Payment Clash Reveals Litigation Funding Link to 100-Plus Cases

On paper, a nondescript Delaware corporation, an icebox maker, and a Finnish businessman appeared to have little in common beyond their Houston lawyer: Bill Ramey, one of the busiest plaintiff-side patent attorneys in the country.

But when Ramey began withdrawing from dozens of cases for nonpayment, a similarity emerged: they were all part of a cluster of patent owners connected to a monetization company called AiPi Inc.

Litigation funders often play a significant role in intellectual property cases, securing money for plaintiffs to bring lawsuits or buying up patents to assert against possible infringers. But at times they operate behind the scenes, not disclosing their connections to lawsuits, which for some has raised ethical hackles and sparked calls for more transparency. Recently, the actions of IP Edge LLC—another patent monetization firm—drew the ire of a Delaware federal judge who took extraordinary steps to call out what he perceived to be unethical behavior, reporting cases to a Texas ethics committee and the US Justice Department.

The fee dispute and court filings linking Ramey and AiPi provide an unusually detailed glimpse into how patent litigation campaigns were sustained and managed in courts spanning California, Colorado, and Texas—even as the exact nature of AiPi’s involvement remains in dispute.

Jonathan Stroud, general counsel for Unified Patents LLC, a group that aims to deter abusive patent litigation, said AiPi’s connection to the suits might never have come to light if not for its unexpected fight with Ramey. He said the possibility that AiPi lawyers made important legal decisions in the cases without ever announcing themselves shows the need for greater openness around investment-backed patent litigation. Unified Patents’ members include companies frequently targeted by patent infringement suits.

“This boatload of cases proves that the lack of transparency in the patent space—where people can file cases, drop cases, have them funded, and not disclose that to anybody—clearly invites bad behavior, and it’s not isolated to one group,” Stroud said. His group is seeking to invalidate a patent tied to a AiPi-connected inventor, Peter Pedersen, in an administrative proceeding.

AiPi, Ramey Dispute

The role of AiPi spilled into public view when Ramey’s replacement in at least 60 cases, Joe Zito of Whitestone Law, sought an extension—justifying it based on his predecessor’s inaction.

“Ramey clearly failed to fulfill his duty of representing his client competently,” Zito wrote in a motion.

That accusation led to a Colorado federal court inquiry into whether sanctions against Ramey were necessary. Ramey responded that he was “appalled” at the suggestion he was to blame and filed disclosures highlighting AiPi’s role in the cases.

Ramey’s disclosures detailed their past connections: AiPi’s founder Eric Morehouse sought his help on a range of lawsuits in November 2021, according to a declaration describing how Ramey would enter appearances in the cases, and AiPi attorneys and staff “would handle the majority of the drafting, including discovery.”

Ramey represented 13 “case group entities” tied to AiPi, including the Delaware-based CTD Networks LLC, which sued Microsoft Corp. and several other tech heavyweights; Ice Rover LLC, which accused several cooler manufacturers of intellectual property theft; and Lauri Valjakka, a Finnish patent owner who took on Netflix Inc. and other streamers.

AiPi has pushed back at suggestions its principals were acting as behind-the-scenes lawyers, saying it “is not a law firm and has never held itself out as a law firm.”

In a responsive filing in the Colorado case, AiPi said it was formed in January 2016 “as a company that provides business consulting and support services to businesses and law firms.” Five years later, it pivoted to “arranging for financing of law suits by matching investors with patent owners.”

Still, several lawyers following the AiPi cases compared the company’s business model to that of IP Edge, which has drawn scrutiny from US District of Delaware Chief Judge Colm F. Connolly for secretly controlling patent litigation through shell companies it set up in that state.

Model ethics rules for lawyers limit the ability of a person investing in a lawsuit to control the direction of a case or interfere with decisions made by the attorney and the client, said Pat Muffo, a shareholder at Polsinelli PC.

“Put simply, litigation funders can’t control the litigation. But that’s what AiPi did,” Muffo said, pointing to Ramey’s declarations stating that AiPi “controlled the cases, strategy, settlements” and also “prepared claim charts and other work product.”

Ramey told Bloomberg Law that accusations he’s faced from AiPi blaming him for litigation decisions are wrong.

“We strongly disagree that there was any bad lawyering,” he said in an email. He declined further comment on any of the AiPi-linked cases due to the ongoing litigation.

Zito, who has taken over most of Ramey’s AiPi-connected cases, said in a phone interview that he was “called in by old friends of mine to try to help them out of the Ramey situation.”

“They decided to stop paying Mr. Ramey because he was not doing quality work for their clients,” Zito said.

He also said the notion that AiPi was engaged in legal practice across the cases was directly contradicted by a Ramey filing from a different AiPi-linked case against Apple Inc., in which Ramey noted he’d worked with the staff at AiPi but then independently “reached an opinion that the claim charts were sufficient and the complaint adequate” before filing suit.

CTD Networks

Among the earliest cases where details of the fracture between Ramey and AiPi began to show was a suit from a little-known LLC based in Delaware.

