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`Attorney Docket No.:
`§
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` 104677-5005-804
`§
`§ Customer No. 28120
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`§
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`Petitioner: Apple Inc.
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`Inventor: Hair
`United States Patent No.: 5,966,440
`Formerly Application No.: 08/471,964
`Issue Date: October 12, 1999
`Filing Date: June 6, 1995
`Former Group Art Unit: 380
`Former Examiner: Hoa T. Nguyen
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`For: System and Method for Transmitting Desired Digital Video or Digital Audio
`Signals
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`MAIL STOP PATENT BOARD
`Patent Trial and Appeal Board
`United States Patent and Trademark Office
`Post Office Box 1450
`Alexandria, Virginia 22313-1450
`
`
`DECLARATION OF DR. JOHN P. J. KELLY IN SUPPORT OF APPLE
`INC.’S PETITION FOR COVERED BUSINESS METHOD PATENT
`REVIEW OF UNITED STATES PATENT NO. 5,966,440 PURSUANT TO 35
`U.S.C. § 321, 37 C.F.R. § 42.304
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`I, John Kelly, hereby declare as follows:
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`I. INTRODUCTION
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`1.
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`I have been retained to provide assistance regarding U.S. Patent No.
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`5,966,440 (“’440 patent”). Attached hereto as Appendix A is a true and correct
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`copy of my Curriculum Vitae describing my background and experience. I have
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`personal knowledge of the facts and opinions set forth in this declaration, and, if
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`called upon to do so, I would testify competently thereto.
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`2.
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`I hold Bachelor of Arts and Master of Arts degrees with Honors in
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`Mathematics from the University of Cambridge, England. I hold a Ph.D. in
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`Computer Science from U.C.L.A. From 1982 through 1986, I was a professor in
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`the Computer Science Department at U.C.L.A. From 1986 through 1997, I was a
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`professor in the Electrical and Computer Engineering Department of the University
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`of California, Santa Barbara, where I held tenure.
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`3.
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`I am the principal of Kelly Computing, Inc. I teach and consult in
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`many different aspects of computer science and engineering, including computer
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`hardware and software architecture and design, software engineering and fault
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`tolerance. My particular areas of expertise include computer architecture, software
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`engineering and “clean-room” development and evaluation, reverse engineering,
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`operating systems (including real-time and embedded), network computing
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`(including Internet computing), storage systems, fault tolerance, parallel and
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`distributed computing systems, transaction processing systems, database systems,
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`and program management.
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`4.
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`As a result of my education and professional experience, I have
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`extensive development experience and knowledge of computer operating systems
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`including access control concepts, data encryption/decryption techniques,
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`networking technologies, database systems, communication protocols including
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`network communication protocols, user interfaces including graphical user
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`interfaces and computer hardware design, and software analysis, design, and
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`development. I have developed computer software and hardware for many
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`different computer systems and applications including programming
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`microprocessors. I have also analyzed several software products related to access
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`control, audio and video playback, network transmission of audio and video,
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`storage of audio and video in multimedia databases, and content delivery networks
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`and distribution systems. For example, I have analyzed databases and repositories
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`used to store and access audio file repositories, network based distribution of
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`electronic media, set top boxes, and content delivery network architecture of
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`leading content delivery network providers. I have also analyzed the source code
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`for computer operating systems such as Apple’s Mac OS X, Microsoft Windows,
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`Linux, etc. I have also testified in Court on several occasions as a computer
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`science expert to report my analysis and opinions.
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`5.
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`I have worked in the area of computer software, hardware and system
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`design and development for over thirty-five years. I have extensive experience in
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`the design and development of small and large scale software systems. I have been
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`involved in the specification, development, integration, and testing of computer
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`systems with a wide range of requirements, sizes and types. These have included,
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`by way of example, custom hardware and software for a US Air Force fighter
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`plane, a distributed real-time system for US FAA air traffic control, and a
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`distributed geographical information system for the US Department of Energy.
