EMC Corporation et al v. Zerto Inc.

Filing 299

MEMORANDUM. Signed by Judge Gregory M. Sleet on 3/31/2016. (mdb)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE

EMC CORPORATION AND EMC ISRAEL
DEVELOPMENT CENTER, LTD.,
Plaintiffs,
v.
ZERTO, INC.,
Defendant.

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C.A. No. 12-956 (GMS)

MEMORANDUM

I.

INTRODUCTION
In this patent infringement action, plaintiffs EMC Corporation and EMC Israel

Development Center, Ltd. (collectively, "EMC") allege that defendant Zerto, Inc. ("Zerto")
infringes the asserted claims ofU.S. Patent Nos. 7,647,460 ("the '460 patent"), 6,073,222 ("the
'222 patent''.), 7,603,395 ("the '395 patent"), 7,971,091 ("the '091 patent"), and 7,577,867 (''the
'867 patent") (D.I. 64). The court held a ten-day jury trial in this matter on April 27, 2015
through May 8, 2015. At trial, both EMC and Zerto moved for judgment as a matter oflaw
("JMOL") on a number of grounds pursuant to Rule 50(a) of the Federal Rules of Civil
Procedure. (D.I. 201, 202, 203.) The court denied those motions.
On May 8, 2015, the jury returned a unanimous, but complicated, verdict. The jury found
that: (1) Zerto directly infringed claim 45 of the '867 patent; (2) Zerto contributorily infringed
claim 38 of the '460 patent, claim 2 of the '395 patent, and claim 5 of the '091 patent; (3) the
'222 patent was not infringed; (4) claims 1, 42 and 44 of the '460 patent, claims 1 and 8 of the

'395 p~tent, and claim 1 of the '091 patent were not infringed; and (5) none of the patents-in-suit
were anticipated or obvious. (D.I. 212.) The jury awarded EMC $585,783.00 in damages. (D.I.
212.) The court entered judgment on the verdict on May 22, 2015. (D.I. 213.) Presently before
the court are the parties' post-trial motions: (1) Zerto's Motion for a Finding that U.S. Patent
Nos. 7,577,867, 7,603,395 and 7,791,091 are Unenforceable Due to Inequitable Conduct (D.I.
240); 1 (2) Zerto's Motion for a New Trial, and to Alter or Amend the Judgment, Due to an
Inconsistent Verdict (D.I. 232); (3) Zerto's Renewed Motion for Judgment as a Matter of Law
(D.I. 230);J4) EMC's Renewed Motion for Judgment as a Matter of Law (D.I. 219); (5) EMC's
Motion for Permanent Injunction (D.I. 226); and (6) EMC's Motion to Amend the Judgment
(D.I. 223).

II.

BACKGROUND OF THE TECHNOLOGY
The patents-in-suit relate to the field of data protection. The '460 patent is entitled

"Method and Apparatus for Implementing a Remote Mirroring Data Facility Without Employing
a Dedicated Leased Line to Form the Link Between Two Remotely Disposed Storage Devices."
The '460 patent discloses a data protection system in which two storage systems are comiected
via at least one communication link. '460 patent at Abstract. As data is written to the source
storage device, it is also written and mirrored to the target storage device. '460 patent at 1:40--42.
This provides a backup in case the source storage device fails or is destroyed. Id. at 1 :27-35.
The '395 and '091 patents (collectively, "the Rokicki patents") share a common
specification. The '395 patent is entitled "Using Pseudosnapshots for Continuous Data Protection
Systems to Surface a Copy of Data." The '091 patent is entitled "Network Configuration Backup
and Restore Operations Using Continuous Data Protection." They relate to "systems and

1

The parties did not present the issue of inequitable conduct to the jury, but agreed for the court to decide the issue
based on their briefs.
2

methods for performing replication operations on a continuous data protection system." '395
. patent at 1:21-23. The patents disclose a continuous data protection ("CDP") engine that
"performs a continuous series of write operations," creating and storing a copy of data whenever
it is written. Id. at 2:25-27. The user can use "the CDP engine to access stored data as it
appeared at a given point in time in the past." Id. at 2:29-30.
The '867 patent is entitled "Cross Tagging to Data for Consistent Recovery." It discloses
a system for consistent, uninterrupted data recovery. '867 patent at 2:31-34. The system quiesces
(~.e.,

halts) con~ol host applic..ations at a_commop. time interval, and uses tags to mark those time

points in a journal of write transactions. Id. at 2:14-15; 7:30-36. The system Gan use the tags to
recover the data as it existed when the applications were quiesced. Id. at 6:21-24.

III.

STANDARD OF REVIEW
A.

Renewed JMOL Motions

To prevail on a renewed motion for judgment as a matter oflaw following a jury trial and
verdict, the moving party '"must show that the jury's findings, presumed or express, are not
supported by substantial evidence or, if they were, that the "legal conclusion( s) implied [by] the
jury's verdict cannot in law be supported by those findings."' Pannu v. Iolab Corp., 155 F.3d 1344,
1348 (Fed. Cir. 1998) (quoting Perkin-Elmer Corp, v. Computervision Corp., 732 F.-2d 888, 893
(Fed. Cir. 1984)). "Substantial evidence" is defined as "such relevant evidence from the record
taken as. a whole as might be accepted by a reasonable mind as adequate to support the finding
under review." Perkin-Elmer Corp., 732 F.2d at 893.
The court should only grant the motion "if, viewing the evidence in the light most favorable
to the nonmovant and giving it the advantage of every fair and reasonable inference, there is
insufficient evidence from which a jury reasonably could find liability." Lightning Lube, Inc. v.

3

Witco Corp., 4 F.3d 1153, 1166 (3d Cir. 1993) (citing Wittekamp v. Gulf Western Inc., 991 F.2d
1137, 1141 (3d Cir. 1993)). "In determining whether the evidence is sufficient to sustain liability,
t:tie court may not weigh the evidence, determine the credibility of witnesses, or substitute its
version of the facts for the jury's version." Lightning Lube, 4 F.3d 'at 1166 (citing Fineman v.
Armstrong World Indus., Inc., 980 F.2d 171, 190 (3d Cir. 1992)). Rather, the court must resolve
all conflicts of evidence in favor of the nonmovant. Williamson v. Consol. Rail Corp., 926 F.2d
1344, 1348 (3d Cir. 1991); Perkin-Elmer Corp., 732 F.2d at 893.
''.}he ques_tion is not whether there is literally no evidence supporting the party against
whom the motion is directed but whether there is evidence upon which the jury could properly
find a verdict for that party." Lightning Lube, 4 F.3d at 1166 (quoting Patzig v. 0 'Neil, 577 F.2d
841, 846 (3d Cir. 1978)). In conducting such an analysis, "the court may not determine the
credibility of the witnesses nor 'substitute

it~

choice for that of the jury between conflicting

elements of the evidence."' Syngenta Seeds, Inc. v. Monsanto Co., 409 F. Supp. 2d 536, 539 (D.
Del. 2005) (quoting Perkin-Elmer Corp., 732 F.2d at 893).
B.