CTD Networks was formed on July 25, 2022. Nine days later it paid a company called Inventship LLC $275,000 for seven network security patents—four active, three expired. It then sued some of the biggest tech companies in the world including Amazon.com Inc., Google LLC, and Microsoft.

Not much is publicly known about CTD beyond a description paragraph in its complaints, corporate registration documents, and an agreement filed with the US Patent and Trademark Office to establish its ownership of the patents.

Microsoft expressed frustration it’d been sued by companies represented by Ramey nine times in two years. The tech giant sought to recover attorneys’ fees in September as a penalty for CTD not clearly stating what Microsoft product allegedly copied CTD’s patents. Departing from convention, it sought to have the penalty paid not by CTD, but by Ramey’s firm.

“Microsoft takes this request for sanctions very seriously and files this motion only because it has become necessary to deter Ramey LLP from repeatedly filing baseless, nuisance-value suits against Microsoft and others,” the company said.

Calling CTD a likely shell company, Microsoft further argued it was necessary to seek the fees from Ramey’s firm directly, as “any money his clients receive—for example through settlements—are paid out to litigation funders” and to Ramey’s firm.

Ice Rover Suits

The funding situation became clearer in the Colorado case involving Ice Rover Inc., a Boulder-based cooler company. Ice Rover launched a patent litigation campaign in July 2022 targeting competitors like Yeti Coolers LLC and retail giant Walmart Inc. for allegedly copying a patented wheeled cooler marketed to campers.

Ramey filed nine Ice Rover’s suits in a Texas federal court popular among patent plaintiffs, but California Innovations, a Walmart supplier, preemptively sued Ice Rover in its home state of Colorado in September 2022.

Magistrate Judge N. Reid Neureiter asked Ramey in November 2023 to explain why he shouldn’t be sanctioned for failing to pursue discovery and for missing a hearing in the case. Neureiter’s order questioned whether Ramey and his firm “are spread too thin to provide competent representation.”

Ramey told the court several weeks later that his firm filed “217 cases” over the past year and represented parties that were sanctioned in six cases over a three-year period.

But he said his firm wasn’t without help: AiPi was assisting “with the legal work from drafting the cases through trial,” Ramey said. And Ramey said lawyers at AiPi—not him or his firm—were responsible for ignoring discovery in the case.

Ramey said Zito and AiPi’s broader arguments painting Ramey LLP as solely responsible for potential sanctions across several AiPi-linked cases should be rejected. Attorneys, “working through AiPi, were involved with drafting of all of the documents that led to the Defendants filing motions for sanctions,” he said.

Neureiter, who sat on the Colorado federal court’s disciplinary committee for ethical violations before joining the bench, said Ramey’s disclosure gave him “serious concerns” and “raised more questions than it answers.” But the judge hasn’t taken formal action in response to any of the filings from Ramey or AiPi.

Finnish Inventor

In Finnish inventor Lauri Valjakka’s suit against Netflix over streaming technology, AiPi also risks being drawn into the case.

Netflix moved to make AiPi party to the suit as it pursues attorneys’ fees following an October 2023 deposition where Valjakka stated that AiPi attorneys represented him “since the start” of the litigation in September 2021. According to Netflix’s motion, AiPi attorneys, including Morehouse, Erik Lund, and Ken Sheets,"claim to represent Valjakka in this action, although they haven’t entered appearances.” Netflix also characterized AiPi as Valjakka’s “litigation funder.”

AiPi again responded that it is “not a law firm and does not provide legal services” and also didn’t fund the Valjakka suit, instead managing a fund on behalf of other unnamed investors backing the suits. AiPi said the fund collected $1.3 million from five settlements, much of which has been distributed, but it is “not the master in control of the litigations or in control of the funds.”

Meanwhile, Valjakka, still represented by Ramey, filed a motion in December—still pending with the US District Court for the Northern District of California—seeking to prevent Whitestone from handling the case and foreshadowing a possible fraud claim against AiPi based on their funding agreement. On Tuesday, however, Ramey filed a motion to withdraw from the case, citing “irreconcilable differences in strategy between Ramey and Valjakka” and lack of payment.

Zito said in a phone interview that Ramey was distorting the issue: “It’s a fee dispute; it’s not because of fraud.”

For some of the defendants in the still-active AiPi-linked cases, the infighting between Ramey and the firm has been eye opening.

Jonathan Lamberson, a White & Case LLP partner who is seeking attorneys’ fees for Microsoft in the CTD Networks case, said who should ultimately be responsible has grown murkier as more information has been divulged.

“I think it’s hard to know right now, he said.” “Is this a Ramey problem, is it an AiPi problem, is it both?”

The cases are:

• CTD Networks, LLC v. Microsoft Corp., Fed. Cir., 23-2429;
• CTD Networks, LLC v. Microsoft Corp., W.D. Tex., 6:22-cv-1049;
• Cal. Innovations Inc. v. Ice Rover, Inc., D. Colo., 1:22-cv-1986;
• Valjakka v. Netflix, Inc., N.D. Cal., 4:22-cv-1490.