by Dennis Crouch
CTD Networks v. Microsoft (Fed. Cir. 2023)
This appeal was filed after CTD’s infringement case was dismissed on the pleadings with Judge Rodriguez (W.D.Tex.) finding the patentee failed to include plausible allegations of infringement of any claims from the patents-in-suit. U.S. Patent Nos. 8,327,442; 9,438,614; 9,503,470; and 11,171,974. Rather, according to the court, CTD improperly mixed and matched elements across Microsoft’s various software tools in its pleadings and failed plead that Microsoft makes, uses, or sells the required hardware components.
William P. Ramey III represented CTD in the district court and filed the notice of appeal. However, Ramey this week filed a blistering emergency motion to withdraw from the case. The motion levels a number of accusations against the funder of the litigation campaign (AiPi) and its cofounder Eric Morehouse. The central issues are that that AiPi has failed to pay legal bills and “controls” CTD to Ramey’s detriment, and in ways that have prevented him from withdrawing smoothly.
According to Ramey, Eric Morehouse originally induced AiPi as both a “patent litigation funder and law firm” and looked for Ramey to support the litigation alongside AiPi. But, Ramey asserts that AiPi have since reneged on paying for Ramey LLP’s work. “Morehouse personally guaranteed payment for all work performed,” Ramey avers, yet “no further payments have been made” despite Morehouse’s repeated assurances.
Ramey also claims he cannot continue representing CTD Networks because of an “direct conflict” with the party controlling that plaintiff – Morehouse and AiPi. Here is where the argument breaks down a bit. It seems that the direct conflict is basically (1) Non-payment of Ramey LLP’s legal fees by AiPi, Inc. (which purportedly controls the plaintiff CTD Networks LLC) and (2) Animosity between Ramey LLP and AiPi/Whitestone Law PLLC. (Whitestone is Morehouse’s separate law firm). But, at least at one level, the animosity appears to stem from the non-payment. I’m pointing this out here because non-payment of fees is not typically seen as the same level of conflict of interest as, for instance, a conflict between current clients. This is especially true where the non-payment is coming from a non-client.
The motion further alleges that Morehouse is purposefully trying to prejudice CTD’s case against Microsoft out of animosity toward Ramey LLP. For instance, no Whitestone attorney appeared for CTD Networks to facilitate Ramey’s withdrawal. And neither CTD, AiPi nor Whitestone seem willing to file an appellant brief in the Federal Circuit appeal.
In light of these purported breaches by his former collaborators, Ramey insists his firm cannot continue representing CTD Networks absent an immediate exit. Ramey seeks emergency permission to withdraw so his firm can still file its own appeal brief defending its interests, while leaving CTD to obtain replacement counsel.
A key feature of Ramey’s claim is that Morehouse and AiPi control CDT. This is important for the story so that he can show that his conflict with the former invade his lawyer-client relationship with the latter.
In a subsequent briefing also filed this week (in district court) CTD disputed Ramey’s claim that the plaintiff CDT is controlled by an adverse third party. The brief argues AiPi is not a law firm, but rather a patent prosecution and litigation support company that had engaged Ramey as lead counsel to file various patent cases on behalf of clients like CTD. “CTD Networks is not controlled by any other party.” According to the brief, AiPi “realized” in mid-2023 “that Mr. Ramey may not be able to properly represent the interests of clients sent to Mr. Ramey by AiPi.”
AiPi is not “adverse” to Mr. Ramey, AiPi is adverse to improper handling of litigation. In addition to Defendant’s pending Motion for Fees in this matter, Mr. Ramey is facing sanctions in a number of other matters in a number of other jurisdictions and has been sanctioned in a number of cases over the past few years.
The brief goes on to explain that over the summer AiPi brought in a different litigator (Joseph Zito from Morehouse’s Whitestone firm) who reviewed about 90 of Ramey’s cases and made appearances in 60 of them. The odd thing about this statement is how CDT’s brief explains that AiPi brought in Mr. Zito to do the work and make appearances in pending cases. It would have been a bit more comforting if the CDT brief had added a line stating that “CDT acting on its own accord engaged Zito.”
The CDT brief contends that by the time Zito was consulted on the CTD v. Microsoft case, the case was already at an advanced stage concerning Microsoft’s motion for fees. So no appearance was made. On December 13, Zito did file his appearance in the district court case (that is still pending on attorney fees) and indicated that it does not object to Ramey withdrawing from the case.
The appeal itself is still pending with CDT’s opening brief due shortly. Note here that Ramey filed a parallel motion in the pending appeal of CDT v. Google.
Just a reminder that this Judge Rodriguez is at the San Antonio, not Waco, division of W.D.Tex.
While this is more strange PAE & patent litigation funding entities conduct, legal media reports also indicate a national leader level practice of “stiffing” attorneys, as it is now apparently called.
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