Earlier this month the Federal Circuit issued its opinion in Backertop Licensing LLC v. Canary Connect, Inc., a patent case that attracted an amicus brief. In this case the Federal Circuit reviewed a determination by the District of Delaware that an out-of-state non-party was in contempt of court for disregarding an order requiring her to testify at a hearing. The Federal Circuit, in an opinion authored by Judge Hughes that was joined by Judges Prost and Stoll, affirmed the contempt order of the district court. This is our opinion summary.
Judge Hughes began by outlining the procedural and factual background of the case,
Over the past year and a half, the Chief Judge of the District of Delaware has identified potential attorney and party misconduct in dozens of related patent cases. . . . In the District Court’s detailed memorandum, it found that IP Edge and Mavexar appear to have created all of the plaintiff LLCs; recruited outside individuals to serve as their sole owners; assigned patents to the plaintiff LLCs . . . . The District Court developed concerns that this arrangement may conceal from the court the real parties in interest . . . . Ms. LaPray is the sole owner of Backertop. In 2022, Backertop filed at least twelve patent infringement cases in federal district courts in California, Colorado, New York, Texas, and Delaware. . . . In the Backertop cases, the District Court identified the same pattern of potential misconduct seen in the other IP Edgelinked and Mavexar-linked cases. . . . In March 2023, after this court denied the mandamus petition challenging the production orders in In re Nimitz. . . [t]he District Court also ordered Ms. LaPray to submit a declaration identifying ‘any and all assets owned by Backertop.’ . . . On May 1, 2023, the District Court set a hearing for June 8, 2023 . . . . The District Court notified the parties that it had ‘questions for Ms. LaPray about the production[, which] require her physical presence in court’ to ‘assess her credibility.’ . . . Despite her previous attendance at a hearing in Delaware on November 10, 2022, Ms. LaPray notified the District Court that she was unable to attend the June 8, 2023, hearing in-person as ordered. . . . To accommodate Ms. LaPray’s specific conflict from June 8 to June 15, 2023, the District Court set a new hearing for July 20, 2023. . . . For the first time, Backertop also argued in its motion for reconsideration that Federal Rule of Civil Procedure 45’s geographic limit precludes the District Court’s order requiring Ms. LaPray to appear in Delaware. . . . After first noting that the argument had been forfeited for failure to raise it earlier, the District Court rejected the argument on the merits. . . . After Ms. LaPray refused to attend the July 20, 2023, hearing, the District Court held a show cause hearing on August 1, 2023, to provide Ms. LaPray with an opportunity to show why she should not be held in civil contempt. Ms. LaPray did not appear at that hearing. . . . The District Court found Ms. LaPray in civil contempt of court and imposed a fine of $200 per day until Ms. LaPray appeared in-person in court. Backertop and Ms. LaPray appealed the District Court’s orders
Judge Hughes began his analysis for the court by explaining how the panel reviews “[t]he District Court’s exercise of its inherent power . . . for abuse of discretion,” but “[w]hether the District Court possesses a particular inherent power . . . is a question of law reviewed de novo.”
On the merits, Judge Hughes pointed out that “[t]he District Court’s order did not conflict” with Federal Rule of Civil Procedure 45, “because that Rule does not limit the geographical range of a court’s ability to sua sponte issue an order to appear.” He explained that Rule 45 “only applies to a party or attorney’s efforts to subpoena a person required to attend a trial, hearing, or deposition within a 100-mile radius.” “Nowhere,” he continued, does Rule 45 “mention the court’s own orders to appear.” As a result, Judge Hughes concluded, “the District Court’s order requiring Ms. LaPray to appear at an in-person hearing falls squarely within its inherent powers.”
Judge Hughes also concluded that “[t]he District Court’s order to compel Ms. LaPray’s attendance was an appropriate means to investigate potential misconduct involving Backertop, a corporate party of which she is the sole representative.” As a result, “it was not an abuse of discretion.”
As a result of its analysis, the Federal Circuit affirmed the district court.