AI refuses to draw a judge without an old-school judicial wig. This is the best I could do.AI-Generated, displayed with permission
Chief Judge Connolly held a second Mavexar-related hearing yesterday, this time in Swirlate IP LLC v. Quantela, Inc., C.A. No. 22-235-CFC (D. Del.). This was after the one in the Backertop action that we just posted about.
Chief Judge Connolly questioned both the out-of-town attorney who represented Swirlate as lead counsel in the action, and the sole member of the Swirlate NPE
The Court addressed several topics with the attorney, including:
Gaps and redactions in the court-ordered document production, which was supposed to include communications with his client.
There was another hearing this morning in the still-ongoing Mavexar saga, this time in Backertop Licensing LLC v. Canary Connect, Inc., C.A. N. 22-572 (D. Del.).
If you recall, this is the case where the sole member of the patent assertion LLC is a litigation paralegal from Texas who was the wife of a Mavexar attorney.
She appeared in one of the first Mavexar hearings back in November 2022. She later accused the Court of "mansplaining" and "gender harassment and intimidation," and she refused to appear in person to testify a second time, incurring a $53,000 fine. She appealed, and the Federal Circuit affirmed.
Long slumbering, but always alert, the Mavexar saga moved step closer to its inevitable conclusion today when Chief Judge Connolly issued a memorandum order in Swirlate IP LLC v. Quantela, Inc., C.A. No. 22-235-CFC (D. Del. Aug. 29, 2024) (Mem. Order).
This order dealt with a pair of cases that have largely flown under the radar, being stayed during the pendency of the Nimitz appeals. But the story here is similar in the broad strokes to that in Backertop and Nimitz. The putative plaintiff is an LLC with a sole owner who was assigned the patent in suit by IP Edge or Mavaxar. The attorneys in the case largely communicated …
Last month, we wrote about the Mavexar-related witness who spent about $44,400 and counting just to avoid a trip to Delaware. Our post was prompted by the Federal Circuit affirming Judge Connolly's order imposing sanctions for her failure to appear in-person (even though, oddly, she agreed to appear remotely) for questioning by the Court related to potential misbehavior by her LLC, its attorneys, and Mavexar/IP Edge.
Well, yesterday the Court set a new hearing date, once again ordering the witness to appear for an in-person examination by the Court:
At Wilmington on this Twenty-third day of August in 2024, having received the Federal …
Is it such a long flight?AI-Generated, displayed with permission
It's hard to believe it has been almost a year, but last August we wrote about a Mavexar-related witness who refused to travel to Delaware to testify, instead insisting that she would offer testimony only remotely.
The Court fined her $200 per day for contempt of Court. She immediately appealed, arguing that the Court cannot force her to attend as she is outside of the 100-mile subpoena radius permitted under FRCP 45. The Court denied her motion to stay the fine pending appeal.
Yesterday, the Federal Circuit issued an order affirming the contempt sanction (and doing so pretty enthusiastically). The Federal Circuit made clear that the Court's inherent authority absolutely …
Power Integrations, Inc. v. Waverly Licensing LLC, C.A. No. 22-1554-CFC (D. Del), is one of my favorite complaints ever. Waverly -- allegedly one of the Mavexar companies -- sued Power Integrations for infringement in Texas right before Judge Connolly held his first hearing in the Mavexar matters in November of 2022.
In a truly inspired move, Power integrations then filed a DJ complaint in Delaware (its state of incorporation) alleging that "Defendants have engaged in a broad and aggressive campaign to harass and threaten many companies, including Power Integrations, with assertions of patent infringement liability . . . ." Id. at D.I. 1. Notably, they managed to get this complaint on file by the end of November 2022.
The complaint is well worth a read, but the best bit is definitely when they point out that Waverly's official address is actually an empty shelf in a Staples:
In an assignment filed with the U.S. Patent and Trademark Office for the ’246 patent, defendant Array IP LLC identified itself as having the same address that defendant Waverly Licensing LLC lists in the Waverly-PI complaint as its principal place of business (3333 Preston Road, Suite 300, Frisco, Texas 75034). (Id.) However, that address is actually a Staples store . . . Moreover, the specific box number that defendant Waverly occasionally lists in its court filings as its “principal place of business” within that “suite” is an open shelf.
Id. at paragraphs 12-13.
There are pictures and everything, it's really great.
This complaint prompted all of the DJ defendants -- which included Waverly, Mavexar itself, and several others -- to ...
