In this episode of the R&G Tech Studio, venture capital and emerging companies co-lead Brad Flint sits down with technology, media & telecommunications co-lead Ed Black to discuss his practice and to share his thoughts on the evolving tech and regulatory landscape impacting the venture community.
In this episode of the R&G Tech Studio, technology and intellectual property transactions partner Regina Sam Penti sits down with technology, media & telecommunications co-lead Ed Black to discuss her practice and how she, as an MIT-trained engineer, leverages her background to counsel clients on technology transactions.
Ed Black: Hi, this is Ed Black, and I want to welcome everybody to another edition of the R&G Tech Studio. This is the podcast where we hear about all of our people involved in the tech industry and what they’re up to. Today’s edition: I’m here with my friend and partner, Regina Sam Penti, one of our superstars, particularly in the core tech hardware space, and in anything involving patent strategy. We’ll get to some of the substance in a second, but I want to kick off by just making sure people hear about who you are. So, can you tell us a little bit about yourself? How long have you been at it? Where are you from? Where do you live? Things like that.
Regina Sam Penti: Thanks, Ed, for having me—it’s great to be on the show. So, as Ed noted, I am in the IP transactions practice. I’ve been at Ropes & Gray now for 17 years. And the thing that drew me to law is really the technology aspects of the practice of intellectual property and technology law. I am originally trained as a computer scientist and electrical engineer, and so that’s the thing that drew me to law. My practice at Ropes focuses on technology and data-driven transactions, tech licenses and then collaborations. My practice spans both the U.S. and the U.K. I am qualified as a solicitor in England, and so my practice focuses on global issues affecting tech companies that have international interests.
Ed Black: All right. Now, also, Regina, you are, in fact, a global person, right? You’re originally from Ghana, and I know you came over to go to that obscure little educational institution across the river. What was it called?
Regina Sam Penti: That’s right. So, I was born and raised in Ghana, and I came to the U.S. to attend college. I went to MIT where I got my bachelor’s and master’s in electrical engineering and computer science.
Ed Black: Then, you mentioned you were here for 17 years. Now, I know that a number of those years you started out, you were in our tech advisor program. Is that right?
Regina Sam Penti: That’s right. So, when I started out, I was in Ropes & Gray’s technical advisor program, which is this really amazing program that basically takes people with technical engineering or science backgrounds and helps them get through legal training, while at the same time, working at the firm and getting real-life experience helping with IP and patent-related issues. Being a technical advisor was really helpful in helping me navigate and understand what it’s like to be a lawyer. And it’s that experience that led to my going to law school, which I did at Harvard while still working at Ropes & Gray.
Ed Black: It is a great program, but candidly, we were lucky to find you—so, thank you for coming to the program. Of course, the tech advisor thing was ages ago—you’ve been through the ranks, and you’re now an accomplished partner at the firm. In general, what kinds of problems cross your desk?
Regina Sam Penti: My clients are generally technology companies and their investors, and they are often looking at companies where a significant portion of the value of the company is in technology and intangible assets. And so, the kinds of problems that cross my desk really are about helping both the companies and their investors maximize that value, both in being able to exploit the technology and being able to really have it contribute to the baseline, as far as valuation of the company, and frankly, in driving the objectives of the company.
Ed Black: You work for companies that are building off of tech, and they need that tech to drive as much value as possible. In general, that’s easy to understand, but can you give me an example of some very specific problem or some very specific issue, just to get a flavor of how this works on a day-to-day basis?
Regina Sam Penti: Sure—I’ll give you a couple of examples. One of them is I have a lot of clients who are in the fintech space. And one of the things that’s really interesting about the fintech space, in addition to having seen a really explosive growth in the last few years, is that a lot of the assets in that space tend to be things like software and data, the kinds of assets that have traditionally been very difficult to evaluate and assess, mostly because they are not registered IP. They don’t have the same structural organization or the backing of statutory and other regulations that help put structure on how these things are traded or how they are held. One specific example is, I worked on a transaction for a financial services company that was acquiring a fintech target where, again, a significant value of the target was really in its technology platform. This was in a scenario where those assets had been, in some cases, licensed to others in the field who were potentially competitors of this new acquirer. And so we had to try to evaluate the assets in a setting where one of the users, persons or entities with assets of the technology would be a potential competitor.
Ed Black: So, you’re looking at buying this company—you find out that your hated enemy has a license. Do you just walk away, or do you find a way around that?
Regina Sam Penti: You find a way around it, because one of the important things to keep in mind for any deal is: What is driving the deal? What are the key drivers for the deal? And, in this case, it turned out my client’s intended use, or at least their post-closing plans for that technology, did not conflict with what this potential competitor was doing with it, and so, there was a way to find a path for coexistence. One of the key issues that we had to manage in this instance is the ability to separate competitively sensitive information so that, obviously, our client was not getting access to their potential competitor’s sensitive information and vice versa. And that is where the IP practice meets the technology practice, and you come up with things like IT solutions and isolated production environments that can really help solve that—and so that’s the thing that we did to help our client in this case.
Ed Black: Suddenly, I can now understand why the degree from MIT goes well with the degree from Harvard, because you’re putting up legal walls and technical firewalls in order to get the deal done. You mentioned data a couple times, and I’d like to drive down a little on that one. One of the things we’ve seen lately is this explosive expansion in the market for data. Is any of that crossing your desk? Do you have experience with clients who are building or participating in or otherwise engaged with these data markets?
