Licensing Office told me it wasn't much.

KESTENBAUM: One person who definitely will not be making money here is Jared Wheat, the former bodybuilder, the guy who used to have a nice six pack. In fact, he says he's going to be spending a lot of money to fight this in court.

SYDELL: Can we do the math here? How much...

WHEAT: Absolutely.

SYDELL: ...Is it going to cost you to fight this?

WHEAT: I would say I have spent in excess of a quarter million to date to fight this one case, and I could have settled and got out of the case for probably 25,000 or 30,000 bucks.

SYDELL: So why are you fighting?

WHEAT: Principle. Companies like mine have had to make the tough decision. Do you discontinue the use of an ingredient? Do you stand up for what you believe is right, or do you pay the troll? And I'm not going to discontinue and make a product not as efficacious. I'm not going to pay the troll, so I really have one choice, which is to fight.

KESTENBAUM: Wheat's case is going to be in court this summer.

SYDELL: While we've been reporting this, I have been trying to find out how many arginine lawsuits are actually out there, and I finally came across this independent group that tracks patent litigation called Lex Machina. And oddly enough, it was started at Stanford.

KESTENBAUM: Lex Machina looked at ThermoLife and Ron Kramer, the guy who licensed the patents from Stanford, and found that he had sued a total of 91 companies with those patents. That's basically the entire supplement industry.

SYDELL: So I went back to Stamford one more time to ask them about all these lawsuits, and the declined my interview request. They did send a statement, and here are the last lines. (Reading) Our license allows for infringement proceedings only if Thermolife is developing licensed product. We were not aware they intended to institute so many lawsuits.

KESTENBAUM: Laura, can I just try and summarize this story to you. Can you tell me if I have it right?

SYDELL: OK.

KESTENBAUM: These are patents that were issued in the 1990s based on research that the scientist himself who did it now says did not pan out the way he hoped. Stanford University then, decades later, licensed the patents out with the intent that they would be used productively somehow. The guy who licensed the patents from Stanford is using them to sue dozens of companies.

SYDELL: That's right. And this is over a supplement that when taken long-term might actually be harmful for some people. We don't know.

(SOUNDBITE OF MUSIC)

KESTENBAUM: Here's the arginine powder that we ordered from Ron Kramer. It came.

SYDELL: Yep. It's called PUMP-BOL, arginine pre-workout protected by U.S. patent number 6117872, which is Stanford's patent.

KESTENBAUM: Should we taste it? You have to be a bodybuilder to open it.

SYDELL: All right.

KESTENBAUM: Sealed for your protection.

SYDELL: Two scoops.

KESTENBAUM: This is the right amount.

SYDELL: Yeah, yeah.

KESTENBAUM: Think I'll stir it with my finger.

SYDELL: Yeah.

KESTENBAUM: And before we drink it, let's do the credits. You can send us an email - we are planetmoney@npr.org - or tweet us @PlanetMoney.

SYDELL: Special thanks to Brian Love (ph) and Doug Carsten (ph).

KESTENBAUM: Our episode today was produced by Nick Fountain. Thanks, Nick. If you're looking for another show to listen to, check out NPR's newest podcast. It just came out last week. It's called Code Switch. It's hosted by a couple of our favorite people here at NPR, Gene Demby and Shereen Marisol Meraji. It's all about race. You can find Code Switch on the NPR One app and at npr.org/podcasts.

SYDELL: Ready - oh, whoa.

KESTENBAUM: I have a heterogeneity of opinion.

SYDELL: But it's kind of...

KESTENBAUM: I would say it's basically as advertised - purple candy flavored dietary supplement.

(LAUGHTER)

SYDELL: So you feel anything yet?

KESTENBAUM: Nervous.

(LAUGHTER)

SYDELL: Give me 50, all right. Keep going. How's it feeling, David.

KESTENBAUM: Hang on.

SYDELL: That's not bad.

KESTENBAUM: I haven't done push-ups in so long.

SYDELL: I'm going to give you 50.

KESTENBAUM: (Laughter) Let's see them. You drank the whole thing.

SYDELL: Yeah.

KESTENBAUM: What's the verb I'm supposed to use - get swole. Swole - is that the right word?

SYDELL: (Laughter) I don't know.

KESTENBAUM: Get swole. I'm David Kestenbaum.

SYDELL: And I'm Laura Sydell.

KESTENBAUM: You're fading. You're fading. Here, drink some more.

SYDELL: (Laughter).

KESTENBAUM: Thanks for listening.

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