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`6.
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`From 1978 to 1995, I specified, designed and implemented distributed
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`database architectures, systems and applications for Los Alamos National
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`Laboratory and NASA’s Jet Propulsion Laboratory and database machine design
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`and implementation at Transaction Technology Incorporated, Ordain, Inc. and
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`Teradata.
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`7.
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`From 1985 to 1998, I consulted for AT&T GIS, NCR, Symbios Logic,
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`and LSI Logic, including working as a member of the AT&T GIS Science
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`Advisory Committee (“SAC”). The SAC evaluated AT&T’s organization,
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`technical direction and product strategy and made recommendations to the Vice
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`President of Technology and Development.
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`8.
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`A listing of testimony that I have provided in the last four years and
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`my compensation is attached hereto as Appendix B. I am being compensated for
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`my time spent in connection with this case. I have no financial interest in the
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`outcome of this case.
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`9.
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`In preparing my opinions, I have considered the following materials:
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`• ’440 patent [Ex. 1301],
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`• ’440 patent file history [Ex. 1302],
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`• ’440 patent reexamination [Ex. 1303],
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`• United States Patent No. 5,191,573 (“’573 patent”) [Ex. 1304],
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`• ’573 patent file history [Ex. 1305],
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`• ’573 patent reexamination [Ex. 1306],
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`• Arthur Hair Dec. 11, 2012 Dep. Tr. [Ex. 1307],
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`• Scott Sander Dec. 18-19, 2012 Dep. Tr. [Ex. 1308],
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`• Steven Dupler, Joint Telerecording Push: CompuSonics, AT&T Link,
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`Billboard, vol. 97, no. 40, Oct. 5, 1985 (“Dupler article”) [Ex. 1309],
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`• David Needle, From the News Desk: Audio/digital interface for the IBM
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`PC?, InfoWorld, vol. 6, no. 23, p. 9, June 4, 1984 (“Needle article”) [Ex.
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`1310],
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`• Larry Israelite, Home Computing: Scenarios for Success, Billboard, Dec. 15,
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`1984 (“Israelite article”) [Ex. 1311],
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`• “Digital Audio Telecommunication System” diagram, ©1985 [Ex. 1315],
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`• David Schwartz, July 16, 1984 Letter to CompuSonics’ Shareholders, July
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`16, 1984 (“Schwartz 1984 Letter”) [Ex. 1316],
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`• Hyun Heinz Sohn, A High Speed Telecommunications Interface for Digital
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`Audio Transmission and Reception, 76th AES Convention, Oct. 1984 (“Sohn
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`article”) [Ex. 1317],
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`• David Schwartz, October 10, 1985 Letter to CompuSonics’ Shareholders,
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`Oct. 10, 1985 (“Schwartz 1985 Letter”) [Ex. 1318],
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`• CompuSonics Video, Application Notes: CSX Digital Signal Processing,
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`1986 (“Application Note”) [Ex. 1319],
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`• “Digital Audio Software Production/Distribution” diagram [Ex. 1320],
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`• 1987 Stanford lecture (“Stanford lecture”) [Ex. 1321],
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`• Bryan Bell, Synth-Bank: The Ultimate Patch Library, Electronic Musician,
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`Sept. 1986, p. 26 (“Synth-Bank article”) [Ex. 1322],
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`• U.S. Patent No. 4,682,248 (“Schwartz patent”) [Ex. 1323],
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`• Brian Dumaine, The Search for the Digital Recorder, Fortune, p. 116, Nov.
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`12, 1984 (“Dumaine article”) [Ex. 1324],
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`• Agreement between Synth-Bank and an Artist dated 2/22/1986 (“Synth-
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`Bank agreement”) [Ex. 1325];
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`• U.S. Patent And Trademark Office, Trademark File History for the Synth-
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`Bank mark (“Synth-Bank TM history”) [Ex. 1326],
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`• Keyboard, vol. 13, no. 3, March 1987, p. 145 (“Keyboard article”) [Ex.
