ZERTO, INC.v.EMC Corporation

Patent Trial and Appeal Board

Feb 20, 2015

08935844 (P.T.A.B. Feb. 20, 2015)

Trials@uspto.gov Paper 33
571-272-7822 Entered: March 3, 2015
UNITED STATES PATENT AND TRADEMARK OFFICE
BEFORE THE PATENT TRIAL AND APPEAL BOARD
ZERTO, INC.,
Petitioner,
v.
EMC CORPORATION,
Patent Owner.
Case IPR2014-01329
Patent 7,647,460 Bl
Before KARL D. EASTHOM, MICHAEL R. ZECHER, and
GEORGIANNA W. BRADEN, Administrative Patent Judges.
EASTHOM, Administrative Patent Judge.
DECISION
Denying Institution of Inter Partes Review
37 C.P.R. § 42.108
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Patent 7,647,460 B1
I. INTRODUCTION
Petitioner, Zerto, Inc., filed a Petition ("Pet.") requesting an inter
partes review of claims 1-5, 9-14, 17-19,22-25, 27-32, 36-40, and 42-46
of U.S. Patent No. 7,647,460 B1 ("the '460 patent," Ex. 1001). Paper 1.
Patent Owner, EMC Corporation ("EMC"), timely filed unredacted and
redacted versions of a Preliminary Response (Papers 11 and 12, "Prelim.
Resp."), l along with a First Motion to Seal (Paper 13) and default Protect
Order set forth in Appendix B of the Office Trial Practice Guide ("Practice
Guide"), 77 Fed. Reg. 48,756, 48,756-66 (Aug. 14,2012).
Shortly before EMC filed its Preliminary Response, we granted-in­
part EMC's Motion for Additional Discovery that was directed to the issue
of whether Zerto, Inc.'s parent entity, Zerto, Ltd., should have been
identified as a real party-in-interest in the Petition, as required by 35 U.S.C.
§ 312(a)(2). Paper 10. In our Decision granting-in-part EMC's Motion for
Additional Discovery, we ordered Zerto, Inc. to: (1) produce an inter­
company agreement between Zerto, Inc. and Zerto, Ltd.; and (2) if
necessary, make the Chief Executive Officer ("CEO") of Zerto, Inc. and
Zerto, Ltd., Mr. Ziv Kedem, available for a deposition that would be
confined to the narrowly tailored topics outlined in EMC's discovery request
(Ex. 2002). Paper 10, 10.
In support of its Preliminary Response, EMC filed the inter-company
agreement between Zerto, Inc. and Zerto, Ltd. (Ex. 2024), the entire
1 Citations hereinafter correspond to the redacted version of each paper.
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transcript of Ziv Kedem's deposition (Ex. 2045), unredacted and redacted
versions of Observations regarding this deposition testimony (Papers 18 and
19), and a Second Motion to Seal (Paper 21). Zerto, Inc. then filed redacted
and unredacted versions of a Reply to EMC's Preliminary Response (Papers
24 and 25, "Pet. Reply"), along with a Third Motion to Seal (Paper 22). In
its Reply to EMC's Preliminary Response, Zerto, Inc. maintains that it was
not required to identify Zerto, Ltd. as a real party-in-interest in the Petition.
Pet. Reply 1-7. Finally, EMC filed redacted ana unredacted versions of a
Sur-Reply (Papers 26 and 27, "PO Sur-Reply"), along with a Fourth Motion
to Seal (Paper 28). We have jurisdiction under 35 U.S.C. § 314.
Section 312 of title 35 of the United States Code establishes the
requirements of a petition for an inter partes review. Section 312 states, in
relevant part, that a petition "may be considered only if- ... (2) the petition
identifies all real parties in interest." 35 U.S.C. § 312(a)(2) (emphases
added). Upon considering the record in its entirety, we are persuaded that
Zerto, Inc. should have identified Zerto, Ltd. as a real party-in-interest in the
Petition, as required by 35 U.S.C. § 312(a)(2). We, therefore, deny the
Petition.
A. Related Matters
The parties indicate that the'460 patent was asserted in a district court
case captioned EMC Corp. & EMC Israel Dev. Ctr., Ltd. v. Zerto, Inc., No.
