In Impact Engine, Inc. v. Google LLC, 3-19-cv-01301 (SDCA 2020-10-20, Order) (Cathy Ann Bencivengo), the District Court for the Southern District of California recently considered whether litigation funding documents could be withheld from production by plaintiff Impact Engine because the documents were work product protected.  In the case, defendant Google had propounded a request on Impact Engine for the production of “[all] Documents Regarding any contracts or agreements between Plaintiff and any Third Party concerning (1) This Litigation and/or (2) any Asserted Patent or Related Patent.”  Impact Engine indicated it would produce non-privileged responsive documents except for potential agreements related to litigation funding because Impact Engine asserted work product protection over the documents.

Generally speaking, when documents are protected by the work product doctrine, a party may not obtain discovery of “documents and tangible things that are prepared in anticipation of litigation or trial by and for another party or its representative (including the other party’s attorney, consultant, surety, indemnitor, insurer or agent).”  Fed.R.Civ.P. 26(b)(3)(A).  As the court explained, “[a] document should be deemed prepared ‘in anticipation of litigation’ and thus eligible for work product protection under Rule 26(b)(3) if ‘in light of the nature of the document and the factual situation in the particular case, the document can be fairly said to have been prepared or obtained because of the prospect of litigation.”  Further, the work product protection is not necessarily waived just because it was shared with another person or entity, such as a potential funder or investor.

In this case, in response to an order from the Court, Impact Engine submitted a non-disclosure agreement and a litigation funding agreement, along with drafts of that agreement, term sheets and a “case discussion” to the Court for an in camera review by the Court.   The Court reviewed each of the documents, which included confidentiality provisions regarding the agreements, the terms and the information related to them.  After doing so, the Court concluded “the documents at issue reflect a common interest between Impact Engine and the funder. They also reflect the clear expectation of both parties to the documents that the information would remain confidential.”

The Court then reasoned “several courts have held that the work product protection for litigation funding documents is not waived when such documents containing confidentiality provision are disclosed to litigation funders with common interests.”  Specifically, the Court cited Continental Circuits LLC v. Intel Corp. 435 F.Supp.3d 1014, 1020-21(D. Ariz 2020) which found “Litigation funding agreements are created ‘because of’ the litigation they will fund.”  And, because the litigation funding documents “would not have been created in substantially similar form but for the prospect of [the] litigation…[t]he agreements therefore satisfy the ‘because of’ test and constitute work product.”  Id. 

Therefore, the Court found that work product protection applies to the documents provided in camera for review by the Court and Impact Engine was not required to produce them to Google.