East Texas Was Top District in Q3 as Delaware Disclosure Drama Continued

The Eastern District of Texas remained the top patent district in Q3 2024 for both overall litigation and NPE litigation, by a wide margin in both categories. In a distant second place was the District of Delaware, which saw a third as many overall filings—less than 30% of which came from NPEs. The Western District of Texas was in fourth place overall, though it was the number-two district for NPE litigation.

The District of Delaware has fallen considerably in the NPE rankings, likely as the result of a still-ongoing battle over heightened disclosure requirements that Chief Judge Colm F. Connolly imposed in his courtroom in April 2022. Later that year, Judge Connolly grew concerned about potential fraud and attorney misconduct centered around the primary monetization scheme of Texas firm IP Edge LLC and its consulting arm MAVEXAR LLC, the details of which were drawn into the judicial spotlight after certain plaintiffs under the IP Edge umbrella failed to comply with those disclosure rules. A contentious and drawn-out investigation followed as Judge Connolly probed further, holding evidentiary hearings in which he questioned a range of individuals involved in this scheme—including those plaintiffs’ attorneys, and the individuals, not otherwise patent professionals, who have served as the entities’ nominal owners—and ordering the sweeping production of documents.

All of this scrutiny culminated in the court’s issuance of letters to the US Department of Justice, to the USPTO, and to various state bodies regulating attorney behavior—while IP Edge, beginning in late 2022, stopped filing in Delaware entirely as a result of pressure from Judge Connolly’s investigations. Because IP Edge, which had previously been the top plaintiff by volume by a wide margin, accounted for the bulk of Delaware’s NPE litigation, those numbers plummeted without IP Edge and have not recovered since.

In the meantime, Judge Connolly has continued to seek more information on this scheme from two IP Edge-linked plaintiffs. One is Backertop Licensing LLC, which has tangled with Judge Connolly over the repeated refusal of its sole owner, Texas paralegal Lori LaPray, to return for a second round of in-person questioning about the assets, control, and behavior of Backertop—a back-and-forth that in August 2023 led Judge Connolly to impose a running civil contempt fine of $200 per open day of court for her continued resistance. After the Federal Circuit backed Judge Connolly in July, ruling that he had properly acted within his inherent authority by ordering her to appear and by imposing the fine, LaPray finally appeared before him on September 18 along with Backertop’s counsel. At that hearing, Judge Connolly refused to overturn the fine against LaPray, which by that point totaled $53K—stating that while he viewed her “to a large extent” as “a victim in this case”, it was necessary to send a “strong signal” that such “deceit” by IP Edge and MAVEXAR would not be tolerated. At that same hearing, Judge Connolly also questioned the counsel and individual owner of a second plaintiff, Swirlate IP LLC, ultimately referring that attorney to state disciplinary authorities.

See RPX’s third-quarter review for more on issues related to venue, plus coverage of other key trends impacting patent litigation in Q3 2024.