Entangled Media, LLC v. Dropbox, Inc.

Filing 132

ORDER re 119 , 125 Following In Camera Review of Security Agreement. Signed by Magistrate Judge Virginia K. DeMarchi on 8/29/2024. (vkdlc2, COURT STAFF) (Filed on 8/29/2024)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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SAN JOSE DIVISION

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ENTANGLED MEDIA, LLC,

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Plaintiff,

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v.

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DROPBOX INC.,

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United States District Court
Northern District of California

Case No. 23-cv-03264-PCP (VKD)

Defendant.

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ORDER FOLLOWING IN CAMERA
REVIEW OF SECURITY
AGREEMENT
Re: Dkt. Nos. 119, 125

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As directed by the Court, on August 26, 2024 plaintiff Entangled Media, LLC (“Entangled

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Media”) submitted a production copy of the Patent Security Agreement (“PSA”)1 and a copy of

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the agreement the PSA refers to as the “Security Agreement” for in camera review. See Dkt. No.

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125. Having reviewed these documents, the Court makes the following observations:
First, consistent with Entangled Media’s representations, the litigation funder LIT-US

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Chisum 22-B LLC (“Chisum”) has a security interest in the asserted patents. Chisum does not

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appear to have any present right, title, or interest in the asserted patents that would implicate or

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undermine Entangled Media’s standing to sue, nor is there a provision in the Security Agreement

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that gives Chisum a “springing” or automatic interest in the asserted patents upon the occurrence

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of a contractual breach or default, as was the case in Uniloc USA, Inc. v. Apple, Inc., No. 18-cv-

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00358, 2020 WL 7122617 (N.D. Cal. Dec. 4, 2020).

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Second, Chisum does not merely have a passive security interest in the asserted patents.

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As may be expected, Chisum has a financial interest in, among other things, the outcome of this

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EM_00001444-1448.

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litigation, and the Security Agreement affords Chisum some contractual rights in connection with

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that interest.

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some indication of how the parties to the agreement valued this and other potential litigation

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relating to the asserted patents; however, consistent with Entangled Media’s representations, the

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Security Agreement does not include a valuation of the asserted patents per se.

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United States District Court
Northern District of California

Third, the Security Agreement includes provisions that could be construed as providing

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Fourth, the PSA includes the following provision:
The security interests granted to the Security Holder [i.e. Chisum]
herein are granted in furtherance, and not in limitation of, the
security interests granted to the Security Holder pursuant to the
Security Agreement. Grantor [i.e. Entangled Media, LLC] hereby
acknowledges and affirms that the rights and remedies of the
Security Holder with respect to the Collateral are more fully set
forth in the Security Agreement, the terms and provisions of which
are hereby incorporated herein by reference as if fully set forth
herein. In the event of any conflict between the terms of this
Agreement and the Security Agreement, the terms of the Security
Agreement shall govern.
PSA, sec. 3 (EM_00001446) (emphasis added).
Before deciding whether to order Entangled Media to produce the Security Agreement (in
its entirety or with redactions) to Dropbox, the Court requests further briefing on two questions:
1. The PSA, which is governed by Delaware law, appears to incorporate the Security

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Agreement in its entirety by reference. See, e.g., Town of Cheswold v. Cent. Delaware Bus. Park,

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188 A.3d 810, 818-19 (Del. 2018) (summarizing law regarding incorporation by reference). If that

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is the case, then why should the PSA and the Security Agreement not be treated as a single

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agreement and produced together?

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2. The PSA has been publicly recorded. If the PSA incorporates by reference the Security

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Agreement, does this incorporation by reference impact Entangled Media’s assertion that the work

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product doctrine protects the Security Agreement (but not the PSA) from disclosure and that there

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has been no waiver of such protection?

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Per the Court’s August 20, 2024 order, the parties have been directed to brief their dispute
regarding Entangled Media’s privilege/work product claims for the 64 documents that concern
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litigation funding as a regularly notice motion under Civil Local Rule 7. See Dkt. No. 125 at 2.

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The parties shall also address these two questions in that forthcoming briefing, rather than in a

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separate supplemental submission.

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IT IS SO ORDERED.
Dated: August 29, 2024

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Virginia K. DeMarchi
United States Magistrate Judge

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United States District Court
Northern District of California

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