Federal Circuit IP
Backertop Licensing v. Canary Connect
Case No. 23-2367, Precedential, (Fed. Cir. July 16, 2024)
Prost, Hughes, Stoll
Facts/Background:
- IP Edge and Mavexar create shell companies operated (in name) by unsophisticated individuals. IP Edge is allegedly using these shell companies as proxies for hundreds of lawsuits. LaPray is one of these individuals.
- This conduct comes to light when defendants and district court note that local rules regarding disclosure of real parties in interest and disclosure of 3rd party funding are not complied with.
- District court requires the individuals named as officers of the shell companies attend a hearing to sort through the “morass.” LaPray refuses and is held in civil contempt.
Issue: Do FRCP 45’s geographic limitations preclude the court from requiring Ms. LaPray to attending a hearing over 100 miles of her location (see FRCP 45(c)(1)(A))?
Holding: No, these orders were within the District Court’s inherent authority. FRCP 45 does not limit the geographical range of a court’s ability to sua sponte issue an order to appear.
Analysis:
- FRCP 45 governs party- and attorney-initiated subpoenas only.
- FRCP 45’s requirements would be illogical if applied to a court’s own orders.
- A court’s sua sponte order to appear does not raise the same policy concerns as a subpoena initiated by the parties.
Takeaways:
- In this case, defendants were partly responsible for initiating the investigation into the failure to comply with local rules, and into the relationship between IP Edge / Mavexar and the shell companies.
- Lawsuits fell apart quickly after the investigation began into this questionable arrangement, defendants were able to wash their hands of the suits entirely.