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`1327],
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`• Inside Macintosh Volumes I, II and III, 1985 (“Inside Macintosh”) [Ex.
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`1328],
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`• The Technical Development of Internet Email” by Craig Partridge, IEEE
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`Annals of the History of Computing (Berlin: IEEE Computer Society) 30
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`(2): 3–29 (“Partridge article” [Ex. 1329],
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`• United States Patent No. 4,124,773 (“Elkins patent”) [Ex. 1330],
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`• U.S. Patent 4,667,088 (“Kramer patent”) [Ex. 1331],
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`• U.S. Patent No. 4,528, 643 (“Freeny patent”) [Ex. 1332],
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`• Photograph of CompuSonics equipment [Ex. 1333],
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`• Declaration of David Schwartz [Ex. 1335],
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`• Special Master’s Report And Recommendation On Claim Construction
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`dated Nov. 19, 2012 in the matter of SightSound Technologies, LLC v.
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`Apple, Inc. (“Claim Construction Recommendation”) [Ex. 1336],
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`• Order re Claim Construction dated 2/13/13 in the matter of SightSound
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`Techs., LLC v. Apple Inc. [Ex. 1337],
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`• New Telerecording Method for Audio, Broadcast Management/Engineering,
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`Oct. 1985 (“Telerecording article”) [Ex. 1342].
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`II. OPINIONS REGARDING A PERSON OF ORDINARY SKILL IN THE
`ART
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`10.
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`I understand that the factors considered in determining the ordinary
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`level of skill in the art include the level of education and experience of persons
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`working in the field; the types of problems encountered in the field; and the
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`sophistication of the technology.
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`11.
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`In my opinion, a person of ordinary skill in the art relating to the
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`technology of the asserted patents at the time at which the patents were filed would
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`have had a bachelor’s degree or equivalent in computer engineering or computer
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`science and approximately two years of experience in developing software and
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`hardware that transmit and receive files over a network.
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`12.
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`I understand that the U.S. District Court in the matter of SightSound
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`Technologies, LLC v. Apple, Inc. has determined that a person of ordinary skill in
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`the art relating to the technology of the asserted patents at the time at which the
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`patents were filed is a person having an undergraduate degree in electrical
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`engineering or computer science and/or approximately 2-4 years of industry
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`experience in the design of systems and methods for storing and transmitting
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`digital information. [See Ex. 1336 (Claim Construction Recommendation) at p.
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`12, fn.12; see also Ex. 1337
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`13.
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`In 1988, I would have exceeded the level of skill required by either
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`definition, and I am in a position to opine on the understanding of a person of
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`ordinary skill in the art. In addition, my opinions are the same under both
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`definitions.
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`III. CLAIM CONSTRUCTION
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`14. For the purposes of this declaration, I have been asked to assume
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`constructions for certain claim terms as presented in the following table. For all
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`remaining claim terms, I have assumed their plain and ordinary meaning.
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`Term
`First Party
`Second Party
`Second Party Control
`Unit
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`Telecommunication Lines
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`“Electronic” Terms
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`“Connecting
`Electronically” Terms
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`Claim Construction
`a first entity, whether a corporation or a real person
`a second entity, whether a corporation or a real person
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`control unit of the second party
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`an electronic medium for communicating between
`computers.
`pertaining to devices or systems which depend on the
`flow of electrons.
`connecting through devices or systems which depend
`on the flow of electrons.
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`Claim Construction
`Term
`transferring through devices or systems which depend
`“Transferring
`on the flow of electrons.
`Electronically” Terms
`providing payment electronically (i.e., through devices
`“Transferring Money
`or systems which depend on the flow of electrons).