Regina Sam Penti: Absolutely. So, I have been advising clients on the use of alternative data and other disparate sources of data in highly regulated industries for the last 10 years or so. One of the challenges with alternative data is that the use of the data, again, as you noted, grew explosively in a way that the law had trouble catching up, and it’s still not caught up. And so companies that are operating use and exploit alternative data are often operating in what we might call “potential gray areas” or areas where it’s difficult to assess the risk of what’s permissible and what isn’t permissible. One example is, I have a client in the financial services sector that wanted to set up what just informally we might call the eBay of alternative data—it’s a marketplace of data. And what the client wanted to do was to be able to allow third parties to come onto the platform and sell data to the clients, subscribers and others that come on to the platform. Now, the challenge here was anytime you become a conduit for the transfer of data, there’s a potential risk that you may take on responsibilities and potentially be seen as vouching for the source of the data. And so we had to navigate this tricky balance between doing enough to make sure that the data sources that are coming in are adequately vetted without taking on the risk of guaranteeing it and really having the regulatory risk exposure for being the conduit for that data.
Ed Black: Did this happen? Did the marketplace go up?
Regina Sam Penti: The marketplace did go up. We helped the client, particularly, set up the vendor qualification process and set up contracting with both sides, both on the data acquirer side and the data supplier side. We helped them set up compliance structures and questionnaires that the different vendors could complete and then a process for vetting the data before they went on their platform. And yes, it’s gone up, and it’s doing very well.
Ed Black: Wow—all right. One more question on what’s on your desk, then I’m going to shift gears a little bit. I know that when you started, you were in the Ropes & Gray technical advisor program. Very patent-focused that program is, and yet, I hear what’s on your desk now. I participate in our tech practice—I agree with you—but AI, data, software analytics, these are all things that are very much at the bleeding edge and often are not patented. Where do you see the world of patents? Is it sort of over? Do you have to be a semiconductor company? Do you have to be doing hardware to care about patents? How do you see patent strategy these days?
Regina Sam Penti: Ed, thank you so much for bringing that up. So, patents are very much an important part of my practice, and, in fact, something that I enjoy doing very much. Now, one of the things that’s happened with patents in recent years in the U.S. and elsewhere is that the rules, particularly around patenting of AI and software-related innovations, have gotten quite complex. Now, this has happened at the same time that we’ve seen an explosion of this kind of technology. So, in the U.S., we’ve seen what’s called the AIA (the America Invents Act), which introduced things like PTAB challenges, different ways to challenge patents, particularly those that are software-based. We’ve also seen what’s called patent subject matter eligibility, where certain types of patents, including software patents, have a risk of being deemed too abstract to be eligible.
Ed Black: So, in light of all of these initiatives, are patents just not as valuable as they used to be, or are there ways to pursue valuable patent strategies in this environment where patents are a little bit under siege?
Regina Sam Penti: Yes, so patents are still valuable, and in my view, they remain the gold standard of IP protection. The key to getting useful patents, particularly in the AI and software space, is to give really careful thought to the thing that actually produces a real-life, usable, useful, technical result in the real world, because that’s what the patent office and others are focused on as far as those patents are concerned, and oftentimes, that’s also the most useful part of the invention. What I’m helping my clients do is really tie those key aspects of their technology to their competitive advantage to make sure that when they do get the patent, they are protecting something that protects their bottom line.
Ed Black: Superb. All right, I’ve got to change gears here because we’re running out of time. I’m going to ask some quick questions: Favorite movie?
Regina Sam Penti: My Cousin Vinny.
Ed Black: In My Cousin Vinny, who’s your favorite character? Is it Vinny, or is it the Marisa Tomei girlfriend character?
Regina Sam Penti: Tomei—it’s Marisa Tomei.
Ed Black: Favorite music?
Regina Sam Penti: Hands down, Afrobeats. I don’t know that many people in the U.S. actually listen to Afrobeats, though it’s very much on the rise. So, this is a high-energy fusion of African music and hip-hop.
Ed Black: Afrobeats—is that because you grew up in Ghana? Was that the music of your childhood, or is that something you discovered here in the States?
Regina Sam Penti: The music of my childhood was actually Highlife, from which Afrobeats is derived.
Ed Black: All right. This is the key personality test; this reveals your true nature. In a peanut butter and jelly sandwich, what is more important, the peanut butter or the jelly?
Regina Sam Penti: See, you’re asking somebody who actually doesn’t eat either of those. I’ll say the bread, because it holds it all together.
Ed Black: Right—without the bread, there’s no sandwich.
Regina Sam Penti: There’s no sandwich.
Ed Black: It is literally true that you can say that other stuff is just filler. Regina, you have twins, right?
Regina Sam Penti: I do have twins, yes. I have two twin boys—they’re six.
Ed Black: Do they eat peanut butter and jelly sandwiches?
Regina Sam Penti: Technically, they do. Usually, what happens is one wants the peanut butter and jelly sandwich without the jelly, and the other wants it without the peanuts, but they each want it with the bread.
Ed Black: Once again, the bread is key. It has been such a pleasure talking to you. Thank you for joining us for this edition of the R&G Tech Studio. For our audience, we also thank you for joining us. The R&G Tech Studio podcast is, of course, a Ropes & Gray production, and it is available both on the Ropes & Gray website and everywhere else that podcasts are made available.