Data Scape Limited v. Pandora Media, Inc.

The Litigation Finance Journal recently reported that Swiss private bank Syz Group is looking to invest in litigation finance, in part due to the “recession-proof” features associated with that asset class. As reported by RPX throughout 2019, litigation finance firms have experienced record fundraising in recent years, with private equity firms and hedge funds—such as Magnetar Capital—seeking opportunities to invest in uncorrelated assets that can withstand, or even perform well in, the next economic downturn.

Litigation finance firms have experienced record fundraising in recent years, with private equity firms and hedge funds looking for opportunities to invest in uncorrelated assets that can withstand, or even perform well in, the next economic downturn. With large amounts of capital on hand, and therefore fewer concerns about diversifying their investments, multi-strategy funds are proving to be attractive investment partners for standalone litigation funders. Through such partnerships, a new breed of NPEs has emerged—one backed by more copious and patient capital than those of years past. This article, the first in a series covering the evolving sources of capital for NPEs today, takes a look at two private equity firms and a hedge fund backing notable NPE campaigns.

Fujitsu (PFU Limited) (5:19-cv-04810) has filed a complaint in the Northern District of California, seeking declaratory judgments that certain of its ScanSnap scanners, and related software, do not infringe six patents held by Data Scape Limited. Data Scape, an Irish NPE, launched litigation over a portfolio acquired from Sony late last year, eventually hitting more than a dozen defendants in multiple district courts and before the International Trade Commission (ITC). Among those cases was a suit in the Eastern District of Texas, filed by Data Scape against other Fujitsu subsidiaries—the wrong Fujitsu subsidiaries, according to this new complaint, which attempts to join the dispute between the correct parties, doing so in California, rather than Texas. The filing comes as joint motions to dismiss to facilitate settlements have been filed across most of Data Scape’s ongoing cases, which were filed after the Central District of California issued an Alice order that dealt a serious blow to most of its original lawsuits.

Data Scape Limited continues to reorder its cloud computing campaign in the wake of a May 17, 2019 order from the Central District of California invalidating four challenged patents under Alice. District Judge David O. Carter ruled that those patents are patent-ineligibly directed to the abstract idea of “data storage, transfer, and processing”, prompting the NPE, that next week, to file voluntary dismissals and new complaints against previous defendants Amazon, Box, Dell, Dropbox, Pandora, Spotify, and Teradata and to file separate complaints against defendants Apple and Verizon. This past week, Data Scape added Citrix (2:19-cv-04667) to that first list, dismissing without prejudice a December 2018 complaint while filing a new one that asserts a single, newly issued patent, not litigated prior to the Alice invalidation.

Irish NPE Data Scape Limited has hit a snag in its ongoing cloud computing campaign with the invalidation of four of its patents under Alice. In an order issued on May 17, District Judge David O. Carter of the Central District of California granted a Rule 12 challenge filed by defendant Western Digital, holding that the four patents are invalid as directed to the abstract idea of “data storage, transfer, and processing” without the addition of an inventive concept. The patents just invalidated are at issue throughout the campaign, and Judge Carter’s ruling has already prompted the plaintiff to file a series of new complaints asserting patents not yet invalidated—including one asserted for the first time.

Last week, the International Trade Commission (ITC) instituted an investigation in response to a February complaint that Irish NPE Data Scape Limited filed, together with New York provider of LED ticker displays C-Scape Consulting Corp., against Amazon, Apple, and Verizon (337-TA-1150). Data Scape asserts three patents—generally related to storing and syncing data files in a distributed computing environment—in its ITC complaint that are already at issue in district court cases in the campaign, which the NPE began in Germany in 2017. In addition to the three ITC respondents, the list of defendants in Data Scape’s campaign includes Barracuda Networks, Box, Citrix, Dell, Dropbox, F5 Networks, Fujitsu, Pandora, Spotify, Teradata, and Western Digital. Data Scape seeks to satisfy the domestic industry requirement based on the activities of two identified licensees of the patents asserted: iCandy and Oracle.

Verizon (Cellco Partnership d/b/a Verizon Wireless) (6:19-cv-00174) is the latest company to be sued in the growing litigation campaign of Irish NPE Data Scape Limited, joining Box, Dell, and Dropbox as defendants in the Western District of Texas. Since late December, Data Scape has also filed multiple cases in districts in California, Colorado, and Texas, each asserting a subset of nearly two dozen patents that the NPE received from Sony in March 2017. The patents generally relate to storing and syncing data files in a distributed computing environment, with infringement allegations throughout the campaign focusing on products and services that sync documents and data across servers and client devices. Against Verizon, Data Scape targets the provision of smartphones using the Verizon Cloud application (offering data backup and sync features), including the Palm smartphone; and of the “Verizon Connect ‘Work’ software and service, the ‘Fleetmatics Work’ software and service, and the Work Mobile application”.

