Lawyers battle over litigation funder’s role in Microsoft patent dispute

A lawyer has asked to withdraw from a patent dispute involving Microsoft, citing a conflict with a litigation funder and allegedly unpaid fees.

On December 11, William Ramey, a lawyer at Ramey LLP, filed a motion at the Court of Appeals for the Federal Circuit in which he asked to withdraw himself from CTD Networks v Microsoft.

Ramey was representing CTD Networks, an electronics company, in the case before the District Court for the Western District of Texas.

Ramey filed the motion on the basis that he had a “direct conflict” with Virginia-based litigation funding company AiPi, which he claimed controlled CTD Networks.

Attorneys are required to file motions with courts requesting permission to withdraw from representing clients.

Ramey also highlighted concerns about AiPi’s co-founder Eric Morehouse.

According to Ramey’s motion, Morehouse mentioned on “multiple occasions” that he controlled several “case groups”, including CTD Networks, through AiPi.

“Morehouse explained that he controls CTD because he bought the [company’s] patents which allowed him to do what he wants with the patents and settlements.”

Ramey added that Morehouse had told him that AiPi was both a litigation funder and a law firm.

According to Ramey, Morehouse would use both AiPi and his own law firm, Whitestone Law, to find potential clients and draft complaints. Those complaints would then be sent to Ramey with instructions to file lawsuits.

Ramey claimed that although Morehouse initially paid him according to the terms of agreement, subsequent payments were not made in full.

At one point, Morehouse told Ramey his bank accounts had been frozen due to a fraud investigation, the motion said.

The motion added: “Ramey LLP has a direct conflict with the entities controlling CTD Networks, namely AiPi. Ramey LLP and its lawyers cannot continue to represent CTD Networks given the conflict and the lack of payment."

On Wednesday, December 13, Joseph Zito, an attorney at Whitestone Law, filed a response on behalf of CTD Networks.

CTD's response said Ramey is facing sanctions in a number of separate matters in other jurisdictions and has been sanctioned in other cases over the past few years.

It stressed that CTD Networks is not controlled by any other party.

“Undersigned counsel is aware that a fee dispute exists between AiPi and the Ramey firm but is not aware of any details of that dispute. No acts of AiPi’s are prejudicing nor have prejudiced the rights of CTD Networks,” Zito’s response said.

It added that CTD Networks had no objection to Ramey withdrawing from representing it in the Microsoft case.

However, the response added that Ramey and his firm cannot withdraw fully from the case because Microsoft is seeking sanctions against him.

Microsoft filed a motion for sanctions against Ramey in September, claiming that the lawyer knowingly filed a meritless claim in the dispute.

The dispute comes at a time when many stakeholders are calling for more transparency into who is behind litigation funding and litigation in general.

AiPi describes itself as a provider of “innovation management services” that include IP litigation finance.

Managing IP contacted Morehouse and AiPi for comment but did not receive a response.A lawyer has asked to withdraw from a patent dispute involving Microsoft, citing a conflict with a litigation funder and allegedly unpaid fees.

On December 11, William Ramey, a lawyer at Ramey LLP, filed a motion at the Court of Appeals for the Federal Circuit in which he asked to withdraw himself from CTD Networks v Microsoft.

Ramey was representing CTD Networks, an electronics company, in the case before the District Court for the Western District of Texas.

Ramey filed the motion on the basis that he had a “direct conflict” with Virginia-based litigation funding company AiPi, which he claimed controlled CTD Networks.

Attorneys are required to file motions with courts requesting permission to withdraw from representing clients.

Ramey also highlighted concerns about AiPi’s co-founder Eric Morehouse.

According to Ramey’s motion, Morehouse mentioned on “multiple occasions” that he controlled several “case groups”, including CTD Networks, through AiPi.

“Morehouse explained that he controls CTD because he bought the [company’s] patents which allowed him to do what he wants with the patents and settlements.”

Ramey added that Morehouse had told him that AiPi was both a litigation funder and a law firm.

According to Ramey, Morehouse would use both AiPi and his own law firm, Whitestone Law, to find potential clients and draft complaints. Those complaints would then be sent to Ramey with instructions to file lawsuits.

Ramey claimed that although Morehouse initially paid him according to the terms of agreement, subsequent payments were not made in full.

At one point, Morehouse told Ramey his bank accounts had been frozen due to a fraud investigation, the motion said.

The motion added: “Ramey LLP has a direct conflict with the entities controlling CTD Networks, namely AiPi. Ramey LLP and its lawyers cannot continue to represent CTD Networks given the conflict and the lack of payment."

On Wednesday, December 13, Joseph Zito, an attorney at Whitestone Law, filed a response on behalf of CTD Networks.

CTD's response said Ramey is facing sanctions in a number of separate matters in other jurisdictions and has been sanctioned in other cases over the past few years.

It stressed that CTD Networks is not controlled by any other party.

“Undersigned counsel is aware that a fee dispute exists between AiPi and the Ramey firm but is not aware of any details of that dispute. No acts of AiPi’s are prejudicing nor have prejudiced the rights of CTD Networks,” Zito’s response said.

It added that CTD Networks had no objection to Ramey withdrawing from representing it in the Microsoft case.

However, the response added that Ramey and his firm cannot withdraw fully from the case because Microsoft is seeking sanctions against him.

Microsoft filed a motion for sanctions against Ramey in September, claiming that the lawyer knowingly filed a meritless claim in the dispute.

The dispute comes at a time when many stakeholders are calling for more transparency into who is behind litigation funding and litigation in general.

AiPi describes itself as a provider of “innovation management services” that include IP litigation finance.

Managing IP contacted Morehouse and AiPi for comment but did not receive a response.

Source: Managing IP - Rani Mehta

Editor: Peter