A Blog About Intellectual Property Litigation and the District of Delaware

Entries for tag: NPE

Hello again my dear readers. I would like to apologize for my long absence, I have missed you almost as much as you have missed us. I would also like to apologize for Andrew's post yesterday, "we're back" which failed to make a joke about the disturbing 90's animated feature "We're Back! A Dinosaur's Story" in which a one-eyed carnival barker with mind control powers is eaten by crows. It shan't happen again.

Mark Tulin, Unsplash

With that out of the way, I wanted to call attention to a recent opinion from Judge Williams on a contract dispute between various NPE entities. We don't get to see these much as they're usually heavily redacted, but as my father used to say, "you can't redact what's in your heart." So too, it's tough to redact a court opinion on a contract you're suing over so we get a lot of detail here.

(Eds. note - my dad does not actually say that)

The agreement in CBV, Inc. v. ChanBond, LLC, C.A. No. 21-1456-GBW (D. Del. Mar. 13, 2024) (Mem. Op.) involved a bewildering array of related parties with silly names exchanging ludicrous sums. CBV had a portfolio of patents "related to the delivery of high-speed date over cable systems." Id. at 3. Apparently they weren't doing CBV much good just sitting around, because they sold them to IP Navigation group, which does just what it says on the tin. IP Navigation then created ChanBond for the purpose of buying and enforcing/licensing the patents and CBV transferred them in exchange for (drumroll . . . ) ...

Here you can see Mavexar, IP Edge, and their counsel after yesterday's opinion.
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 ...

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 …

Under Rock
AI-Generated, displayed with permission


I flagged on Wednesday that Chief Judge Connolly planned to hold an evidentiary hearing today regarding compliance with his litigation funding and entity ownership orders in three cases. Well, I went, and it was one of the most remarkable hearings I've seen in a patent case.

The purpose of the hearing was to dig into whether the parties complied with Chief Judge Connolly's standing orders regarding litigation funding and entity ownership.

But the Court's statements at the hearing offered some insight into what motivated those orders in the first place: Chief Judge Connolly believes (as he has said before) that the District Court is not a "star chamber," and that the public has …