A Blog About Intellectual Property Litigation and the District of Delaware


CFC
The Honorable Colm F. Connolly

"If we don't consent, which visiting judge do you think we'll get?" Hush Naidoo Jade Photography, Unsplash

We've talked before about Chief Judge Connolly's orders that allow parties to choose to either consent to a specific magistrate judge or to have the case assigned to a visiting judge.

Last month, the Court issued those orders in six patent cases. All of the orders followed the same pattern as last time, giving the choice between a specific magistrate judge or an unknown visiting judge:

ORAL ORDER: It is HEREBY ORDERED that on or before November 1, 2022, the parties shall either (1) submit to the Clerk of Court an executed Form AO 85 Notice, Consent, and Reference of a Civil Action to a Magistrate Judge, indicating their consent to have a United States Magistrate Judge conduct all proceedings in this case including trial, the entry of final judgment, and post-trial proceedings; or (2) file a joint letter indicating that all the parties do not consent to a referral of this action to a Magistrate Judge. The letter should not indicate which party or parties did not consent. If all the parties consent, the case will be referred to Magistrate Judge Burke. Because of the Court's caseload, if the parties do not consent, the Court intends to assign the case to a visiting judge from another district. Ordered by Judge Colm F. Connolly on 10/18/2022.

These orders started last year, before Judge Stark's departure for the Federal Circuit. It makes sense that the Court is sticking with ...

We're sad to see it go, but honestly the case is probably happier in Florida
We're sad to see it go, but honestly the case is probably happier in Florida Joël de Vriend, Unsplash

A few weeks ago, we discussed a case where Judge Noreika transferred a trademark case under 1404, citing court congestion. This week, Chief Judge Connolly made a similar move, transferring a contract claim to Florida based largely on the relative congestion of the two courts.

The plaintiff in Arthrex, Inc. v. Nat'l Union Fire Insurance Co. of Pittsburgh, PA , C.A. No. 22-465 (D. Del. Nov. 8, 2022), was a Delaware entity, headquartered elsewhere and none of the defendants had any particular Delaware connection. As is often the case in a patent action, the facts of the dispute …

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 …

"This is how I'm going to explain to my wife why she should have an LLC that holds our company's patents." AI-Generated, displayed with permission

Chief Judge Connolly held another hearing today regarding compliance with his standing orders on litigation funding, this time exploring the relationship between NPE plaintiff Backertop Licensing LLC and MAVEXAR, the entity that is said to have created Backertop.

Last week's hearing involved testimony from a sales person and a restaurateur who owns a food truck, each of whom had been recruited by MAVEXAR to be the sole member of a patent assertion NPE, as an "investment" opportunity or a way to make "passive income."

Each "owner" received either 5% or 10% of the …

A lot of people are interested in Chief Judge Connolly's Friday hearing about litigation funding. Here is a chart of this blog's traffic for its entire existence through this weekend:

Blog Traffic Through Nov. 6 2022

And here is a chart for that same period of time, plus one day—the day we circulated the post about Friday’s hearing:

Blog Traffic Through Nov. 7 2022

The Court clearly hit on an issue that people care about!

Why an Entity Like Mavexar Might Want to (Supposedly) Operate This Way

Watching some of the comments on yesterday's post, one of the questions that came up was why a patent assertion entity would be interested in giving away 5-10% of their settlement revenue to what seems to be a random person, in exchange for that person …

Under Rock
AI-Generated, displayed with permission

Wow.

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 …

"Do you think 11 patents might be more than we need? Nah" Maciej Ruminkiewicz, Unsplash

Back in May, we wrote about an order by Chief Judge Connolly directing an ANDA plaintiff to cut back to 4 claims prior to trial, or potentially face a more difficult road for injunctive relief.

Plaintiff cut back to 6 claims, apparently dropping five patents from the case, and the bench trial proceeded.

Last month, Chief Judge Connolly issued his post-trial opinion regarding infringement and invalidity, and directed the parties to enter a proposed order. The parties ended up disputing what should happen to those dropped claims from the five dropped patents in the final judgment:

The proposals differ with respect to the disposition …

Get your popcorn ready...
Linus Mimietz, Unsplash

We've talked a lot about Chief Judge Connolly's standing orders on disclosure and litigation compliance, including about how he recently ordered in-person hearings regarding compliance with those orders in a fairly large number of cases.

Chief Judge Connolly's standing order on Rule 7.1 statements requires disclosure of all individual or corporate owners of certain entities, going all of the way up the chain and including indirect owners:

[I]n all cases assigned to Judge Connolly where a party is a nongovemmental joint venture, limited liability corporation, partnership, or limited liability partnership, that the party must include in its disclosure statement filed pursuant to Federal Rule of Civil Procedure 7.1 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.

Standing Order Regarding Disclosure Statements Required by Federal Rule of Civil Procedure 7.1 (D. Del. April 18, 2022).

We wrote about one instance, in VLSI Technology LLC v. Intel Corporation, C.A. No. 19-426 (D. Del.), where the Court ordered the plaintiff to confirm compliance with its standing order, and stayed the case when the plaintiff filed an inadequate response.

Now we have an update

Bullet Holes
Mykola Makhlai, Unsplash

At this point it's clear that Chief Judge Connolly's standing orders regarding initial disclosures and litigation funding are no joke, and plaintiffs need to comply with them or risk consequences.

Today, the Court took the further step of requiring the owners of plaintiff entities in at least 14 cases to appear in-person for evidentiary hearings regarding compliance with his standing orders.

The orders today generally took the following form:

Whereas the amended corporate disclosure forms Plaintiff filed in the above-captioned cases identify [owner name(s)] as Plaintiff s owner; and
Whereas the Court has concerns about whether Plaintiff has complied with the Court's standing order regarding third-paty litigation funding [or about the accuracy of the …

Federal Circuit on the left vs. Federal Circuit on the right. Will we get to see round 2?
Federal Circuit on the left vs. Federal Circuit on the right. Will we get to see round 2? Charl Folscher, Unsplash

We talked a couple of days ago about how, in Longbeam Technologies LLC v. Amazon.com, Inc., C.A. No. 21-1559-CFC (D. Del.), Chief Judge Connolly stayed the action after raising plaintiff's inadequate disclosures at a § 101 hearing.

But, at the same hearing, plaintiff actually prevailed on the § 101 motion—and Chief Judge Connolly made some notable comments about how the Federal Circuit has responded to his previous § 101 decisions, and what that means for cases going forward.

Case 1, Universal Secure: Affirmed

The first case, Universal Secure Registry LLC v. Apple Inc., …