Motion for a New Trial

Pursuant to Federal Rule of Civil Procedure 59, a court may grant a new trial "for any of
the reasons for which a new trial has heretofore been granted in an action at law in federal court."
Fed. R. Civ. P. 59(a)(l)(A). The decision to grant or deny a new trial is within the sound discretion
of the trial court. See Allied Chem. Corp. v. Dai.flan, Inc., 449 U.S. 33, 36 (1980). In making this
determination, the trial judge should consider the overall setting of the trial, the character of the
evidence, and the complexity or simplicity of the legal principles which the jury had to apply to
the facts. Lind v. Schenley Indus., Inc., 278 F.2d 79, 89 (3d Cir. 1960). Unlike the standard for
determining judgment as a matter of law, the court need not view the evidence in the light most

4

favorable to the verdict winner. Allied Chem. Corp., 449 U.S. at 36. A court should grant a new
trial in ajury case, however, only if "the verdict was against the weight of the evidence ... [and]
a miscarriage of justice would result ifthe verdict were to stand." Williamson, 926 F.2d at 1352.

IV.

DISCUSSION
Having considered the substantial evidence in the record, the parties' post-trial

submissions, and the applicable law, the court will partially grant EMC's Renewed JMOL Motion
and EMC's Motion to Amend the Judgment, and deny the rest of the post-trial motions. The
·court's reasoning follows.
A.

Zerto's Motion for a Finding that the '867, '395 and '091 Patents Are
Unenforceable Due to Inequitable Conduct

Zerto argues that the '867, '395, and '091 patents are unenforceable due to inequitable
conduct

before

the

Patent

and

Trademark

Office

("PTO").

A

determination

of inequitable conduct is committed to the discretion of the district court. Kingsdown Med.
Comultants, Ltd. v. Hollister Inc., 863 F.2d 867, 876 (Fed. Cir. 1988) (en bane). As a general
matter, patent applicants and their attorneys have a duty of candor, good faith, and honesty in their
dealings with the PTO. 37 C.F.R. § l.56(a). The court may find inequitable conduct where a party
breaches that duty. Id. "Inequitable conduct can consist of affirmative misrepresentations of
material fact, submission of false material information, or the failure to disclose known material
information during the prosecution of a patent, coupled with the intent to deceive the PTO." Life
Techs., Inc. v. Clontech Labs., Inc., 224 F.3d 1320, 1324 (Fed. Cir. 2000). A finding
of inequitable conduct renders the entire patent unenforceable. Kingsdown, 863 F.2d at 877.
Intent and materiality are separate requirements that must be proved by clear and
convincing evidence. Life Techs., 224 F.3d at 1324. The evidence must show but-for materiality,

5

which means "the PTO would not have allowed a claim had it been aware of the undisclosed prior
art." Am. Calcar, Inc.

v. Am. Honda Motor Co., 651 F.3d 1318, 1334 (Fed. Cir. 2011). The only

exception to but-for materiality is a case of affirmative egregious conduct. "When the patentee has
engaged in affirmative acts of egregious misconduct, such as the filing of an unmistakably false
affidavit, the misconduct is material." Therasense, Inc. v. Bechton, Dickinson & Co., 649 F.3d
1276, 1292 (Fed. Cir. 2011). Deceptive intent may be inferred from circumstantial evidence only
if deceit is the single most reasonable inference available. Id.
1.

Mr. Walsh and the '867 Patent

Zerto argues that the '867 patent is unenforceable due to the actions of Mr. Edmund Walsh,
EMC' s counsel during Inter Partes Review ("IPR"). The '867 patent was originally filed by
Kashya Inc. in February 2006, and was purchased by EMC in May of that same year. (Tr. at
752:20-757:13.) According Zerto, the '867 patent was drafted to cover a Kashya product called
theKBX4000. 2 (Id. at 751 :10-769:2.) Zerto filed a Petition for IPR of the '867 patent in July 2013,
asserting that the patent was anticipated by the 2004 Kashya KBX4000 Administrator's Guide
("Administrator's Guide"). (D.I. 242, Ex. D at 41-44.) The version of the Administrator's Guide
that Zerto submitted to the Patent Trial and Appeals Board ("PTAB") contained a 2013 copyright
date, indicated it was "confidential and proprietary," and included internal tracked changes. (Id.,
Ex. E.) Based on these observations, Mr. Walsh argued in EMC's Preliminary Response that the
Administrator's Guide was not a printed publication from 2004, but more likely "was recently
printed

~om

an electronic file consisting of an internal draft." (Id., Ex. F at 34 (emphasis in

original).)

2

EMC disagrees, claiming that the '867 patent was drafted to cover a later Kashya product, the KBX5000, which is
not prior art to the '867 patent. (D .I. 271 at 16-17.) For the purposes of this ruling, it is irrelevant whether the '867
patent was drafted to cover ~e KBX4000 or the KBX5000.

6

In response, Zerto sent Mr. Walsh a letter demanding it either disclose its copies of

Administrator's Guide to the PTAB, or recant its argument that the Administrator's Guide was not
prior art "because EMC knew that the copy of the Administrator's Guide submitted to the PTO
was, in all material respects, an identical copy of prior art manuals in EM C's possession." (D.I.
241 at 6.) Mr. Walsh did not investigate Zerto's allegations and refused to comply with Zerto's
request. (D.I. 272, Ex. B; D.I. 242, Ex J. at 26:9-11.) Zerto consequently requested a conference
with the PTAB to resolve the dispute.
The PTAB held a conference call with the parties on December 19, 2013. During the call,
Zerto requested authorization "to file a short statement, as well as an affidavit, to support its
position that [the Administrator's Guide] qualifies as a prior art printed publication." (Id., Ex Cat
2.) Zerto argued that there was no dispute about the prior art status of the Administrator's Gui4e,
and that it "was unable to obtain a true copy of [the Administrator's Guide] from Patent Owner."
EMC responded that Zerto had failed "to establish that there is a reasonable likelihood that [the
Administrator's Guide] is a prior art printed publication," and further, "it had no responsibility :to
help" Zerto meet its burden of proof. (Id., Ex.Cat 2-3.) The PTAB agreed with EMC, and in its
order stated that Zerto "did not direct us to credible or sufficient authority that supports its
argument that Patent Owner has a responsibility to help Petitioner satisfy that burden." (Id., Ex. C
at 3.) Subsequently, the PTAB denied Zerto's Petition, in part because it was unpersuaded "that
Petitioner has established sufficiently that [the Administrator's Guide] qualifies as a prior art
printed publication." (D.I. 242, Ex Cat 25-28.)
Eventually, during discovery for this case, Zerto acquired a copy of the Administrator's
Guide with a 2004 copyright date that, though not identical, was substantially the same as the
document with a 2013 copyright date. (See id., Ex. I.) Zerto now requests the court to hold the

