Judge Behind Litigation-Funding Probe Unloads After Forced Pause

Delaware’s chief judge issued a searing, 78-page defense of his “inherent authority” to order the production of evidence detailing who’s really funding two among a plethora of lawsuits by companies that don’t practice the patents they wield in court.

Judge Colm F. Connolly issued the opinion in the US District Court for the District of Delaware on Wednesday, the latest salvo in an unusual saga that has prodded heavyweights including Intel Corp. and Dish Network Corp. to enter the ring.

The day had been slated for Connolly’s third hearing in a series exploring who’s actually behind a rash of patent-infringement suits by so-called non-practicing entities whose owners and places of business often are shrouded. But the judge last week canceled the session, pausing a half-dozen cases, pending the Federal Circuit’s resolution of a mandamus petition filed by another of his targets, Nimitz Technologies LLC.

Nimitz argues Connolly has unfairly launched a “judicial inquisition” that seeks to access privileged information irrelevant to the patent cases. The appeals court froze Connolly’s order while it determines whether his request—which seeks information including bank statements and the content of litigation-related discussions—is justified.

Connolly, who was a federal prosecutor long before he took the court’s reins in Wilmington, wrote in Wednesday’s filing that he “purposely did not repeat” in his since-frozen order his concerns about the “professionalism and potential role in the abuse of the Court” of Nimitz’s lawyer, George Pazuniak. The judge said that although he “had serious concerns that counsel had violated the Rules of Professional Conduct,” he withheld those concerns at the time “because I have made no definitive conclusions about those issues, and I did not want to unnecessarily embarrass counsel.”

‘Inherent Power’

With Wednesday’s opinion, Connolly appears to have shed any reservations about embarrassing lawyers. He cited the Federal Circuit’s stay order “and the fact that I issued the Memorandum Order to protect important interests of this Court and not at Defendants’ request” as fueling his desire to “explain more fulsomely and in writing” what drove him to issue the order.

Connolly then laid out the timeline of his probe and rehashed exchanges from the first hearings. The opinion captures portions of the judge’s questioning of the plaintiffs’ purported owners that revealed they lack basic knowledge of their companies—at times, it reads likes dialogue in a screenplay, stretching for several pages at a time.

“It cannot be seriously disputed that I had the inherent authority to order the production of these records,” Connolly said, calling them “manifestly relevant to addressing the concerns I raised” at the Nov. 4 hearing.

Left unanswered, at this point, is whether there are “real parties in interest other than Nimitz, such as Mavexar and IP Edge, that have been hidden from the Court and the defendants.” Connolly also floated whether such parties have “perpetrated a fraud on the court” by transferring a patent to “a shell LLC” and “filing a fictitious patent assignment” with the US Patent and Trademark Office “designed to shield those parties from the potential liability they would otherwise face” in asserting the patent in lawsuits.

Connolly closed with an assertion of his own. When district judges can’t “point to a specific federal statute or the Federal Rules to explain their actions,” he said, Supreme Court precedent allows them to “safely rely on” their “inherent power.”

“I have so relied here,” he said.

Nimitz is represented by O’Kelly & O’Rourke LLC. Defendants are represented by Fish & Richardson PC.

The case is Nimitz Techs. LLC v. CNET Media Inc., D. Del., No. 21-cv-1247, opinion issued 11/30/22.