Covered Business Method Patent Review
`United States Patent No. 8,033,458
`
`IN THE UNITED STATES PATENT AND TRADEMARK OFFICE
`
`Petitioner: Apple Inc.
`
`Attorney Docket No.:
`
` 104677-5008-827
`Customer No. 28120
`
`§
`Inventor: Hulst et al.
`United States Patent No.: 8,033,458 §
`Formerly Application No.: 12/943,847 §
`Issue Date: October 11, 2011
`§
`Filing Date: November 10, 2010
`§
`Former Group Art Unit: 2887
`§
`Former Examiner: Thien M. Le
`§
`
`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
`
`PETITION FOR COVERED BUSINESS METHOD PATENT REVIEW OF
`UNITED STATES PATENT NO. 8,033,458 PURSUANT TO 35 U.S.C. § 321,
`37 C.F.R. § 42.304
`
`
`
`

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` Covered Business Method Patent Review
`United States Patent No. 8,033,458
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`TABLE OF CONTENTS
`
`B.
`
`INTRODUCTION ....................................................................................................... 1
`I.
`II. OVERVIEW OF FIELD OF THE CLAIMED INVENTION ......................... 6
`III. OVERVIEW OF CHALLENGED CLAIMS ....................................................... 19
`IV. PETITIONER HAS STANDING .......................................................................... 23
`A.
`The ’458 Patent Is A Covered Business Method Patent ........................... 23
`1.
`Exemplary Claim 4 Is Financial In Nature ...................................... 25
`2.
`Claim 4 Does Not Cover A Technological Invention ................... 28
`(a)
`Claim 4 Does Not Recite A Technological Feature That Is
`Novel And Unobvious ............................................................ 28
`(b) Claim 4 Does Not Solve A Technical Problem Using A
`Technical Solution .................................................................... 31
`Related Matters And Mandatory Notice Information; Petitioner Is
`A Real Party In Interest Sued For And Charged With
`Infringement ..................................................................................................... 34
`V. DETAILED EXPLANATION OF REASONS FOR RELIEF
`REQUESTED, SHOWING IT IS MORE LIKELY THAN NOT
`THAT AT LEAST ONE CHALLENGED CLAIM IS
`UNPATENTABLE .................................................................................................... 36
`A.
`Claim Construction .......................................................................................... 38
`B.
`The Challenged Claims Are Unpatentable Under § 101 ............................ 41
`1.
`The Challenged Claims Are Directed To Abstract Ideas .............. 42
`2.
`The Challenged Claims Do Not Disclose An “Inventive
`Concept” That Is “Significantly More” Than An Abstract
`Idea ......................................................................................................... 50
`(a)
`Field Of Use Limitations Cannot Create Patent Eligibility
` ..................................................................................................... 50
`(b) Generic Computer Implementation Cannot Transform
`Abstract Ideas Into Patent Eligible Inventions ................... 51
`Functional Nature Confirms Preemption and Ineligibility 67
`(c)
`(d) Machine-or-Transformation Test Confirms Patent
`Ineligibility ................................................................................. 70
`
`
`
`i
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`

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`C.
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` Covered Business Method Patent Review
`United States Patent No. 8,033,458
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`Claims 3-5 Are Indefinite Under § 112 ........................................................ 71
`1.
`“The Code” Lacks A Clear Or Definite Antecedent Basis
`In The Claims ....................................................................................... 71
`“The Content Data Memory” Lacks A Clear Or Definite
`Antecedent Basis In The Claims ........................................................ 74
`VI. CONCLUSION........................................................................................................... 75
`
`2.
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`
`
`ii
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` Covered Business Method Patent Review
`United States Patent No. 8,033,458
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`
`U.S. Patent No. 8,033,458
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`Plaintiffs’ First Amended Complaint
`
`U.S. Patent No. 5,925,127
`
`File History for U.S. Patent No. 8,033,458
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`U.S. Patent No. 5,940,805
`
`U.S. Patent No. 4,999,806
`
`U.S. Patent No. 5,675,734
`
`August 2014 Emails Titled “RE: Smartflash: Meet and Confer
`Regarding Further Claim/Prior Art Limits.”
