Case 1:16-cv-00455-RGA Document 397 Filed 02/09/18 Page 1 of 7 PageID #: 29758
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`IN THE UNITED STATES DISTRICT COURT
`FOR THE DISTRICT OF DELA WARE
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`ACCELERATION BAY LLC,
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`Plaintiff,
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`v.
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`ACTIVISION BLIZZARD, INC.
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`Defendant.
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`ACCELERATION BAY LLC,
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`Plaintiff,
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`v.
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`ELECTRONIC ARTS INC.
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`Defendant.
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`ACCELERATION BAY LLC,
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`Plaintiff,
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`v.
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`TAKE-TWO INTERACTIVE
`SOFTWARE, INC., ROCKSTAR
`GAMES, INC., AND 2K SPORTS,
`INC.
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`Defendants.
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`Civil Action No. 16-453-RGA
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`Civil Action No. 16-454-RGA
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`Civil Action No. 16-455-RGA
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`MEMORANDUM ORDER
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`Presently before the Court are Plaintiffs objections to Special Master Order No. 13 (No.
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`16-453, D.I. 361; No. 16-454, D.I. 327, No. 16-455, D.I. 322). The parties have submitted
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`Case 1:16-cv-00455-RGA Document 397 Filed 02/09/18 Page 2 of 7 PageID #: 29759
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`briefing. (D.I. 379; D.I. 394). 1 For the reasons that follow, I overrule Plaintiffs objections (D.I.
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`379) and adopt the Special Master's Order No. 13 (D.I. 361).
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`I. BACKGROUND
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`As explained by the Special Master, this Order concerns "emails" and "documents that
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`Plaintiff provided to Hamilton Capital and/or [Hamilton Capital's] counsel, Reed Smith, during
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`their negotiation of a litigation financing agreement in 2014 and 2015." (D.I. 361 at 4). Plaintiff
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`asserts that these communications were provided to Hamilton Capital in "connection with
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`diligence for the funding of' this litigation. (D.I. 379 at 2). The communications were
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`exchanged "before any agreement was reached between Plaintiff and Hamilton Capital, and
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`before any litigation was filed." (D.I. 361 at 7).
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`II. ANALYSIS
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`Defendants seek to exclude these communications on three grounds: the communications
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`are "non-discoverable attorney work product;" Plaintiff and Hamilton Capital "share a common
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`legal interest in the successful enforcement of the asserted patents" such that the communications
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`are subject to attorney-client privilege; and the communications are not relevant. (D.I. 379 at 1-
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`2). The Court reviews the Special Master's order de nova as to factual findings and legal
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`conclusions, and for abuse of discretion as to procedural matters. Fed. R. Civ. P. 53(£).
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`a. Work Product Privilege
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`The work product doctrine, codified in Federal Rule of Civil Procedure 26(b ), provides
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`that "a party may not discover documents and tangible things that are prepared in anticipation of
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`litigation or for trial by or for another party or its representative." Fed. R. Civ. P. 26(b)(3). The
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`party asserting work product immunity bears the burden of showing that the sought documents
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`1 All citations to the docket are to No. 16-453.
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`were prepared "in the course of preparation for possible litigation." Holmes v. Pension Plan of
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`Bethlehem Steel Corp., 213 F.3d 124, 138 (3d Cir. 2000). If the party claiming work product
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`immunity meets this burden, then the party seeking production may obtain discovery "only upon
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`a showing that the party ... has a substantial need of the materials in preparation of the party's
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`case and that the party is unable without undue hardship to obtain the substantial equivalent of
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`the materials by other means." Id; Fed. R. Civ. P. 26(b)(3). The test employed by courts is
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`whether "in light of the nature of the document and the factual situation of the case, the
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`document can fairly be said to have been prepared or obtained because of the prospect of
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`litigation." US. v. Rockwell lnt'l, 897 F.2d 1255, 1265-66 (3d Cir. 1990). A document will be
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`granted protection from disclosure if the court finds that the "primary" purpose behind its
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`creation was to aid in possible future litigation. Id at 1266.
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`Here, Plaintiff has characterized the communications as being created "for the purpose of
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`obtaining funding to assert [the] patents." (D.I. 379 at 3). The communications were exchanged
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`before Hamilton Capital had agreed to fund Plaintiff's litigation, and before Plaintiff filed any
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`litigation. (D.I. 361at7; D.I. 380-1, Exh. C).
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`The documents were thus prepared with a "primary" purpose of obtaining a loan, as
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`opposed to aiding in possible future litigation. For that reason alone, the communications are not
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`work product.
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`Furthermore, if a document sought "is prepared for a nonparty to the litigation, work
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`product protection does not apply, even if the nonparty is a party to closely related litigation." 6
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`James Wm. Moore et al., Moore's Federal Practice§ 26.70 (3d ed. 2015); see also In re Cal.
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`Pub. Utils. Comm 'n, 892 F.2d 778, 781 (9th Cir. 1989). Here, Hamilton Capital is not a party to
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`the litigation. For that separate reason, the communications are not work product.
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`I accordingly overrule Plaintiffs objection to the Special Master's Order on the ground
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`that the communications are non-discoverable attorney work product. (D.I. 379 at 1).
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`b. Common Interest Privilege
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`"The attorney-client privilege" is a common-law privilege that "protects communications
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`between attorneys and clients from compelled disclosure." Jn re Teleglobe Commc'ns Corp., 493
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`F.3d 345, 359 (3d Cir. 2007). In order for the privilege to apply, there must be "(l) a
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`communication (2) made between privileged persons (3) in confidence (4) for the purpose of
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`obtaining or providing legal assistance for the client." Id. (quoting Restatement (Third) of the
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`Law Governing Lawyers§ 68 (Am. Law. Inst. 2000)). The party asserting the privilege bears
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`the burden of establishing the requisite elements. In re Grand Jury, 705 F.3d 133, 160 (3d Cir.
