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`Covered Business Method Patent Review
`United States Patent No. 7,334,720
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`
`
`Petitioner: Apple Inc.
`
`Attorney Docket No.:
`
` 104677-5008-817
`Customer No. 28120
`
`§
`Inventor: Hulst et al.
`United States Patent No.: 7,334,720 §
`Formerly Application No.: 11/336,758 §
`Issue Date: February 26, 2008
`§
`Filing Date: January 19, 2006
`§
`Former Group Art Unit: 2876
`§
`Former Examiner: Steven S. Paik
`§
`
`For: Data Storage and Access Systems
`
`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 ANTHONY J. WECHSELBERGER IN SUPPORT OF
`APPLE INC.’S PETITION FOR COVERED BUSINESS METHOD
`PATENT REVIEW OF UNITED STATES PATENT NO. 7,334,720
`PURSUANT TO 35 U.S.C. § 321, 37 C.F.R. § 42.304
`
`
`
`
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`Apple Exhibit 1219 Page 00001
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`I, Anthony J. Wechselberger, declare as follows:
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`Covered Business Method Patent Review
`United States Patent No. 7,334,720
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`I.
`INTRODUCTION
`1. My name is Anthony Wechselberger. I am the President of Entropy
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`Management Solutions (EMS), a consulting company I founded in 1999. I have been
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`retained by Apple Inc. to provide assistance regarding U.S. Patent No. 7,334,720 (“the
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`’720 patent”). Specifically, I have been asked to consider the validity of claims 1 and 2
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`of the ’720 patent (“the challenged claims”) under 35 U.S.C. § 101 and claim 1 of the
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`’720 patent under 35 U.S.C. § 103. I have personal knowledge of the facts and
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`opinions set forth in this declaration, and, if called upon to do so, I would testify
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`competently thereto.
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`2. My areas of expertise include broadcast and broadband content
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`distribution networks and communications infrastructures (Internet, broadcast, cable,
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`satellite and wireless mediums) including one-way and two-way interactive
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`architectures, computer networks, communications systems technologies and
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`equipment, various content and information distribution and merchandizing channels,
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`digital television, digital cinema, interactive media/multimedia systems, Internet
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`technologies (including but not limited to delivering content via the Internet,
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`communications standards and protocols), digital rights management (DRM), physical
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`media and file based and streaming content delivery, and other areas of expertise
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`relevant to the technologies of this matter. Attached hereto as Appendix A is a true
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`and correct copy of my Curriculum Vitae describing my background and experience.
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`3.
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`I am currently the President of Entropy Management Solutions
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`(“EMS”), a position I have held since I founded the company in 1999. In this
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`capacity I perform consulting services related to technology and business
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`development, content management, distribution and merchandizing, systems
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`engineering and product design in the areas of industrial and consumer broadband
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`and multimedia technologies and associated commercial systems.
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`4.
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`I have forty years of experience working with high technology systems
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`related to military, commercial, and consumer communication systems and networks.
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`I have held various design, leadership and executive positions in, for example,
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`engineering, operations, sales and marketing, and product management at leading
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`companies in those fields, such as TV/COM International, Inc. (TV/COM) and Oak
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`Communications, Inc. Over many years I have published and/or presented a number
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`of articles and papers related to content/information creation,
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`transmission/distribution and reception/consumption in various media sectors,
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`including cable, satellite, broadcast/wireless, Internet and digital cinema. Attached as
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`part of Appendix A is a list of my publications.
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`5.
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`I specialize in the areas of digital communications technologies, systems
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`and networks, including infrastructures, signal processing, network management and
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`command and control, and information security as used for content management,
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`merchandizing and delivery. My background includes much experience with
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`interactive and client-server technologies, such as those used in broadband and
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`Internet networks. Network management and command and control refers to the
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`technical oversight and management of communication systems and equipment
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`within a distribution system to direct both the transmission equipment (e.g., network
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`infrastructures, servers, hubs, nodes, head ends and uplinks etc.) and receiving
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`equipment (e.g., personal computer, television, set top box, handset/mobile device or
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`other consumer appliance) as to communications, applications and set-up and
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`operation in order to perform required features and functions. The “required features
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`and functions” of course includes the managed delivery of content over a network
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`from content suppliers to content consumers according to specified constraints—
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`which in digital delivery systems is commonly referred to as Digital Rights
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`Management (DRM).
