Case Information
1
2
3 UNITED STATES DISTRICT COURT
4 NORTHERN DISTRICT OF CALIFORNIA 5 6 HAPTIC, INC., Case Nos. 24-cv-02296
7 25-mc-80114 Plaintiff, 8 v. 9 ORDER RE: APPLE’S MOTION TO COMPEL COMMUNICATIONS AND APPLE, INC., 10 AGREEMENTS WITH THIRD PARTIES; AND JOINT MOTION TO Defendant. QUASH SUBPOENAS Re: Dkt. No. 164 (24-cv-02296); & HAPTIC, INC., et al ., Dkt. No. 1 (25-mc-80114) Plaintiffs, v. APPLE, INC., Defendant.
Haptic, Inc. (“Haptic”) sues Apple, Inc. (“Apple”) for infringement of its U.S. Patent No. 9,996,738 (“the ‘738 patent”). In engaging counsel for litigation, Haptic has enlisted a litigation funder. Apple now moves for an order compelling Haptic to produce all relevant documents relating to litigation funding. (Dkt. No. 164.) [1] Having carefully reviewed the parties’ briefing and with the benefit of oral argument on June 3, 2025, the Court DENIES Apple’s motion to compel.
BACKGROUND
I. Litigation Funding Background
Prior to filing suit against Apple, Haptic retained Susman Godfrey as counsel. (Dkt. No. 170-2 ¶ 6.) As part of its work in “[a]dvising Haptic in its plans to pursue litigation against Apple, … Susman Godfrey engaged a third-party firm and oversaw its creation of a rеport identifying the state of the art prior to the Asserted Patent.” ( Id. ¶ 7.) Haptic’s counsel also “engaged and collaborated with an expert to prepare an analysis of Haptic’s potential damages in anticipated litigation.” ( Id. )
In early 2022, Haptic communicated with “several litigation-funding entities.” ( Id. ¶ 8.) Prior to sharing “substantive information about its anticipated claims,” Haptic entered into confidentiality or nondisclosure agreements where potential funders agreed “not to disclose” information about its potential litigation. ( Id. ¶ 10-16.) “Haptic did not provide to any litigation funder, or receive from any litigation funder, a valuation of the Asserted Patent.” ( Id. ¶ 17.) Though Haptic communicated with a number of potential funders, it eventually entered an agreement with Siltstone Capital Litigation Fund, LP (the “Funder”). ( Id. ¶ 8.) The Funder “is lending capital to Haptic for litigation costs in connection with this litigation,” but “has no present or future ownership interest in Haptic or the Asserted Patent,” and “has no authority to control this litigation or settlement decisions.” ( Id. ¶¶ 19-21; see also Haptic v. Apple , No. 25-mc-80114-JSC (N.D. Cal.) (Dkt. No. 1-1 ¶ 9 (“None of the Siltstone Entities have any ownership interest, rights, title, or other interest in the 738 Patent and are not parties to the Haptic Action. None of the Siltstone Entities’ approval is required for any litigation or settlement decision in the Haptic Action or with respect to the 738 Patent, nor do any of the Siltstone Entities have authority tо make litigation or settlement decisions regarding the same.”)).)
II. Procedural Background
Apple now seeks discovery into all documents and communications between Haptic and any litigation funders. On February 19, the parties indicated in their joint case management statement they were meeting and conferring regarding this issue. (Dkt. No. 141.) At the same time, Apple served subpoenas on Haptic and the Funder to obtain the same information it sought from Haptic. (Dkt. No. 164 at 9 n.1.) On February 24, 2025, Haptic and the Funder jointly sought to quash Apple’s subpoena in federal court in the Southern District of Texas. Haptic v. Apple , No. 25-mc-80114-JSC (Dkt. No. 1.) The parties briefed the motion to quash and also briefed Apple’s motion to transfer the quashal action to this Court. (Dkt. No. 5.) On April 10, 2025, the Texas court granted Apple’s motion to transfer to this Court, id. (Dkt. No. 19); the matter was then related to this one. On March 13, 2025, Apple filed a unilateral discovery dispute letter which was subsequently stricken for failure to comply with the Court’s civil standing order regarding discovery disputes. (Dkt. Nos. 150, 152.) Soon thereafter, the parties filed a joint discovery dispute letter seeking the Court’s guidance on the production of these documents. (Dkt. No. 154.)
