Entangled Media, LLC v. Dropbox, Inc.
- Virginia Demarchi
- 5:23-cv-03264
- U.S. District Court · Northern District of California
- 3
In Entangled Media v. Dropbox, Judge DeMarchi reviewed funding documents but deferred deciding whether Entangled must produce the Security Agreement.
Entangled Media, LLC and Dropbox, Inc. are affected by the unresolved disclosure dispute; the order also concerns litigation funder LIT-US Chisum 22-B LLC’s security interest and contractual rights.
What happened
Entangled Media, LLC v. Dropbox, Inc. concerns whether Entangled Media must disclose a Security Agreement connected to litigation funding and asserted patents. The court reviewed the Patent Security Agreement and the referenced Security Agreement privately.
The court found that litigation funder LIT-US Chisum 22-B LLC has a security interest in the asserted patents but no present ownership interest that would appear to affect Entangled Media’s ability to sue. The court also found that the Security Agreement gives Chisum contractual rights and does not itself state the patents’ value.
Judge Virginia K. DeMarchi did not decide whether Entangled Media must produce the Security Agreement to Dropbox. Instead, she required further briefing on whether the two agreements should be treated as one and whether the publicly recorded Patent Security Agreement affected Entangled Media’s work-product protection claim.
The detailed version
- Entangled Media, LLC v. Dropbox, Inc. · No. 5:23-cv-03264
- Virginia Demarchi
- Aug. 29, 2024
Background
The court reviewed, privately and at its direction, a production copy of Entangled Media’s Patent Security Agreement and the separate agreement that document calls the “Security Agreement.” The review concerned a dispute over litigation funding and whether the Security Agreement should be produced to Dropbox.
Court’s observations
The court stated that litigation funder LIT-US Chisum 22-B LLC has a security interest in the asserted patents. It found that Chisum did not appear to have a present right, title, or interest in those patents that would affect or undermine Entangled Media’s standing to sue. The court also found no provision giving Chisum an automatic or “springing” interest in the patents after a contractual breach or default.
The court further observed that Chisum’s interest is not merely passive. Chisum has a financial interest in the litigation’s outcome, and the Security Agreement gives Chisum some contractual rights related to that interest. The agreement contains provisions that could provide some indication of how the parties valued litigation involving the patents, but the court stated that it does not value the asserted patents themselves.
Questions requiring further briefing
The Patent Security Agreement states that the Security Agreement’s terms are incorporated into it and control if the two documents conflict. Because the Patent Security Agreement is governed by Delaware law, the court said it appeared to incorporate the Security Agreement in its entirety. The court asked why the documents should not therefore be treated as a single agreement and produced together.
The court also noted that the Patent Security Agreement had been publicly recorded. It asked whether that incorporation by reference affected Entangled Media’s position that the work-product doctrine protects the Security Agreement from disclosure, while not protecting the Patent Security Agreement, and that there had been no waiver of that protection.
Disposition
The court did not yet order production of the Security Agreement, either in full or with redactions. Under its earlier order, the parties were directed to brief the litigation-funding dispute through a regularly noticed motion under Civil Local Rule 7. The court ordered them to address the two questions identified in this order in that briefing rather than in a separate supplemental submission.
Read the full 3-page opinion on CourtListener, the free public archive maintained by the Free Law Project.