7

'867 patent unenforceable based on Mr. Walsh's representations. Because EMC had the 2004
version :of the Administrator's Guide in its possession, Zerto argues that Mr. Walsh misled the
PTAB by arguing that the document was not prior art. Zerto asserts that by making those
arguments, Mr. Walsh violated his duty of candor and duty to conduct a reasonable investigation.
As an initial matter, the court notes that questions remain regarding the public availability
of the Administrator's Guide. Even the earlier-dated copy of the Guide contains some evidence
that it was not a public document. 3 Additionally, Zerto's CEO Mr. Ziv Kedem was both an inventor
on the '867 patent and a co-founder and high-ranking executive of Kashya;. He certainly.would
have been aware of the Administrator's Guide, but he certified to the PTO that he did not believe
the invention was "described in any printed publication in any country." (D.I. 272, Ex. Z at
EMC_0184175.) Mr. Z. Kedem's representations before the PTO. weigh in favor of an inference
that the Administrator's Guide was not publically available.
But even assuming the Administrator's Guide was prior art to the '867 patent, the PTAB
did not seem to find Mr. Walsh's actions misleading. Mr. Walsh only made factual statements to
the PTAB-statements that Zerto contends were calculated to deceiVe. Appropriately, Zerto raised
its complaints with Mr. Walsh before the PTAB. Squarely presented with this issue, the PTAB
found that EMC did not have a duty to assist Zerto in meeting its burden. In other words, Mr.
Walsh had done nothing wrong.
The court recognizes that in some circumstances, factual statements can be used to mislead
a finder ,of fact. The court does not want to encourage attorneys to engage in such misbehavior.
But the court is also unwilling to insert itself into the PTAB' s management of its own cases. After
all, the PTAB has the best idea of what is required by the duty of candor. The PTAB was fully

3

The Administrator's Guide with the 2004 copyright is labeled "Final Draft," contains a notice it is "confidential
and proprietary," and contains at least one internal comment.
8

appraised of, and unconcerned by, the conduct which is the basis of this allegation of inequitable
conduct. Having failed to satisfy the PTAB' s burden, Zerto cannot now convince the court to
nullify the patents based on behavior the PTAB apparently did not find inappropriate. Therefore,
the court denies Zerto's motion as to the '867 patent.

2.

Ms. Jones and the '395 and '091 Patents

Zerto alleges that the '395 and '091 patents are unenforceable because of the actions of
Ms. Sara Jones, EMC's attorney during prosecution of the Rokicki patents. Zerto asserts that she
willfully failed to disclose two prior .art references to the PTO. The Rokicki patents share nearly
identical specifications and were both filed in May 2006. The '395 patent issued on October 13,
2009, and the '091 patent issued on June 28, 2011. Zerto characterizes the invention as a
combination of a backup and recovery program called NetWorker with a CDP system supplied by
a vendor called Mendocino. EMC obtained Networker, which used traditional snapshot
technology, from a third party called Legato. (D.I. 242, Ex.Mat 13:17-14:10; 12:18-22:13.)
Even though Mendocino and NetWorker were prior art to the Rokicki patents, 4 Ms. Jones
did not .explicitly disclose them as prior art, or identify them in an Information Disclosure
Statement. The references were indirectly disclosed in transcripts which Ms. Jones submitted in
an attempt to establish an earlier date of invention for the '091 patent. They were not submitted in
regards to the related application for the '395 patent.
These transcripts memorialize several conversations between Ms. Jones and two of the
inventors. For example, Exhibit D to the PTO filing is a copy of the transcript of the June 13, 2005
meeting Ms. Jones had with the inventors. (Id., Ex. P at EMC_0116948.) That meeting begins with
the statement, "So we're taking the CDP technology that's been done by the group in

4

EMC disputes whether Mendocino was actually prior art.
9

Massachusetts and combining that with our N etWorker infrastructure so that we have a CDP
solution for NetWorker." Ms. Jones asks for the name of the supplier forthe CDP, and the inventor
replies, "The name of the company is Mendocino. (Id., Ex.Pat EMC_0116949.) In the transcript
for a meeting on July 10, 2008, the inventors explained that EMC was "creating a
hardware/software infrastructure that surrounds the CDP engine" that EMC obtained from
Mendocino. (Id., Ex.Pat EMC_0116949.) The inventors expressed some doubts as to whether
their new system would be patentable, as the Mendocino product was central to the invention. (Id.,
Ex.Pat EMC_0116931, EMC_0116964.) Ms. Jones testified that it was not her practice "to
withhold material information form the PTO," that she did not recall withholding any material
information from the PTO during prosecution of the Rokicki patents, and that she did not intend
to deceive the PTO. (D.I. 272, Ex.Mat 121 :8-22:15.)
Although Ms. Jones did not disclose NetWorker and Mendocino in an Information
Disclosure Statement, the references were undoubtedly in front of the Patent Examiner. The
Examiner performed a "thorough review" of the transcripts and found them insufficient to swearbehind a different prior art reference. (Id., Ex.Hat EMC_ 185228.) Even though the Examiner was
considering the issue of conception, he did not lose the ability to consider that things mentioned in
those transcripts may be relevant prior art. The references to Mendocino and NetWorker were not
buried in the transcripts. The court cannot know what was in the Examiners' mind, but the
disclosu~e

of the transcripts cuts against a finding of inequitable conduct.

Further, Zerto has the burden of proving, by clear and convincing evidence, that Ms. Jones
acted with the intent to deceive the PTO. The court does not find that such intent clearly existed
here. EMC argues that the Mendocino and NetWorker references were not material, but does not
directly explain why Ms. Jones did not disclose them to the PTO. Counsel for Zerto apparently

10

never questioned her directly about the references. Ms. Jones stated in her deposition that she
believed she would have submitted any references that the inventors identified as material. To
conclude that Ms. Jones committed inequitable conduct, the court must infer that malicious intent
is clearly the only reasonable inference. But if Ms. Jones intended to deceitfully hide Mendocino
and NetWorker from the PTO, it does not follow that she would disclose transcripts that
repetitively mention those very references. This weighs against a findingthat Ms. Jones acted with
the intent to deceive the PTO. The standard of clear and convincing evidence is a high one, and
Zerto has failed to meet it. The court denies Zerto's motion as to the '395 and '091 patents.