On April 2, 2025, the Court held an informal discovery conference about this dispute. (Dkt. No. 164-5.) At the conference, the Court indicated Haptic must prepare a privilege log for documents between Haptic and the Funder regarding either “valuation of the patent” or “evaluation of the patent.” ( Id. at 19-20.) The Court did not rule on whether the documents were relevant or privileged. ( ) Pursuant to the Court’s instructions, Haptic served a privilege log with 16 entries, claiming “Work Product; Common-Interest Privilege” for all entries. (Dkt. No. 163-2.) Apple then moved to compel all litigation funding communications and documents, including documents not described in the log. (Dkt. No. 164.) potential infringement; (2) whether any party has an interest in the outcome of the litigation; and (3) dealings between Haptic and the Funder and potential funders. (Dkt. Nos. 164-2, 164-3.) [2] I. Apple seeks to obtain documents relating to (1) the ‘738 patent’s valuation, validity, and Relevance ANALYSIS
“Parties may obtain discovery regarding any nonprivileged matter that is relevant to any рarty’s claim or defense and proportional to the needs of the case.” Fed. R. Civ. P. 26. Information is relevant if “it has a tendency to make a fact more or less probable than it would be” otherwise. Fed. R. Evid. 401.
a. Logged Documents Relevance Apple claims the logged documents are relevant because (1) valuation documents inform or dispute damages numbers; and (2) evaluation documents “bear directly on the issues that the jury must decide here, [and] they are also relevant to assessing witness credibility at trial.” (Dkt. No. 164 at 12-14.) Further, Apple seeks discovery into litigation funding to rebut potential trial themes it expects Haptic to make—namely the so-called “David v. Goliath” story—and to target witness credibility. ( Id. at 24.) Finally, Apple contends the litigation funding agreement(s) would be relevant to whether Haptic has standing to sue.
i. Valuation Documents “Valuation” is a slight misnomer here, because, as Haptic contends and Apple does not contest, Haptic has not logged any documents that speak to the value of the patent in itself. Instead, the documents Apple seeks—and which Haptic logged—are so-called “damages analysis” reports shared by Mr. Boshernitzan (Haptic’s CEO) with the Funder. (Dkt. No. 170-8 at 4 (privilege log nos. 14-16).) The log indicates three email attachments from January 2023, prior to the institution of this action, where Haptic shared “damages analys[es] prepared by and at the direction of counsel in anticipation of litigation.” ( Id. ) Mr. Boshernitzan attests “Haptic’s counsel also engaged and collaborated with an expert to prepare an analysis of Haptic’s potential damages in anticipated litigation,” though Haptic does not intend to use these reports at trial. (Dkt. No. 170-2 ¶ 7.) And at the April 2, 2025 informal discovery hearing, Haptic’s counsel stated, “We did not do some independent valuation of the patent itself. … What Apple wants is our damages model, preliminary sketches of our damages model that we would have provided to a funder.” (Dkt. No. 164-5 at 7.) And in its brief, Haptic further details the documents “reflect what Haptic’s counsel and a non-testifying expert estimated Haptic could recover in anticipated litigation against Apple,” (Dkt. No. 170 at 16), which it also characterizes as “its counsel’s royalty analysis based on Apple’s usage, even though that analysis does not assess the value or validity of the Asserted Patent itself.” ( at 11.) So, the Court considers whether these shared pre-litigation royalty base analyses are relevant under Federal Rule of Civil Procedure 26.