`Electronically” Terms
`requesting payment electronically
`“Charging a Fee” Terms
`providing a product or service electronically in
`“Electronically Selling”
`exchange for transferring money electronically
`Terms
`No construction needed
`Sold
`digital representations of sound waves
`Digital Audio Signal
`a permanent, rigid, magnetic storage device
`Hard Disk
`“Second Party Hard Disk” non-volatile storage portion of the second memory
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`IV.
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`THE ’440 PATENT
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`A. OVERVIEW OF THE ’440 PATENT
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`Figure 1. Overview of the ’440 patent. The first party’s system (components
`on the left side of the figure) are connected to the second party’s system
`(components on the right side of the figure) by telephone lines. [See Ex. 1301
`(’440 patent) at Fig. 1]
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`
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`15. The ’440 patent issued on Oct. 12, 1999, from U.S. Patent Application
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`No. 08/471,964 (“’964 application”), which was filed on June 6, 1995. For the
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`purpose of this declaration only, I have been asked to assume that the priority date
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`of the ‘440 patent is June 13, 1988.
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`16. The’440 patent is directed to a system and method for the sale and
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`transmission of audio and data signals. [See, e.g., Ex. 1301 (’440 patent) at
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`Abstract] The audio and/or data signals are stored on the system of the seller
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`(“first party”). [See, e.g., Ex. 1301 (’440 patent) at 4:11-13] A buyer (“second
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`party”) can purchase audio or video signals, transfer these signals over telephone
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`lines, and store the signals on the buyer’s system. [See, e.g., Ex. 1301 (’440
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`patent) at 3:62-4:63, Fig. 1] The buyer can then play the audio or video signals
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`stored on the buyer’s system. [See Ex. 1301 (’440 patent) at 5:1-18]
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`V. THE INVALIDATING PRIOR ART
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`A. OVERVIEW OF THE STATE OF THE ART
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`17.
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`In June of 1988 – at the time of the filing of the ’497 application, now
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`abandoned, from which SightSound claims priority for the ’440 patent – the
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`elements of the asserted claims in this case were already well known in the art for
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`digital data, including audio and video. Storing data, including audio and video
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`data, at a remote server was well known. Downloading data from a remote server
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`to a local computer was a well-known method of obtaining data. The electronic
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`sale of merchandise, including digital data, was also well-known.
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`18. The sole named inventor of the ’440 patent, Arthur Hair, agrees that
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`he did not invent, among other things, electronic sales, the electronic transmission
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`of digital audio signals, the electronic transmission of digital video signals, the
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`electronic transmission of digital content such as computer programs for electronic
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`sale, the electronic transmission of MIDI files for electronic sale, or the capability
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`of playing digital audio signals, digital video signals, hard disks, telephone lines,
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`compact disc players, video display units or stereo speakers. [See, e.g., Ex. 1307
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`(Hair Dec. 11, 2012 Dep. Tr.) at pp. 49-52; Ex. 1302 (Declaration of Arthur Hair
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`dated January 9, 1998, attached to applicant’s Response during prosecution of U.S.
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`Patent Application No. 08/471,9641); Ex. 1301 (’440 patent) at 4:33-38; see also
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`Ex. 1301 (’440 patent) at 1:55-58, 1:67-2:1; Ex. 1308 (Sander Dec. 18-19, 2012
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`Dep. Tr.) at pp. 42-44]
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`19. Computer scientists, engineers and users have long recognized the
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`advantages of connecting computers together so that they can share information.
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`Over the years many different technologies have been developed to connect
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`computers into networks for this purpose. Some technologies work over shorter
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`distances and are appropriate for creating local-area networks (LANs) while other
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`technologies can span longer distances and are used to create wide-area networks
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`(WANs). Some of the technologies used for WAN connections included the “plain
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`old telephone system” (POTS), dedicated telephone lines, fiber optic lines and
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`satellite links.
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`20. By June 1988, since most homes had telephone lines, the telephone
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`system was a popular method of connecting a home computer to a remote
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`computer. A modem was used on each side of the telephone call in order to
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`1 The ’964 application issued as U.S. Patent No. 5,966,440.