Two of the eight patents asserted across the growing campaign of Data Scape Limited are at issue in the NPE’s latest suit, filed against Teradata (2:19-cv-01002) in the Central District of California. Those patents broadly concern storing and syncing data files in a distributed computing environment, with infringement allegations throughout the campaign focusing on products and services that sync documents and data (e.g., music files) across servers and client devices. Data Scape targets Teradata over the provision of products and services (including “Unity, Unity Director, Unity Loader, Data Mover, Teradata Managed Server Unity, Unity Director/Loader Model 8-81X and Expansion Server Model 8-81XE, Unity Source Link Server, [and] Teradata Managed Server Unity Data Mover”) that transfer data between devices.

Data Scape Limited appears to be unrolling its sole litigation campaign, begun in late 2017 in Germany, by US district. This past week the NPE, formed in Ireland, sued Barracuda Networks (1:19-cv-00100) in the Eastern District of California, after prior waves of litigation hit defendants in the Central District of California (Apple, Citrix, Pandora, Spotify, and Western Digital); the Eastern District of Texas (Dell, Fujitsu, and SAP); the District of Colorado (Amazon, F5 Networks); and then the Western District of Texas (Box, Dropbox). Data Scape received the patents-in-campaign through a March 2017 assignment from Sony in a transaction involving over 20 issued US patents, together with various foreign assets. The NPE’s infringement allegations focus on products and services that sync documents and data (e.g., music files) across servers and client devices, targeting in its most recent complaint Barracuda’s provision of enterprise network backup products, including certain models of the “Barracuda Backup Physical Appliance…, Barracuda Backup Virtual Appliances, [and] Barracuda Cloud”.

Data Scape Limited continues to add cases to the litigation campaign begun in late 2017 in Germany. This past week the NPE, formed in Ireland, sued Box (6:19-cv-00025) and Dropbox (6:19-cv-00023) in the Western District of Texas, asserting against each the same four patents broadly related to storing and syncing data files in a distributed computing environment. Data Scape received the patents through a March 2017 assignment from Sony in a transaction involving over 20 issued US patents, together with various foreign assets. Data Scape targets products and services of the defendants that sync documents and data (e.g., music files) across servers and client devices, calling out in these complaints various Box services (Platform, for Business, for Individuals & Teams, Sync, Drive), as well as Dropbox Business. Both suits are filed in the Waco division of Western District of Texas; Data Scape has filed a notice of dismissal without prejudice of the case filed earlier in January against Dropbox in the Austin division.

Last week, Dropbox (1:19-cv-00048) joined Amazon and F5 Networks as defendants in the US litigation campaign of Data Scape Limited, an entity formed in Ireland in January 2017. Late that year, the NPE appears to have kicked things off in Germany, as publicly available litigation records indicate that a hearing was held in October 2017 in Germany’s Munich Regional Court for a lawsuit filed by the NPE against Riverbed Technology and another, anonymous defendant, with a March 2018 hearing held in a second case against Riverbed in that same district. In December 2018, Data Scape sued Apple, Citrix, Pandora, Spotify, and Western Digital in the Central District of California, as well as Dell, Fujitsu, and SAP in the Eastern District of Texas, asserting subsets of patents acquired through a March 2017 assignment from Sony.

The campaign that Data Scape Limited kicked off late last year has seen its first defendants added in 2019 after the NPE sued Amazon (1:19-cv-00056) and F5 Networks (1:19-cv-00064), both in the District of Colorado. Its new infringement allegations are in line with those in prior complaints, with Data Scape targeting products and services that synchronize data across multiple devices, including “Amazon Kindle, Amazon Photo, Amazon Drive, Amazon Prime Music, Amazon Music Unlimited, [and] Amazon devices on which they operate (e.g., Fire, Echo, Kindle, Amazon servers, etc.)” and F5’s BIG-IP software and hardware, respectively. The NPE asserts in each complaint overlapping subsets of patents from a portfolio comprising two families, both broadly pertaining to storing and syncing data files in a distributed computing environment and both received through a March 2017 assignment from Sony.

Data Scape Limited, an NPE formed in Ireland in January 2017, has launched its first litigation campaign, asserting subsets of eight patents in separate cases filed against Apple (2:18-cv-10659), Citrix (2:18-cv-10658), Pandora (2:18-cv-10656), Spotify (2:18-cv-10653), and Western Digital (8:18-cv-02285) in the Central District of California, and against Dell (6:18-cv-00658), Fujitsu (6:18-cv-00659), and SAP (6:18-cv-00660) in the Eastern District of Texas. The patents belong to two families, both broadly pertaining to storing and syncing data files in a distributed computing environment and both received through a March 2017 assignment from Sony. That transaction involved over 20 issued US patents, together with foreign counterparts issuing in Canada, Europe, France, Germany, Japan, Korea, and the United Kingdom. Data Scape targets products and services of the defendants that sync documents and data (e.g., music files) across servers and client devices.