In patent infringement cases, “[u]pon finding for the claimant the court shall award the
claimant damages adequate to compensate for the infringement, but in no event less than a
reasonable royalty for the use made of the invention by the infringer.” 35 U.S.C. § 284. The
“predominant measure of damages in patent infringement cases” is a reasonably royalty, which “is
often determined on the basis of a hypothetical negotiation, occurring between the parties at the
time that infringement began.”
Uniloc USA, Inc. v. Microsoft Corp.
,
The shared royalty base analyses are relevant to both
Georgia-Pacific
factors. The
analyses Haptic shared with the Funder are the same analyses parties use in determining damages
in infringement cases—reasonable royalty bases.
See Uniloc USA, Inc.
,
Haptic’s cited cases are inapposite. While some courts have held, for instance, that litigation funding agreements are “informed gambling on the outcome of litigation,” none of the cases cited considered whether reasonable royalty bases shared with a third party are relevant to damages in a patent case. AVM Techs., LLC v. Intel Corp. , No. 15-cv-00033-RGA, 2017 WL 1787562, at *3 (D. Del. May 1, 2017) (holding the agreements themselves were irrelevant to damages); see also GoTV Streaming, LLC v. Netflix, Inc. , No. 22-cv-07556-RGK-SHK, 2023 WL 4237609, at *13 (C.D. Cal. May 24, 2023) (holding “any valuation for litigation funding has no ‘more than a vague relationship (if that) with actual damages in patent litigation’”). Further, that the damages calculations do not have a “valuаtion of the Asserted Patent,” (Dkt. No. 170 at 15), does not make these documents irrelevant where the documents include reasonable royalty base calculations, as described above. And that the reasonable royalty bases were prepared in 2022 or 2023 also does not make the documents irrelevant because Haptic claims infringement since at least 2020, and potentially longer. (Dkt. No. 1 ¶ 42.) This is supported by Haptic’s argument about these documents: “they reflect what Haptic’s counsel and a non-testifying expert estimated Haptic could recover in anticipated litigation against Apple.” (Dkt. No. 170 at 16.)
As such, these damages-related documents are relevant. [3] ii. Evaluation Documents
Next, Haptic’s privilege log records a number of documents described as reports “analyzing the validity of the Asserted Patent,” “merits analysis,” “merits of anticipated litigation,” reports “analyzing the validity of the Asserted Patent,” and references for those merits analyses. (Dkt. No. 170-8.)
Documents shared with third parties containing “infringement or validity analys[es]” (Dkt. No. 170 at 17), are relevant because they are relevant to Haptic’s infringement claims and Apple’s invalidity defenses. Fed. R. Civ. Proc. 26. Indeed, these documents were sent by Mr. Boshernitzan or Haptic’s counsel, and speak to Haptic’s own impressions about the strength—and potentially weaknesses—of its claims. (Dkt. No. 170-8.)
Haptic’s arguments that these documents are only speculatively relevant and are irrelevant to witness credibility are unavailing. First, an infringement or validity analysis by Haptic’s counsel is not speculatively relevant. Such documents would speak directly to Haptic’s impressions on the strengths of its claims. Further, insofar as Mr. Boshernitzan makes statements as to these documents or the infringement/validity claims, these documents would certainly be relevant to either bolster or contradict his testimony about Apple’s infringement or the ‘738 patent’s validity. Haptic’s logged evaluation documents are thus also relevant. iii. Standing Apple also argues the agreement with the Funder (and related documents) are relevant to
whether Haptic has standing to sue because the agreement could reveal it lacks “the entire bundle
of sticks” for the ‘738 patent. (Dkt. No. 164 at 26.) In particular, Apple contends the agreement
might have granted the Funder some present or future ownership interest in the patent, so that
Haptic would not have “all legal rights to the patent as the patentee or assignee of all patent
rights.”
Morrow v. Microsoft Corp.