Here you can see Mavexar, IP Edge, and their counsel after yesterday's opinion.Mae Mu, Unsplash
Wow! Today, in the Mavexar cases, Chief Judge Connolly issued a huge, 102-page opinion referring plaintiffs' counsel to the Texas Supreme Court's Unauthorized Practice of Law Committee, the PTO, and the Department of Justice to determine whether counsel violated various rules—or federal laws:
As it appears that [three Mavexar employees] engaged in the unauthorized practice of law, I will refer them to the Texas Supreme Court's Unauthorized Practice of Law Committee.
* * *
I believe it appropriate to bring these matters to the attention of the PTO and the Department of Justice to allow them to conduct further inquiry into whether the PTO's rules or [18 U.S.C.] § 1001 were violated. The Department may also deem it appropriate to investigate whether the strategy employed by IP Edge to hide from the defendants in these cases and the Court real parties in interest, including France Brevets, violated any federal laws.
Nimitz Technologies LLC, v. CNET Media, Inc., C.A. No. 21-1247-CFC, D.I. 34 at 98, 100 (D. Del. Nov. 27, 2023).
If you're not familiar with them, Mavexar appears to be an entity that recruits people to serve as the sole members of shell LLCs that assert patents. The recruited individuals may not fully understand what is going on, and may get something like 5-10% of the proceeds of the patent infringement suits in exchange for accepting all of the risk. It looks like Mavexar sets up the entities, hires the attorneys, and does the work of selecting targets and even drafting claim charts.
The opinion goes through exactly what these entities and attorneys did—at least, as far as the Court can tell from the factual record and their production, which was apparently full of holes.
In short, the attorneys acted as if they were attorneys for Mavexar and IP edge rather than their nominal clients (the LLCs asserting the patents). They generally didn't communicate with their clients until Chief Judge Connolly started pressing them, which was months after they had been asserting and settling these cases.
Instead, the Court describes how they worked almost exclusively with Mavexar / IP Edge employees. Given that Mavexar ...
As you may recall, the witness initially attempted to appear via teleconference, citing financial concerns and responsibilities at home and at work. Judge Connolly denied the request, and she ultimately failed to appear for the hearing. Thus began a running fine of $200 per day (that the Court is open) until she appears.
AI-Generated, displayed with permission
Shortly thereafter, Backertop moved to stay enforcement of the order pending appeal. Judge Connolly denied that motion in a short opinion today noting that success on appeal was unlikely:
I think it unlikely that Backertop and Ms. LaPray will prevail in their appeal. Indeed, were Ms. LaPray's reading of Rule 45 to be adopted by the Federal Circuit, 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
Backertop Licensing LLC v. Canary Connect, Inc., C.A. No. 22-572-CFC, D.I. 62 at 5-6 (D. Del. Oct 3, 2023)
Given the track record of Mavexar appeals so far, this seems a fair assessment.
And so the fine continues to pick up steam. By my count, it has currently been building for 31 taxable days. for a total of $6,200 smackeroos.
When we last wrote about Mavexar, Chief Judge Connolly had held a civil contempt hearing after he ordered the sole member of Backertop, a Mavexar-related LLC, to appear in-person in Delaware and she failed to appear (she instead initiated a head-on challenge to the authority of the Court). She likewise failed to appear for her contempt hearing.
Today, the Court issued its opinion and order, holding the witness in contempt. It handily dispatched with each of the witness' arguments against the hearing.
It easily rejected their first argument—that the Court lacks jurisdiction after the entity, Backertop Licensing LLC, dismissed it's complaint. The Court reiterated the same ruling it made last time.
Next, the Court easily rejected the idea that civil contempt is "meant to benefit the complainant," citing multiple U.S. Supreme Court opinions to the contrary. It also rejected the idea that a party can re-litigate the underlying order in context of a contempt proceeding.
I found the Court's discussion of the alleged Fifth Amendment violation interesting, particularly when the Court attempts to identify exactly which Fifth Amendment right it could possibly have ...
We're back! Our trial was a success, Nate is back from his travels, and things have cooled down enough for us to resume regular posts this week.
While we were tied up, there was some progress in the Mavexar cases. If you recall, Chief Judge Connolly had ordered the sole member of Backertop, a Mavexar-related LLC, to appear in-person in Delaware to answer for the entities' potential fraud on the Court. She objected, stating that she would not appear.
Since then, the July 20 hearing occurred, and as promised she did not appear—although her counsel, and counsel for Backertop, did show up. The transcript for that hearing is below.
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