`
`U.S. Patent No. 4,878,245
`
`U.S. Patent No. 7,334,720
`
`U.S. Patent No. 4,337,483
`
`U.S. Patent No. 5,103,392
`
`U.S. Patent No. 5,530,235
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`U.S. Patent No. 5,629,980
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`U.S. Patent No. 5,915,019
`
`European Patent Application, Publication No. EP0809221A2
`
`International Publication No. WO 99/43136
`
`JP Patent Application Publication No. H11-164058 (transla-
`tion)
`
`Eberhard von Faber, Robert Hammelrath, and Franz-Peter
`Heider, “The Secure Distribution of Digital Contents,” IEEE
`(1997)
`
`iii
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`EXHIBIT LIST
`1001
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`1002
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`1003
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`1004
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`1005
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`1006
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`1007
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`1008
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`1009
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`1010
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`1011
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`1012
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`1013
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`1014
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`1015
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`1016
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`1017
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`1018
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`1019
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`
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`

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` Covered Business Method Patent Review
`United States Patent No. 8,033,458
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`
`Declaration of John P. J. Kelly In Support of Apple Inc.’s Pe-
`tition for Covered Business Method Patent Review
`
`Declaration of Michael P. Duffey In Support of Apple Inc.’s
`Petition for Covered Business Method Patent Review
`
`Declaration of Megan F. Raymond In Support of Apple Inc.’s
`Petition for Covered Business Method Patent Review
`
`U.S. Patent No. 8,118,221
`
`File History for U.S. Patent No. 8,061,598
`
`Claim Construction Memorandum Opinion from Smartflash
`LLC v. Apple Inc., No. 6:13cv447 (Dkt. 229)
`
`U.S. Patent No. 7,725,375
`
`International Publication No. WO95/34857
`
`U.S. Patent No. 5,646,992
`
`U.S. Patent No. 5,903,721
`
`R. Mohan, J.R. Smith, C.S. Li, “Adapting Multimedia Internet
`Content for Universal Access,” IEEE Transactions on Multi-
`media, Vol. 1, No. 1, 1999, pp. 104-114
`JP Patent Application Publication No. H10-269289 (transla-
`tion)
`U.S. Patent No. 5,761,485
`
`Apr. 8-9, 2015 Deposition Transcript of Jonathan Katz,
`CBM2014-00102/106/108/112
`International Publication No. WO99/13398
`
`U.S. Patent No. 5,953,005
`
`iv
`
`EXHIBIT LIST
`1020
`
`1021
`
`1022
`
`1023
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`1024
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`1025
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`1026
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`1027
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`1028
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`1029
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`1030
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`1031
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`1032
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`1033
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`1034
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`1035
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` Covered Business Method Patent Review
`United States Patent No. 8,033,458
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`EXHIBIT LIST
`1036
`
`1037
`
`J. Taylor, “DVD-Video: Multimedia for the Masses,” IEEE
`Multimedia, Vol. 6, No. 3, July-September 1999, pp. 86-92
`Excerpt of Transcript of Trial Afternoon Session, February
`16, 2015 from Smartflash LLC v. Apple Inc., No. 6:13cv447
`
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`v
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`

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` Covered Business Method Patent Review
`United States Patent No. 8,033,458
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`I.
`
`INTRODUCTION
`
`Pursuant to § 321 and Rule § 42.304,1 the undersigned, on behalf of and acting
`
`in a representative capacity for, Apple Inc. (“Petitioner”), hereby petitions for covered
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`business method review of claims 2-5, 7, 9, and 12 (“challenged claims”) of U.S. Pa-
`
`tent No. 8,033,458 (“the ’458 Patent” or “’458”), issued to Smartflash Technologies
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`Limited and assigned to Smartflash LLC (“Patent Owner”). Petitioner asserts that it
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`is more likely than not that the challenged claims are unpatentable for the reasons
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`herein and requests review of, and judgment against, claims 2-5, 7, 9, and 12 as un-
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`patentable under § 101, and claims 3-5 as unpatentable under § 112.
