A Blog About Intellectual Property Litigation and the District of Delaware


Uh-oh.
Uh-oh. AI-Generated, displayed with permission

Shortly after today's hearing regarding compliance with Chief Judge Connolly's standing orders, the Court issued orders in each of the cases from the similar hearing last week, requiring production of a broad range of communications among the plaintiffs, Mavexar, and their attorneys.

The Court issued similar orders in each case, each setting forth the Court's concerns:

Whereas the testimony of witnesses and representations of counsel at the November 4, 2022 hearing give rise to concerns that include but are not limited to the accuracy of statements in filings made by [each plaintiff] with the Court and whether the real parties in interest are before the Court;

The Court then issued production of multiple categories of documents. The attached orders include the specific lists, but each order generally included:

  • Retention letters and/or agreements between the plaintiffs and local and lead counsel;
  • All communications and correspondence on certain subjects between the principals of the plaintiffs or their attorneys and Mavexar or its representatives relating to:
    • The formation, assets, potential acquisition of assets, and potential liabilities of the plaintiff LLCs
    • The patents-in-suit
    • The retention of attorneys
    • Settlement or potential settlement, and dismissal
    • The November 4, 2022 hearing
  • The plaintiffs' bank account statements for certain period
  • Documents relating to the use, lease, purchase, and/or retention of addresses used in the complaints (remember when the Court dropped the word fraud?)
  • Sworn declarations from the principals regarding assets owned at certain times

What Effect Will This Have?

These orders will likely register on seismographs in NPE plaintiff attorney offices around the country. I expect these kinds of NPEs will probably try to file elsewhere, at least until this settles down.

These Documents May Not Be as Privileged as They Seem

While at first glance it may look like the Court is sua sponte ordering production of privileged communications, that's not necessarily what is going on here.

In these cases, the plaintiffs intentionally structured their patent assertion entities to retain only a 5-10% portion of the profits, and to give the remainder to other entities, including Mavexar. The witnesses who testified in the related hearings described Mavexar as a "consulting company" or similar—something like a third party, that sometimes acts as an agent of each plaintiff.

According to testimony at the hearings, the agreements between Mavexar and the plaintiffs say that Mavexar provides only non-legal services, and the attorneys in the hearings did not assert privilege for communications between the plaintiffs and Mavexar. To the extent any privilege existed, it has likely been waived by now.

How Will This Work, Mechanically?

Parties typically do not "produce" material to the Court (as opposed to "filing" or "e-mailing" material). It will be interesting to see how these plaintiffs submit the documents, and whether they end up being public.

I have to imagine that they will try to keep as much of the information off of the docket as they can. But Chief Judge Connolly made clear at the hearing that Third Circuit law does not permit them to hide their material absent a strong showing.

Most likely, the plaintiffs will submit a disc or thumb drive to the Clerk's office with the documents, and and then file a notice of multimedia filing. Given the likely size of the material, that may be the only way to do it. It also keeps the documents off of PACER and makes them, in practice, more difficult to retrieve.

If they get clever, they might try filing a sealed letter with a URL link, and then a redacted version that redacts the URL. Or they might fool around with URL expiration dates. Both of those strategies strike me as dangerous, particularly in light of the Court's comments at the hearing.

If you enjoyed this post, consider subscribing to receive free daily or weekly e-mails about any new posts.

All

Similar Posts