PFU Limited v. Data Scape Limited

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.

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”.

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.