The academics said that a change in EU law could "wipe out" much of the biotechnology industry and halt work on revolutionary cures for conditions that affect millions of people.
At present Britain is a world leader in the use of stem cells thanks to investment from the private sector and the government.
Scientists are working on treatments for blindness, Alzheimer's, Parkinsons, strokes and spinal injuries as well as coming up with an alternative to testing new drugs on animals.
But scientists say all this work could be halted – and much of it moved to China and the US – if the European Court of Justice makes a new directive effectively outlawing the use of human embryos for any commercial purpose.
EU judges are considering a test case that could make it unlawful to patent applications using embryonic stem cells – or anything derived from them – on moral grounds.
The academics are concerned because the judges have been told that patenting any use of cells derived from human embryos breaches ethical principles.
That recommendation was given by French judge Yves Bot, the "advocate general" appointed to provide reasoned, independent guidance to the court.
He has a powerful voice, and although his opinion is not binding, the court follows his advice in eight out of 10 judgments.
A European legal ban on embryonic stem cell patents will have potentially catastrophic consequences for the multi-billion pound European biotech industry, the UK economy, and patients, according to the scientists.
It will lead to a withdrawal of funding and force patients to go abroad to get treatments initially developed in this country.
It could be potentially damaging to the health and wealth of the nation.
Such is the alarm that thirteen leading researchers have written to the journal Nature outlining their concerns.
They include clone pioneer and "Dolly the Sheep" creator Professor Ian Wilmut, chairman of the Scottish Centre for Regenerative Medicine in Edinburgh, and Professor Austin Smith, director of the Wellcome Trust Centre for Stem Cell Research in Cambridge.
Speaking at a press conference in London, Prof Smith said the advocate general's opinion, issued in a public statement, was "astonishing and shocking".
He said: "If the European Court of Justice was to follow this opinion then the reality ... is that all patents in Europe that involve human embryonic stem cells will be eliminated.
"Other patents will apply in the United States, China and Japan, so this will put Europe at a huge disadvantage. It will effectively wipe out the European biotech industry in this area."
The ruling could potentially have a massive impact on the provision of new treatments, said the scientists.
Read more at The Telegraph
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