,
Apple has not shown the agreement is relevant to Haptic’s standing. Both Haptic and the Funder separately attest the agreement does not grant or vest any present or future interest in the patent to the Funder. (Dkt. No. 170-2 ¶¶ 19-21; see Haptic v. Apple , No. 25-mc-80114 (N.D. Cal.) (Dkt. No. 1-1 ¶ 9).) And both Haptic and the Funder also attest the Funder has no say in the ultimate resolution of the case. ( ) Apple has not shown or even argued why Haptic and the Funder’s testimony is not dispositive.
Apple cites
Uniloc
, where the court held the plaintiffs lacked standing to sue for patent
infringement because they defaulted on their loan from their litigation funder under an agreement
which granted the funder a royalty-free license upon default.
Uniloc USA, Inc. v. Apple, Inc.
, No.
18-cv-00358-WHA,
“David v. Goliath” theme at trial, and (2) rebut witness testimony. Apple requests three groups of documents:
• Documents relating to two conversations between the Funder and Haptic, one when Haptic reached out to inquire about funding for litigation and the other when the partiеs signed a Non-Disclosure Agreement (NDA) before discussing the substance of litigation. Haptic v. Apple , No. 25-mc-80114 (N.D. Cal.) (Dkt. No. 1-1 ¶ 4-5).
• Communications surrounding the parties’ NDA(s).
• Communications about the Funder’s ultimate decision to fund litigation. Apple fails to demonstrate these documents are relevant.
The cases Apple cites to support its assertion litigation funding materials are relevant to
rebut trial themes fail to persuade. (Dkt. No. 164 at 25; Dkt. No. 171 at 17.) In
Continental
Circuits
, the court conducted little analysis as to relevancy, but held the funding agreement and
other documents “concern Plaintiff’s financial resources and could be used to refute any David vs.
Goliath narrative at trial.”
Cont’l Cirs. LLC v. Intel Corp.
,
Therefore the non-logged documents are not relevant and are thus not discoverable. c. Additional Documents Sought from the Funder
Finally, Apple seeks from the Funder, in a nutshell, “discovery about the Asserted Patent,
Siltstone’s relationship and communications with Haptic, and the extent of Siltstone’s relevant
financial interest.”
Haptic v. Apple
, 25-mc-80114-JSC (Dkt. No. 6 at 6). While this request
significantly overlaps with the discovery Apple seeks from Haptic, thе subpoena also seeks
documents created by the Funder. at 13. Apple offers an example: “[the Funder] likely
performed its own analyses, including of the patent and as to the value of the expected return, and
such documents created by [the Funder] may be uniquely in [its] possession.” But Apple fails
to show how such documents, to the extent they exist, are more relevant than any other third-
party’s analyses of the patent. Unlike Haptic’s valuation and evaluation of
its own patent
at suit,
the Funder’s same valuations and evaluations are “so far removed from the hypothetical
negotiation that they have no relevance.”
AVM Techs., LLC
,
F.3d 559, 567 (9th Cir. 2011). “To qualify for work-product protection, documents must: (1) be
‘prepared in anticipation of litigation or for trial’ and (2) be prepared ‘by or for another party or by
or for that other party’s representative.’”
In re Grand Jury Subpoena (Mark Torf/Torf Env’t
Mgmt
,
a. Prima-facie Showing of Privilege Having found the valuation and evaluation documents are relevant, the Court considers whether the work-product doctrine protects these documents from production. As a preliminary matter, Haptic makes a prima facie showing that, absent waiver, the documents on its privilege log are protected as attorney-work product. Haptic’s log provides adequate explanations for what each withheld document contains, who created it, who sent it, who received it, and the date of sending. ( See generally Dkt. No. 170-8.) Haptic further provides a supporting declaration from its CEO who attests that Haptic’s attorneys or their agents prepared these documents in anticipation of litigation. (Dkt. No. 170-2.)
