In this month’s interview, we talk to Dr. J. Steven Rutt, Partner and Chairman of the Nanotechnology Industry Team at Foley & Lardner LLP. Dr Rutt’s practice includes patent counseling, patent prosecution, IP licensing and agreements, including technology transfer carried out under the Bayh-Dole Act, patent landscaping and clearance opinions, due diligence, patent litigation support, trade secrets, and trademarks. Dr. Rutt is a frequent writer and conference presenter with respect to nanotechnology and the law, actively helping to lead and participate in Foley’s Nanotechnology Industry Team. Currently, he is editor of the blog, www.nanocleantechblog.com. He is also the author of a dozen scientific publications and inventor on four patents. His experience includes nine years of hands-on research in polymer synthesis and morphological studies, and his experience in private industry includes two years of corporate chemical research with NTT in Tokyo, Japan. Dr. Rutt’s legal papers have been published widely, including publications such as Nanotechnology Law and Business Journal, Journal of the Patent & Trademark Office Society, The SciTech Lawyer, and the Legal Times.
Dr. Rutt received his law degree from Georgetown University Law Center, his doctorate in chemistry from The Pennsylvania State University, and his bachelor’s degree in chemistry from Goshen College.
In our interview, we discuss intellectual property, the current regulatory environment for nanotech, what kinds of services are in demand currently by the nanotech community, as well as the upcoming Supreme Court case on Bayh-Dole and what the implications might be for the nanotech community. We hope you enjoy the interview with Steven Rutt. – Steve Waite, Director of Research and Strategy, NanoBCA
SW: It’s great to speak with you today, Steve. I would like to begin by having you give us an overview of the nanotech practice at Foley & Lardner (F&L) and tell us about the role you play in the nanotech community.
SR: Foley and nanotech go back a long way. A relatively young, astute Foley lawyer identified nanotech and the NNI early on as an important driver for the future. The firm agreed, rapidly organized a nanotech team, and positioned itself ahead of many other firms. Later, other firms jumped in when nanotech became a buzz. Foley is a relatively large, general practice firm of almost 1,000 lawyers, so the innovative spirit is also coupled with strength and stability. The firm provides closely networked experts in different legal fields including intellectual property, regulatory, corporate, and litigation.
Over the years, we have done many things: sponsored and supported nanotech conferences and organizations, taken part in working with the government and its agencies (including lobbying and the NNI), spoken to media, and participated in journals. All of this is so we are better situated to serve clients and keep pace with the many developments. We also work with regional accelerators as advisors. We have also tried to understand deeply the dynamics of things and how, for example, energy applications of nanotech morph into cleantech. For me, personally, I had a background in chemistry and materials science, so it was a natural fit for me to get involved with nanotech.
A recent example: we try to work closely with the U.S. Patent & Trademark Office (PTO) which is a short drive from our D.C. offices. Last December, we were at the NNI at Ten conference and met some of our contacts at the PTO. From that informal talk, we agreed to help the PTO organize a cleantech customer partnership meeting this April, including how nanotech has contributed to cleantech. So we try not to sit still.
SW: We are seeing nanotech R&D initiatives bear fruit in terms of product commercialization and job creation. What’s your sense of the support for nanotech-related research and business activity in Washington today, particularly with the changes in Congress we’ve seen recently?
SR: Surprisingly, some common ground exists between the two parties. Hopefully, nanotechnology can continue to be a bi-partisan effort, and we will experience thoughtful leadership rather than crass rancor. There tends to be more agreement in the view that we need to fund defense-related technology. Even DARPA promotes nanotech and cleantech. Also, funding of basic research is an area of common ground. Finding the next nanoscale switch for the electronics/computer industries is vital. Also, no one can deny energy is important when gasoline pump prices go sky high and political tensions erupt around the world. Manufacturing and nanomanufacturing are also common grounds.
The Obama Administration has quietly supported nanotech, including for example the recent $2.1 billion supplemental NNI budget request. Nanotech does not get as much press as cleantech from the Obama administration, but a critical chunk of cleantech is based on nanotech.
Clearly, a compelling policy debate is whether the United States should fund and promote more direct commercialization efforts as found in competing countries like China and Germany (so-called “picking winners and losers” in the marketplace). The two leading parties simply do not agree on this issue. ARPA-E may be the most vivid example of this. Also, if the government supports a loan, and a failure happens, the politics can get hot as accusations fly about government mismanagement (even though failure is inherent to innovation).
Unfortunately, many observers believe that the U.S. is now “falling behind” in vital areas like nanotech and cleantech. Action is needed to catch up, whether from the government or the private sector. If the private sector is not doing it, we should not be surprised if the government steps in, or is at least asked to step in, to fill the vacuum. Venture capital, for example, may be attracted for business reasons to fund social media innovation, but government can also help ensure that innovation in the physical and life sciences also occurs whether or not venture capital funds it.