`
`As discussed in Section IV.B, infra, Petitioner previously filed CBM2014-
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`00106/107 and CBM2015-00016 seeking CBM review certain claims of the ’458 Pa-
`
`tent. Those petitions were instituted for trial (and CBM2014-00106 and 00107 were
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`consolidated as CBM2014-00106) with respect to claim 1 on § 103 grounds, claims 1,
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`6, 8, and 10 on § 101 grounds, and claim 11 on § 112 grounds.2 In general, the previ-
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`ous petitions were directed towards claims asserted in a first litigation filed by Smart-
`
`
`1 All section cites herein are to 35 U.S.C. or 37 C.F.R., as the context indicates.
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`2 Petitioner respectfully notes that the Director, pursuant to Rule 325(c), may deter-
`
`mine after institution that consolidation of this proceeding with CBM2015-00016 may
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`be appropriate, or may at minimum decide to coordinate the schedules of this pro-
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`ceeding and CBM2015-00016.
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`
`
`1
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`

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` Covered Business Method Patent Review
`United States Patent No. 8,033,458
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`flash against Petitioner as of the time those petitions were filed. Since that time,
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`Smartflash has filed a second litigation against Petitioner in which it again asserts the
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`’458 Patent. Although Smartflash has not yet identified the asserted claims in the sec-
`
`ond litigation, this petition is directed towards the additional claims that Smartflash
`
`may assert in the new litigation. In addition, Samsung Electronics America (“Sam-
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`sung”) previously filed CBM2014-00192 and CBM2014-00197 seeking CBM review of
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`the ’458 Patent. CBM2014-00192 was instituted for trial with respect to claim 11 on
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`§ 101 grounds. On April 30, 2015 Petitioner filed a Motion for Joinder with pending
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`Covered Business Method review CBM2014-00193 (Attorney Docket No 104677-
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`5008-826). The Board has not yet rendered a decision on this motion. However,
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`none of the challenged claims herein has previously been challenged by Petitioner or
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`Samsung on §§ 101 or 112 grounds, and the challenged claims were not being asserted
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`against Petitioner by Smartflash at the time Petitioner filed the CBM2015-00016 peti-
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`tion.
`
`The challenged claims of the ’458 Patent are merely directed to “[d]ata storage
`
`and access systems [that] enable downloading and paying for data,” including a well-
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`known “portable data carrier” and a “data access device for retrieving stored data
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`from a data carrier.” See Ex. 1001 at Abstract, claims 2-5, 7, 9, 12. Claim 4, for ex-
`
`ample, recites five rudimentary components of a portable data carrier—(A) an inter-
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`face for reading and writing data, (B and C) non-volatile data memory for storing
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`2
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` Covered Business Method Patent Review
`United States Patent No. 8,033,458
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`data and supplementary data and non-volatile payment data memory for providing
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`payment data to an external device, (D) a program store storing code implementable
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`by a processor, and (E) a processor … for implementing code on the program store.
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`The recited code is similarly conventional and well-known: code to (F) output supple-
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`mentary data and stored data in response to an external request, (G) output payment data and (H)
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`provide external access to data memory:
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`4. A portable data carrier, comprising:
`[A] an interface for reading and writing data from and to the carrier;
`[B] non-volatile data memory, coupled to the interface, for storing da-
`ta on the carrier;
`[C] non-volatile payment data memory, coupled to the interface, for
`providing payment data to an external device;
`[D] a program store storing code implementable by a processor; and
`[E] a processor, coupled to the content data memory, the payment data
`memory, the interface and to the program store for implementing code
`in the program store;
`[F] wherein the portable data carrier is configured for storing supple-
`mentary data in said data memory, and further comprising code to output
`the supplementary data from the interface in addition to the stored data, in re-
`sponse to an external request to read the data memory, and
`[G] wherein the code comprises code to output payment data from the
`payment data memory to the interface and [H] code to provide external ac-
`cess to the data memory.
