Column: Apple’s quest for documents from litigation funder Omni sparks venue fight

Omni Bridgeway

16/07/2024 21:48

(The opinions expressed here are those of the author, a
columnist for Reuters.)
    By Alison Frankel
       July 16 (Reuters) - Critics of litigation funding have
been agitating for years for new federal rules that would
require disclosure of outside financial backers of lawsuits.
Just last week, U.S. Congressman James Comer, the Kentucky
Republican who chairs the House Committee on Oversight and
Accountability, sent a letter to Chief Justice John Roberts of
the U.S. Supreme Court asking him to direct the Judicial
Conference to begin working toward a nationwide disclosure rule.
    All of that foment has not, so far, resulted in a
one-size-fits-all rule for the disclosure of litigation funding
arrangements. Some federal districts have adopted their own
district-wide disclosure rules, but disclosure demands are most
often litigated on a case-by-case basis.
    That’s the context of a fight right now between tech giant
Apple  AAPL.O  and litigation funder Omni Bridgeway  OBL.AX 
over Apple’s subpoena for information about the relationship
between Omni and Finnish patent owner MPH Technologies Oy.
    MPH sued Apple in San Francisco federal court back in 2018,
alleging that Apple mobile devices and computers infringe
messaging security patents that MPH acquired from another
Finnish company. The case was stayed for several years while
Apple challenged the patents before the U.S. Patent Trial and
Appeal Board, but the litigation resumed in early 2023. A trial
is now scheduled for April 2025.
    Apple demanded discovery last year in the San Francisco case
about any communications between MPH and third parties —
including litigation funders — about the allegedly infringed
patents. It argued that its defense would be bolstered if
discovery revealed that potential licensors or funders had
expressed doubts to MPH about the value of the patents. 
    MPH refused to turn over any information about
communications with litigation funders. It insisted that any
such third-party funding agreement was irrelevant to the
infringement case and that Apple’s request was overly broad.
Each side cited rulings from California federal trial courts,
which are divided on whether and to what extent patent
plaintiffs can be compelled to disclose outside financial
backing.
    The U.S. magistrate judge overseeing discovery in the San
Francisco case refused last month to order MPH to turn over
funding documents, instead instructing Apple and MPH to try
again to work out a variety of discovery disputes without
relying on her to step in.
    As the discovery dispute with MPH played out in the docket
of the San Francisco case, Apple quietly subpoenaed Omni
Bridgeway in December 2023, demanding testimony and documents
about the funder's relationship with MPH.
    We don’t know why Apple believes Omni is backing the Finnish
company because that information is under seal. But we do know
from a court filing that Omni raised a host of objections to the
subpoena, including arguments that Apple's demand was vague,
ambiguous and overly burdensome and that the company sought
irrelevant information that was proprietary and, in some
instances, privileged.
    On July 3, Apple acted to compel Omni to comply with the
subpoena. But it did not do so by filing a motion in MPH’s San
Francisco case. Instead, Apple sued Omni in federal court in
Wilmington, Delaware, where the international funder’s U.S.
limited liability company is based.
    Last week the case was assigned to the district’s chief
judge, U.S. District Judge Colm Connolly.
    Apple could not have hoped for a better assignment.
    Connolly, who oversees a plethora of patent cases, adopted a
standing order in April 2022 that requires everyone litigating
in his courtroom to disclose whether they have outside financial
backing and, if so, whether the funder has any control over
litigation or settlement decisions. The judge has subsequently
demonstrated rigorous enforcement of that order, embarking on an
intense investigation of a web of patent plaintiffs with ties to
the self-described patent monetizer IP Edge.
    Given Connolly's record on litigation funding disclosure, it
is hardly a surprise that Omni Bridgeway moved last Friday to
transfer the subpoena enforcement case to the judge overseeing
MPH’s infringement case in San Francisco.
    Omni's lawyers at Warren Kash Warren and Morris, Nichols,
Arsht & Tunnell argued that the funder’s opposition to Apple’s
demand for information is based on the information’s purported
irrelevance to claims and defenses in MPH’s case. To avoid
wasting Connolly’s time and risking inconsistent rulings, Omni
said, Apple’s subpoena demand should be heard by the court that
is already familiar with the underlying litigation.
    Omni also said it had repeatedly told Apple’s lawyers that
the subpoena issue should be decided in San Francisco but that
Apple insisted Delaware was the proper venue because Omni is a
Delaware corporation and the subpoena was served in Delaware.
    I don’t know what Apple said initially about Delaware’s
jurisdiction because its motion to compel is sealed and neither
the company nor its lawyers from Walker Stevens Cannom and DLA
Piper responded to my query. But in a letter on Monday to
Connolly, the Delaware judge, Apple said it opposes transfer to
San Francisco. It asked Connolly to entertain simultaneous
briefing on Omni’s transfer motion and its motion to compel
compliance with the subpoena.
    I should note that Omni has not accused Apple in its public
filings of shopping for a friendly judge to suss out litigation
funding information. (Omni and its lawyers did not respond to my
email.)
    But it seems inevitable that if Connolly opts to keep the
subpoena case — and if he orders Omni to comply — other
defendants will try similar jurisdictional tactics to wrest
information from litigation funders. As long as there’s
variation in disclosure regimens, smart defendants will attempt
venue arbitrage.
    As of midafternoon on Tuesday, Connolly has not docketed an
order indicating how he intends to proceed.
    
    Read more:
    Delaware judge justifies litigation funding ‘inquisition’ in
thriller order    
    U.S. appeals court asked to halt Del. judge's litigation
funding disclosure order
    
    

 (Reporting By Alison Frankel)