Microsoft Renews Push for Sanctions Against Texas IP Firm (1)

Microsoft Corp. asked a Texas federal judge to order Ramey LLP to pay $100,000 in sanctions for maintaining a patent-infringement lawsuit against the tech giant after the patent owner asked the law firm to dismiss.

CTD Networks LLC’s replacement counsel, Joseph Zito of DNL Zito, told Microsoft his client never approved certain litigation tactics by its former counsel Ramey, according to a renewed motion for sanctions filed June 14 in the US District Court for the Western District of Texas. Microsoft said Ramey didn’t inform CTD it was filing an amended complaint on the patent owner’s behalf and refused its client’s request to dismiss the lawsuit.

“These new facts confirm it was Ramey LLP that pursued baseless claims, ignoring its own client’s instructions, and thus Ramey LLP should be held liable for the fees Microsoft incurred defending against these claims,” Microsoft said in the motion.

Microsoft argued the small law firm—with only three partners—built its business around filing “frivolous” patent lawsuits and collecting “nuisance-value settlements.” Ramey LLP filed over 250 patent suits in the past year, including 80, in the Western District of Texas, according to the motion.

In February, Vizio Inc. won sanctions against another Ramey client, but failed to convince a judge to make the law firm liable.

CTD sued Microsoft in October 2022, alleging the company infringed four patents by incorporating security monitoring technology into its Microsoft Azure and Microsoft Security systems.

Ramey filed a second amended complaint in April 2023 without receiving CTD’s approval, which contained a new allegation and multiple errors, according to Microsoft.

Microsoft filed a motion to dismiss in the following month. Microsoft said it didn’t know at the time that CTD had told Ramey LLP to dismiss the complaint, but the law firm refused.

The court granted Microsoft’s motion to dismiss in August 2023 and Ramey filed a notice of appeal in September 2023, according to court records. The appeal was later dropped by CTD.

Microsoft filed a motion for sanctions in September, arguing Ramey was liable for attorneys’ fees in the dispute.

Ramey withdrew as CTD’s counsel in the district court case in December 2023, stating there was a conflict of interest.

Ramey Responds

Bill Ramey of Ramey LLP denied Microsoft’s allegations in an emailed statement. He said the dispute between the law firm and its former client CTD is a “fee issue.”

“It is not a secret that CTD and its financial backer AiPi, run by Eric Morehouse, owes Ramey LLP substantial money,” he wrote.

The CTD case was one of dozens connected to AiPi Inc. that Ramey withdrew his representation from, citing nonpayment.

Morehouse approved the law firm’s filings in the CTD case and was involved in the drafting of the second amended complaint, Ramey said.

The attorney said CTD approved the appeal filing but dropped the matter after settling with Microsoft.

“Microsoft and CTD are working together against Ramey LLP,” Ramey said.

White & Case LLP and Gillam & Smith LLP represent Microsoft. DNL Zito represents CTD.

The case is CTD Networks LLC v. Microsoft Corporation, W.D. Tex., No. 6:22-cv-01049, renewed motion for sanctions filed 6/14/24.