12-CV-00956 (D. Del). Pet. 1; Paper 5, 1. The evidence of record indicates
that the complaint in this district court case was served on or around August
21,2013. Ex. 2003. In addition to the Petition in this proceeding, Zerto,
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Inc. filed three other Petitions challenging the patentability of a certain
subset of claims in the following patents owned by EMC: (1) U.S. Patent
No. 7,603,395 B1 (Case IPR2014-01254); (2) U.S. Patent No. 7,971,091 B1
(Case IPR2014-01295); and (3) U.S. Patent No. 6,073,222 (Case IPR2014­
01332). Paper 5, 2.
B. Factual Background
In November 2009, Messrs. Ziv and Oded Kedem founded Zerto, Ltd.
in Israel to sell disaster recovery software that they had designed and
developed. Ex. 20031f1f 40,49; Ex. 20041f1f 40, 49. According to an article
published in the Wall Street Journal, Ziv Kedem stated that "[w]e
recognized early that the U.S. would be our largest target market, so
naturally we wanted to open an office where we had access to both
customers as well as top talent for our sales and marketing teams. Boston
proved to be the ideal location for our U.S. headquarters." Ex. 2005, 1. In
May of 2011, Zerto, Inc. was founded as a United States entity-located in
Boston, Massachusetts-to sell the disaster recovery software designed and
developed by Ziv and Odem Kedem. Ex. 20031f1f 41,50; Ex. 20041f1f 41,
50. As such, Zerto, Inc. is a wholly-owned subsidiary of Zerto, Ltd.
Ex. 2003 1f 44; Ex. 2004 1f 44. Ziv Kedem is the CEO of Zerto, Ltd. and
President/CEO of Zerto, Inc. Ex. 20031f 42; Ex. 20041f 42. Oded Kedem is
the Chief Technology Officer ("eTO") ofZerto, Ltd. and member of the
Board of Directors for Zerto, Inc. Ex. 20031f 43; Ex. 20041f 43. The
members of the Board of Directors for Zerto, Ltd. and Zerto, Inc. are
identical. Compare Ex. 2006, with Ex. 2007.
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Although there is a website-http://www.zerto.com-andLinkedIn
webpage that corroborates this information to some extent, neither the
website nor the LinkedIn webpage differentiate clearly between Zerto, Ltd.
and Zerto, Inc. According to the "About Us" webpage on the website,
"Zerto was found in 2010 by a team of storage industry veterans," including
Ziv and Oded Kedem. Ex. 2009, 1. The LinkedIn webpage indicates that
"Zerto is dual-headquartered in Israel and the United States." Ex. 2010, 1.
The inter-company agreement between Zerto, Ltd. and Zerto, Inc.,
produced in accordance with our Decision granting-in-part EMC's Motion
for Additional Discovery, includes an indemnification clause. Ex. 2024,4.
During the deposition of Ziv Kedem, conducted in accordance with
our Decision granting-in-part EMC's Motion for Additional Discovery,
counsel for EMC inquired whether "[Zerto,] Inc. ever had a board of
directors meeting." Ex. 2045,45:3-4. Ziv Kedem testified that he couldn't
"recall a specific [Board of Director's meeting for Zerto, Inc.]." Id. at 45:5­
10. Counsel for EMC also inquired who was responsible for paying Foley
and Lardner, the law firm representing Zerto, Inc. in this proceeding. See id.
at 163:20-22; 164:12. Ziv Kedem testified that he didn't "know who
[provided] actual payment," but that payments generally are resolved by
Zerto, Ltd.' s "finance department," which "oversees the subsidiaries,"
including Zerto, Inc. Id. at 163:23-164:22. This is consistent with Ziv
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Kedem's prior testimony, in which he indicated that the financial reports of
Zerto, Ltd. and Zerto, Inc. are consolidated with the financial reports of all
the subsidiaries. See id. at 159:3-13.
II. ANALYSIS
We begin our analysis by explaining who has the burden of
establishing whether a third party has, or has not, been identified properly as
real party-in-interest in a petition, followed by principles of law that
generally apply to identifying a real party-in-interest in a given proceeding,
and then we address the parties' contentions directed to whether Zerto, Inc.
should have identified Zerto, Ltd. as a real party-in-interest in the Petition.
A. Burden
In an inter partes review, the statutory requirement under 35 U.S.C.