B.

Zerto's Motion for a New Trial Due to an Inconsistent Verdict

Zerto alleges the jliry verdict was inconsistent in four areas. First, the jury found that Zerto
directly infringed claim 45 of the '867 patent, but that Zerto's customers did not. Second, the jury
found that Zerto had contributed to, but had not induced, its customers' direct infringement of the
'460, '395, and '091 patents. Third, the jury found that Zerto's customers did not directly infringe
independent claims 1, 42, or 44 of the '460 patent, but directly infringed claim 38. Finally, the jury
found that Zerto infringed the dependent claims, but not the independent claims, of the '395 and
'091 patent.
The Third Circuit has outlined four ways that a district court may approach an inconsistent
verdict: (1) allow the inconsistent verdict to stand; (2) read the verdict in a manner that will resolve
the inconsistencies; (3) resubmit the question to the jury; or (4) "if verdicts are genuinely
inconsistent and ifthe evidence might support either of the 'inconsistent' verdicts, the appropriate
remedy is ordinarily ... not simply to accept one verdict and dismiss the other, but to order an
entirely new trial." Mosley v. Wilson, 102 F.3d 85, 90-91 (3d Cir. 1996) (quoting Los Angeles v.
Heller, 475 U.S. 796, 806, 106 S.Ct. 1571, 1577, 89 L.Ed.2d 806 (1986) (Stevens, J. dissenting)).

11

The failure to object to an inconsistency in a general verdict before the jury is discharged results
in a waiver of the objection. Frank C. Pollara Grp., LLC v. Ocean View Inv. Holding, LLC, 784
F.3d 177, 190-91 (3d Cir. 2015). The same is true for a failure to object to the jury instructions
and verdict form that authorize inconsistent findings. Id. at 91 n.19.
The verdict form in this case is best categorized as a general verdict form with special
questions. See Fed. R. Civ. P. 49(b)(l); Ocean View, 784 F.3d at 190 (discussing differences
between general and special verdict). Because Zerto did not raise the issue of inconsistency before
the jury was dismissed, the issue has been waived. This waiver is unfortunate because of-the
obvious and irreconcilable inconsistency of some portions of the jury verdict. To illustrate the
issue, the court focuses on Zerto's fourth objection. 5 The jury ruled that dependent claims of the
Rokicki patents were infringed, but that independent claims were not infringed. This is legally
unsupportable. The court correctly instructed the jury that if "an Asserted Claim on which other
claims depend is not infringed, there cannot be infringement of any dependent claim that refers
directly or indirectly to that independent claim." (D.I. 208 at 24.)
EMC ignores this inconsistency by cleverly erasing much of the jury's verdict. EMC
alleges that the jury did not decide whether Zerto's customers infringe: (1) claims 1, 42, and 44 of
the '460 patent, (2) claims 1 and 8 of the '395 patent, or (3) claim 1 of the '091 patent. The court
will illustrate EMC's logic using the instructions for the '395 patent. The verdict form asks, "Has
EMC proven, by a preponderance of the evidence, that at least one of Zerto's customers has
directly infringed any Asserted Claim of the '395 patent? Checking "yes" below indicates a finding
for EMC. Checking "no" below indicates a finding for Zerto." (D.I. 212 at 5.) The jurors checked
"Yes." Below, the form reads, "If you answered "Yes," please mark the claim(s) you found to be

5

Because the issue is waived, the court does not address here the legitimacy of other Zerto' s allegations of
inconsistency.
12

infringed," and provides blanks for the jurors to mark beside claim 1, claim 2, and claim 8. The
jurors marked only claim 2.
Logically, the absence of check marks next to claim 1 and claim 8 indicates that the jury
decided against EMC on those issues, and found that Zerto did not infringe claims 1 or 8. EMC
does not accept this simple interpretation, and instead argues that the absence of marks beside
claims 1 and 8 indicates the jurors did not decide whether those claims were infringed. This is an
argument only a lawyer could love. EMC imagines that the jury, after listening to nine days of
complex testimony on fourteen different claim~, simply decided not to address whether almO-sf half
of those claims were infringed. The court will not engage in such divination. To the extent that
EMC implies a latent ambiguity in the jury form, that objection is waived at this late stage.
Zerto's waiver places the court in the uncomfortable position. of allowing a logically
incomprehensible verdict to stand. Ideally, the court would order a new trial in spite of the waiver.
A district court may, sua sponte, order a new trial for any reason that would justify a new trial
upon a party's motion. Fed. R. Civ. P. 59(d). But the court's discretion is limited to a window of
28 days after the entry of judgment. Fed. R. Civ. P. 59(d). After that tirrie frame has passed, the
court no longer has the authority to grant a new trial on its own initiative. See Lesende v. Borrero,
752 F.3d 324, 334-35 (3d Cir. 2014) ("Because the District Court failed to enter its memorandum
opinion within twenty-eight days of the entry of judgment, it lacked jurisdiction under the first
sentence of Rule 59(d) to consider the propriety of a new trial on liability on its own accord.").
The 28-day window has long passed, and the court cannot exceed its jurisdictional authority. 6 The
jury verdict, though flawed, must stand.

6

The court recognizes its share in the blame in failing to recognize the inconsistency. Plainly, someone should have
noticed and taken timely action to remedy the glaring inconsistencies in the jury verdict.
13

C.

Renewed JMOL Motions

A patent infringement analysis entails two steps: "(1) claim construction to determine the
scope of the claims, followed by (2) determination of whether the properly construed claim
encompasses the accused device." Bai v. L & L Wings, Inc., 160 F.3d 1350, 1353 (Fed. Cir. 1998)
(citations omitted). The first step, claim construction, is a matter of law for the court to decide.