Apple’s contention that the documents were prepared with a business rather than litigation
purpose is unpersuasive. First, Haptic’s CEO attests:
Advising Haptic in its plans to pursue litigation against Apple,
Haptic’s counsel thoroughly investigated Haptic’s anticipated claims
of patent infringement against Apple, assessing the merits and
potential damages. As part of that evaluation, Susman Godfrey
engaged a third-party firm and oversaw its creation of a report
identifying the state of the art prior to the Asserted Patent. Haptic’s
counsel also engaged and collaborated with an expert to prepare an
analysis of Haptic’s potential damages in anticipated litigation.
(Dkt. No. 170-2 ¶ 7.) Although these documents were likely created to assist with obtaining
litigation funding, “[t]hese internal discussions leave a revealing trail of mental impressions, legal
theories, and strategic notes—all created as confidential internal documents or sent under
nondisclosure agreements, and so written with vulnerable candor.”
Design with Friends, Inc. v.
Target Corp.
, No. 21-cv-01376-SB,
[its] “because of” standard does not consider whether litigation was a
primary or secondary motive behind the creation of a document.
Rather, it considers the totality of the circumstances and affords
protection when it can fairly be said that the document was created
because of anticipated litigation, and would not have been created in
substantially similar form but for the prospect of that litigation.
In re Grand Jury Subpoena
,
Apple’s reliance on
Acceleration Bay LLC v. Activision Blizzard, Inc
., No. 16-cv-00453-
RGA,
So, Haptic has met its burden of showing its communications are, absent waiver, protected from disclosure by the work-product doсtrine.
b. Waiver
“The privilege derived from the work-product doctrine is not absolute. Like other qualified
privileges, it may be waived.”
United States v. Nobles
,
Apple argues Haptic waived its work-product privilege over documents shared with the Funder by sharing those documents. Haptic counters it shares a common legal interest with the Funder, so the documents remain privileged despite being shared with a third party. Since there is no dispute Haptic shared documents it claims are privileged with the third-party funders, the Court must determine whether the common interest doctrine shields Haptic from waiving its claimed privilege. And, if the common interest doctrine does not shield Haptic from waiver, the Court must then consider whether Haptic’s conduct nonetheless constitutes waiver of the privilege.
i. Common Interest Doctrine
The common interest/joint defense doctrine does not make a document or communication
privileged; rather, it is a doctrine that prevents waiver of a pre-existing privilege if the privileged
information is shared only with those with a common legal interest. Thus, it “is not technically a
privilege in and of itself but instead constitutes an exception to the rule on waiver where
communications are disclosed to third parties.”
Holmes v. Collection Bureau of Am., Ltd.
, No. 09-
cv-02540-WHA,
does not satisfy its burden to justify a claim of privilege simply by demonstrating that a confidential communication took place between parties who purportedly share a common interest. Rather, the party seeking to invoke the doctrine must first establish that the communicated information would otherwise be protected from disclosure by a claim of privilege. For example, the content of the communication may comprise information shared in confidence by a client with his or her attorney, a legal opinion formed and advice given by the lawyer in the course of the attorney-client relationship, or a writing reflecting an attorney’s impressions, conclusions, or theories. The next step in the аnalysis is to determine whether disclosing the information to a party outside the attorney-client relationship waived any applicable privileges.
OXY Res. California LLC v. Superior Court
,
The common interest doctrine does not apply to Haptic’s disclosure to the funders. Prior
to sharing confidential communications with any potential litigation funder, Haptic and these
entities “entered into nondisclosure and common-interest agreements.” (Dkt. No. 170-2 ¶ 10.)
After entering into these agreements, Haptic shared documents prepared by its attorneys with the
Funder and potential funders. ( ) These communications were made
before
any funder agreed
to fund Haptic’s litigation. Even though at this point the funders and Haptic were negotiating in
pursuit of Haptic’s ultimate litigation against Apple, it cannot be said the parties had something
more than “a shared desire to see the same outcome in a legal matter.”
In re Pac. Pictures Corp.
