Since late last year, a growing web of plaintiffs associated with IP Edge LLC have become tangled in compliance issues over heightened disclosure requirements imposed by Delaware Chief Judge Colm F. Connolly in a pair of April 2022 standing orders. Now, Judge Connolly has rejected motions from two more IP Edge-linked plaintiffs, Backertop Licensing LLC and Mellaconic IP LLC, that sought to overturn a related set of production orders requiring them to disclose reams of information on their corporate control, assets, and legal representation. Not only did those decisions reject objections related to jurisdiction and allegations of overbreadth, Judge Connolly also ominously suggested that their claims of attorney-client privilege are undercut by the crime/fraud exception—which allows the disclosure of communications between a party and counsel that relate to legal advice used in furtherance of illegal activity.

Over the past several months, several plaintiffs affiliated with patent monetization firm IP Edge LLC have sparred with Delaware Chief Judge Colm F. Connolly over disclosure rules imposed in his courtroom. As this “Series of Extraordinary Events” has unfolded, those plaintiffs have found themselves under close scrutiny due to their apparent failure to disclose information on their management and control in compliance with those heightened rules. Now, one of those entities, Backertop Licensing LLC, has urged the court to halt an order mandating the wide-ranging production of information on those topics until its challenge of that order gets decided—while its attorney is looking for a way off of its cases altogether.

As former top filer IP Edge LLC struggles to extricate itself from the courtroom of Delaware Chief Judge Colm F. Connolly, last April’s standing orders remain in force: one of those orders requiring litigants to disclose details related to any nonrecourse funding arrangements with third parties; and another requiring all “nongovernmental joint ventures, limited liability corporations, partnerships or limited liability partnerships” to include in disclosure statements “the name of every owner, member and partner of the party, proceeding up the chain of ownership until the name of every individual and corporation with a direct or indirect interest in the party has been identified”. Both orders continue to surface information that otherwise would have remained private.

Litigants have been closely watching the “Series of Extraordinary Events” that have been playing out in Delaware as the result of a pair of standing orders issued by Chief Judge Colm F. Connolly in April, which require the disclosure of details on funding and corporate control for parties in his courtroom. Recent weeks have seen a group of related plaintiffs taken to task by Judge Connolly for their noncompliance with these orders, including their failure to disclose links to monetization firm IP Edge LLC and purported consulting firm MAVEXAR LLC—subjecting the NPEs to a series of revelatory evidentiary hearings and imposing a set of sweeping orders requiring some of those plaintiffs to produce a wide-ranging ream of information on their ownership/control, assets, and legal representation. Judge Connolly has now denied a motion to withdraw one of those production orders from one of those plaintiffs, Nimitz Technologies LLC—rejecting it as “devoid of merit”, and ordering it to show cause why he should not sanction the entity for failure to provide the required evidence, as a parallel fight over his probing plays out before the Federal Circuit.

In April of this year, Delaware Chief Judge Colm F. Connolly posted two standing orders imposing heightened disclosure requirements—regarding party ownership and any third-party litigation funding—on litigants in his courtroom. The responsive disclosures from certain plaintiffs, associated with various notable patent monetization players, have spawned intense scrutiny from the court, including a series of evidentiary hearings followed by an order requiring the production to the court of documents governing the relationships between those plaintiffs and those monetization outfits, together with related communications. Four of the plaintiffs then filed separate petitions for writs of mandamus with the Federal Circuit, prompting Judge Connolly to take certain additional hearings off calendar, to stay some of these cases, and to submit a memorandum to the appeals court, “explain[ing] more fulsomely and in writing” the reasons for this series of extraordinary events. This past week, (1) the Federal Circuit denied two of those petitions, (2) a denied petitioner filed a motion before Judge Connolly seeking the withdrawal of his explanatory memorandum (as well as recusal from its cases going forward), (3) defendants and amici filed responses to the other two petitions still pending before the appeals court, and (4) VLSI Technology LLC and Intel provided their answers to four related questions that Judge Connolly posed in the Delaware case between the two, in advance of a December 14 hearing.

