Chief Judge Colm F. Connolly has referred David R. Bennett of Direction IP Law to “his bar’s disciplinary counsel” given that the record in cases filed in the District of Delaware by Swirlate IP LLC, a plaintiff tied to Texas monetization firm IP Edge LLC, “is very clear that [Bennett] never obtained the informed consent of Swirlate to file and settle lawsuits on its behalf”. Judge Connolly has also expressed the intention to refer the matters filed by Backertop Licensing LLC, another IP Edge-linked plaintiff, to the US Department of Justice, indicating that although the court views Backertop’s sole owner, Texas paralegal Lori LaPray, “to a large extent” as “a victim in this case”, he will only reduce a $53K civil contempt fine (for failure to appear in person before him) to a judgment that he will now bring “to the attention of the Department of Justice” for enforcement because it would be a “terrible message to the folks at IP Edge” to do otherwise.

Last month, the Federal Circuit denied an appeal filed by Backertop Licensing LLC and its sole owner and Texas paralegal Lori LaPray from an order in which Delaware Chief Judge Colm F. Connolly imposed a running civil contempt fine. The mandate ending that appeal and returning jurisdiction to Judge Connolly has now issued. The court has set a September 18, 2024 hearing, at which LaPray is to be physically present “to address potential fraud on the Court involving Backertop, potential misconduct by Backertop's counsel, and Backertop's document production made in response to the Court's March 31, 2023 Memorandum Order” and by which time LaPray is to be prepared to pay the cumulative contempt fine, which the court indicates comes to $53K.

Last week, the Federal Circuit denied an appeal filed by Backertop Licensing LLC and its sole owner and Texas paralegal Lori LaPray from an order in which Delaware Chief Judge Colm F. Connolly imposed a running civil contempt fine. Judge Connolly had ordered LaPray to appear before him in person to answer questions about the assets, control, and behavior of Backertop. She refused, and Judge Connolly fined her $200 per open day of court until she does. The appeals court has now backed Judge Connolly, ruling that his order requiring her to appear in person and his order imposing the civil contempt fine “were within the District Court’s inherent authority and were not abuses of discretion”. The fines began to run on August 23, 2023—roughly 334 calendar days ago.

Since late last year, Delaware Chief Judge Colm F. Connolly has expressed increasing concerns over the activities of multiple litigating plaintiffs linked to IP Edge LLC and a related consulting firm, MAVEXAR LLC: namely, that by failing to disclose those relationships as required in his courtroom, those entities had possibly committed fraud. However, he has stopped short of detailing the possible ramifications of those actions—until now. On November 27, in a blistering, 105-page order, Judge Connolly found that IP Edge had been the “de facto” owner of the patents asserted by its litigating affiliates and held that the entity and its principals should face “consequences” for their improper attempt to “use separate LLCs to insulate themselves” from liability: He has now called upon the Department of Justice (DOJ) and the USPTO to potentially investigate these misrepresentations. Judge Connolly has also teed up potential punishment for some of the individuals involved: He has referred certain attorneys employed by IP Edge (which is not a law firm) to a Texas disciplinary body for the unauthorized practice of law and has referred the LLCs’ local and lead counsel to state disciplinary bodies for improperly treating IP Edge as their true client.

The ongoing saga between IP Edge LLC and Delaware Chief Judge Colm F. Connolly has reached the Federal Circuit once again. Since June, Judge Connolly has repeatedly ordered Lori LaPray, the owner of IP Edge-linked plaintiff Backertop Licensing LLC, to testify in person about an unusual situation involving the attempted withdrawal of its counsel. LaPray’s subsequent refusals to do so led him to find her in civil contempt of court, imposing a $200 per day fine until she complies with the order. Judge Connolly declined to stay that contempt order earlier this month, expressing skepticism that she would prevail on the merits on appeal. Now, LaPray has filed an emergency motion to stay those fines with the Federal Circuit, taking another pass at some of the same arguments previously rejected by Judge Connolly—including her contention that he lacks the authority to find her in contempt in the first place.