§ 312(a)(2) that a petition identify all real parties-in-interest is a threshold
issue. See ZOLL Lifecor Corp. v. Philips Elects. N. Am. Corp., Case
IPR2013-00606, slip op. at 7-8 (PTAB Mar. 20, 2014) (Paper 13). We
generally accept the petitioner's identification of real parties-in-interest at
the time of filing the petition. Changes to Implement Inter Partes Review
Proceedings, Post-Grant Review Proceedings, and Transitional Program for
Covered Business Method Patents; Final Rule, 77 Fed. Reg. 48,680, 48,695
(Aug. 14,2012). Our practice in this regard, however, acts as a rebuttable
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presumption that benefits the petitioner.2 When, as here, a patent owner
provides sufficient rebuttal evidence that reasonably brings into question the
accuracy of a petitioner's identification of real parties-in-interest, the burden
remains with the petitioner to establish that it has complied with the
statutory requirement to identify all real parties-in-interest. This allocation
of the burden for establishing whether a third party has, or has not, been
identified properly as a real party-in-interest appropriately accounts for the
fact that a petitioner is far more likely to be in possession of, or have access
to, evidence relevant to the issue than is a patent owner.
B. Principles ofLaw
The Practice Guide explains that that "[w ]hether a party who is not a
named participant in a given proceeding nonetheless constitutes a 'real
party-in-interest' ... to that proceeding is a highly fact-dependent question."
77 Fed. Reg. at 48,759. The Practice Guide cites Taylor v. Sturgell, 553
U.S. 880 (2008), as informing this determination. Taylor lists six categories
that create an exception to the common law rule that normally forbids non­
party preclusion in litigation. Id. at 893-95. Under the category relevant
here-namely, whether a third party exercises or could exercise control over
this proceeding-"[c]ourts and commentators agree ... that there is no
2 With a few exceptions not pertinent in this proceeding, the Federal Rules
of Evidence apply to an inter partes review. 37 C.F.R. § 42.62(a). "[T]he
party against whom a presumption is directed has the burden of producing
evidence to rebut the presumption. But this rule does not shift the burden of
persuasion, which remains on the party who had it originally." Fed. R.
Evid. 301 (emphasis added).
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'bright-line test' for determining the necessary quantity or degree of
participation to qualify as a 'real party-in-interest' ... based on the control
concept." 77 Fed. Reg. at 48,759 (citing Gonzalez v. Banco Cent. Corp., 27
F.3d 751, 759 (1st Cir. 1994).3 A third party's participation may be overt or
covert, and the evidence may be circumstantial, but the evidence, as a whole,
must show that the third party possessed effective control from a practical
standpoint. Gonzalez, 27 F.3d at 759. This inquiry is not based on isolated
facts, but rather must consider the totality of the circumstances. Id.
e. The Parties' Contentions
In its Petition, Zerto, Inc. identifies itself as the sole real party-in­
interest. Pet. 1. In its Preliminary Response, EMC contends that Zerto,
Inc.'s failure to identify Zerto, Ltd. as a real party-in-interest is fatal to the
Petition. Prelim. Resp. 1. EMC briefly describes the overlap between Zerto,
Inc. and Zerto, Ltd., as well as the relevant aspects of the co-pending district
court case (id. at 1-4), before presenting the following arguments: (1) Zerto,
Ltd. and Zerto, Inc. hold themselves out as a single entity and, therefore, we
should deny the Petition because it does not identify Zerto, Ltd. as a real
party-in-interest (id. at 4-8); (2) Zerto, Inc.'s failure to identify Zerto, Ltd. as
a real party-in-interest renders the Petition incomplete, and adding Zerto,
3 Another category discussed in Taylor that might be relevant here is a
special statutory scheme that forecloses successive attacks by third parties,
and otherwise is consistent with due process. Taylor, 553 U.S. at 895.
Examples of such schemes include bankruptcy and probate proceedings
(id.), which are similar in some respects with this proceeding because they
also consider the public interest.
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Ltd. as a real party-in-interest would require according the Petition a new
filing date, which, in turn, would fall outside the one-year time bar set forth
in 35 U.S.C. § 315(b) (id. at 9-10); and (3) dismissal of the Petition is the
consequence of the strategic decision made by Zerto, Inc. not to identify
Zerto, Ltd. as a real party-in-interest in the Petition (id. at 11-12).