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`convert and send digital data over the analog telephone lines. The rate at which
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`data was sent over the telephone line depended on the kind of modem used. For
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`example, the International Telecommunication Union (ITU) published standards
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`for a 1200 bps2 modem in 1980 (Recommendation V.22), a 9600 bps modem in
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`1984 (Recommendation V.32) and a 14.4 kbps modem in 1991 (Recommendation
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`V.32bis). By 1988, 1200 and 2400 baud modems were in common use. In 1988,
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`higher speed home options such as cable television systems were not commonly
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`used. Businesses that required higher speed network access often leased a
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`dedicated line (e.g., a T1 line with a speed of approximately 1.5 Mbps).
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`21. Prior to June 1988, computer users accessed remotely-stored data in a
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`wide variety of ways such as email, FTP sites, Bulletin Board Systems (BBSs),
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`online services, etc. I will give a brief description of some of these methods.
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`22. Email systems consist of user agents (the email client programs that
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`allow a user to create, send and manage email messages) and mail transfer agents
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`(email servers that move mail messages across the network). Computer users were
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`sending email messages across the ARPANET (a precursor to the Internet) in the
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`1970s. [See, e.g., Ex. 1329 (Partridge article)3] Although email messages were
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`initially text only, methods of supporting binary objects such as graphics and sound
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`2 “bps” means bits per second. “kbps” means kilobits per second or thousands of
`bits per second. “Mbps” means megabits per second or millions of bits per second.
`3 http://www.ir.bbn.com/~craig/email.pdf.
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`were under development in the 1980s. [See also Ex. 1329 (Partridge article) at pp.
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`24-27]
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`23. The File Transfer Protocol (“FTP”), as its name suggests, is a protocol
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`for transferring files to or from a server computer over a network. The user
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`interacts with the FTP server using an FTP client program. FTP servers have been
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`used for distributing software and many other types of files. Any type of computer
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`file, including audio and video file types, could be transferred by FTP. The FTP
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`standard (RFC114) was published in 1973.
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`24. A Bulletin Board System (BBS) is a computerized system for
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`allowing remote users to upload/download software and other files, to read news,
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`exchange messages with other users, etc. Most BBSs provided access through
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`modems and the phone system. Some BBSs were free while others operated on a
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`subscription basis. Online services such as Delphi were similar to BBSs and
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`provided access to many kinds of information and services.
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`25. By June 1988, devices for playing digital audio and video were also
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`well known. For example, in 1978, United States Patent No. 4,124,773 to Elkins4
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`(Ex. 1330) described a system for distributing digitized audio programs from a
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`master data bank to remote users. [See Figure 2] The audio programs were
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`4 United States Patent No. 4,124,773 to Elkins, titled “Audio storage and
`distribution system,” was filed November 26, 1976, and issued November 7, 1978.
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`digitized and stored in a digital storage subsystem for “later retrieval.” [See, e.g.,
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`Ex. 1330 (Elkins patent) at 3:16-19, 3:46, 49] The user could send a code to the
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`master data bank representing a desired audio program, which was then delivered
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`to the user over telephone lines or another communication medium.
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`“As a user located at a remote location desires to listen to a selected
`one of the programs, the operator actuates the command signal
`generator 100 with a code representing the selected one of the stored
`programs. A
`command
`signal
`is
`transmitted
`along
`the
`communications circuit 59 and interpreted by the digital interrogator
`50. The digital interrogator 50 then retrieves the selected one of the
`stored digital signals from the digital storage subsystem 42. The
`digital signal is then reformatted by the data reformatter 56 and
`transmitted along the communications circuit 59.” [Ex. 1330 (Elkins
`patent) at 6:16-27]
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`The user’s device contained storage, analog to digital converter, amplifier and
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`transducer to convert the digitized audio programs into sound waves (i.e., play the
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`digitized audio programs). [See Figure 2] Second, CD players were common in
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`the 1980s. Third, some types of personal computers could play digital audio. The
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`Apple Macintosh, for example, had built-in speakers and sound generator circuitry.
