Covered Business Method Patent Review
`United States Patent No. 7,942,317
`
`IN THE UNITED STATES PATENT AND TRADEMARK OFFICE
`
`Petitioner: Apple Inc.
`
`Attorney Docket No.:
`
` 104677-5008-831
`Customer No. 28120
`
`§
`Inventor: Racz et al.
`United States Patent No.: 7,942,317 §
`Formerly Application No.: 12/014,558 §
`Issue Date: May 17, 2011
`§
`Filing Date: January 15, 2008
`§
`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. 7,942,317 PURSUANT TO 35 U.S.C. § 321,
`37 C.F.R. § 42.304
`
`
`
`

`
` Covered Business Method Patent Review
`United States Patent No. 7,942,317
`
`
`
`
`TABLE OF CONTENTS
`
`I.
`
`INTRODUCTION ....................................................................................................... 1
`
`II. OVERVIEW OF FIELD OF THE CLAIMED INVENTION ......................... 7
`
`III. OVERVIEW OF THE CHALLENGED CLAIMS ............................................ 20
`
`IV. PETITIONER HAS STANDING .......................................................................... 22
`A.
`The ’317 Patent Is A Covered Business Method (“CBM”) Patent .......... 22
`1.
`Exemplary Claim 8 Is Financial In Nature ...................................... 24
`2.
`Claim 8 Does Not Cover A Technological Invention ................... 27
`(a)
`Claim 8 Does Not Recite A Technological Feature
`That Is Novel And Unobvious ........................................... 28
`Claim 8 Does Not Solve A Technical Problem Us-
`ing A Technical Solution ...................................................... 31
`Related Matters And Mandatory Disclosures; Petitioner Is A Real
`Party In Interest Sued For And Charged With Infringement ................... 32
`
`(b)
`
`B.
`
`V. DETAILED EXPLANATION OF REASONS FOR RELIEF
`REQUESTED, SHOWING IT IS MORE LIKELY THAN NOT
`THAT AT LEAST ONE CHALLENGED CLAIM IS
`UNPATENTABLE .................................................................................................... 34
`A.
`Claim Construction .......................................................................................... 36
`B.
`The Challenged Claims Are Unpatentable Under § 101 ............................ 38
`1.
`The Challenged Claims Are Directed To Abstract Ideas .............. 39
`2.
`The Challenged Claims Do Not Disclose An “Inventive
`Concept” That Is “Significantly More” Than An Abstract
`Idea ......................................................................................................... 48
`(a)
`Field Of Use Limitations Cannot Transform Ab-
`stract Ideas Into Patent Eligible Inventions ...................... 49
`Generic Computer Implementation Cannot Trans-
`form Abstract Ideas Into Patent Eligible Inven-
`tions ......................................................................................... 50
`
`(b)
`
`i
`
`

`
`(c)
`
`(d)
`
`The Functional Nature Of The Challenged Claims
`Confirms Preemption and Patent Ineligibility .................. 69
`Machine-Or-Transformation Test Also Confirms
`Patent Ineligibility .................................................................. 72
`Claims 13 And 19 Are Indefinite Under § 112 ........................................... 73
`
` Covered Business Method Patent Review
`United States Patent No. 7,942,317
`
`
`C.
`
`VI. CONCLUSION........................................................................................................... 76
`
`
`ii
`
`

`
`
`EXHIBIT LIST
`1001
`
`1002
`
`1003
`
`1004
`
`1005
`
`1006
`
`1007
`
`1008
`
`1009
`
`1010
`
`1011
`
`1012
`
`1013
`
`1014
`
`1015
`
`1016
`
`1017
`
`1018
`
`1019
`
` Covered Business Method Patent Review
`United States Patent No. 7,942,317
`
`
`U.S. Patent No. 7,942,317
`
`Plaintiff’s First Amended Complaint
`
`U.S. Patent No. 5,940,805
`
`U.S. Patent No. 4,999,806
`
`U.S. Patent No. 5,675,734
`
`U.S. Patent No. 4,337,483
`
`File History for U.S. Patent No. 7,942,317
`
`Declaration of Megan F. Raymond In Support of Apple Inc.’s
`Petition for Covered Business Method Patent Review
`U.S. Patent No. 5,103,392
`
`U.S. Patent No. 5,530,235
`
`U.S. Patent No. 5,629,980
`
`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)
`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
`U.S. Patent No. 4,878,245
`
`iii
`
`