Markman v. Westview Instruments, Inc., 517 U.S. 370, 372, 116 S.Ct. 1384, 1387, 134 L.Ed.2d
577 (1996). The second step, determination of infringement, is a question of fact for the jury. Bai,
160 F.3d at 1353. A patentee must establish literal infringement by a preponderance of the
evidence. Braun Inc. v. Dynamics Corp., 975 F.2d 815, 819 (Fed. Cir. 1992). "To establish literal
infringement, every limitation set forth in a claim must be found in [the] accused product, exactly."
I

Southwall Techs., Inc. v. Cardinal JG Co.,

~4

F.3d 1570, 1575 (Fed. Cir. 1995). "The scope of a

patent is not limited to its literal terms but instead embraces all equivalents to the claims
described." Festa Corp. v. Shoketsu Kinzoku Kogyo Kabushiki Co., 535 U.S. 722, 732, 122 S.Ct.
1831, 1837, 152 L.Ed.2d 944 (2002).
Proving that a patent is invalid based on anticipation "requires that the four corners of a
single, prior art document describe every element of the claimed invention, either expressly or
inherently, such that a person of ordinary skill in the art could practice the invention without undue
experimentation." Advanced Display Sys., Inc. v. Kent State Univ., 212 F.3d 1272, 1282 (Fed. Cir.
2000). A patent is invalid for obviousness "if the differences between the subject matter sought to
be patented and the prior art such that the subject matter as a whole would have been obvious to a
person having ordinary skill in the art." 35 U.S.C. § 103. The jury must consider four issues: (1)
the scope and content of the prior art; (2) the level of ordinary skill in the art; (3) the differences
between the claimed subject matter and the prior art; and (4) secondary considerations of non-

14

obviousness, such as commercial success and long felt but unsolved need. Graham v. John Deere
Co., 383 U.S. 1, 17-18, 86 S.Ct. 684, 15 L.Ed.2d 545 (1966). Because a patent as a whole is

entitled to the presumption of validity, an accused infringer seeking to prove that a patent is
anticipated or obvious must do so by clear and convincing evidence. State Contracting & Eng'g
Corp. v. Condotte Am. Inc., 346 F.3d 1057, 1067 (Fed. Cir. 2003).

EMC moves for judgment as a matter oflaw on infringement of claims 1, 42, and 44 of the
'460 patent, claim 1 of the '395 patent, and claim 1 of the '091 patent. Zerto seeks judgment as a
matter of law on invalidity of the '460 patent, and noninfringement of claim 3 8 of the '-460 patent,
claim 2 of the '395 patent, claim 5 of the '091 patent, and claim 45 of the '867 patent. The court
finds that substantial evidence supports many of both parties' positions when viewed in isolation.
Examined as a whole, this leads to several inconsistent and conflicting results. For some patents,
the jury seemed to credit both Zerto' s and EMC' s theories of the case, even where those theories
stood in direct opposition. The strangeness of the ensuing final results highlight the difficulty
raised by the verdict's inconsistency. As discussed supra IV.B., the court cannot grant judgment
as a matter oflaw solely based on inconsistency. See Mosley, 102 F.3d at 91. The court also lacks
jurisdiction to grant a new trial on that basis.
The court cannot substitute its own judgment in place of the jury's where there is evidence
supporting the jury's decision. Having considered the evidence on record, the parties' post-trial
submissions, and the applicable law, the court denies Zerto's renewed motion for judgment as a
matter oflaw, and grants EMC's motion only as to the '091 patent. The court's reasoning follows.

15

1.

EMC's JMOL Motion for Infringement and Zerto's JMOL Motion for
Noninfringement of the '460 Patent

The jury found contributory infringement of claim 3 8, but no infringement of claims I and
44 of the '460 patent. Zerto argues that the evidence did not support a finding of contributory
infringement of claim 38. EMC argues that the evidence should have compelled a reasonable jury
to find contributory infringement of claims I and 44. The contested issues are the same for the
three claims: whether Zerto Virtual Replication ("ZVR") software meets the "mirror" limitation;
whether .ZVR satisfies the "storage system" limitation; and whether Zerto had the knowledge
necessary for contributory infringement. The court analyzes each in turn.

a.

"Mirror" Limitation

The court construed "mirror" in the context of claim I to mean "maintain a continually
updated copy of data that exists on a first storage system on a second storage system by creating,
in essentially real-time, an identical copy of at least some of the information written from the CPU
to the first storage system in the second storage system."7 (D.I. 144 at 4.)
Zerto presented evidence that ZVR software does not meet the "mirror" limitation. Zerto's
expert, Dr. Zadok, argued that the court's construction requires the system to create an identical
copy of data in the second storage system. (Tr. at 1121 :4-14.) Zerto' s theory is that its system does
not satisfy the court's construction for mirror because there is no "continually updated copy of
data." Dr. Zadok explained that every individual write that is written to the protected storage
system is copied to a second site, where it is stored in a chronological journal. (Id. at 1109:191111 :25;) The journal is not a "copy" of anything that exists on the protected site, and although

7

The court disagrees with Zerto's assertion that it did not construe "mirroring" as used in claim 38. Zerto concedes
that claim 1 and claim 38 "cover the same thing," and both are directed to "a controller that mirrors information
from the CPU to the second storage system." (DJ. 233 at 10.) Although the language of the two claims is not
identical, the spirit of the court's construction of"mirror" for claim 1 applies equally to claim 38.
16

each individual write is a copy, it is not a copy that is continually updated. (Id. at 321: 13-25,
1126:7-1127:14.)
EMC, on the other hand, presented evidence through its expert, Mr. Jestice, that ZVR
software mirrors because it makes an identical copy of each write that a protected virtual machine
generates, and sends the copied write to the replication site. (Id. at 301 :7-15, 301 :23-302:10.) Mr.
Jestice also testified that the court's construction did not require the data to be stored in a particular
format. (Id. at 549:23-553 :5.) Rather, Mr. Jestice argues that the court's construction only requires
the creation of an identical copy of the information in the first storage-system.
4-.jury could have reasonably credited EMC's arguments that simply copying and sending
each write qualifies as mirroring. A jury also could have reasonably accepted Zerto's arguments
that copying data in real time is not mirroring. Therefore, there substantial evidence supports both
Zerto and EMC on the "mirror" limitation.

b.

"Storage System" Limitation

The court construed "storage system" to mean "the set of components that stores and
controls the storage of information written from the CPU, including one or more storage devices
and one or more controllers." (D.I. 144 at 1.) Dr. Zadok testified that the replication from the
protected site to the recovery site takes place many layers above, and separate from, the host
computer where the physical CPU is located. (Tr. at 1109:19-1111 :25.) Therefore, according to
Zerto, ZVR software does not meet this claim limitation. In contrast, Mr. Jestice argued that a
virtual machine qualifies as a CPU, and that there is no material difference between managing the
replication of data from a protected virtual machine and controlling the storage of information
written from a CPU. (Id. at 284:12-15, 287:1-13.) Based on this, EMC claims that the ZVR
software clearly satisfies the "storage system" limitation.

17

The parties did not ask the court to determine whether the claim language limits a CPU to
a physical CPU. The jury could have concluded that the "storage system" limitation was not
satisfied based on Dr. Zadok's description of the virtual machine operating separately from the
CPU. Or, the jury could have credited Mr. Jestice's assertions that the CPU in the claim included
a virtual CPU in one of the virtual machines. The evidence supports both Zerto and EMC as to the
"storage system" element.
Because the evidence supports the jliry' s verdict of noninfringement of claims 1 and 44,
the court denies EMC's motion as to infringement of the '460 patent.
c.