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`[See, e.g., Ex. 1328 (Inside Macintosh)] Similarly, some computers, such as the
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`Apple Macintosh, and other devices could play digital video. Fourth, even
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`portable audio players had been developed. For example, in 1987, U.S. Patent
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`4,667,088 to Kramer et al.5 (Ex. 1331) disclosed a credit card size portable audio
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`player. The 8 MB bubble memory on the device stored the digitized audio data.
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`This memory could store 3.5 minutes of audio using the DPCM method for
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`encoding the audio. [See, e.g., Ex. 1331 (Kramer patent) at Abstract, 3:8-41] The
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`audio could be played through speakers or headphones. [See, e.g., Ex. 1331
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`(Kramer patent) at 5:55-65, 6:6-12]
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`5 U.S. Patent 4,667,088 to Kramer et al., titled “Portable data processing and
`storage system,” was filed Nov. 1, 1982, and issued May 19, 1987.
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`Figure 2. An illustration of the system of Elkins. The components in the red
`box are at the master data bank. The components in the green box are the
`user’s device. [See Ex. 1330 (Elkins patent) at Fig. 1 (emphasis added)]
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`26. Electronic sale of goods and services was also well known. For
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`example, David Schwartz, president of CompuSonics Corporation, said of the
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`“Electronic Record Store” concept that “All of the technology that makes this
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`possible has been proven by many people, ourselves among them.” [See, e.g., Ex.
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`1321 (Stanford lecture) at parts 9-10; see also § V.B below] The advantages to the
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`consumer of access to online services were discussed in a 1984 article in Billboard:
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`“A fully integrated home computer will enable us to do our banking,
`buy groceries, pay bills, set up doctor's appointments, and help our
`children do their homework. The computer will also show local
`movie schedules, let us study the menus from our favorite restaurants,
`and allow us to order and pay for concert and theatre tickets. It will
`remind us to mail birthday cards, take the car in for service, and call
`the baby sitter.” [Ex. 1311 (Israelite article) at p. 4]
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`This Billboard article also discussed online sales scenarios.
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`“One evening you decide that you would like to own a copy of the
`soundtrack of the video clip you just watched on MTV. You change
`the channel (using the keyboard on your home entertainment control
`module) so you can find out the name of the song and the access
`number under which it is stored in the cable company’s data base.
`Then, after you load a floppy disk into your DSP-1000, you dial up
`the cable station, enter the access code and a ‘send data’ code. When
`you receive a ‘data transmission complete’ signal, the process is
`finished. The floppy disk now will contain the song, stored in digital
`form. All charges associated with the data transfer will be itemized
`on your monthly cable service bill, which you can see on the monitor
`if you so choose.” [Ex. 1311 (Israelite article) at p. 4]
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`“If the consumer had access to a computer and to a service like
`Yellow Data … he or she could look through a data base of songs
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`available in digital form, indicate those wished to purchase, type in a
`charge card number and address, and the floppy disc would arrive in
`the mail two days later.” [Ex. 1311 (Israelite article) at p. 5]
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`“Thus, as other forms of entertainment (e.g., video) are digitized, they,
`too, will become candidates for these scenarios.” [Ex. 1311 (Israelite
`article) at p. 4]
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`27. The advantages to businesses and consumers of electronic distribution
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`and sales, for example, of digital music, were known:
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`“Thus, the owner of the information embodied in recordings faced the
`configuration problem (how many phonograph records are to be
`manufactured, how many 8-track tapes are to be manufactured and
`how many reel-to-reel tapes are to be manufactured), and then the
`owner of such recording
`information faced
`the problems of
`distributing such material objects to retail outlets and attempting to
`collect for the sale of such material objects… The system of the
`present invention solves the problems associated with manufacturing,
`inventory, configuration distribution and collection previously
`discussed and permits sale of material objects embodying information
`in a more efficient, economical and profitable manner.” [Ex. 1332
`(Freeny patent6) at 1:64-2:4, 4:13-18]
`
`“The author and his colleagues at CompuSonics Corporation see great
`potential for expanding the music market through digital technology.