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`
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`3
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` Covered Business Method Patent Review
`United States Patent No. 8,033,458
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`Ex. 1001 at cl. 4.3 But at the earliest claimed priority date, these simple elements and
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`their combination were all well-known. See Section II; Ex. 1020 ¶¶ 77-78.4 The pa-
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`tent itself acknowledges that the idea of providing access to data in exchange for a
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`payment (e.g., purchase of music on a CD) was well-known at the time. E.g., Ex. 1001
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`5:9-12 (“where the data carrier stores … music, the purchase outright option may be
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`equivalent to the purchase of a compact disc (CD), preferably with some form of content
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`copy protection such as digital watermarking”). The idea of purchasing digital data
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`for payment was similarly well-known. See, e.g., Ex. 1007 at 5:41-56; Ex. 1033 at
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`14:21-15:14.5 And, as shown herein, the prior art was teeming with disclosures of this
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`basic concept and its straightforward implementation. See, e.g., Section II. Further, as
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`its language makes clear, claim 4 involves no “technology” at all other than a “portable
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`3 All emphasis herein is added unless otherwise noted
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`4 In further support of the Petitioner’s grounds, the Declaration of technical expert
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`John P.J. Kelly, Ph.D., is attached as Exhibit 1020. Dr. Kelly qualifies as a person of
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`ordinary skill in the art (Ex. 1020 §§ I, III) and has analyzed whether the challenged
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`claims are unpatentable based on the grounds in this petition (Ex. 1020 §§ I-II and
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`IV-VIII).
`
`5 Exhibit 1033 is the April 8-9, 2015 Deposition Transcript of Jonathan Katz, Patent
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`Owner’s expert, for CBM2014-00102/106/108/112 regarding the ’458 Patent as well
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`as other related patents (see Section IV.B infra describing related matters).
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`4
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`

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`data carrier” with an interface, non-volatile memory, and program store/processor—
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` Covered Business Method Patent Review
`United States Patent No. 8,033,458
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`which the patent itself concedes was well-known and entirely commonplace at the
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`time. See, e.g., Ex. 1001 at 11:28-29 (“standard smart card”), 3:37, 4:9-13, 6:19-31,
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`11:27-44, 17:6-18:4, Figures 2, 9. Thus, as the intrinsic record reflects, claim 4 recites
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`nothing more than a system for reading and writing data while outputting payment
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`data and other stored data, which was similarly well-known as discussed in Section II.
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`Indeed, the ’458 Patent states that “[t]he physical embodiment of the system is not
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`critical and a skilled person will understand that the terminals, data processing systems
`
`and the like can all take a variety of forms.” See, e.g., id. at Fig 1; 12:29-32. It is thus
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`no surprise that each element of the challenged claims of the ’458 Patent has been
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`disclosed in the prior art.
`
` Indeed, as confirmed by the Supreme Court’s recent decision in Alice Corp. Pty,
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`Ltd. v. CLS Bank Int’l, 134 S. Ct. 2347 (2014)—decided after Petitioner filed its first
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`petitions challenging the ’458 Patent—claim 4 and the remaining challenged claims
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`are also directed to patent-ineligible subject matter under § 101. As the Board noted
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`in its previous Institution Decisions, “the ’458 patent makes clear that the asserted
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`novelty of the invention is not in any specific improvement of hardware, but in the
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`method of controlling access to data,” CBM2014-00106, Pap. 8, at 12; CBM2015-00016,
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`Pap. 23, at 15; CBM2014-00192, Pap. 7, at 10-11; and the challenged claims are di-
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`rected to nothing more than the unpatentable abstract idea of payment for and/or
`
`
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`5
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` Covered Business Method Patent Review
`United States Patent No. 8,033,458
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`controlling access to data, with at most the addition of well-known, routine and con-
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`ventional features that do not render them patentable—in particular, generic comput-
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`er implementation that cannot confer patentability on these patent-ineligible abstrac-
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`tions. E.g., Alice, 134 S. Ct. at 2359-60. Further, each of claims 3-5 lacks a clear or
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`definite antecedent basis and is thus indefinite under § 112. In summary, each chal-
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`lenged claim recites ineligible subject matter, and claims 3-5 are indefinite; thus, each
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`is unpatentable.