Contributory Infringement

The only issue remaining is whether Zerto contributed to its customers' infringement of
claim 38. Contributory infringement requires a finding that Zerto knew its so:frn:are was especially
made to infringe claim 38. Substantial evidence supports the jury's conclusion. EMC presented
evidence that Zerto knew of the patent at least as of service of the amended complaint in August
2013. (Tr. at 240:22-25.) As a rebuttal, Mr. Z. Kedem testified that Zerto did not think it infringed
the patents-in-suit. (Id. at 865:4-9, 921 :7-9.) The jury reasonably could have disregarded Mr. Z.
Kedem' s testimony and found that Zerto knew its software infringed claim 3 8. 8 Therefore, the
court denies Zerto' s motion as to noninfringement of the '460 patent.
2.

Zerto's JMOL Motion for Invalidity of the '460 Patent

There is substantial evidence on the record that supports the jury's finding that the Zarrow
reference does not anticipate the '460 patent. Mr. Jestice explained that the court's construction of
"storage system" required the storage system components to be separate from the CPU. (Tr. at
1605:23-1606:4.) He testified that Zarrow does not anticipate this limitation because Zarrow

8 Zerto also argues that EMC improperly instructed the jury on the standard for contributory infringement. Because
Zerto did not object to this allegedly erroneous statement during trial, it has waived the argument.

18

discloses a host-based mirroring system in which the same CPU both generates data to be mirrored
and performs the mirroring operation. (Id. at 1604:1-13.) A jury could reasonably rely on Mr.
Jestice's testimony to find that Zarrow does not invalidate the '460 patent.
There is also substantial evidence on the record that supports the jury's finding that the
Bergsten reference does not render the '460 patent anticipated or obvious. The parties' experts
disputed whether Bergsten disclosed a "network cloud." Mr. Jestice testified that a person of
ordinary skill in the art would not have understood the LAN disclosed in Bergsten to be a "network
clorid." (Id. at 1611:19-1612:12, 1614:25-1616:22,

1618:22-~5.)

Mr. Jestice provided .sufficient

evidence upon which the jury could rely to find that Bergsten does not invalidate the '460 patent.
There is substantial evidence on the record that supports the jury's finding that combining
Zarrow and Yanai does not render the '460 patent.obvious. Mr. Jestice asserted that a person of
ordinary skill in the art would not have combined the references because Zarrow did not disclose
that its network provides cost savings or redundancy, Yanai taught away from host-based
mirroring systems, arid Yanai teaches a technique. for achieving redundancy. (Id. at 1606: 161610: 17.) The jury could have accepted Mr. Justice's testimony over that of Dr. Zadok to conclude
the asserted claims are not obvious. Accordingly, the court denies Zerto's motion as to the
invalidity of the '460 patent.
3.

EMC's JMOL Motion for Infringement and Zerto's JMOL Motion for
Noninfringement of the '395 Patent

The jury found that Zerto contributorily infringed dependent claim 2 of the '395 patent, but
did not infringe independent claim 1. Zerto requests judgment of nonin:fringement as to claim 2,
and EMC requests judgment of infringement as to claim 1. The parties dispute three issues:

19

whethei: ZVR meets the "quiescent state" limitation; whether ZVR meets the "GUI'~ limitation;
and whether Zerto contributorily infringed the patent.
a.

"Quiescent State" Limitation

The court construed "quiescent state" to mean "an inactive state wherein the production
application does not generate write operations." (D.I. 144 at 13.) This limitation covers "a
replication application configured to ... create at least one event marker ... wherein at least one
pseudosnapshot corresponds to a quiescent state." The parties, and their experts, disagree on the
scop~

of this limitation. Zerto argues the limitation requires at least one customer to use the ZVR

product with the VSS Agent software in a manner that placed a production application into a
quiesceQ.t state. Zerto asserts that EMC failed to provide any evidence that this occurs. EMC argues
the claim limitation is :Satisfied by the ZVR software itself, because it is configured to create event
markers when a production application is in a quiescent state.
Lacking more detailed instruction from the court, the jury could have credited the theory
of either expert. But even if the jury had adopted Zerto's more restrictive reading of the claim
language, the evidence clearly shows that at least one Zerto customer infringed the "quiescent
state" limitation. EMC produced evidence that VSS-aware applications do not generate write
operations (i.e., quiesce) after receiving instructions to prepare for backup. Mr. Jestice showed the
jury Zerto technical documents that state that VSS causes applications to quiesce. (Tr. 355:2-9;
I

PTX-0037 at EMC_7162.) He also described Microsoft technical documents that explain how VSS
instructs applications to enter a quiescent state. (Id. at 356:1-357:22.) The record shows that at
least

on~

Zerto customer, Rapidparts, used the VSS Agent to generate VSS checkpoints for its

'

virtual machine. (Id. at 373:24--374:19.) There is insufficient evidence to support Zerto' s assertion
that the "quiescent state" limitation is not met.

20

b.

"GUI" Limitation

The parties dispute the meaning of the phrase "at least one pseudosnapshot is viewed by
the user as a snapshot in a graphical user interface." Again, the jury was free to listen to the experts
battle over the plain meaning of the phrase. Mr. J estice and the inventor, Mr. Rokicki, testified that
the GUI was intended to look the same to the user as the GUI a user would have seen using a
traditional snapshot program. CITE. According to EMC, this claim limitation covers a GUI that
displays event markers corresponding to pseudosnapshots. Dr. Zadok argues that for this
limitation, the GUI must be configured to display the event markers as though they were traditional
snapshots. (Tr. at 1147 :21-1148 :3.) Therefore, Zerto contends its software does not infringe this
limitation, because it presents Checkpoints not as traditional snapshots, but as markers
corresponding to points in time. Sufficient evidence supports both parties' contentions on this
limitation. Because a reasonable jury could find that the ZVR software does not satisfy the "GUI"
limitation required by claim 1, the court denies EMC's motion as to_ infringement of the '395
patent.

~

c.

Contributory Infringement

The parties' arguments on contributory infringement largely mirror those for the '460
patent. As the court noted above, substantial evidence supports the jury's conclusion that Zerto
had the requisite knowledge of infringement. Zerto presents one additional argument here: that a
reasonable jury could have found a substantial noninfringing use. As evidence, Zerto points to one
VSS-aware application, Oracle, that Zerto contends does not stop generating write operations after
receiving instructions from VSS. Even if the jury credited Zerto's restrictive view of the claim
language, and accepted its argument that a customer using Oracle does not infringe, the record
lacks sufficient evidence to support a finding that this is a substantial noninfringing use, especially

21

in light of the strong evidence that VSS-aware applications satisfy the "quiescent state" limitation.
The court finds a substantial nonin:fringing use is not supported by the record. Accordingly, the
court denies Zerto's motion as to noninfringement of the '395 patent.
4.