In its Reply to EMC's Preliminary Response, Zerto, Inc. contends that
Zerto, Ltd. is not controlling or funding this proceeding. Pet. Reply 1-2
(citing Ex. 2045, 169:5-170:10). Zerto, Inc. argues that, although there is
some overlap between Zerto, Ltd. and Zerto, Inc., there is insufficient
evidence showing that someone from Zerto, Ltd. is acting for Zerto, Inc. in a
legal capacity. Id. at 4-5. Zerto, Inc. further argues that it has not
demanded that Zerto, Ltd. indemnify Zerto, Inc. with respect to the litigation
involving EMC. Id. at 6 (citing Ex. 2045, 170:11-20).
In its Sur-Reply, EMC contends that Zerto, Inc. has not met its burden
of showing that Zerto, Ltd. should not be identified as a real party-in-interest
in the Petition. PO Sur-Reply 1. Instead, EMC argues that, despite
exclusive access to the evidence, Zerto, Inc. does not provide sufficient
evidence demonstrating that it takes actions independent of Zerto, Ltd. (id. at
3), nor does Zerto, Inc. provide documentation showing that it paid for this
proceeding-not Zerto, Ltd. (id. at 1-2).
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D. The Evidence, as a Whole, Shows it is Unclear Whether Zerto, Ltd.
and Zerto, Inc. Operate as a Separate and Distinct Entities, or
Effectively Operate as a Single Entity
Upon reviewing the evidence presented by Zerto, Inc. and EMC, we
. are not persuaded Zerto, Inc. has met its burden of identifying all real
parties-in-interest in the Petition, as required by 35 U.S.C. § 312(a)(2). The
evidence of record demonstrates that, because Zerto, Ltd. and Zerto, Inc. are
so intertwined it is difficult for both insiders and outsiders to determine
precisely where one ends and the other begins, there exists an actual measure
of control or opportunity to control that reasonably might be expected
between entities in such a relationship. In other words, the evidence shows
that Zerto, Ltd. and Zerto, Inc. blur the lines of corporate separation, such
that in certain instances, these entities operate as a single entity.
As we explained previously, even though Zerto, Inc. is a whoUy­
owned subsidiary of Zerto, Ltd. (Ex. 2003 1f 44; Ex. 2004 1f 44), there is also
evidence indicating that these entities hold themselves out as a single entity.
Ziv Kedem is the CEO of both Zerto, Ltd. and Zerto, Inc. Ex. 2003 1f 42;
Ex. 2004 1f 42. The members of the Board of Directors for Zerto, Ltd. and
Zerto, Inc. are identical, as required by the by-laws of Zerto, Ltd. Compare
Ex. 2006, with Ex. 2007; Ex. 2045, 25:5-26:3. The website and LinkedIn
webpage that represents both Zerto, Ltd. and Zerto, Inc. does not
differentiate between these entities, but instead commonly refers to them as
simply "Zerto." Ex. 2009, 1; Ex. 2010, 1. For instance, the LinkedIn
webpage does not indicate that Zerto, Ltd. and Zerto, Inc. are separate and
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distinct entities because one is headquartered in Israel and the other is
headquartered in Boston, MA, but rather represents that Zerto is a single
entity that is dual-headquartered in Israel and the United States. Ex. 2010, 1.
Similarly, a Wall Street Journal article quotes Ziv Kedem as stating that "we
wanted to open an office where we had access to both customers as well as
top talent for our sales and marketing teams. Boston provided the ideal
location for our U.S. headquarters." Ex. 2005, 1 (emphases added).
The testimony offered by Ziv Kedem during his deposition does not
resolve the uncertainty with respect to whether Zerto, Ltd. and Zerto, Inc.
operate as separate and distinct entities, or effectively operate as a single
entity. For instance, when probing the differences between Zerto, Ltd. and
Zerto, Inc., counsel for EMC inquired whether Zerto Inc. had ever held a
Board of Director's meeting. Ex. 2045,45:3--4. In response, Ziv Kedem
testified that he couldn't "recall a specific [Board of Director's meeting for
Zerto, Inc.]." [d. at 45:5-10. If Zerto, Inc. has never held a Board of
Directors meeting, it is unclear then how Zerto, Inc. operates independently
of Zerto, Ltd. Without evidence suggesting otherwise, the implication is that
the operations of Zerto, Inc. are discussed at the Board of Director meetings
for Zerto, Ltd. Regardless whether this is a proper implication to draw from
Ziv Kedem's cited testimony, the lack of clarity concerning the manner in
which Zerto, Inc. operates independently of Zerto, Ltd. weighs in favor of
concluding that Zerto, Ltd. exercises control, at least in certain instances,
over Zerto, Inc.
