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Shopify seeks funding disclosures from patent owner in Texas lawsuit

FILE PHOTO: The logo of Shopify is seen outside its headquarters in Ottawa

By Blake Brittain

(Reuters) - E-commerce company Shopify on Monday asked a federal judge in West Texas to force a patent owner suing it for infringement to reveal its financial backers, arguing the disclosures are necessary to prevent potential conflicts of interest.

Shopify said there was evidence that Lower48 IP LLC is backed by previously undisclosed litigation funders. "Unless the court requires disclosure of third-party interests, neither the court nor Shopify will know who the beneficiaries of this litigation are," its lawyers wrote.

Shopify general counsel Jess Hertz said in a statement that it would "aggressively" seek to expose companies that it said "stealthily orchestrate hundreds of patent litigation cases yearly" seeking quick payouts.

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Representatives for Lower48 and alleged funders IP Edge and the US Innovation Fund did not immediately respond to requests for comment on the motion.

Lower48 sued Shopify last year, alleging several features of Shopify's software infringe four patents related to the GraphQL computer language.

Shopify said a document assigning the patents to Lower48 listed email addresses associated with IP Edge, a self-described patent monetizer. Shopify said Lower48's registered agent and manager is also a senior executive for tech investor US Innovation Fund.

Shopify told U.S. District Judge David Ezra that Lower48 refused to provide it information about third-party interests in the case. It said a court order requiring Lower48 to disclose the information was "critically important" for identifying conflicts and avoiding the appearance of impropriety.

Shopify's motion cited a standing order issued last year by Delaware federal judge Colm Connolly requiring plaintiffs to disclose third parties with financial interests in their litigation. IP Edge's alleged secret backing of other patent-assertion entities is at issue in a case before Connolly.

Connolly also criticized patent owner VLSI Technology last year for disclosing insufficient information about its backers in a high-stakes patent lawsuit against Intel. VLSI agreed to drop the lawsuit in December.

The case is Lower48 IP LLC v. Shopify Inc, U.S. District Court for the Western District of Texas, No. 6:22-cv-00997.

For Lower48: Oded Burger of Daignault Iyer, Raymond Mort of the Mort Law Firm

For Shopify: Gregory Lantier and Brittany Amadi of Wilmer Cutler Pickering Hale & Dorr

Read more:

Delaware judge justifies litigation funding ‘inquisition’ in thriller order

Patent plaintiff can't block order to disclose funding, appeals court says

Judge hits pause in Intel patent case, says VLSI must detail investors

Intel, VLSI drop Delaware dispute in blockbuster patent fight

(Reporting by Blake Brittain in Washington)