Judge’s Investigation Into Patent Troll Results In Criminal Referrals

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In 2022, three companies with strange names and no clear business purpose beyond  patent litigation filed dozens of lawsuits in Delaware federal court, accusing businesses of all sizes of patent infringement. Some of these complaints claimed patent rights over basic aspects of modern life; one, for example, involved a  patent that pertains to the process of clocking in to work through an app.

These companies–named Mellaconic IP, Backertop Licensing, and Nimitz Technologies–seemed to be typical examples of “patent trolls,” companies whose primary business is suing others over patents or demanding licensing fees rather than providing actual products or services. 

However, the cases soon took an unusual turn. The Delaware federal judge overseeing the cases, U.S. District Judge Colm Connolly, sought more information about the patents and their ownership. One of the alleged owners was a food-truck operator who had been promised “passive income,” but was entitled to only a small portion of any revenue generated from the lawsuits. Another owner was the spouse of an attorney at IP Edge, the patent-assertion company linked to all three LLCs. 

Following an extensive investigation, the judge determined that attorneys associated with these shell companies had violated legal ethics rules. He pointed out that the attorneys may have misled Han Bui, the food-truck owner, about his potential liability in the case. Judge Connolly wrote: 

[T]he disparity in legal sophistication between Mr. Bui and the IP Edge and Mavexar actors who dealt with him underscore that counsel’s failures to comply with the Model Rules of Professional Conduct while representing Mr. Bui and his LLC in the Mellaconic cases are not merely technical or academic.

Judge Connolly also concluded that IP Edge, the patent-assertion company behind hundreds of patent lawsuits and linked to the three LLCs, was the “de facto owner” of the patents asserted in his court, but that it attempted to hide its involvement. He wrote, “IP Edge, however, has gone to great lengths to hide the ‘we’ from the worl

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