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The inter-company agreement between Zerto, Ltd. and Zerto, Inc. is
another factor that weighs in favor of concluding that Zerto, Ltd. exercises
control over Zerto, Inc. in this proceeding. Ex. 2024. The indemnification
clause
Even though Ziv Kedem
testified that Zerto, Inc. has not demanded that Zerto, Ltd. indemnify Zerto,
Inc. with respect to this proceeding (Ex. 2045, 170:11-20), other testimony
from Ziv Kedem indicates that it is unclear who funded this proceeding.
For instance, when counsel for EMC inquired about who was funding
this proceeding, Ziv Kedem testified that he didn't "know who [provided]
actual payment," but that payments generally are resolved by Zerto, Ltd. 's
"finance department," which "oversees the subsidiaries." Ex. 2045, 163:23­
164:22. Ziv Kedem also testified that the financial reports of Zerto, Ltd. and
Zerto, Inc. are consolidated with the financial reports of all the subsidiaries.
See id. at 159:3-13. This cited testimony implies that the finances of both
Zerto, Ltd. and Zerto, Inc. are commingled such that the CEO of these
entities, Ziv Kedem, chose not to ascertain or demonstrate clearly who is
funding this proceeding. Although Zerto, Inc. is in the best position to
provide evidence relevant to the issue of funding, it did not produce receipts
or statements showing clearly that Zerto, Inc.-not Zerto, Ltd.-paid the
filing fees and legal expenses associated with this proceeding.
We recognize that at least one other panel of the Board has held that
an indemnification clause, by itself, is not dispositive with respect to
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whether the indemnitor exercises or could exercise control over an inter
partes review proceeding. See Samsung Elecs., Co., Ltd. v. Black Hills
Media, LLC, Case IPR2014-00737, slip op. at 4 (PTAB Nov. 4, 2014)
(Paper 7). To be clear, the isolated fact that Zerto, Ltd. must,
defend Zerto, Inc. is not, by itself,
dispositive in this case. Instead, as instructed by Gonzalez, 27 F.3d at 759,
we must consider the totality of the circumstances. Given that Zerto, Ltd.
and Zerto, Inc. have not maintained well-defined corporate boundaries, and
it is unclear who paid the filing fees and legal expenses associated with this
proceeding, we are not convinced it matters whether Zerto, Inc. officially
invoked the indemnification clause in the inter-company agreement.
We note that Zerto, Inc.'s position that Zerto, Ltd. is not controlling or
funding this proceeding is predicated, in part, on testimony elicited from Ziv
Kedem by counsel for Zerto, Inc. For instance, when counsel for Zerto, Inc.
inquired whether Zerto, Ltd. exercises control over Zerto, Inc. in this
proceeding, Ziv Kedem testified that: "I don't-I can't think of a way for
[Zerto, Ltd.] to control ... the IPR[]." Ex. 2045, 169:5-16. When counsel
for Zerto, Inc. inquired whether Zerto, Ltd. is funding this proceeding, Ziv
Kedem testified that: "No. I think [Zerto, Inc.] is paying for the IPR." Id.
at 170:6-10. Contrary to Zerto, Inc.'s assertions, Ziv Kedem's testimony
does not establish clearly that Zerto, Ltd. is not controlling or funding this
proceeding. See Pet. Reply 1-2. We view the lack of clarity in this cited
testimony as additional evidence of the pervasive nature of the corporate
blurring between Zerto, Ltd. and Zerto, Inc.
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Finally, Zerto, Inc. suggests that, under these particular circumstances,
we should exercise our discretion under 37 C.P.R. § 42.5(b) to suspend the
requirements of 37 C.P.R. § 42.106, which establishes the regulatory
requirements for according a petition a filing date, to allow Zerto, Inc. to
identify Zerto, Ltd. as a real party-in-interest in the Petition without effecting
the August 15, 2014, filing date. Pet. Reply 7. At best, Zerto, Inc. has
suggested that correction of the Petition is a potential remedy, while
simultaneously asserting that Zerto, Ltd. should not be identified as a real
party-in-interest in the Petition. Zerto, Inc., therefore, has failed to take the
necessary steps to put the merits of this position squarely before us.