`
`6 U.S. Patent No. 4,528, 643 to Freeny was filed on Jan. 10, 1983 and issued on
`July 9,1985.
`
`
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`20
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`
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`Imagine that a large database of the latest music chart successes exist
`only a phone call away. Video music services which broadcast over
`cable networks can simultaneously release new album and have it
`ready for immediate sale without first having filled the distribution
`pipeline. In fact, a trend of selling the music, not the media would
`have been set. This would reduce expensive inventory and shipping
`costs and at the same time assure a supply of recording that can meet
`any demand.” [Ex. 1317 (Sohn Article) at p. 11]
`
`Thus, amongst other benefits, electronic sales reduces manufacturing and shipping
`
`costs for businesses, and increases choice and convenience for consumers.
`
`28. As can be appreciated from the above review, practitioners in the art
`
`knew how to build the components of an audio distribution and listening system.
`
`In addition, the limitations of such systems at the time were well known. Many of
`
`the technological issues that minimized the commercial viability of such systems at
`
`the time related to the amount of digital data required for digital audio and digital
`
`video. For example, approximately 36 MB of data is required to represent 3.5
`
`minutes of CD-quality digital audio. Digital video is even more voluminous.
`
`Uncompressed, low-definition television video requires about 10 MB7 per second
`
`
`7 512 lines per frame by 512 samples per line by 1 byte per sample by 30 frames
`per second equals about 8 million bytes per second, which does not include the
`overhead for control data.
`
`
`
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`21
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`
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`or 2,100 MB for 3.5 minutes. [See, e.g., Ex. 1323 (Schwartz patent8) at 3:7-13]
`
`Even though methods of compressing digital data were known, both compressed
`
`digital audio and compressed digital video still required large amounts of data.
`
`[See, e.g., Ex. 1331 (Kramer patent) and Ex. 1323 (Schwartz patent)] Recall that
`
`8MB of data was still required for 3.5 minutes of digital music compressed using
`
`the DPCM method. Even if a video were compressed by a factor of 100, a single
`
`90 minute movie would require about 540 MB of data assuming a data rate of
`
`10 MB/second.
`
`29. The first problem was how to transfer such a large file to the user’s
`
`personal computer in a reasonable amount of time (minutes or seconds instead of
`
`hours). Transfer of data over telephone lines was known to be very slow.
`
`“One medium that is currently used for shipping digital data over long
`distances is telephone lines. Unfortunately, the speed at which data
`can be shipped over existing phone lines is relatively slow (1,200
`single pieces of information per second), and the error rate is
`relatively high. This makes shipment of large amounts of data via this
`medium somewhat difficult.” [Ex. 1311 (Israelite article) at p. 4]
`
`Downloading a single uncompressed song in digital format could take more than a
`
`day. Even if the digital audio data is compressed, the download time for a song is
`
`8 U.S. Patent No. 4,682,248 to David M. Schwartz; titled “Audio and video digital
`recording and playback system,” was filed September 17, 1985 and issued July 21,
`1987 (“Schwartz patent”).
`
`
`
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`22
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`
`
`still several hours: for example, downloading 8MB of data (approximately one
`
`song compressed using DPCM) would require about 8 hours at 2,400 bps.
`
`Downloading a 540 MB movie at 2,400 bps would take about 500 hours. In
`
`addition to being slow, it was not uncommon for a modem to drop a call or
`
`encounter an error that required restarting the file download from the beginning.
