Judge Connolly’s Disclosure Push in Delaware Forces Top Filer to Change Course

Over the past several months, patent litigants have been closely watching a “Series of Extraordinary Events” that have been playing out in Delaware as the result of a pair of standing orders issued by Chief Judge Colm F. Connolly in April 2022: one requiring litigants in his courtroom to disclose details related to any nonrecourse funding arrangements with third parties, and the other forcing the broad disclosure of corporate management and control.

While all parties appearing before Judge Connolly must comply with these orders, perhaps the most impacted has been monetization firm IP Edge LLC. Throughout the fall, Judge Connolly repeatedly questioned a group of plaintiffs apparently connected to IP Edge over their alleged noncompliance with his standing orders—including for their failure to disclose links to IP Edge as well as an associated entity, the supposed consulting firm MAVEXAR LLC. After discovering this, Judge Connolly held a series of especially revealing evidentiary hearings and then ordered the parties to produce a wide-ranging ream of information on their ownership/control, assets, and legal representation. Judge Connolly has since rejected attempts to reconsider those orders, while a related appellate battle is now playing out. One plaintiff linked to IP Edge, Nimitz Technologies LLC, has signaled that it may turn to the Supreme Court after the Federal Circuit declined to rehear its appeal arguing that Judge Connolly’s investigation has violated core principles of attorney-client privilege—also denying Nimitz’s request to stay its mandate in the meantime. Additionally, two related plaintiffs have challenged his authority to issue the standing orders in the first place.

Perhaps as a result of the pressure it has faced in Delaware, IP Edge has halted its activity there entirely. It did not file a single case in that venue in all of the fourth quarter, and for the month of December it even stopped filing litigation altogether, in any district (though it has since begun to file once again).

The result has been a dramatic dip for Delaware’s NPE numbers overall. As illustrated below, IP Edge has accounted for the majority of all Delaware NPE litigation since Q3 2020, dropping off only in Q3 2022 (when Judge Connolly began pressuring the entities mentioned above). In Q4, when IP Edge filed no Delaware cases, the district saw just 51 defendants added by other NPEs, a 62% drop from Q4 2021 (during which NPEs collectively added 138 defendants, at that point including IP Edge).

See RPX’s fourth-quarter review for more on Judge Connolly and Delaware, as well as other key trends that impacted patent litigation and the patent marketplace in Q4 and 2022.