Chief Judge Colm F. Connolly has denied a motion to stay the imposition of civil contempt fines in connection with multiple cases that Texas NPE Backertop Licensing LLC affirmatively filed in the District of Delaware. The court ruled that the motion, brought by Backertop and its sole owner, Texas paralegal Lori LaPray, raises arguments that are procedurally barred and substantively wrong. Judge Connolly is skeptical that the position to be advanced in the related appeal is unlikely to prevail because, at least in part, according to that position, “a resident of Hawaii (which is more than 100 miles from any other federal judicial district) could form a shell LLC, give the LLC no assets except for a questionable patent, assert the patent in frivolous infringement lawsuits filed under the LLC’s name in the other 93 federal judicial districts, and have the LLC engage in fraudulent and sanctionable conduct through the course of those suits with impunity”.

On August 21, 2023, Chief Judge Colm F. Connolly held in civil contempt the sole owner of an NPE plaintiff that filed multiple affirmative patent cases in Delaware, fining her $200 for every day that the court is open and she fails to appear in person, as previously ordered. Last week, David L. Finger of Finger & Slanina, LLC—counsel for that plaintiff, Backertop Licensing LLC—filed a brief that opens by noting that the court held “non-party Lily [sic] LaPray in civil contempt” before reporting that actual Backertop owner Lori LaPray has appealed the contempt order and asking Judge Connolly to stay imposition of those fines, which the submission estimates could reach $36K by the time the appeal reaches a conclusion.

As perhaps expected, Delaware Chief Judge Colm F. Connolly has held Texas paralegal and NPE owner Lori LaPray in civil contempt for her failure to make a second in-person appearance before him as has been multiple times previously ordered. In the memorandum explaining his reasoning, Judge Connolly repeats his concern, not whether LaPray herself has engaged in fraud but rather “about the possibility that real parties in interest such as [MAVEXAR LLC] and [IP Edge LLC] may have perpetrated a fraud on the court” through their main monetization strategy, which the Texas firms halted last December. As also telegraphed, LaPray and Backertop Licensing LLC (one of her IP Edge-tied NPEs) have appealed the civil contempt finding, which carries a daily price tag that falls well below the court-estimated cost of the one-day trip from Dallas (where LaPray lives) to Judge Connolly’s Delaware courtroom.

Lori LaPray and Jacob LaPray, the respective sole owners of IP Edge LLC-tied plaintiffs Backertop Licensing LLC and Creekview IP LLC, failed to attend an August 1 hearing addressing the prospect of civil contempt, both responding to the show cause order from Delaware Chief Judge Colm F. Connolly days before. The two LLC plaintiffs—each of which affirmatively filed patent cases in Delaware—and the two LaPrays argued in that written response that Judge Connolly generally “lacks authority to pursue this contempt proceeding”; that “the orders requiring defendants and the LaPrays [sic] are transparently invalid”; and that “the court lacks inherent authority to require theappearance [sic] of [the LaPrays], who live[] more than 100 miles away”. David L. Finger of Finger & Slanina, LLC signed a brief that further argues that “a different judge must be seated to address contempt as the present judge cannot serve as both investigator and judge”. Circumstances here suggest that Backertop, Creekview IP, and the LaPrays may ask the Federal Circuit to intervene should they be held in civil contempt.

Delaware Chief Judge Colm F. Connolly has set an in-person hearing for August 1 at which IP Edge LLC-tied plaintiff Backertop Licensing LLC and its sole owner Lori LaPray “will be afforded the opportunity to show cause for why Ms. LaPray should not be held in civil contempt for failing to comply with” a pair of orders requiring LaPray to appear before the court (in person) last Thursday. New counsel for Backertop David L. Finger of Finger & Slanina, LLC appeared without LaPray, further representing that Jacob LaPray, the sole owner of IP Edge-linked plaintiff Creekview IP LLC would likewise not show up the next day as Judge Connolly had ordered. The August 1 show-cause hearing will also accommodate any arguments from Creekview IP and Jacob as to why the latter should not face civil contempt as well.