Takeaway: A petitioner has the burden of identifying all real parties-in-interest in the Petition as required by 35 U.S.C. § 312(a)(2).

In its Decision, the Board denied the Petition that Petitioner had filed requesting inter partes review of claims 1-18 of the ’395 patent. In particular, the Board was persuaded that Petitioner Zerto, Inc. should have identified Zerto, Ltd. as a real party-in-interest in the Petition as per 35 U.S.C. § 312(a)(2). Consequently, no trial was instituted. The Board also addressed various Motions to Seal in rendering its Decision.

The Board set forth the following factual background in the course of reaching its conclusions. Zerto, Ltd. was founded in Israel by Messers. Ziv and Oded Kedem “to sell disaster recovery software that they had designed and developed.” Thereafter, “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 Oded Kedem.” The Board further noted that the Boards of Directors for Zerto, Ltd. and Zerto, Inc. have identical members; that Ziv Kedem is the CEO of Zerto, Ltd. and the President and CEO of Zerto, Inc.; and that Oded Kedem is the CTO of Zerto, Ltd. and a Board member of Zerto, Inc. According to the Board, neither the website www.zerto.com nor the LinkedIn page “differentiate clearly between Zerto, Ltd. and Zerto, Inc.” and the LinkedIn page states that “Zerto is dual-headquartered in Israel and the United States.”

Having set forth its understanding of the factual background, the Board turned its discussion to the relevant legal issues, including the question of “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[.]” The Board then noted that “[w]hen, 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.” According to the Board, “[t]his 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.”

Applying the law to the facts, the Board concluded that Zerto, Inc. had not “met its burden of identifying all real parties-in-interest in the Petition, as required by 35 U.S.C. § 312(a)(2).” According to the Board, “[t]he 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.” Thus, “[i]n other words,” stated the Board, “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.”

Zerto, Inc. v. EMC Corporation, IPR2014-01254
Paper 35: Decision Denying Institution on Inter Partes Review
Dated: March 3, 2015
Patent: 7,603,395 B1
Before: Karl D. Easthom, Michael R. Zecher, and Georgianna W. Braden
Written by: Zecher
Related Proceedings: EMC Corp. & EMC Israel Dev. Ctr., Ltd. v. Zerto, Inc., No. 12-CV-00956 (D. Del.); IPR2014-01295 (addressing U.S. Patent No. 7,971,091 B1); IPR2014-01329 (addressing U.S. Patent No. 7,647,460 B1); and IPR2014-01332 (addressing U.S. Patent No. 6,073,222)