`
`II. OVERVIEW OF FIELD OF THE CLAIMED INVENTION
`By October 25, 1999, electronic sale, distribution, and content protection for
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`digital products all would have been well-known to a POSA.6 See, e.g., Ex. 1020 ¶¶ 23-
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`25, 29-30, 46, 75. A POSA would have been aware of computer-based systems for
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`providing digital content, including software, audio, and video content, for a fee. See,
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`e.g., id. ¶¶ 29-30, 46, 75; Ex. 1033 at 14:21-15:14, 16:6-17:9; see also Ex. 1019; Ex. 1009
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`at 4:27-35, 6:49-7:6; Ex. 1034 at 4:9-5:3; Ex. 1028 at 1:42-60, 4:48-54; Ex. 1029 at Ab-
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`stract, 6:14-25; Ex. 1035 at 5:9-17. Such systems included servers, computers, e-
`
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`6 All references to a person of ordinary skill in the art (“POSA”) refer to the
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`knowledge or understanding of a POSA as of October 25, 1999. A POSA would
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`have at least a B.S. degree in E.E., C.S., or a telecommunications-related field, and at
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`least three years of industry experience that included client-server data/information
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`distribution and management architectures. See Ex. 1020 ¶¶ 15-17.
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`6
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`payment systems, and user devices connected over known wired and wireless com-
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`munications networks to distribute content from content owners to users. See, e.g.,
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`Ex. 1020 ¶¶ 23-25, 29-30, 34-38, 43-46, 48, 71-73, 75; Ex. 1033 at 19:3-18; see also Ex.
`
`1011 at Figure 1, 9:50-68.
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`Indeed, the ’458 Patent explains that the physical embodiment of the system is
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`“not critical and a skilled person will understand that the terminals, data processing
`
`systems and the like can all take a variety of forms.” Ex. 1001 at 12:26-32. For ex-
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`ample, the patent concedes that various claimed components and functionalities were
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`conventional and well-known in the art (see Ex. 1020 ¶ 22), such as:
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` Internet users paying for goods and/or services by credit card transaction.
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`Ex. 1001 2:17-18; 19:5-9.
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` Encrypting/decrypting content for security: “The skilled person will be
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`aware of a range of suitable encryption/decryption techniques,” “using a
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`conventional encryption system,” “in a conventional manner as is well
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`known to those skilled in the art (for example, using public key data encryp-
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`tion).” Id. at 2:64-3:7, 18:65-19:2, 21:33-38.7
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`7 See also Fidelity National Information Serv., Inc. v. DataTreasury Corp., CBM2014-00020,
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`Pap. 34, at 13, 19.
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`7
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` Data access terminal or content access terminal hardware: “conventional
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`computer” or “mobile phone,” “home personal computer,” “mobile com-
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`munications device,” “set top box.” Id. at 4:4-5, 15:63-16:5.
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` WAP and i-mode allowing mobile phones to access the internet and down-
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`load data. Id. at 4:5-9.
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` SIM cards including a user identification means. Id. at 4:9-13.
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` Non-volatile memory, including EEPROM, Flash memory, optical memory.
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`Id. at 4:41-47, 17:22-29.
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` Purchasing digital music and its equivalence to the purchase of a CD. Id. at
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`5:9-12.
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` Data carrier hardware: “IC card,” “smart card,” “memory stick,” “standard
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`smart card.” Id. at 6:28-30, 11:28-31, 17:8-29.
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` Electronics Point of Sale System (EPoSS) functionality for smart cards. Id.
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`at 11:37-41.
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` E-payment systems and standards. Id. at 13:35-38.
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` Data access terminal: a “general purpose computer” with standard compo-
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`nents. Id. at Figure 8, 16:31-53.