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`6.
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`As a Vice President at Oak Communications (1980s) and Chief
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`Technology Officer at TV/COM (1990s), I was involved in the development of
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`terrestrial broadcast, satellite uplink and cable head end industrial equipment for
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`television transmissions, as well as consumer appliance equipment such as set top
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`boxes (STB) and other home based or home networked devices. All of these
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`architectures included computer control systems for network and associated network
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`device command and control, and for management of content distribution and
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`consumer appliance functions. These systems are all “addressable,” meaning that the
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`STB is controlled by a head end management computer, which executes so called
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`“conditional access system” (CAS) computer programs, as to which content
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`(programs and/or networks) is accessible by the consumer via the STB. CAS
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`technology is a form of DRM applied to real-time content delivery and consumption
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`systems such as those used in the pay television industries.
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`7.
`
`I was involved from the start with the development and evolution of
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`modern consumer digital audio and video communications systems and technologies.
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`In 1991, my employer, TV/COM, and I began to participate in the International
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`Organization for Standardization (ISO) MPEG-2 digital television standards
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`initiatives, and, in the following year, in both the both the European Digital Video
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`Broadcast (DVB) and U.S. Advanced Television Systems Committee (ATSC) forums
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`(which were based upon MPEG-2). I was an active participant and contributor to the
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`first two standard-setting bodies, and was a voting member of the ATSC. As Chief
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`Technology Officer of TV/COM, I developed a business strategy based on
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`supporting open international standards for digital television (DTV). In the mid
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`1990s, as the technologies and standards in support of DTV moved towards
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`implementation, the dawn of the Internet age arrived. This had a dramatic impact on
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`the way broadband systems engineers like me began to plan for the future. This is
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`because the concept of convergence—the melding of traditional broadband
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`communications systems and equipment, computers and computer networks, and the
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`telecommunications worlds—was changing the communications infrastructure and
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`technology landscape. When television distribution went all-digital, the information
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`of television became simply “data”— and it became possible for the technologies of
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`digital television, computers and computer networks and the telephony industry
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`(which was in the midst of its transition to digital infrastructure that began in the
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`1970s) to coalesce. Support for on-line and Internet services demanded a high
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`performance two-way data transmission capability, and so broadband network
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`providers began to upgrade their distribution infrastructures accordingly.
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`8.
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`In conjunction with this convergence, as TV/COM’s Chief Technology
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`Officer I directed the expansion of our network products into broadband data
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`communications generally, from an initial focus on digital television. Networks
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`became more advanced in order to support real-time interaction between consumers
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`and information sources within the network. Interactive and on-line applications led
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`to rapid adoption of client-server information access approaches (typical of the
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`computer industry) in the products and technologies I worked with for content
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`delivery and network command and control functions. Starting in the early 1990s the
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`ubiquitous set top box began to evolve from a minimalist appliance towards its
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`current status as a communications hub of the consumer’s media room. In this same
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`time period, the PC had also become a ubiquitous consumer appliance, and with the
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`Internet age came much innovation in electronic information distribution and
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`electronic merchandizing – that is, technology related to complementing physical
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`information media and brick and mortar institutions with all-electronic digital
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`alternatives. This was an explosive period of so called digital rights management
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`(“DRM”)—the management and control of the distribution and consumption of
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`digital content in electronic systems, which I will discuss in more detail below. I and
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`TV/COM were part of this evolution until TV/COM was purchased in 1999.
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`9.
`
`In my consulting work I have continued to work with technologies and
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`network infrastructures for content distribution, management, and control, i.e., DRM.
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`My current work involves both traditional and newly developing architectures and
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`distribution channels. As an example of the latter, I am the chief security systems
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`architect on behalf of the six major Hollywood studios for their “Digital Cinema
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`Initiatives” (DCI) consortium.1 DCI develops and evolves the specifications for
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`transitioning first run theatrical movie releases from film to digital for distribution and
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`exhibition display. I am responsible for all elements of command and control and
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`digital rights management (DRM) for digital cinema system design and
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`implementation. I also represent DCI at the Society of Motion Picture and Television
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`Engineers (SMPTE), which is developing the set of internationally recognized
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`1 See: http://www.dcimovies.com
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`standards for global adoption of digital cinema. The migration to all-digital
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`distribution impacts other content distribution channels such as early window release
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`for hospitality, airplane and cable/satellite video-on-demand (VOD), as well as newer
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`so called “over-the-top” distribution channels based on Internet distribution. I have
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`also been a strategy and technology consultant to content management and
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`distribution entities in those areas. Attached as a part of Appendix A are further
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`details about relevant projects.
