British medical researchers have condemned a Europe-wide ban on the patenting of stem cell inventions derived from human embryos – setting back possible new treatments for a range of disorders, from heart disease and diabetes to blindness and Parkinson's.

Scientists expressed their dismay at the decision, saying the ban will act as a huge disincentive for investment in a critical area of research that promises to revolutionise medicine in the coming decades. They said the ban means that their discoveries, often made within universities with public funding, are unlikely to be developed into practical treatments for NHS hospitals because companies will not be prepared to take the investment risk without a guarantee of intellectual property protection.

The judgment makes no mention of the morality of using human embryos for stem cell research but it comes to the same conclusion as the Catholic Church in its opinion that it is not right to destroy human "test-tube" embryos for commercial gain.

The ruling by the European Court of Justice in Luxembourg, which is binding across all EU countries, means that existing patents involving the use of embryonic stem cells are no longer valid and that future patent applications will not be considered. The court upheld an earlier opinion by the Court's advocate general, Yves Bot, that no one should be able to patent an invention that comes out of research involving the use of human embryonic stem cells. Mr Bot had argued that it is unethical to use human embryos for the production of stem cells for commercial applications unless those stem cells are used for the benefit of the embryo itself.

Professor Sir Ian Wilmut, head of the Centre for Regenerative Medicine at Edinburgh University, said the decision will lead to a shift of vital stem cell research from Europe to the US and Asia. "It will unfortunately make it less likely that companies in Europe will invest in the research to develop treatments to use embryonic stem cells for treatment of human diseases," Sir Ian said.

Professor Austin Smith, of the Wellcome Trust Centre for Stem Cell Research at the University of Cambridge, who has patents in this field, said: "We are funded to do research for the public good, yet prevented from taking our discoveries to the marketplace where they could be developed into new medicines. The benefits of our research will be reaped in America and Asia."

Another leading researcher, Professor Pete Coffey of University College London, who has just won an award for his work into age-related blindness, said: "The potential to treat disabling and life-threatening disease using stem cells will not be realised in Europe. I have just won a prize from the New York Stem Cell Foundation for translating stem cell research into clinical practice, yet I now find that Europe, the continent in which I am doing this research, is basically calling me immoral.

"I cannot produce a medicine. I can give a therapy; I can show how it works in a small group of patients, but we need companies to commercialise this work. This decision will be a major barrier to patients receiving these treatments."

The European Court was asked to make a ruling on the patentability of human embryonic stem cells as part of a court case in Germany between Greenpeace and Oliver Brüstle, director of the Institute for Reconstructive Neurobiology at Bonn University, who holds patents on a technique involving stem cells.

Stem cells: The uses

Blindness Stem cells could develop into light-sensitive cells at the back of the eye which degrade in age-related macular degeneration.

Spinal injury The cells could be injected into spinal cords to restore lost nerve function.

Parkinson's disease Scientists hope to test new treatments on laboratory "models" of the disease based on human cells.