When considering the totality of the circumstances, it is unclear
whether Zerto, Ltd. and Zerto, Inc. operate as separate and distinct entities,
or effectively operate as a single entity. The inter-company agreement and
the deposition testimony offered by Ziv Kedem do not resolve this
uncertainty. As we explained previously, because EMC provides sufficient
rebuttal evidence that reasonably brings into question the accuracy of a
Zerto, Inc.' s identification of real parties-in -interest, the burden remains with
Zerto, Inc. to establish that it has complied with the statutory requirement to
identify all real parties-in-interest. See supra, Section I1(A). Given the
uncertainty with respect to whether Zerto, Ltd. and Zerto, Inc. operate as
separate and distinct entities, or effectively operate as a single entity, we are
not persuaded that Zerto, Inc. has met its burden of identifying all real
parties-in-interest in the Petition, as required by 35 U.S.C. § 312(a)(2). To
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comply with this statutory requirement, the Petition should have identified
Zerto, Ltd. as a real party-in-interest.
E. Other Consideration
The Petition was accorded a filing date of August 19,2014. Paper 3,
1. At this stage of the proceeding, correction of the Petition to include Zerto,
Ltd. as a real party-in-interest would require assignment of a new filing date.
37 C.F.R. § 42.106(b). Granting Zerto, Inc. a new filing date would be futile
in this instance because, even if corrected, the earliest filing date that could
be accorded to the Petition would fall outside the one-year time bar for
pursuing an inter partes review set forth in 35 U.S.C. § 315(b).4
F. Motions to Seal
On December 3, 2014, EMC filed unredacted and redacted versions of
its Patent Owner Response (Papers 11 and 12), along with a First Motion to
Seal (Paper 13). The First Motion to Seal seeks to seal certain portions of
EMC's Patent Owner Response, Exhibit 2017, and Exhibit 2024. Exhibit
2017 includes a settlement agreement executed by EMC, its affiliate EMC
Israel Development Center, Ltd. ("EIDC"), and Zerto, Inc. to terminate two
prior inter partes review proceedings that Zerto, Inc. initiated against patents
assigned to EIDC. Those proceedings are Case IPR2013-00456 and Case
IPR2013-00457. When terminating both proceedings, we granted the
4 As we explained previously, the evidence of record indicates that Zerto,
Inc. was served with a complaint alleging infringement of the'460 patent on
or around August 21,2013. Ex. 2003. Therefore, the one-year time period
expired on or around August 21,2014. See 35 U.S.C. § 21(b).
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parties' joint request to treat the settlement agreement as business
confidential information. IPR2013-00456, Paper 14, 2; IPR2013-00457,
Paper 13, 2. Exhibit 2024 includes the inter-company agreement between
Zerto, Inc. and Zerto, Ltd. that Zerto, Inc. produced in accordance with our
Decision granting-in-part EMC's Motion for Additional Discovery.
On January 9,2015, EMC filed unredacted and redacted versions of
Observations regarding the deposition testimony of Ziv Kedem (Papers 18
and 19), along with a Second Motion to Seal (Paper 21). The Second
Motion to Seal seeks to seal certain portions of EMC's Observations
regarding Ziv Kedem's deposition testimony and Exhibit 2045. Exhibit
2045 includes the transcript of Ziv Kedem' s deposition that was conducted
in accordance with our Decision granting-in-part EMC's Motion for
Additional Discovery.
On January 14,2015, Zerto, Inc. filed redacted and unredacted
versions of a Reply to EMC's Preliminary Response (Papers 24 and 25),
along with a Third Motion to Seal (Paper 22). The Third Motion to Seal
seeks to seal certain portions of Zerto, Inc.' s Reply to EMC' s Preliminary
Response. On January 16, 2015, EMC filed redacted and unredacted
versions of a Sur-Reply (Papers 26 and 27, "PO Sur-Reply"), along with a
Fourth Motion to Seal (Paper 28). The Fourth Motion to Seal seeks to seal
certain portions of EMC's Sur-Reply.
The record for an inter partes review shall be made available to the
public, except that a document filed with a motion to seal shall be treated as
sealed until the motion is decided. 35 U.S.C. § 316(a)(I); 37 C.F.R. § 42.14.
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Our standard for granting a motion to seal is discussed in Garmin Int'l, Inc.
v. Cuozzo Speed Techs., LLC, Case IPR2012-00001 (PTAB March 14, 2013)
(Paper 34). In summary, there is a strong public policy for making all
information filed in an inter partes review proceeding open to the public. Id.
at 1-2. The standard for granting a motion to seal is "good cause."