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`10. The technologies of the ’720 patent and its family relate generally to
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`apparatus, systems and methods to download content over a network from a source
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`location to a data carrier storage device via an intermediary device called a data access
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`terminal. The terminal serves the role of qualifying the downloading to confirmation
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`of a payment process, after which content on the data carrier can be consumed by a
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`user via a rendering device. This involves methods and technologies to collect (select
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`or source), distribute and deliver content to consumers, who interact with supplied
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`information and supporting network infrastructure in real time. My experience with
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`these types of systems and technologies for conditioned distribution and access to
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`content stretches from the late 1970s (long before the term “DRM” was coined) until
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`today, inclusive of similar network architectures, interactive systems and equipment,
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`and associated consumer appliances.
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`11. My consulting practice today includes a balance of technology and
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`
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`systems engineering services and assistance to the legal community as a technology
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`consultant and/or expert witness. I have been accepted to provide, and have
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`provided expert testimony in the areas of multimedia technologies and associated
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`networks as used for content management and delivery on many occasions.
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`12.
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`I have a Bachelors degree and a Master’s degree in Electrical
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`Engineering, conferred by the University of Arizona in 1974 and San Diego State
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`University in 1979, respectively. I also completed the Executive Program for
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`Scientists and Engineers at the University of California at San Diego in 1984. I am a
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`named inventor on two patents, U.S. Patent No. 4,531, 020, “Multi-layer Encryption
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`System for the Broadcast of Encrypted Information,” and U.S. Patent No. 5,113,440,
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`“Universal Decoder.”
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`13. A listing of testimony that I have provided in the last six years is
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`attached hereto as Appendix B. I am being compensated for my time spent in
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`connection with this case at a flat rate of $325 per hour (plus expenses). I am being
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`paid regardless of the facts I know or discover and/or the conclusions or opinions I
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`reach. I have no personal interest or financial stake in the outcome of this case.
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`14.
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`In preparing my opinions I have considered the materials itemized in
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`Appendix C.
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`United States Patent No. 7,334,720
`II. THE ’720 PATENT
`15. The ’720 patent, entitled “Data Storage and Access Systems,” issued on
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`February 26, 2008, to assignee Smart-Flash Limited and named inventors Hermen-ard
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`Hulst and Patrick Sandor Racz. The ’720 patent purports to cover “[d]ata storage and
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`access systems . . . for downloading and paying for data such as audio and video data,
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`text, software, games and other types of data.” See, e.g., Ex. 1201, the ’720 patent, at
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`Abstract. The alleged invention applies classical client-server models in a multi-stage
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`architecture that revolves around appliances and methods for loading data into a
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`memory storage device generally referred to as a data carrier. The user can then
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`access the data subject to certain conditions.
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`16.
`
`I have analyzed claims 1, 3, 13, 14, and 15 of the ’720 patent and
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`reviewed the File History of the ’720 patent (Ex. 1209).
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`17. The ’720 patent issued from application number 11/336,758, which was
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`on filed January 19, 2006. This application issued from a chain of applications
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`claiming priority to United Kingdom application no. 9925227.2, filed October 25,
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`1999.
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`18. During prosecution of the ’720 patent, the Examiner considering the
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`application leading to the ’720 patent issued a Restriction Requirement on August 29,
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`2006. The Examiner stated that the filed claims were drawn to four inventions that
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`are “related as product and process of use.” (Ex. 1209, 8/29/2006 OA at 2). The
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`Examiner defined Group I as “drawn to a method of providing portable data,” Group
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`II as “drawn to a portable data carrier,” Group III as “drawn to a method and an
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`apparatus of controlling access to data,” and Group IV as “drawn to a system
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`controlled by data bearing records.” (Ex. 1209, 8/29/2006 OA at 2).
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`19. Applicants filed an amendment responsive to the Restriction
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`Requirement on September 29, 2006. Applicants elected to prosecute the claims
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`designated as Group III in the Restriction Requirement (claims 22-23, 35-50, and 59-
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`62) and cancelled the remaining claims (1-21, 24-34, 51-58, and 63-74) without
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`traverse. (Ex. 1209, 9/29/2006 Amend. at 7).