EMC's JMOL Motion for Infringement and Zerto's JMOL Motion for
N oninfringement of the '091 Patent

The jury found that Zerto contributorily infringed dependent claim 5 of the '091 patent, but
did not infringe independent claim 1. Zerto requests judgment of noninfringement as to claim 5,
and EMC requests judgment of infringement as to claim 1. The

p~rties

dispute three issues:

whether ZVR meets the "quiescent state" limitation, whether ZVR meets the "remote server"
limitation, and whether Zerto contributorily infringed the patent. The "quiescent state" limitation
is identical to that for the '395 patent. As discussed previously, the court finds that a reasonable
jury could only conclude that at least one of Zerto's customers satisfied the "quiescent state"
element.
a.

"Remote Server" Limitation

To satisfy this limitation, EMC must have proved that at least one Zerto customer operated
ZVR with two Zerto Virtual Machines ("ZVMs"). EMC produced strong circumstantial evidence
to the affirmative. Mr. Jestice showed the jury a Zerto price sheet advertising a ZVR software
package that includes two ZVMs, as well as Zerto technical documents describing the use of a
second ZVM. (Tr. at 381:18-382:17; PTX-0612; PTX-0543 at ZERT0_56280.) Mr. Jestice also
explainea that two Zerto customers (UGL Unnico and Rapidparts) had two sites, and therefore
likely also used two ZVMs. (Id. at 560:18-561:4.) In addition, EMC disclosed an email from
Zerto's CTO, Mr. Odem Kedem, indicating a large portion of Zerto's customers make and use a
system that includes a remote server. (Id. at 1292:1-1293:8.) In response, Zerto argues that EMC

22

has not directly shown that at least one customer used a remote server. But the onlyreasonable
inference a jury could draw from the evidence on record is in favor of EMC. The court therefore
concludes that the jury did not act reasonably when it found that claim 1 of the '091 patent is not
directly infringed by at least one of Zerto's customers.
b.

Contributory Infringement

Because the evidence requires a finding of direct infringement of claims 1 and 5, the final
question is whether Zerto contributed to that infringement. The evidence regarding contributory
infringement is largely the same as for the '460 patent. The court finds that a reasonable jury could
find that Zerto had the requisite knowledge for contributory infringement. Zerto also argues that
the use of only one ZVM rather than two qualifies as a substantial noninfringing use. The evidence
does not support Zerto's position. Zerto provided almost no evidence to indicate that its customers
operate in this noninfringing state. The jury reasonably found that Zerto contributed the
infringement of claim 5 of the '091 patent, and that finding applies with equal force to claim 1.
In conclusion, the court finds that the jury's verdict of contributory infringement of claim
5 is supported by evidence on the record, but the jury's verdict of noninfringement of claim 1 is
not. Accordingly, the court grants EMC's motion for judgment as a matter of law as to
infringement of the '091 patent, and denies Zerto's motion as to noninfringement of the '091
patent.
5.

Zerto's JMOL Motion for Noninfringement of the '867 Patent

Zerto contends that its ZVR software does not infringe claim 45 of the '867 patent. Zerto
argues that no reasonable jury could have found that: Zerto had infringing computer readable
media; Zerto's software halts host device controllers; or Zerto uses a journal to roll back a duplicate

23

storage ,.system. The court concludes that substantial evidence in the record supports the jury's
finding that Zerto directly infringes all elements of claim 45.
First, the jury could have reasonably concluded that Zerto maintained "a computer readable
medium storage program code." Zerto disputes that it ever had a copy of the VSS Agent software,
which is required to satisfy this element. But EMC produced evidence that Zerto's customers
download the VSS Agent software from Zerto's website, that the Zero Virtual Manager
Administration Guide instructs users to access the "Zerto Support Portal downloads page," and
that installation of the software includes a license agreement between the user and Zerto. (Tr.
388:8-23; D.I. 247, Ex. 12 at ZERT0_56097.) Zerto argues that website, and therefore the VSS
Agent software, is maintained by Amazon.com. (Tr. 903:12-19.) Still, a jury could have inferred
that Zerto had control over the software.
Second, the jury could have reasonably concluded that Zerto software "cause[ s] host device
controllers ... to halt processing I/O requests." Mr. Jestice provided thorough testimony regarding
this limitation. He explained that when a user creates a VSS checkpoint, ZVR causes an application
to become frozen, and a frozen application no longer sends I/O requests. (Tr. at 396:5-399:8.) A
jury could have credited Mr. Jestice's testimony and found that by preventing I/O requests from
being sent to the host device controller, the ZVR software causes the host device controller to halt
processing the requests. The court declines Zerto's invitation to impose a narrower claim
I

construction to overturn the jury's interpretation of plain and ordinary meaning. See HewlettPackard Co. v. Mustek Sys., Inc. 340 F.3d 1314, 1320-21 (Fed. Cir. 2003).
The jury could have reasonably concluded that Zerto rolls back a duplicate storage system.
Mr. Jestice demonstrated how ZVR's Test Failover operation rolls data back to a previous point

in time. (Tr. at 391:11-18.) This testimony was corroborated by Zerto webinars featuring Zerto's

24

Director of Product Marketing, Jennifer Gill. (Id. at 1365:3-1366:22.) The jury could have credited
this evidence and rejected Zerto's arguments to the contrary.
The court concludes that substantial evidence on the record supports the jury's finding that
Zerto literally infringes claim 45 of the '867 patent. The court denies Zerto's motion as to
nonin:fringement of the '867 patent.

C.

