The legal battle between GoTV Streaming, LLC and Netflix, Inc. continues to unfold, captivating the streaming industry and legal observers alike. In a recent development in the case, the district court issued an order denying Netflix’s motion to compel GoTV Streaming to disclose its third-party funding related documents. This ruling adds a new layer of complexity to the proceedings and sheds light on the district court’s perspective regarding the use of third-party funding in high-stakes litigation.
Netflix sought to compel GoTV Streaming to disclose its third-party funding documents, arguing that the information was essential to understanding the financial dynamics behind the lawsuit. They contended that such funding arrangements might create conflicts of interest, influence litigation strategy, or affect the plaintiff’s ability to meet potential damages awards. Netflix believed that these documents were critical for a comprehensive assessment of the case and ensuring a fair trial.
In the order, the district court denied Netflix’s motion to compel GoTV Streaming to disclose its third-party funding documents. The district court acknowledged the potential relevance of the information requested by Netflix but found that Netflix did not meet the standard required for disclosure. The district court reasoned that the mere possibility of conflicts of interest or influence on litigation strategy was not sufficient grounds to compel disclosure without stronger evidence of impropriety.
The district court also rejected Netflix’s main argument that the information should be provided because “they contain relevant valuations of the patents-in-suit, and . . . [D]efendant could not receive the information any other way.” Id. at 4-5. In support of this argument Netflix cited to Odyssey Wireless, 2016 WL 7665898, at *7, where the court found that the defendant had not been provided any information regarding valuations, that the defendant could not obtain this information without undue hardship, found the documents to be relevant, and ordered the documents to be produced, but allowed for redaction of those portions of the documents that did not address valuation. Netflix also cited to Preservation Technologies LLC, 2020 WL 10965161, at *7, and distinguished that case from the present one, where the special master did not order the production of the litigation funder related materials because other licenses had been provided to the defendants such that there was no showing of a substantial need.
The district court concluded that “Netflix has not carried its burden under either prong of the test set forth in Rule 26(b)(3)(A). First, as explained previously, under Rule 26(b)(1), Netflix has not carried its burden to show that the litigation funding related materials contain relevant material. Second, Netflix has not shown a substantial need for the documents.
Several facts are important in this regard: (1) an in camera review of the documents confirms that there are no valuations of the patents-in-suit in those documents; (2) GoTV stated during the hearing that several software licenses had been produced, which were entered into by the previous owner of the patents-in-suit and which Netflix claims involved software utilizing technology covered by the patents-in-suit; and (3) GoTV confirmed during the hearing that no licenses had been granted solely involving the patents-in-suit, i.e. a “naked” patent license.”
The district court’s decision not to compel disclosure of third-party funding documents has significant implications for the ongoing litigation and the broader legal landscape as the disclosure of litigation financing documents remains controversial. This ruling reinforces the principle that third-party funding arrangements, while potentially relevant, should not automatically lead to disclosure without a compelling justification.
GoTV Streaming, LLC v. Netflix, Inc., Case No. 2:22-cv-07556-RGK-SHK (May 24, 2023)
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.