SW: Intellectual property is clearly an important area for nanotech. What kinds of activity and trends are we seeing in nano-related IP today?
SR: For IP, three lead topics include obtaining patents, licensing patents, and litigating patents. We monitor each week the patents and patent publications emerging which are classified as 977 nanotechnology patents. We are now approaching 7,000 class 977 patents, and more importantly, we have now over 8,000 published nanotech patent applications. We monitor these patents to get a feel for the trends and the types of language used in the claims. Many of these patents relate to electronics and semiconductors. For instance, companies like Samsung are filing in large volume. Unfortunately, fewer patents relate to pharma and biotech which is due to how the USPTO defines the classification. One must go outside of 977 to monitor nanobio; 977 is just a starting point. I have been impressed by the broad, balanced diversity of patent applicants populating 977, ranging from the Samsungs to the lone inventors, from the universities to the mid-sized companies, and from the government labs to the VC-backed start-ups.
Nanotech patent licensing and litigation are alive and well, from our experience. Universities and federal laboratories continue to aggressively market their patent licensing, and will face increasing pressure in coming years to show the government how the government funding for research is translating into jobs. Many companies, of course, want to avoid litigation, but if your product is valuable, competitors will arise, and IP disputes are almost unavoidable at some point – there are so many patents out there. Smart, well-managed companies aggressively manage the risks from the very start, searching for and formulating strategy for competitive patents. Some companies appear to just want to posture, and litigation can’t always be avoided.
New things seem to constantly come up. For example, we monitor deep shale gas drilling patenting and innovation, including Marcellus shale, which will have a profound impact. Now, nanotech patents are starting to appear in this innovation space. Graphene? Metamaterials? Always something new!
SW: You mentioned four areas of focus at F&L – Litigation, Corporate, Intellectual Property (IP) and Regulatory. Let’s discuss regulatory briefly. Generally speaking, how does the current regulatory environment for nanotech look from your perspective? What are the hot topics for nanotech at the EPA and FDA today, for example?
SR: Much has been written about nanotech and EHS, of course – perhaps too much? It seems as if more has been written than actually done. Innovation tends to flow faster than and not wait for regulation. The current climate for budget cutting and promotion of jobs tends to cool the fervor to regulate.
One topic that should receive more attention than it does is connecting innovation and regulation. It can come in several flavors. For example, one form is innovation to facilitate nanotech regulation. If you want to regulate exposure to nanoparticles, how do you measure the exposure? Is there a way to study nanomaterial toxicity without killing larger animals and minimizing animal rights concerns? Other EHS technologies actively do something remedial. As an example, the Department of Energy recently filed a patent application (2011/0039291) related to bioremediation of nanomaterials. EHS is best as an innovation growth area for the coming decade. Inventions can help with or be required for the kinds of regulation we want and make sense.
The EPA is perhaps the most active agency, and we have an active environmental regulation group which works with the EPA (e.g., Foley lawyers Sarah Slack, Dick Stoll, and Steven Chester). The EPA should be issuing TSCA nano-related rules in 2011 including reporting obligations for manufacturers. Another area of activity is regulation of certain public health claims about nanoscale products (e.g., “kill germs”). While we have an active FDA group (e.g., Foley lawyers, David Rosen and Nate Beaver), the FDA has been seemingly less active with nanotech in recent years. Some drug products and medical devices which incorporate nanoparticulate technology have been approved. In FDA’s discussion of looking ahead for the next five years, the FDA recognizes they need to become more involved, and keep abreast of new developments and emerging technologies like nanotech. As for OSHA, not much new for now, in the bigger picture.
One never knows when a crisis might occur to profoundly change the EHS debate. No one predicted too well the BP oil spill or the Japan nuclear crisis. In the meantime, we have slow evolution of regulatory dialog, tempered by the need to allow business to grow in a sluggish economy.
SW: With respect to the corporate services F&L provides, what types of services are most in demand today?
SR: It crosses the gamut. For example, new emerging tech companies, whether they are called nanotech or not, are always forming, expanding, and preparing to take it to the next level such as the next financing round, an IPO, or being bought. They need to be structured and financed through the changes. They need grant money. Employment matters come up. Stock options. Lobbying. IP. Complex agreement issues come up including supply agreements and technical advisory agreements are but some examples. Etc. Multi-disciplinary teams are essential. Finally, international issues are key including China. In particular, our corporate lawyers in such offices as Boston and Silicon Valley are active in these areas (e.g., Foley’s Jim Chapman, Susan Pravda, Julie Lee, Linda Ji, and Ken Duck).
