The article says “All they had to do was become the owners of a patent assertion entity, and accept the "liabilities" that come along with that.”

Can you say more what this means? What were the risks these people were (I would guess unknowingly) accepting in return for their 5-10% if things went ‘well’?

They seemed unsure at the hearing of what exactly they had signed up for.

Certainly, their LLCs could be subject to attorneys fees if the Court awards fees (which it generally only does in exceptional cases) or for sanctions based on attorney behavior.

However, normally, only their LLCs would be liable rather than the owners personally--unless they fail to observe the corporate formalities.

Once they own the patent, could they not break with MAVEXAR and keep 100% of what they would get from the litigation? In theory, I'm aware they probably had neither the know-how nor the funding.

> However, normally, only their LLCs would be liable rather than the owners personally--unless they fail to observe the corporate formalities.

Failing to observe which formalities in particular would expose them personally to such liability?

Commingling assets, undercapitalization

> They seemed unsure at the hearing of what exactly they had signed up for.

One even had no idea what the name of the patent "he" owned was, or what it was for.

It sounds like a trade. I give you a patent, aka cause of action, and in return you cut me in on your winnings. But if you lose you're on your own.

It spreads downside risk directly. It also makes unraveling the real interests harder.

It's a clever, evil hack of the justice system. It's very cool this judge uncovered it. I hope they get nailed and I hope we close these loopholes.