`
`30. The second problem was how to store such large files for later
`
`playback. This requires a non-volatile medium (i.e., a medium that retains its
`
`contents when power is removed) capable of storing a reasonable size library of
`
`songs or videos. Non-volatile storage devices included CD-ROMs (a read-only
`
`medium), Write-Once-Read-Many (“WORM”) optical disks, tapes, floppy disks,
`
`hard drives and bubble memory (a solid state memory). The floppy drives
`
`commonly used in personal computers had relatively low capacity (under 1.5 MB).
`
`Therefore, a single floppy disk was large enough to hold only about 40 seconds of
`
`digital music encoded using the DPCM method utilized by Kramer, not enough for
`
`even one song. The solid state memory used by Kramer also had relatively low
`
`capacity. It was large enough to hold only a single song compressed using the
`
`DPCM method. Hard drives were larger (for example, the Apple Macintosh IIx in
`
`1988 could have an 80MB hard drive) but relatively expensive. An 80MB hard
`
`drive would be large enough to hold only about 10 songs compressed using the
`
`
`
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`23
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`
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`DPCM method. Again, digital video files were even larger. A 540 MB video
`
`would not fit on such a hard drive.
`
`31.
`
`If improved networking bandwidth and larger capacity memories
`
`could be provided to one of ordinary skill in the art, then a commercially attractive
`
`audio distribution system involving a remote server and a personal player could
`
`have been built using known techniques with predictable results. However, the
`
`’440 patent did not address the problems of bandwidth or storage.
`
`B.
`
`COMPUSONICS SYSTEM
`
`32. CompuSonics Corp. and CompuSonics Video Corp. (“CompuSonics”)
`
`developed digital audio and video recorder/players, and related technology in order
`
`to, amongst other things, facilitate electronic record sales. In addition,
`
`CompuSonics patented its technology, publicly demonstrated its recorder/players,
`
`and discussed the intended uses for which its recorder/players were designed
`
`(including its plans for electronic sale of music) in the media. Collectively, the
`
`technology and its use for distribution and sale of digital media are the
`
`“CompuSonics system.” Some of the publications that describe the CompuSonics
`
`system [see Ex. 1335 (Declaration of David Schwartz) at ¶¶ 5-19] are
`
`• David Needle, From the News Desk: Audio/digital interface for the IBM
`
`PC?, InfoWorld, vol. 6, no. 23, p. 9, June 4, 1984 (Ex. 1310);
`
`
`
`24
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`
`
`
`
`• David Schwartz, July 16, 1984 Letter to CompuSonics’ Shareholders, July
`
`16, 1984 (Ex. 1316);
`
`• Hyun Heinz Sohn, A High Speed Telecommunications Interface for Digital
`
`Audio Transmission and Reception, 76th AES Convention, Oct. 1984 (Ex.
`
`1317);
`
`• Brian Dumaine, The Search for the Digital Recorder, Fortune, p. 116, Nov.
`
`12, 1984 (Ex. 1324);
`
`• New Telerecording Method for Audio, Broadcast Management/Engineering,
`
`Oct. 1985 (Ex. 1342);
`
`• Steven Dupler, Joint Telerecording Push: CompuSonics, AT&T Link,
`
`Billboard, vol. 97, no. 40, Oct. 5, 1985 (Ex. 1309);
`
`• David Schwartz, October 10, 1985 Letter to CompuSonics’ Shareholders,
`
`Oct. 10, 1985 (Ex. 1318);
`
`• CompuSonics Video, Application Notes: CSX Digital Signal Processing,
`
`1986 (Ex. 1319);
`
`• U.S. Patent No. 4,682,248 to David M. Schwartz; filed September 17, 1985;
`
`issued July 21, 1987 (Ex. 1323);
`
`• “Digital Audio Telecommunication System” diagram, ©1985 (Ex. 1315);
`
`• “Digital Audio Software Production/Distribution” diagram (Ex. 1320);
`
`
`
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`25
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`Page 00025
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`
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`• 1987 Stanford lecture (Ex. 1321).
`
`1.
`
`Digital Recording/Playback D