Takeaway: A company that holds itself out as a single entity with the petitioner implicitly has control over its actions and may provide grounds for seeking additional discovery into whether the company is a real party-in-interest.

In its Order, the Board granted-in-part Patent Owner’s Motion for Additional Discovery regarding whether Petitioner’s parent entity, Zerto, Ltd., should have been listed as a real party-in-interest.

In particular, Patent Owner sought (1) a specific “intercompany agreement” that Petitioner’s counsel indicated laid out the companies’ obligations, (2) documents relating to whether the parent “approves the budget and/or corporate plans for [Zerto, Inc.] and/or contributes to funding of the IPRs,” and (3) deposition of Ziv Kedem, both Petitioner’s and its parent’s highest ranking official.  The Board granted Patent Owner’s request (1) for the intercompany agreement as well as request (3) to depose Ziv Kedem.

The standard for granting additional discovery is whether the moving party has shown the discovery is in the interests of justice. The Board noted that the five Garmin factors are analyzed to determine if the requested discovery is in the interests of justice, but largely confined its analysis to the first factor of whether something useful will be found.

To satisfy the first factor, a movant must show more than a “mere possibility” or “mere allegation that something useful” will be found. Patent Owner relied upon the website of Petitioner’s parent.  Patent Owner argued that the website indicated that Petitioner and its parent held themselves out as a single entity, for example, indicating its dual headquarters and identifying a single management team located in both locations where Petitioner and its parent are situated.  Patent Owner also relied upon a newspaper article in which the CEO of both companies was quoted as referring to the companies collectively (e.g., “our sales and marketing teams” and “our U.S. headquarters”).  Patent Owner also cited case law holding that a parent is a real party-in-interest of its subsidiary.

As the Board noted, Petitioner did not oppose the first document request with particularity, but instead argued that it was “inappropriately broad and vague.” The Board also pointed out that Petitioner itself raised the “intercompany agreement” during the conference call in which Petitioner stated the agreement “lays out all those—the obligations between the companies.”  Based on the record, the Board found that Patent Owner established more than a mere possibility that something useful would be found from the requested discovery of the agreement.

With respect to the second request for documents “demonstrating that Zerto Ltd. approves the budget and corporate plan of Zerto, Inc.,” the Board found that Patent Owner failed to show beyond speculation that something useful would be uncovered. The Board was not persuaded by Patent Owner’s reliance upon Zoll, IPR2013-00609, Paper 15, in which additional discovery was granted mainly on this basis.  As the Board noted, whether the parent approves the budget or corporate plan in this case may not be useful if it is established that the parent has complete control over Petitioner.

Regarding the third request, Petitioner opposed the requested deposition of Ziv Kedem as being overly burdensome because he was just deposed for two days in a related district court case. To address this burden, the Board allowed the parties to use the deposition transcript from the district court, provided that the parties could produce the transcript without violating the protective order in that case.  If no agreement could be reached, the Board authorized a limited deposition in the instant proceedings.

Zerto, Inc. v. EMC Corp., IPR2014-01254, IPR2014-01295, IPR2014-01329, IPR2014-01332
Paper 15: Order Granting-in-Part Patent Owner’s Motion for Discovery
Dated: November 21, 2014
Patents: 7,603,395 B1; 7,971,091 B1; 7,647,460 B1; 6,073,222
Before: Karl D. Easthom, Michael R. Zecher, and Georgianna W. Braden
Written by: Easthom