Following an April 2022 standing order that mandated parties appearing in his court adhere to third-party funding disclosureOne of the primary objectives of the patent system. In return for the government-granted right to exclude that is embodied in the patent, the inventor must disclose to the public through his patent the invention for which protection is sought. Inventors unwilling to disclose their invention to the public may instead opt for trade secret protection. requirements and an eye-popping November 2022 memorandum detailing “potential abuse of our courts,” Judge Colm Connolly continues to push for additional information on parties claiming patent infringement in the District of Delaware.
In a March 31 memorandum, ordering plaintiff Backertop Licensing LLC to produce additional information about potential funding arrangements, Connolly again raised concerns about abuse as he questioned whether real parties of interest “perpetrated a fraud on the court by fraudulently conveying to a shell LLC patents asserted in this Court and filing fictitious patent assignments with the United States Patent and Trademark Office designed to shield those parties from the potential liability they would otherwise face in asserting patents in litigation in this Court.” It is worth noting that Backertop, a subsidiary of notorious non-practicing entity aggregatorAn entity that acquires patents for strategic purposes as distinct from protecting a line of business. Aggregators often license patents nonexclusively to shareholders or other insiders, and then sell the patents to patent assertion entities (PAEs) to monetize. More IP Edge, was established in April 2022 and shortly thereafter filed infringement cases against a pairPatent Application Information Retrieval System. The USPTO's electronic system for storing and accessing information regarding a patent. There is a public version for searching file wrappers. of home security companies. In the fall of 2022, Backertop voluntarily dismissed the cases without prejudice as Connolly was taking steps to hold them accountable to the standing order. The fact that these entities would rather dismiss the cases—in which they claimed to have been legitimately wronged—rather than provide basic funding information, raises serious questions about what non-practicing entities like Backertop have to hide.
In a separate case, Judge Connolly recently postponed a hearing that had been originally scheduled for last week. The attorney for IP Edge-linked entity Nimitz Technologies, a serial District of Delaware plaintiff, had been ordered to appear before the court and show why they should not be sanctioned for refusing to comply with the transparency order. The hearing was delayed, because after repeated, unsuccessful attempts to fight the order in the Federal CircuitSee CAFC, Nimitz’s attorney finally provided documents that Connolly needed time to review.
These are just two of a number of similar plaintiff disclosureOne of the primary objectives of the patent system. In return for the government-granted right to exclude that is embodied in the patent, the inventor must disclose to the public through his patent the invention for which protection is sought. Inventors unwilling to disclose their invention to the public may instead opt for trade secret protection. disputes in the District of Delaware. They illustrate that even if it takes time, last year’s standing order is getting results. Whether it is Backertop’s decision to dismiss what we can now likely assume was a meritless patent infringement claim or Nimitz begrudgingly providing additional information that the Court requested, Connolly’s repeated insistence that parties adhere to his order is proving valuable.
As we have asked before, the longer these battles over transparency continue, the more it raises the question of what these non-practicing entities are trying to hide.