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`8
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` Data access device hardware: a “portable audio/video player” or a “conven-
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`tional dedicated computer system” with standard components. Id. at 18:5-
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`27.
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` Use control routines, which include digital watermarking and content pro-
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`tection from the SDMI specification. Id. at 18:29-35.
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` “Standard transmission protocols,” which are used to transmit content data
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`items. Id. at 21:44-47.
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` Communication networks, such as the “Internet,” “web-based technology,”
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`“any electronic communications network,” “wide area network,” “local area
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`network,” “wireless network,” “conventional land line network,” “extranet.”
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`Id. at 25:41-48.
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`In addition, a POSA also would have known, for example, that content could
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`be provided to, and played on, mobile phones, as disclosed in Japanese Patent Appli-
`
`cation Publication No. H11-164058 (“Sato,” published June 18, 1999). See also Ex.
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`1030; Ex. 1031 at ¶ 5; Ex. 1032 at Figure 1, 5:65-7:16. Sato disclosed a mobile phone
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`connected to a music distribution center server via a public communications network.
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`Ex. 1018 Figure 1, Abstract, ¶ 3. Using the phone, a user accesses a distribution cen-
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`ter, enters a song selection, and receives the selected music on the mobile phone. Id.
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`¶¶ 12, 14. The downloaded music is stored either in a local “storage device” in the
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`mobile phone or in a “removable storage device,” such as “a memory card similar to,
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`9
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`for example, a magnetic card, a magnetic tape, a CD, a DVD, or an IC card” for later
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`playback on the mobile phone. Id. ¶¶ 8-9. Sato also discloses performing a billing
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`process after transmission from the distribution center. Id. ¶ 15. See, e.g., Ex. 1020 ¶
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`73.
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`International Publication No. WO99/43136 (“Rydbeck,” published August 26,
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`1999) also disclosed a cellular telephone that stores and plays music through the tele-
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`phone’s headset. Ex. 1017 at Figure 1, Abstract. Rydbeck disclosed a “digital enter-
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`tainment module” that includes “RAM and/or removable memory cartridges for stor-
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`ing music or other audio signals which can be played back through the headset” of the
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`cellular phone. Id. at 6. Rydbeck discloses a bus or input port on the entertainment
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`module for interfacing with a source of the music, or the music may be obtained
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`“from the transceiver unit 12 in an ‘internet-enabled’ phone.” Id. The digital enter-
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`tainment module integrated with the cellular phone advantageously shares compo-
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`nents already present in the cellular phone. Id. at 3. In addition to the hardware
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`components disclosed in Rydbeck and Sato, a POSA would have understood that the
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`cellular phone devices discussed in both references contained SIM cards that were
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`well-known and common by 1999, or at a minimum would have appreciated that such
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`a SIM card could be installed in the phone. See, e.g., Ex. 1020 ¶¶ 72-73; Ex. 1033 at
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`41:19-42:10.
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`A POSA also would have known systems for selling and distributing digital
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`10
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`United States Patent No. 8,033,458
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`content to user devices. For example, U.S. Patent No. 5,675,734 (“Hair,” published
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`October 7, 1997) disclosed a system for selling digital video or audio content. Ex.
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`1007 at Abstract. Hair describes a distribution system that transmits digital video or
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`audio signals stored on a first memory belonging to a first party to a second memory
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`belonging to a second party for a fee. Id. at 5:41-44. In a first step, money is trans-
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`ferred from the second party to the first party via telecommunications line for an elec-
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`tronic sale. Id. at 5:44-47. Then, the memory of the second party is connected to the
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`memory of the first party over a communications line, and the digital or audio signals
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`are transmitted from the first memory to the second memory. Id. at 5:47-56. See, e.g.,
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`Ex. 1020 ¶ 29.
