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Disclosure in the Spotlight for Patent Cases with Third-Party Funding

August 29, 2022

Disclosure in the Spotlight for Patent Cases with Third-Party Funding

The topic of disclosure in litigation where there is the presence of third-party funding has been a hot topic in several jurisdictions, with defendants strongly arguing that there needs to be an increased level of transparency when it comes to litigation funding. In a recent development, outlined in The National Law Review, a judge in the District of Delaware has ruled that parties in patent litigation cases must comply with enhanced Rule 7.1 disclosures, specifically those required around funding arrangements. Chief Judge Connolly, in the case of Longbeam Technologies v. Amazon.com, stated concerns around the plaintiff’s lack of disclosure for its third-party funding and stayed the case to allow for the defendant to pursue discovery on Longbeam’s litigation funding. This latest example of a court mandating further disclosure around third-party funding agreements is unlikely to be the last, and as the use of litigation funding increases around the globe, both funders and litigants should keep a close eye on whether courts are mandating a heightened degree of transparency.
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Case Developments Commercial

Locke Capital Backs Sarama in US $120 Million ICSID Claim Against Burkina Faso

By John Freund |

A junior gold explorer is turning to third-party capital to fight what it calls the expropriation of a multi-million-ounce deposit.

According to a press release on ACCESS Newswire, ASX- and TSX-listed Sarama Resources has drawn down a four-year, US $4.4 million non-recourse facility from specialist funder Locke Capital II LLC. The proceeds will pay Boies Schiller Flexner’s fees and expert costs in Sarama’s arbitration against Burkina Faso at the International Centre for Settlement of Investment Disputes (ICSID).

Sarama alleges the government retroactively revoked its Tankoro 2 exploration permit in 2023, halting development of the flagship Sanutura project. An arbitral tribunal chaired by Prof. Albert Jan van den Berg held its first procedural hearing on 25 July; Sarama’s memorial is due 31 October, and the company is seeking no less than US $120 million in damages.

Under the Litigation Funding Agreement, Locke’s recourse is limited to arbitration proceeds and the ownership chain of Sanutura; Sarama’s other assets remain ring-fenced. Repayment occurs only on a successful award or settlement, with Locke’s return calculated on a multiple-of-invested-capital basis and adjusted for timing.

The deal underscores the continued appetite of specialist funders for investor-state claims, particularly in the mining sector where treaty protections offer a clear legal framework and potential nine-figure payouts.

Case Developments Commercial

Pogust Goodhead Targets BHP in £1.3B Conspiracy

International plaintiffs’ firm Pogust Goodhead has opened a fresh front in the marathon litigation over the 2015 Fundão dam collapse, dispatching a pre-action letter that accuses BHP, Vale and their joint-venture Samarco of orchestrating an unlawful plot to sabotage the English proceedings.

Acting through U.S. counsel Orrick, the firm says the miners induced claimants to sign cut-price settlements in Brazil, interfered with existing retainers and weaponised redress programmes run by the Renova Foundation to starve the London group action of participants. Pogust Goodhead pegs its damages at more than £1.3 billion—roughly the fees and uplifts it stands to lose if the 620,000-strong claimant cohort is picked off piecemeal.

An article in Reuters says the firm will argue three causes of action—unlawful means conspiracy, inducement of breach of contract and enforcement of its equitable lien—and blames the defendants’ constitutional challenge in Brazil (ADPF 1178) and the proposed “Repactuação” mega-settlement for the intensified pressure campaign.

The pre-action salvo lands just months after the close of a 13-week liability trial against BHP in London; judgment is due later this year, with a quantum phase already on the docket for 2026. Separately, Vale and BHP confront contempt allegations for allegedly funding satellite litigation to derail municipal claims. Should the new claim proceed, the miners could face parallel exposure not only for compensatory payouts—estimated at up to £36 billion—but also for the law firm’s lost fees and financing costs, which Pogust Goodhead says now exceed $1 billion.

Case Developments Commercial

Court Shields Haptic’s Litigation-Funding Files From Apple

By John Freund |

A Northern District of California decision has handed patent plaintiff Haptic Inc. an important procedural win in its infringement fight with Apple over the iPhone’s “Back Tap” feature.

An article in eDiscovery Today by Doug Austin details Judge Jacqueline Corley’s ruling that work-product protection extends to Haptic’s damages analyses and related documents that were shared with a third-party litigation funder during due diligence.

Although Apple argued that those materials might reveal funder influence over strategy or settlement posture, the court held that Apple showed no “substantial need” sufficient to overcome the privilege. The opinion also rejects Apple’s broader bid for a blanket production of Haptic-funder communications, finding the parties had executed robust NDA and common-interest agreements that preserved confidentiality and avoided waiver. Only royalty-base spreadsheets directly relevant to Georgia-Pacific damages factors must be produced, but even those remain shielded from broader disclosure.

Judge Corley’s order is the latest in a string of decisions limiting discovery into financing arrangements unless a defendant can identify concrete, case-specific prejudice. For funders, the ruling underscores the importance of tight contractual language—and disciplined information flows—in preserving privilege. For corporate defendants, it signals that speculative concerns about control or conflicts will not, standing alone, open the door to funder dossiers.