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`20. The Examiner issued a first non-final office action on November 6,
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`2006. The Examiner objected to application claims 41 and 44 for informalities and
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`rejected claims 35 and 40 under 35 U.S.C. § 112, ¶ 2 for insufficient antecedent basis
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`because the term “a processor” was recited twice in application claim 35, and the term
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`“the card” lacked antecedent basis in application claim 40. (Ex. 1209, 11/6/2006 OA
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`at 2-33). The Examiner also rejected claims 22, 23, 35-50, and 59-62 under 35 U.S.C.
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`§ 102(b) as being anticipated by U.S. Patent 5,754,654 (“the Hiroya patent”).
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`21. On February 6, 2007, Applicants filed a reply to the office action
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`correcting the informalities and antecedent basis and amending the claims to
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`overcome the Hiroya patent. Applicants argued that the limitations of amended claim
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`22 emphasized below are not disclosed by Hiroya:
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` - receiving a data access request from a user for at least one content item of the content
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`data stored in the non-volatile data memory;
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` - reading the use status data and use rules from the parameter memory that pertain to use of the at
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`least one requested content item;
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` - reading the use status data and use rules from the parameter memory that pertain to use of the at
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`least one requested content item;
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` - reading the use status data and use rules from the parameter memory that pertain to use of the at
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`least one requested content item;
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`(Ex. 1209, 2/6/2007 Amend. at 9). With regard to claim 22, Applicants argued that
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`“Hiroya does not disclose use status data stored separately from associated content
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`data” and that “as Hiroya discloses only ticket information that can be redeemed, and
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`not content that can be accessed multiple times, partially used, used at different times,
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`etc., such that there would be no motivation to include use data with the device of
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`Hiroya.” (Ex. 1209, 2/6/2007 Amend. at 9-10).
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`22.
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`In that same response, Applicants also argued that Hiroya does not
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`disclose the following emphasized limitations of amended claim 35:
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` - code responsive to the payment validation data to retrieve data from the data
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`supplier and to write the retrieved data into the data carrier; and
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` - code responsive to the payment validation data to receive at least one access rule from the data
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`supplier and to write the at least one access rule into the data carrier, the at least one access rule
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`specifying at least one condition for accessing the retrieved data written into the data carrier, the at
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`least one condition being dependent upon the amount of payment associated with the payment data
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`forwarded to the payment validation system.
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`(Ex. 1209, 2/6/2007 Amend. at 10). Applicants argued that these limitations are not
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`disclosed because “Hiroya does not disclose writing separate access rules to an
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`electronic ticket storage device, particularly where the access rules contain conditions
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`that are dependent upon an amount of payment. As a ticket is either purchased or
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`not purchased, and thus validly present or not present on the device, there is no need
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`to store access rules including conditions based on an amount of payment.” (Ex.
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`1209, 2/6/2007 Amend. at 10)
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`23. The Examiner issued a final office action on May 3, 2007. The
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`Examiner allowed claims 22, 23, and 35-50, and rejected claims 59-62 under 35 U.S.C.
`
`§ 102(b) as being anticipated by the Hiroya patent.
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`24. On September 4, 2007, Applicants filed a reply to the office action,
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`canceling claims 59-62 to expedite issuance of the allowed claims. (Ex. 1209,
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`9/4/2007 Amend. at 7-8). Applicant noted that an Examiner interview was
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`conducted on May 16, 2007, during which the declaration and claims 59-62 were
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`discussed. (Ex. 1209, 9/4/2007 Amend. at 7).
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`25. The Examiner issued a Notice of Allowability on October 5, 2007. The
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`Examiner stated that the prior art is “silent about the step of evaluating the use status
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`data using the use rules to determine whether access to the at least one requested
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`content item stored in the content memory is permitted and displaying to the user
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`whether access is permitted for each of the at least one requested content item stored
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`in the data memory.” (Ex. 1209, 10/5/2007 Notice at 2-3). The Examiner further
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`stated that Hiroya “fails to teach the step of writing at lest [sic] one access rule into
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`the data carrier, particularly where the access rules contain conditions that are
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`dependent upon an amount of payment associated.” (Ex. 1209, 10/5/2007 Notice at
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`3).
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`III. ONE OF ORDINARY SKILL
`I understand that the factors considered in determining the ordinary
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`26.
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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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`27.