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`U.S. Patent No. 4,999,806 (“Chernow,” published March 12, 1991) also dis-
`
`closed a system for digital content sales. Chernow described a software distribution
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`system in which a seller computer communicates with buyers over a telephone line for
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`the buyers to browse and purchase or lease software. Ex. 1006 at 2:22-36. The seller
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`computer answers calls from buyers, verifies credit card information, transmits pur-
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`chased software to buyers, and performs accounting functions to ensure proper billing
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`and record keeping. Id. at 2:37-47. A POSA would have understood that delivery of
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`the purchased content could be conditioned on successful payment, as the system de-
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`scribed in Chernow ensures that the customer is able to pay for the purchase, for ex-
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`ample by verifying credit card approval for the sale amount, before providing request-
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`United States Patent No. 8,033,458
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`ed software. Id. 6:48-65, 7:53-63; Ex. 1033 27:4-9. A POSA also would have appreci-
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`ated the need to limit leased software to a period of time or a number of runs, in view
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`of Chernow’s description of software that renders itself unusable or erases itself at the
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`conclusion of the leased use. Ex. 1006 at 5:10-18. See, e.g., Ex. 1020 ¶¶ 25-28.
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`U.S. Patent No. 5,530,235 (“’235 Stefik,” published June 25, 1996) disclosed a
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`transportable DocuCard “used for storing digital information which may be accessed
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`by a system that is capable of playing or rendering the digital information, such as a
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`computer system, digital copier, audio CD player and the like.” Ex. 1013 at Abstract,
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`4:21-31. The ’235 Stefik specification described implementing the DocuCard as a
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`card “in accordance with standards promulgated by the Personal Computer Memory
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`Card International Association (PCMCIA),” which may be “desirable because of their
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`small size and support for plug and play applications.” Id. at 4:55-5:12. A user ac-
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`cesses documents from a repository using the DocuCard by logging in to the Docu-
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`Card, for example by entering a PIN, which may “activate credit accounts,” assigning
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`payment of any fees, and then selecting a desired document and function before con-
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`firming the transaction. Id. at 3, 6:60-7:13. See, e.g., Ex. 1020 ¶ 30.
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`The DocuCard disclosed in ’235 Stefik implements the functionality of a “re-
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`pository,” described in more detail in U.S. Patent No. 5,629,980 (“’980 Stefik,” pub-
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`lished May 13, 1997).8 See Ex. 1013 at 2:48-52, 4:35-40. The ’980 Stefik specification
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`8 ’235 Stefik incorporates ’980 Stefik by reference. See Ex. 1113 at 2:47-52.
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`disclosed a repository having a processing means that provides the functions of the
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`repository by executing code stored in a processor memory. Ex. 1014 at Figure 12,
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`14:15-27. The repository also includes a content storage for storing content and a de-
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`scription storage, which may be the same memory or a physically different memory
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`device, for storing description trees for the associated content. Id. at Figure 12, 14:28-
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`35. A description file includes an identifier for its associated digital work and a point-
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`er to the starting address in memory at which the work is stored. Id. at Figure 7, 9:54-
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`58. The identifier includes both a number identifying the work and a unique number
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`identifying the repository that is assigned upon manufacture of the device. Id. at Fig-
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`ure 7, 9:62-66. See, e.g., Ex. 1020 ¶¶ 29-33.
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`The stored descriptions include a “rights portion” that indicates the “granted
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`usage rights and their status data….” Ex. 1014 at Figures 7 and 10, 9:59-10:1, 10:24-
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`33, Table 1. The usage rights associated with a digital work “define how that digital
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`work may be transferred, used, performed, or played.” Id. at 19:14-15. When a digital
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`work is transferred between repositories or used, a “next set of rights” can track and
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`update the rights remaining on the digital work. Id. at Figure 15, 11:40-44, 19:58-20:2,
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`20:55-67. The updated rights may limit usage of the digital work, for example by set-
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`ting a limit on the number of copies of a digital work that may be loaned out or
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`viewed at one time. Id. 21:10-24. See, e.g., Ex. 1020 ¶¶ 29-33.