The rapidly escalating battle over disclosures in Delaware has suddenly hit a wall. In April 2022, Chief Judge Colm F. Connolly issued two new standing orders that required parties before him to reveal information related to funding arrangements and corporate control, thereby pushing many plaintiffs to file new or updated disclosures. Among those plaintiffs were entities associated with Texas monetization firm IP Edge LLC, which have frequently named individuals with no discernible connections to patent monetization as managers or managing members. Yet those relationships soon came under the microscope after Judge Connolly flagged several of its plaintiffs’ disclosures as insufficient and forced a variety of individuals linked to those NPEs to testify in person on November 4 and 10. Those hearings left Judge Connolly with “concern[s]” over the “accuracy of statements” made in the filed disclosures from three of the plaintiffs, and over “whether the real parties of interest are before the Court”—leading him to order those NPEs to disclose a range of information related to their legal representation, corporate ownership and control, assets, and potential liabilities. However, the Federal Circuit has now stayed one of those orders while it considers a mandamus petition from one of the impacted plaintiffs, Nimitz Technologies LLC, leading to stays in cases from the other two.

Earlier this month, Delaware Chief Judge Colm F. Connolly held two hearings to consider whether patent plaintiffs Lamplight Licensing LLC, Mellaconic IP LLC, and Nimitz Technologies LLC (on November 4) and Backertop Licensing LLC (on November 10) have fully complied with new standing orders regarding corporate and third-party litigation funding disclosures. These two hearings are the first in a string of similar hearings scheduled before Judge Connolly through December, although after the Federal Circuit's recent related stay, it is unclear if the additional hearings will proceed. A review of the transcripts suggests that parties and counsel headed toward coming appearances should be prepared for an in-depth examination directed toward a wide range of related issues, including ethical considerations surrounding engagement with a party that litigation counsel has never met, concerns about the corporate form where an LLC maintains no bank account and its sole member receives payments directly deposited into a personal account, the differences between a post office box in Texas and a suite in Delaware, the involvement of third party consultants—here, MAVEXAR LLC, an entity associated with prolific patent monetization firm IP Edge LLC—in running litigation campaigns, and the appearance (in documents reviewed) of unexpected acronyms, like the perhaps not-so-mysterious “NWM”.

Last week, RPX raised the possibility of IP Edge LLC’s practices—specifically, the naming of Texas residents with seemingly no discernible connections to patent monetization as managers or managing members of most of its LLCs—sliding under the judicial microscope. On September 12, District of Delaware Chief Judge Colm F. Connolly ordered a handful of such individuals to appear, in person, at evidentiary hearings to determine whether a group of apparent IP Edge plaintiffs has complied with his standing order regarding the disclosure of any third-party litigation funding. A similar order has been issued in multiple cases associated with Dynamic IP Deals, LLC (d/b/a DynaIP), Judge Connolly setting an October hearing to determine the accuracy of those plaintiffs’ amended corporate disclosure statements. Perhaps unsurprisingly, voluntary dismissals have been noticed across these cases, ending the court’s jurisdiction over the matters.

Last week, RPX pointed its readers toward a string of new cases filed by various NPEs under the Dynamic IP Deals, LLC (d/b/a DynaIP) umbrella as well as public data suggesting that the start of multiple additional campaigns was likely imminent. Since then, one of those campaigns has begun; a new patent assignment to DynaIP has appeared; and the firm has created yet another Texas NPE.

Increasingly prolific monetization firm Dynamic IP Deals, LLC (d/b/a DynaIP) has been busy this month, so far opening up three campaigns—SmartWatch Mobileconcepts LLC focused on smartwatches, HALEY IP LLC on in-vehicle cameras, and WFR IP LLC on wireless earpieces and wearable piece products—and also filing several new cases via controlled plaintiff MISSED CALL LLC. The firm has filed dozens of new cases since the start of this year, and, having formed more than a handful of NPEs in Texas during the first half of 2022, DynaIP shows no signs of slowing down.