,
Haptic posits it shares a common legal interest with both potential funders and the Funder
“by virtue of [the] nondisclosure and common-interest agreements.” (Dkt. No. 170 at 30.) As
support, Haptic cites
Devon It
, where the court held a plaintiff and its litigation funder had “a
common interest in the successful outcome of the litigation which otherwise [the plaintiff] may
not have been able to pursue without the financial assistance of [the funder].”
Devon It, Inc. v.
IBM Corp.
, No. 10-cv-02899,
“[D]isclosure of work product to a third party does not waive the protection unless such
disclosure is made to an adversary in litigation or has substantially increased the opportunities for
potential adversaries to obtain the information.”
Sanmina
,
Haptic has not disclosed attorney work product “to an adversary in litigation” nor has it “substantially increased the opportunities for potential adversaries to оbtain the information.’” at 1121 (quoting 8 Charles Alan Wright & Arthur R. Miller, Federal Practice & Procedure § 2024 (3d ed. 2020)). Haptic did not communicate any of the work product without first “enter[ing] into nondisclosure and common-interest agreements with the litigation funders.” (Dkt. No. 170-2 ¶ 10.) Further, Haptic shared these communications in anticipation of litigation between itself and Apple, not itself and the funders. Though Haptic ultimately did not enter into a final funding agreement with potential funders, they were not Haptic’s adversaries and disclosure to them did not increase the opportunity for potential adversaries to obtain the work product. The parties had non-disclosure and common-interest agreements and the communications were shared in furtherance of Haptic’s efforts to sue Apple, not these entities.
Sanmina
,
Similarly here, Haptic’s work product documents were not shared with an adversary and
the nondisclosure аnd common interest agreements gave Haptic a reasonable basis for believing
the Funder and potential funders would keep the documents confidential.
See Continental Circuits
LLC v. Intel Corp.
,
Waymo v. Uber does not support finding a waiver here. There the defendant retained a third party to investigate an entity and individuals with whom it was contemplating entering into an agreement. The court held the defendant’s disclosure of the investigation report to the entity and persons being investigated was disclosure to an adversary and therefore waived the work- product privilege. Waymo LLC v. Uber Techs., Inc. , No. 17-cv-00939-WHA (JSC), 2017 WL 2485382, at *12-13 (N.D. Cal. June 8, 2017). The disclosure here is not similar. Haptic did not disclose a report investigating potential funders to the potential funders; instead, it disclosed patent evaluation and damages valuation information to the potential funders to facilitate their assistance with litigation against Apple, Haptic’s adversary. So, Haptic did not wаive the work-product protections over its logged documents by sharing these with the Funder or with potential litigation funders. * * *
Accordingly, Haptic’s logged documents are protected from production by the work-
product privilege. And, the privilege was not waived by disclosure as the Funder and potential
funders are not Haptic’s adversaries, and Haptic’s disclosure has not “substantially increased the
opportunities for potential adversaries to obtain the information.”
Sanmina
,
CONCLUSION
For the reasons stated above, Apple’s mоtion to compel is DENIED and the Funder’s and Haptic’s joint motion to quash is GRANTED.
This Order disposes of Docket No. 164 in Haptic v. Apple , No. 24-cv-02296, and Docket No. 1 in Haptic v. Apple , No. 25-mc-80114.
IT IS SO ORDERED.
Dated: June 3, 2025
JACQUELINE SCOTT CORLEY United States District Judge
Notes
[1] Record citations are to material in the Electronic Case File (“ECF”); pinpoint citations are to the ECF-generated page numbers at the top of the documents.
[2] The Court ordered on April 2, 2025 that Haptic first log only valuation and evaluation documents. (Dkt. No. 164-5.) Even so, Apple seeks all litigation funding documents whether logged or not.
[3] Apple also seeks the funding agreement itself, arguing this too informs damages. The Court is
unpersuaded because unlike the damages analysis documents which are relevant to the damages at
issue, the funding agreement’s valuation of the litigation itself is merely “informed gambling on
the outcome of litigation” and has little relation to a hypothetical negotiation or reasonable royalty
base.
AVM Techs., LLC
,