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`As Stefik disclosed, attaching fee specifications to digital content allows a varie-
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`ty of distribution and fee schemes to be created, including creating special deals or re-
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`bates for specified users. Ex. 1014 at 43:46-49. Examples of fee specifications in-
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`clude discounts, incentives paid to users, or best price specifications that “accommo-
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`date special deals, rebates, and pricing that depends on information that is not availa-
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`ble to the repository.” Id. at 23:60-24:25, 24:34-57. The fee specifications “can be
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`combined with tickets or authorizations that could indicate that the consumer is a
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`wholesaler or that he is a preferred customer” in which case when the transaction is
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`reconciled and “any excess amount will be returned to the consumer in a separate
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`transaction.” Id. 24:39-47. See, e.g., Ex. 1020 ¶ 31. A POSA would have understood
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`that these fee specifications (e.g., reward data) could be modified in response to other
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`data. See, e.g., Ex. 1020 ¶ 31.
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`In addition to changing fee specifications, Stefik disclosed that repositories may
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`also change or create the digital works by editing or merging multiple digital works in-
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`to a “composite work” that has distinguishable parts, each with its own rights and fees
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`attached. Ex. 1014 at 50:41-44. An example of a composite work is a collection of
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`digital works combined into one content item. Id. at 6:39-42. The repositories in
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`Stefik include code (like the claimed “synthesis code”) that supports extraction, em-
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`bedding, and editing functions that allow the user to add shells or portions of digital
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`works to each other to create new works. Id. at 39:56-41:39. See, e.g., Ex. 1020 ¶¶ 29-
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` Covered Business Method Patent Review
`United States Patent No. 8,033,458
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`34.
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`In another example, U.S. Patent No. 5,915,019 (“Ginter,” published June 22,
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`1999) disclosed a Virtual Distribution Environment (“VDE”) with flexibility to sup-
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`port different transactions among content producers and consumers wishing to obtain
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`rights to use programs from the producers. Ex. 1015 at Figure 1, 53:38-59. The
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`VDE distributes content among “electronic appliances,” which include computers, set
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`top boxes, phones, and “smart” credit cards. Id. at Figure 8, 60:18-30. In some em-
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`bodiments, the electronic appliance is portable, for example implemented as a
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`PCMCIA card or “smart card.” Id. at Figure 71, 228:36-54, 230:20-38. The portable
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`appliance may contain memory storing information which uniquely identifies each de-
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`vice for authentication and verification. Id. at 229:12-17. The electronic appliances
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`store VDE content and code for operating VDE functions in a secondary storage of
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`the appliance that is accessible by a CPU or SPU (“Secure Processing Unit”). Id. at
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`Figure 8, 62:56-67. The VDE protects content distributed among appliances by im-
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`plementing flexible “rules and controls” that are used to grant users specific rights,
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`specify how much is to be paid for content usage, and establish usage reporting re-
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`quirements. Id. at 56:25-61. The rules and controls either travel with the content to
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`which they apply or are delivered to a user separately from content. Id. at 57:27-40.
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`See, e.g., Ex. 1020 ¶¶ 48-51.
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`The secure data management functions of electronic appliances are performed
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`by a processing unit, such as an SPU. Ex. 1015 at Figure 8, 63:27-31. The functions
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`performed by an SPU include “secure data management processes including govern-
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`ing usage of, auditing of, and where appropriate, payment for VDE objects 300
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`(through the use of prepayments, credits, real-time electronic debits from bank ac-
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`counts and/or VDE node currency token deposit accounts).” Id. at 63:34-41. The
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`processes performed by the SPU, and dictated by the rules and controls, include
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`“events” processes, “meter” processes, “billing” processes, and “budget” processes
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`that track and control use of and payment for VDE content. Id. at 57:50-58:32. A
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`VDE appliance employs a “usage map” to store usage history information, for exam-
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`ple by mapping which content or parts of a piece of content (e.g., chapters in a book) a
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`user accesses. Id. at 145:48-146:22. See, e.g., Ex. 1020 ¶¶ 48-51.
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`A POSA would have appreciated the need to monitor and control usage of dis-
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`tributed digital content to ensure that usage was properly paid for and that the distr