Lawyers associated with the Houston patent monetization firm IP Edge LLC are facing possible ethics inquiries after a judge stated they used so-called “shell” companies to obscure their involvement in a slew of patent lawsuits. According to Delaware federal Judge Colm F. Connolly, the lawyers violated professional conduct rules in a scheme involving around 60 patent infringement suits in Delaware against various companies including Buzzfeed Inc., Imagine Learning Inc., and CNET Media Inc.
IP Edge is thought to have overseen the litigation, but apparently employed LLCs to protect its involvement in the cases. “The reality in these cases is that the de facto owner of the asserted patents—that is, the party that truly controls and profits from their assertion—is IP Edge,” wrote Connolly in his detailed 105-page opinion.
The judge found that Nimitz Technologies, Mellaconic, and Lamplight Licensing filed lawsuits over patents effectively owned by IP Edge, with all three firms operating under its influence. Connolly also suggested that other attorneys associated with IP Edge could face ethics investigations. Four lawyers representing the LLCs—George Pazuniakis, Jimmy Chong, Andrew Curfman, Howard Wernow—will reportedly be referred to state bar groups for ethics inquiries.
These proposed investigations followed a series of patent cases involving external funding, leading Connolly to mandate third-party funding disclosures in April 2022 in response to concerns about funders covertly exerting impact in cases within his court.
Connolly’s detailed opinion outlines the strategy applied for the patent infringement suits, noting that a web of lawsuits were filed by various firms under the influence of IP Edge. The lawsuits allege infringements of diverse computer and cellphone technology patents. Furthermore, the individuals listed as owners of the LLCs that brought the lawsuits in his court are deemed to be “relatively unsophisticated”, suggesting they were potentially shielded from the attorneys’ fees and court sanctions associated with such lawsuits.
Connolly stressed that the lawyers “must accept the consequences that flow from that [shielding] strategy.” Further hearings will be following from participants who allegedly were persuaded into supporting IP Edge’s supposed scam by becoming owners of the stated shell companies.
Meanwhile, Pazuniakis has challenged the judge’s authority to conduct an investigation, labelling the probe a “judicial inquisition“. He expressed confidence that the lawyers involved “followed the law, and had not done anything wrong or unethical or unprofessional,” adding that they were thankful the issues are being referred to neutral bodies for consideration.
Meanwhile, other attorneys affiliated with IP Edge were unreachable for comments. This includes the cases of Chaudhari, Bodepudi, and Tran, who also are set to be referred for ethics inquiries according to Connolly’s estimations. Further proceedings in the investigation are eagerly anticipated by the legal community.
For a full breakdown of the case details, please read through the opinions and document filings of the case, Nimitz Techs. LLC v. CNET Media, Inc., on record at the district court.