EMC's Motion for Permanent Injunction

EMC seeks a permanent injunction against Zerto' s infringing ZVR software. In appropriate
cases, a district court may grant an injunction as an equitable remedy for patent in:fringemf<nt. 35

s

U.S.C. 283. A plaintiff seeking a permanent injunction "must demonstrate: (1) that it has suffered
an irreparable injury; (2) that remedies available at law, such as money damages, are inadequate
to compensate for that injury; (3) that, considering the balance of hardships between the plaintiff
and the defendant, a remedy in equity is warranted; and (4) that the public interest would not be
disserved by a permanent injunction." eBay, Inc. v. MercExchange, L.L.C., 547 U.S. 388, 391, 126
S.Ct. 1837, 1839, 164 L.Ed. 2d 641 (2006). Applying the equitable factors to the facts of this case,
the court concludes that a permanent injunction is not warranted.
To establish irreparable harm, EMC argues that Zerto's infringement has caused it to lose
market share, experience price erosion, lose future downstream sales, and diminished its reputation
as an innovator. EMC also argues that Zerto may be unable to pay the judgment.
EMC depicts Zerto as its direct and only competitor in the "hypervisor-based replication
I

market." The court finds that this characterization unreasonably narrows the market of data
protection systems, which is highly competitive and includes many players. Certainly, Zerto
aggressively competes with EMC (see Tr. at 571:14-583:3), but Zerto is not the only competitor
EMC faces. The record shows that EMC has lost customers to Zerto. (D.I. 229, Ex. S.) EMC also

25

reports losing several sales opportunities (D.I. 228 at mf23-24), but EMC has not shown that if
Zerto had not made those sales, those customers would definitely have gone to EMC. EMC does
not address how other competitors affect its market share.
EMC contends that it is losing revenue from downstream sales and services. EMC also
provided evidence that Zerto' s competition forced it to reduce prices for its product, RecoverPoint
for VMs. (Id. at ifif 28-34.) The court notes that when RecoverPoint for VMs entered the market,
EMC initially priced it substantially higher than Zerto's three-year-old product. There is no
·. evidence customers would have been willing to pay EMC' s original price for that prodl1ct if Zerto .
had not already been in the market. This cuts against a finding of price erosion.
A finding of irreparable harm requires a causal nexus between the patent infringement and
I

tpe alleged injury. The nexus analysis is a flexible, fact-based inquiry. Apple, Inc. v. Samsung
Elecs. Co., 809 F.3d 633, 641 (Fed. Cir. 2015). A patent owner can show a nexus by providing
evidence that infringing features make the defendant's product more desirable. Id. at 642. The
court finds a causal nexus exists between Zerto's infringement and EMC's harm. Zerto markets
some of the patented features as advantages of its product. (D.I. 229, Ex G at EMC_7162, Ex. V
at EMC_195721, Ex.Rat EMC_194852.) Although these features may not be the main drivers of
product sales, it is enough that they are one factor in a potential customer's decision.
The court is unpersuaded by EMC's final arguments that Zerto has harmed its reputation
as an innovator and that Zerto may not be able to pay the judgment. The record does not support
either contention. Considering all of these facts, the court finds the irreparable harm factor weighs
slightly in favor of EMC.
·EMC argues that a monetary award would be inadequate to compensate it for its loss. The
court disagrees. EMC' s supporting evidence for this factor largely overlaps with the evidence used

26

to show irreparable harm. Although EMC does suffer competitive harm, this harm is quantifiable.
For exatnple, a per-virtual machine royalty structure would account for any lost licensing revenue
from additional sales. The parties could surely use their experience in the market to project other
lost downstream revenue and determine a compensation algorithm. Although EMC tends not to
grant patent licenses, the evidence shows it has licensed the patents at issue to several of its
competitors. (Tr. at 701:11-703:3, 727:9-729:8.) Overall, the court

~ds

that money damages

would be adequate to compensate EMC for its injury. This weighs against awarding an injunction.
As for the third factor, the balance of hardships clearly favors Zerto. In determining the .
balance of hardships, the court considers "the parties' sizes, products, and revenue sources." i4i
Ltd. v. Microsoft Corp., 598 F.3d 831, 862 (Fed. Cir. 2010). The products EMC targets with this

injunction comprise the entirety of Zerto's business. In contrast, the lost sales EMC identifies
represent about 0.001 % of its annual revenues. This factor weighs strongly against awarding an
injunction.
The final factor, public interest, weighs slightly in EMC's favor. In any patent case, the
public has an interest in promoting innovation and enforcing patent rights. This interest would also
be served through a compulsory license. This public policy, however, is not strong enough to carry
an injunction here. Considering and weighing all of the factors, the court finds that a permanent
injunction is not warranted in this case.
D.

EMC's Motion for an Accounting and to Amend the Judgment

In its motion, EMC seeks to amend the judgment to include: (1) an accounting of pre-

verdict infringing sales not included in the jury's damages award (between April 22, 2015 and
May 8, 2015), (2) an accounting of infringing sales that occurred after the jury's verdict, (3) an
enhancement of damages awarded for infringing sales that occurred after the jury's verdict, (4)

27

I

pre-judgment interest on all pre-judgment damages, and (5) post-judgment interest on the total
damages awarded to EMC.
1.

Pre-judgment Sales and Interest

The court will order that the judgment be amended to include an accounting of any
infringing sales made between April 22, 2015 and May 8, 2015. The court also grants EMC's
motion regarding pre-judgment interest on the total damages award. District courts have discretion
in determining the applicable interest rate for an award of pre-judgment interest.
. Studiengesellschaft Kahle, m.b.H. v. Dart Indus., Inc., 862 F.2d 15_64, 1580 (Fed.· Cir. 1988).
"Courts have recognized that the prime rate best compensate[s] a patentee for lost revenues during
the period of infringement because the prime rate represents the cost of borrowing money, which
is 'a better measure of the harm suffered as a result of the loss of the use of money over time."'
IMX, Inc. v. LendingTree, LLC, 469 F. Supp. 2d 203, 227 (D. Del. 2007) (citing Mars, Inc. v.
Conlux USA Corp., 818 F. Supp. 707, 720-21 (D. Del. 1993), ajf'd, 16 F.3d 421 (Fed. Cir. 1993)).
The court accordingly will order Zerto to pay pre-judgment interest at the prime rate, compounded
quarterly.
2.

Post-judgment Sales and Interest

Given the court's denial of EMC's motion for a permanent injunction, EMC is entitled to
an ongoing royalty covering all infringing sales made after May 8, 2015. The court denies the
remainder of EMC' s motion without prejudice and directs the parties to engage in mediated
negotiations regarding an appropriate royalty. 9 If the parties are unable to reach an agreement by

9

The court follows the Federal Circuit's guidance in this area: "In most cases, where the district court determines
that a permanent injunction is not warranted, the district court may wish to allow the parties to negotiate a license
amongst themselves regarding future use of a patented invention before imposing an ongoing royalty. Should the
parties fail to come to an agreement, the district court could step in to assess a reasonable royalty in light of the
ongoing infringement." Paice LLC v. Toyota Motor Corp., 504 F.3d 1293, 1315 (Fed. Cir. 2007)
28

June 30, 2105, EMC may file a renewed motion for an ongoing royalty covering post-judgment
sales.

V.

CONCLUSION
For the reasons stated above, the court will: (1) deny all of Zerto's post-trial motions; (2)

partially grant EM C's renewed JMOL motion; (5) deny EMC's motion for a permanent injunction;
and (6) partially grant EMC's Motion to Amend the Judgment (D.1. 223).

Dated: March___}_l_, 2016

29