37 C.F.R. § 42.54. The moving party bears the burden of showing that the
relief requested should be granted. 37 C.F.R. § 42.20(c). That includes
showing that the information is truly confidential, and that such
confidentiality outweighs the strong public interest in having an open record.
Given the public's interest in maintaining a complete and understandable
record, there is an expectation that confidential information relied upon in a
subsequent decision will be made public. See Practice Guide, 77 Fed. Reg.
at 48,760-61.
We have reviewed the unredacted versions ofEMC's Patent Owner
Response (Paper 11), EMC's Observations regarding the deposition
testimony of Ziv Kedem (Paper 18), Zerto, Inc,'s Reply to EMC's
Preliminary Response (Paper 25), and EMC's Sur-Reply (Paper 27), and the
unredacted versions of Exhibits 2017, 2024, and 2045. We are persuaded
/
that good cause exists to have most, but not all, of these documents remain
under seal. With the exception of Exhibits 2024 and 2045, the parties have
demonstrated that the redacted portions of these papers and exhibits contain
confidential information pertaining to either Zerto, Inc.'s business or EMC's
business, and are tailored narrowly to redact only confidential information.
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This Decision cites to excerpts from Exhibits 2024 and 2045. With
respect to Exhibit 2045, we are not persuaded that the entirety of Ziv
Kedem's deposition testimony constitutes confidential information,
especially the excerpts we cited in our analysis above. With respect to
Exhibit 2024, we only relied upon the indemnification clause in our analysis
above. Considering the stated importance and sensitivity of the information
included in Exhibit 2024, we are mindful that the public does not have an
interest in viewing the confidential information included in this Exhibit that
we did not rely upon to reach our decision.
We also recognize that the First and Second Motions to Seal filed by
EMC respectively seek to seal Exhibits 2024 and 2045, yet the information
disclosed therein constitutes confidential information of Zerto, Inc. As such,
EMC's interest in maintaining these exhibits under seal is not aligned with
its initial request to seal the confidential information disclosed therein,
which appears to have been filed as a courtesy to Zerto, Inc., beca~se it does
not constitute confidential information of EMC.
In light of the public's interest in maintaining a complete and
understandable record, as well as the parties' interest in protecting truly
sensitive information that is not necessary to reach our decision, the parties
are ordered to file jointly new proposed, redacted versions of Exhibits 2024
and 2045 by Mach 15, 2015. These newly proposed, redacted versions of
Exhibits 2024 and 2045 should only redact information that is truly
confidential, as well as account for the public's interest in understanding
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how we reached our decision. If further guidance is necessary, the parties
may request a conference call with the panel.
In the meantime, this Decision has been filed "For Board and Parties
Only." After we receive the parties' new proposed, redacted versions of
Exhibits 2024 and 2045, we will determine if the proposed redactions are
consistent with the guidance we provided above and, thereafter, issue a
subsequent public Decision. If the parties do not file new proposed,
redacted versions of Exhibits 2024 and 2045 by March 15,2015, we will
issue a public Decision and unseal both Exhibits in their entirety.
III. ORDER
In consideration of the foregoing, it is
ORDERED that the Petition is DENIED and no trial is instituted;
FURTHER ORDERED that the First and Second Motions to Seal are
PROVISIONALLY GRANTED. Exhibit 2017 will remain sealed. The
redacted versions of Exhibit 2024 and 2045 are expunged. The parties are
authorized to file jointly new proposed, redacted versions of Exhibits 2024
and 2045 by March 15, 2015. The new proposed, redacted versions of these
Exhibits should be filed as Exhibits 2024 and 2045, respectively, and labeled
,
"new proposed, redacted versiQns." No other changes to these Exhibits are
authorized;
FURTHER ORDERED that the Third Motion to Seal is GRANTED;
and
FURTHER ORDERED that the Fourth Motion to Seal is GRANTED.
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For PETITIONER:
Matthew B. Lowrie
Aaron W. Moore
James C. De Villis
Foley & Lardner, LLP
Mlowrie-PTAB@foley.com
Amoore-PT AB@foley.com
For PATENT OWNER
Richard Giunta
Edmund J. Walsh
Marc S. Johannes
Wolf, Greenfield & Sacks, P.C.
Rgiunta-PTAB@wolfgreenfield.com
Ewalsh-PT AB@wolfgreenfield.com
Mjohannes-PTAB@wolfgreenfield.com
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