SW: On your blog, (Cleantech & Nano Blog) you’ve written about the upcoming Supreme Court decision on Bayh-Dole. Give us some background on the case and tell us what the implications of a ruling in favor or rejection might be.
SR: Briefly, the case is Stanford v. Roche. Oral argument at the Supreme Court was held February 28, 2011, and a decision should issue shortly (sorry, I should avoid saying who will or should win). The fact that the Supreme Court agreed to take the case confirms the importance of IP, innovation, and government funding in the Court’s modern mindset. The Court could issue a broad, sweeping opinion or, more likely, issue a narrowly tailored opinion.
This is an important case because it touches on what can happen when federally funded research at the university is linked to private efforts for commercialization. The case interprets the Bayh-Dole Act, which is the legal regime set up thirty years ago to govern IP rights and licensing for federally funded inventions. These days, most agree that partnering is important for commercialization, and partnering includes individuals visiting other organizations to collaborate and learn. However, this can generate legal problems.
Here, for example, Stanford University fell into dispute with Roche over whether Roche needed to take a license on a Stanford patent. In essence, Roche said it obtained rights in the patent due to activities by a Stanford professor at Roche, and the nature of Stanford’s IP policies and assignments. Stanford says the Bayh-Dole Act preempts the Roche ownership claim.
I would guess the Court will rule narrowly, but they certainly have the option to provide extensive commentary about the complexities of modern innovation involving government funding and collaborations (”thought leadership” in addition to deciding the case).
SW: Your blog covers nanotech and cleantech. What role is nanotech playing today with respect to fostering innovation in cleantech?
SR: Many of the photo and electrical processes at the root of cleantech innovation are at the nanoscale. Examples include batteries, solar cells, and efficient lighting. Mitsubishi Chemical just announced a major initiative for organic solar cells, for example. The NNI has recently identified nanosolar as one of three signature areas to promote. Then there is nanoscale chemical engineering like filtration, passing water through the inside of nanotubes for example.
One particularly recent example was covered by CNN and caught my eye. It relates to rare earth metal magnets. These magnets are critical to defense and cleantech, but something like 97% of the supply comes from China. People also want to make stronger magnets, and ARPA-E has funded work in the area. Nanocrystalline powders turn out to be an important approach. Just recently, I learned one innovative company working in this area is actually located just a mile from where I grew up (which is a small, one red light town two hours away from the closest large city).
It is these sorts of remarkable stories which keep my interest in nanotechnology, including how nanotech continuously fuels cleantech, life sciences, and many other sectors. Nanotech perhaps does not always get enough appreciation by way of name recognition.
SW: You are involved with the Pennsylvania Nanomaterials Commercialization Center. Tell us about the Center and what kinds of activities you are engaged in today.
SR: The PA Nanomaterials Center is an excellent example of more state- or region-oriented efforts as opposed to Federal. The Center also reflects how large companies can come together to encourage innovation in sectors of their interests. I am a member of their Technical Advisory Board. Among its roles, it helps to bridge the “valley of death” through providing grant money. It also provides business counsel and networking opportunities for local companies. Much emphasis is placed on partnering, including for example asking the requestor for their fund money to find a partner to facilitate commercialization. We recently took a day to review a round of grant proposals. We also took a tour of Alcoa and heard some of the latest about defense and nanotechnology. The group brings people together. In reviewing the grants, the group worked very hard to “get it right” and hear all opinions on the merits of the proposals. Washington cannot and should not resolve all the innovation and job creation issues.
SW: What have been some highlights of your work in and with the nano community?
SR: There have been many. We are always pleased to hear, for example, when clients take it to another level such as an IPO or being bought and come to us to help them get there. Seeing fresh innovation directly and in person is also a treasure, talking to inventors about their latest “baby” and seeing their demos. Also, always good to see the Patent Office finally understand why an invention is patentable and grant the patent. Seeing how IP links in with regulatory, corporate, and litigation issues is also an on-going stimulation. On a personal level, a recent highlight was to see my daughter’s school and county science fairs, where high school students were exploring concepts in cleantech and even nanotech!
One more: feels good also when we are able to help a client finish the year “in budget” – perhaps most, we appreciate the loyalty and trust clients show.
SW: Thanks again for your time, Steven. We wish you and your colleagues at Foley & Lardner, LLP all the best in the future.
Steven and his team will be speaking at our 10th Annual NanoBusiness Conference at the Seaport World Trade Center in Boston, MA on September 25-27th. Save the dates for Boston.
Originally posted on Evolving Innovations, Vincent Caprio's blog, on May 2nd, 2011