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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—the
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`field of “data storage and access systems,” including the use of a “portable data carrier
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`for storing and paying for data and to computer systems for providing access to data
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`to be stored.” (see, e.g.¸ Ex. 1201 (the ’720 patent) at col.1, lns. 5-9)—would have had
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`at least a Bachelor of Science degree in electrical engineering, computer science or a
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`telecommunications related field, and at least three years of industry experience that
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`included client-server data/information distribution and management architectures.
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`28. As I described in the discussion of my paragraphs describing my
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`background beginning at paragraph 3 above, I have had decades of experience with
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`computer based content/ information distribution networks, which included mixtures
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`of consumer and industrial equipment. As of October 25, 1999, I would have
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`qualified as one of skill in art according to the above definition.
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`IV. CLAIM CONSTRUCTION
`For the purposes of this declaration, I have been asked to assume
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`29.
`
`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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`Claim term
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`“payment data” 2
`(Claim 2)
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`“use rules”
`(Claims 1, 2)
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`
`Claim Construction
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`“data representing payment made for
`requested content data” and distinct from
`“access control data”
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`“rule[s] specifying a condition under
`which access to content is permitted”
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`2 I understand that the district court construed “payment data” to mean “data that can
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`be used to make payment for content.” My conclusions regarding invalidity would
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`not be changed if the Board adopted that construction here.
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`V.
`STATE OF THE ART
`30. By Smartflash’s claimed priority date of October 25, 1999, the elements
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`of challenged claim 1 were all well-known in the art, and their combination as claimed
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`was at minimum obvious to a person of ordinary skill.3
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`31. Years before the October 25, 1999 priority date claimed by Smartflash,
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`the electronic sale and distribution of digital products and content protection for
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`digital products were well-known. Further, the concept of providing access to data in
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`exchange for payment as well known.
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`32.
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`For example, U.S. Patent No. 4,999,806, entitled “Software Distribution
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`System,” filed on September 4, 1987 and issued on March 12, 1991, to Fred Chernow
`
`and Randy J. Peterson (“Chernow” or “the Chernow patent”), discloses a system and
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`method for the sale and distribution of digital products by telephone, with a focus on
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`software, and also discloses content protection for those digital products. See, e.g., Ex.
`
`1206, the Chernow patent, at Abstract “A central station distributes software by
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`telephone. The central station accepts credit card information, transmits an
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`acceptance code to a caller and then terminates the call. After verifying the credit card
`
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`3 At various points in this declaration I refer to my opinions about the knowledge or
`
`understanding of a person of ordinary skill in the art. All of these opinions should be
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`understood to refer to the knowledge or understanding of a person of ordinary skill in
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`the art as of October 25, 1999, unless specifically noted otherwise.
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`information, the station calls the purchaser back and continues with the transaction
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`only after receiving the acceptance code.”); col. 1, ln. 67-col. 2, ln. 9 (“It is an object
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`of this invention to provide a means for selling and distributing protected software
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`using standard telephone lines for transferring the software from the seller to the
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`purchaser. Another object of this invention is to permit the purchaser to rent the
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`protected software for a period of time after which it will self destruct. Another
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`object of this invention is to permit the purchaser to rent the protected software for a
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`specific number of runs which would be useful, e.g., if the software were a game.”).
`
`As illustrated above, the Chernow patent also discloses making different types of
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`access available, such as purchase versus rental. Further, the Chernow patent
`
`discloses a Control Transfer Program and a Primary Protection Program that ensure
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`the computer receiving a downloaded program does not have another program
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`present that could create unauthorized copies. See Ex. 1206 Abstract; col. 2, ln. 65-
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`col. 3, ln. 23.
`
`33. U.S. Patent No. 4, 878,245, entitled “Control and Metering System for
`
`Pay Television Over a Cable Network,” filed January 22, 1987 and issued October 31,
`
`1989, to Graham C. Bradley et al. (“Bradley” or “the Bradley patent”), discloses a
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`system for pay television. See, e.g., Ex. 1208, the Bradley patent, at Abstract, col. 4 lns.
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`27-35 (“This apparatus can permit programming to be sold to the subscriber by the
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`month, by the program, and by the hour of any portion thereof. Payment by the
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`month is known as Subscription Television. Payment by the program is known as
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`Pay-per-View. Payment by viewing time is known as Pay-for-Use (PFU) television. It
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`also permits the Cable Operator to share revenues with independent programming
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`suppliers sharing some portion of the cable TV distribution system.”).