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`2012). A communication is only privileged if made in confidence. Tele globe, 493 F .3d at 361.
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`Therefore, if "persons other than the client, its attorney, or their agents are present, the
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`communication is not made in confidence." Id. Further, "if a client subsequently shares a
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`privileged communication with a third party, then it is no longer confidential, and the privilege
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`ceases to protect it." Id.
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`The common interest doctrine is an exception to the general rule that voluntary disclosure
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`to a third party of purportedly privileged information waives the privilege. Leader Techs., Inc. v.
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`Facebook, Inc., 719 F. Supp. 2d 373, 376 (D. Del. 2010); see also Corning Inc. v. SRU
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`Biosystems, LLC, 223 F.R.D. 189, 190 (D. Del. 2004). The privilege protects "all
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`communications shared within a proper 'community of interest.'" Tele globe, 493 F.3d at 364
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`(internal citations omitted). To show that there is a proper community of interest, the interests
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`"must be 'identical, not similar, and be legal, not solely commercial."' Leader Techs., 719 F.
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`Supp. 2d at 376 (quoting In re Regents of the Univ. of Cal., 101 F.3d 1386, 1390 (Fed. Cir.
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`1996)). Additionally, to show that the members of the community are "allied in a common legal
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`cause," the party asserting the privilege bears the burden of showing "that the disclosures would
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`not have been made but for the sake of securing, advancing, or supplying legal representation."
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`See In re Regents of the Univ. of Cal, 101 FJd at 1389 (quoting Jn re Grand Jury Subpoena
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`Duces Tecum, 406 F. Supp. 381, 386 (S.D.N.Y. 1975)); see also In re Bevill, Bresler &
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`Schulman Asset Mgmt. Corp., 805 F.2d 120, 126 (3d Cir. 1986).
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`Plaintiff argues that "[l]itigation funders provide funds 'for the sake of securing,
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`advancing, or supplying legal representation,' and thus have a common legal interest with the
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`plaintiffs they fund." (D.I. 379 at 6; citing Jn re Regents of the Univ. of Cal., 101 F.3d at 1389).
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`Therefore, argues Plaintiff, because "Hamilton Capital [was] [P]laintiffs litigation funder with a
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`financial interest in [Plaintiffs] successful enforcement of the patents," Plaintiff and Hamilton
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`Capital had a common legal interest when the communications were exchanged. (D.I. 379 at 6).
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`Plaintiff also cites an unpublished Court of Chancery opinion, Carlyle Inv. Mgmt. L. L. C. v.
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`Moonmouth Co. S.A., 2015 WL 778846, at *7 (Del. Ch. Feb. 24, 2015), for the proposition that
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`"there is a community of legal interest between a patent owner and its litigation funder." (D.I.
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`379 at 5). Carlyle is about work product privilege, not common interest attorney-client privilege.
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`2015 WL 778846, at *7.
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`However, as explained by the Special Master, "even accepting Plaintiffs representation"
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`of the confidential relationship between Plaintiffs counsel and Hamilton Capital's counsel, "it
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`[does not] appear that there was any written agreement at [the time of the communications] to
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`have a legally 'common interest' in whatever was provided by Plaintiff." (Id). Furthermore, the
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`Special Master explained that the "documents were provided before any agreement was reached
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`between Plaintiff and Hamilton Capital, and before any litigation was filed." (D.I. 361at7).
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`Thus, Plaintiff has not shown that Plaintiff and Hamilton Capital possessed identical legal
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`interests in the patents-in suit or were otherwise "allied in a common legal cause" at the time of
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`the communications. Leader Techs., 719 F. Supp. 2d at 376; In re Regents of the Univ. of
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`Cal, 101 F .3d at 13 89. Because Plaintiff has not carried its burden of establishing a common
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`legal interest, the privilege does not apply, and Plaintiffs objection falls short. (D.I. 379 at 2).
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`c. Relevance
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`Defendants contend that these documents "may be relevant to central issues like validity
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`and infringement, valuation, damages, royalty rates, pre-suit investigative diligence, and whether
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`[Plaintiff] is an operating company," and that "[ c ]ommon sense confirms the emails' relevance"
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`because Plaintiff "would not have been providing irrelevant information about the patents to its
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`prospective litigation financier to secure money to bring this case." (D.I. 394 at 8). Defendants
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`note that Plaintiff agrees that the emails "relate[] to the asserted patents." (D.I. 394 at 8; D.I. 379
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`at 2).
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`Plaintiff, on the other hand, argues that the communications are "irrelevant to the limited
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`scope of discovery permitted by the Court" in a past Order. (D.I. 379 at 6-7; D.I. 285).
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`I agree with Defendants that the communications are relevant. Accordingly, I adopt the
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`Special Master's Order requiring Plaintiff "to produce what it provided in writing to Hamilton
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`Capital or its counsel at the time of Hamilton's Capital's due diligence." (D.I. 361 at 7). My
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`conclusion is the same, regardless of whether the standard ofreview is de nova, as Plaintiff
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`argues is the case, or abuse of discretion, as Defendants argue is the case. 2 (D.I. 379 at 1; D.I.
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`394 at 8).
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`2 Defendants argue that the relevance of the communications concerns the "scope
`of discovery," which is a procedural matter.
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`Case 1:16-cv-00455-RGA Document 397 Filed 02/09/18 Page 7 of 7 PageID #: 29764
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`III. CONCLUSION
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`For the reasons discussed above, the Special Master's Order No. 13 (D.I. 361) is
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`ADOPTED.
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`IT IS SO ORDERED this i day of February 2018.
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