Lawyers associated with Houston patent monetization firm IP Edge LLC are facing possible ethics inquiries after a judge said they used “shell” companies to obscure involvement in a string of patent lawsuits.

Delaware federal Judge Colm F. Connolly said Monday that he plans to refer the lawyers to the Justice Department, U.S. Patent & Trademark Office, and state lawyer ethics officials.

The lawyers violated professional conduct rules in a scheme involving some 60 patent infringement suits in Delaware against Buzzfeed Inc., Imagine Learning, Inc., and CNET Media Inc., among others, Connolly found. IP Edge oversaw the litigation, but used LLCs to shield its involvement in the cases, Connolly said.

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,” Connolly wrote.

The sprawling 105-page opinion marks a turn in the investigation by Connolly, chief judge for the federal court in Delaware, into outside funding in a series of patent cases. The lawsuits allege infringements of various computer and cellphone technology patents.

Connolly began requiring third-party funding disclosures in April 2022 in response to concerns about funders covertly wielding influence in cases in his courtroom.

Nimitz Technologies, Mellaconic, and Lamplight Licensing filed lawsuits over patents effectively owned by IP Edge, Connolly found. All three firms did so under the influence of IP Edge, Connolly said.

The lawyers “may have perpetrated a fraud on the court by fraudulently conveying the patents asserted in this Court to a shell LLC and filing fictitious patent assignments,” Connolly said. The moves appear to be “all designed to shield the real parties in interest from the potential liability they would otherwise face,” he added.

Four lawyers for the LLCs—George Pazuniakis, Jimmy Chong, Andrew Curfman, Howard Wernow—will be referred to state bar groups for ethics inquiries, Connolly said.

Pazuniakis has called the probe a “judicial inquisition,” and challenged the judge’s authority to carry it out.

“Plaintiffs’ counsel followed the law, and had not done anything wrong or unethical or unprofessional,” Pazuniak said via email on Monday. “Thus, we are not concerned, but are thankful, that the issues are being transferred to neutral bodies for consideration.”

Chong, Curfman, and Wernow did not respond to requests for comment.

Connolly also said he would refer three attorneys affiliated with IP Edge for ethics inquiries: Papool Chaudhari, Gau Bodepudi, and Duy Tran. They did not respond to requests for comment.

Web of Lawsuits

Connolly’s opinion details the strategy behind the patent infringement suits.

He chided the attorneys for shifting liabilities—including potential attorneys’ fees and court sanctions—onto “relatively unsophisticated individuals” recruited to serve as owners of the LLCs that brought the lawsuits in his court.

“Instead of fulfilling those obligations, counsel treated the LLC plaintiffs as ‘mere inventory,’” he wrote. “Their loyalty was not to their clients, but rather to IP Edge.”

The lawyers “must accept the consequences that flow from that strategy,” Connolly said.

Connolly heard in hearings from participants who’d been lured into supporting IP Edge’s alleged scam by becoming owners of the supposed shell companies.

Houston software salesman Mark Hall and Waco, Texas, food truck operator Hau Bui, testified that they were recruited to become owners of several IP Edge-affiliated LLCs. The deals were pitched as investment opportunities or chances to earn passive income, they said.

Bui is the owner of Mellaconic IP LLC, an IP Edge entity subject to Connolly’s order that filed 18 lawsuits in the District of Delaware asserting infringement of a cellphone patent.

Nimitz Technologies filed several lawsuits over a patent tied to France Brevets, a sovereign state investment fund specializing in intellectual property that received €100 million in seed money from the French government.

France Brevets assigned the patent to Burley Licensing LLC, which was formed by IP Edge affiliate Mavexar. Per their agreement, Burley will pay France Brevets 35% of all gross revenue received as a result of monetizing and enforcement of the patent through March 2023.

Bloomberg LP is among the companies sued by Nimitz. Bloomberg Law is operated by entities controlled by Michael Bloomberg, the founder and majority owner of Bloomberg LP.

The case is Nimitz Techs. LLC v. CNET Media, Inc., D. Del., 1:21-1247, mem. op. 11/27/23.