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`34. U.S. Patent No. 5,675,734, entitled “Method for Transmitting a Desired
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`Digital Video or Audio Signal,” filed September 18, 1990 and issued March 2, 1993, to
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`Arthur R. Hair (“Hair” or “the Hair patent”), discloses a method for electronic sales
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`of digital audio and digital video. See, e.g., Ex. 1207, the Hair patent, at Abstract (“A
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`method for transferring desired digital video of digital audio signals”), col. 1, lns. 15-
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`20 (“The present invention is related to a system and associated method for the
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`electronic sales and distribution of digital audio or digital video signals, and more
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`particularly, to a system and method which a user may purchase and receive digital
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`audio or digital video signals from any location which the user has access to
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`telecommunications lines.”).
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`35.
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`In addition, U.S. Patent No. 5,103,392, entitled “System for Storing
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`History of Use of Programs Including User Credit Data and Having Access by the
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`Proprietor,” filed on December 5, 1990 and issued on April 7, 1991, to Ryoichi Mori
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`and assigned to Fujitsu Limited (“Mori” or “the Mori patent”), discloses a method for
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`storing information about customer use of digital products so that a customer can be
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`charged according to that use and in accordance with that customer’s credit. See, e.g.,
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`Ex. 1211, the Mori Patent, at col. 1, ln. 64-col. 2, ln. 17 (“In accordance with a
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`fundamental aspect of the present invention, there is provided a system for storing
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`data on the history of use of programs, including a data processing apparatus used by
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`a user and program storage means for storing a program acquired from a proprietor
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`and program-specific data. The data processing apparatus includes user-specific credit
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`data storage means for storing data identifying the user of the data processing
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`apparatus and indicating credit for payment capacity, use time length, or the like of
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`the user of the data processing apparatus. Also included is use decision means for
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`determining permission to use the program on the data processing apparatus on the
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`basis of program-specific data supplied from the program storage means or user-
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`specific credit data supplied from the user-specific credit data storage means, the use
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`decision means delivering either an affirmative or negative signal corresponding to
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`results of the decision. Also included is program use history storage means connected
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`to the use decision means for storing program use history data derived from the
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`program-specific data or the user-specific credit data.”). The Mori patent’s emphasis
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`on determining whether a user has permission to access a program and making sure
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`program providers are compensated for the use of their programs underscores this
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`existing focus in the art on digital rights management (“DRM”), over eight years
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`before Smartflash’s claimed October 25, 1999 priority date.
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`Further, European Patent Application, Publication No. EP0809221A2,
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`36.
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`entitled “Virtual vending system and method for managing the distribution, licensing
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`and rental of electronic data,” listing applicant Sun Microsystems, Inc. and inventors
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`Andrew A. Poggio and Leo A. Hejza, and published on November 26, 1997
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`(“Poggio” or “the Poggio patent application”), likewise discloses a “virtual vending
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`machine” system for the sale and distribution of digital products. See, e.g., Ex. 1215,
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`the Poggio patent application, at Abstract (“A virtual vending machine manages a
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`comprehensive vending service for the distribution of licensed electronic data (i.e.,
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`products) over a distributed computer system. . . . The virtual vending machine
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`distributes licenses for the electronic data for the complete product or for
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`components thereof and for a variety of time frames, including permanent licenses
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`and rental period licenses. The virtual vending machine provides client computers
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`with the capability to obtain information regarding the available products and the
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`associated license fees and rental periods, to receive the product upon receipt of a
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`corresponding electronic payment, and to reload the product during the term of the
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`license.”). Like the Chernow patent, the Poggio patent application discloses different
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`types of access, including rentals, and re-download capabilities for already-purchased
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`content. See, e.g., id.
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`37.
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`Similarly, a 1997 IEEE article, “The Secure Distribution of Digital
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`Contents,” by Eberhard von Faber, Robert Hammelrath, and Franz-Peter Heider
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`(“the von Faber article”), recognized in its Introduction that “[e]lectronic commerce
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`systems dealing with the distribution of digital contents like software or multimedia
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`data have to couple the use of the provided digital goods with a prior payment for the
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`goods in a way which cannot be bypassed.” See Ex. 1218, the von Faber article, at 1.
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`The von Faber article sets forth a propo