In this patent infringement action, AT&T filed a motion to compel certain litigation-funding discovery from the plaintiff, United Access Technologies, LLC ("UAT"). The district court reviewed documents relating to or from third parties regarding potential investments by those third parties in UAT's lawsuits and communications to and from third parties relating to "quarterly updates" about UAT's current lawsuits. In its motion, AT&T contended the information was not privileged and should be produced. UAT responded that the litigation funding was irrelevant and was protected by the work-product doctrine.
To analyze the issue, the district court explained that "[d]iscoverability of litigation funding materials under Federal Rule of Civil Procedure 26 is a contested issue on which there is no binding precedent in the Third Circuit. See In re Valsartan N-Nitrosodimethylamine (NDMA) Contam. Prod. Liab. Lit., 405 F. Supp. 3d 612, 615 (D.N.J. 2019) (collecting cases and agreeing "with the plethora of authority that holds that discovery directed to a plaintiff's litigation funding is irrelevant"). Generally, when confronted with this sort of dispute, close consideration of the subject matter in the disputed documents (e.g., through in camera review) is a prudent approach. See, e.g., ART+COM Innovationpool GmbH v. Google, Inc., C.A. 14-217 D.I. 196 (D. Del. Sept. 11, 2015) (finding, after in camera review, agreements with plaintiff's litigation financiers were irrelevant)."
After conducting an in camera review, the district court then concluded that AT&T had "failed to meet the threshold requirement to show that the litigation funding-related discovery it seeks here is relevant. See Invensas Corp. v. Renesas Elecs. Corp., 2013 WL 12146531, at *2 (D. Del. May 8, 2013) ("When a party objects to discovery requests, the burden falls on the party seeking the discovery to show the relevance of the information requested.") (further citation omitted). In support of relevance, AT&T points to Acceleration Bay LLC v. Activision Blizzard, Inc., 2018 WL 798731, at *3 (D. Del. Feb. 9, 2018), for the broad proposition that communications with prospective sources of funding, as well as subsequent litigation updates to eventual funders, are "relevant to central issues like validity and infringement, valuation, damages, royalty rates, and whether plaintiff is an operating company."3 (See D.I. 191 at 3; see also D.I. 238 at 7) But Acceleration Bay does not hold (as no case could) that such materials are always relevant, without any consideration of additional factors."
The district court then found, after the review of the numerous documents submitted for in camera review by UAT, that none of the documents appeared to be relevant to any issue in the case. Because AT&T failed to carry its burden on relevance, the district court did not address the parties' various additional disputes relating to work-product doctrine, attorney-client privilege, common interest, parent-child privilege, and spousal privilege.
United Access Technologies, LLC v. AT&T Corp., Case No. 11-338-LPS (D. Del. June 12, 2020)
The authors of www.PatentLawyerBlog.com are patent trial lawyers at Jeffer Mangels Butler & Mitchell LLP. For more information about this case, contact Stan Gibson at 310.201.3548 or SGibson@jmbm.com.
Originally published 17 June 2020
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