`
`EXHIBIT LIST
`1020
`
`1021
`
`1022
`
`1023
`
`1024
`
`1025
`
`1026
`
`1027
`
`1028
`
`1029
`
`1030
`
`1031
`
`1032
`
`1033
`
`1034
`
` Covered Business Method Patent Review
`United States Patent No. 7,942,317
`
`
`Claim Construction Memorandum Opinion from Smartflash
`LLC v. Apple Inc., No. 6:13cv447 (Dkt. 229)
`U.S. Patent No. 5,925,127
`
`JP Patent Application Publication No. H10-269289 (transla-
`tion)
`U.S. Patent No. 5,903,721
`
`International Publication No. WO95/34857
`
`U.S. Patent No. 5,953,005
`
`U.S. Patent No. 7,725,375
`
`August 2014 Emails Titled “RE: Smartflash: Meet and Confer
`Regarding Further Claim/Prior Art Limits.”
`Apr. 8-9, 2015 Deposition Transcript of Jonathan Katz,
`CBM2014-00102/106/108/112
`Taylor, Jim “DVD-Video: Multimedia for the Masses,” IEEE
`Multimedia, Vol. 6, No. 3 (July-September 1999).
`U.S. Patent No. 5,646,992
`
`Rakesh Mohan, John R. Smith and Chung-Sheng Li , “Adapt-
`ing Multimedia Internet Content for Universal Access” IEEE
`(March 1999)
`U.S. Patent No. 5,761,485
`
`International Publication No. WO99/13398
`
`Excerpt Transcript of Trial Afternoon Session, February 16,
`2015 from Smartflash LLC v. Apple Inc., No.6:13cv447
`
`iv
`
`

`
` Covered Business Method Patent Review
`United States Patent No. 7,942,317
`
`I.
`
`INTRODUCTION
`
`Pursuant to 35 U.S.C. § 321 and 37 C.F.R. § 42.304, the undersigned, on behalf
`
`of and acting in a representative capacity for Apple Inc. (“Petitioner” and the real par-
`
`ty in interest), petitions for review under the transitional program for covered busi-
`
`ness method (“CBM”) patents of claims 1-17 and 19 (“challenged claims”) of U.S. Pat.
`
`No. 7,942,317 (“the ’317 Patent”), issued to Smartflash Technologies Limited and as-
`
`signed to Smartflash LLC (“Patent Owner”). Petitioner hereby asserts that it is more
`
`likely than not that claims 1-17 and 19 are unpatentable for the reasons herein and re-
`
`quests review of, and judgment against, the challenged claims 1-17 and 19 as un-
`
`patentable under 35 U.S.C. § 101, and challenged claims 13 and 19 as unpatentable
`
`under § 112.1
`
`As discussed in Section IV.B, infra, Petitioner previously filed CBM2014-00112
`
`and 00113 seeking CBM review of claims 1, 6-8, 12, 13, 16, and 18 of the ’317 Patent
`
`on §§ 102 and 103 grounds, and CBM2015-00018 seeking CBM review of claim 18 on
`
`§ 101 grounds. Those petitions were instituted for trial (and CBM2014-00112 and
`
`00113 were consolidated as CBM2014-00112). 2 However, none of the challenged
`
`
`1 All section cites herein are to 35 U.S.C. or 37 C.F.R., as the context indicates.
`
`2 Petitioner respectfully notes that the Director, pursuant to Rule 325(c), may
`
`determine after institution that consolidation of these proceedings may be appropriate,
`
`
`
`

`
` Covered Business Method Patent Review
`United States Patent No. 7,942,317
`
`claims herein has previously been challenged by Petitioner on § 101 grounds. Nor has
`
`Petitioner previously challenged claim 19 on § 112 grounds. Petitioner’s previous pe-
`
`titions were directed towards claims asserted in a first litigation filed by Smartflash
`
`against Petitioner as of the time those petitions were filed. See Ex. 1027 (email from
`
`Patent Owner’s counsel confirming that only claim 18 of the ’317 Patent was being
`
`asserted against Petitioner as of August 2014 in Smartflash LLC. et al. v. Apple Inc. et al.,
`
`No. 6:13-cv-447 (E.D. Tex.)). Since that time, Smartflash has filed a second litigation
`
`against Petitioner in which it again asserts the ’317 Patent. Although Smartflash has
`
`not yet identified the asserted claims in the second litigation, this petition is directed
`
`towards the additional claims that Smartflash may assert.
`
`As detailed herein, exemplary claim 8 is merely directed to steps well-known in
`
`the field of data storage and access, including the method of “providing data to a data
`
`requester.” See, e.g., Ex. 1001 at claim 8, 19; Abstract (“Data storage and access sys-
`
`tems are described for downloading and paying for data . . .”). The system claims re-
`
`lating to “computer system[s]” and “data access system” are equally well-known. And
`
`in fact, the ’317 Patent itself states that “[t]he physical embodiment of the system is
`
`not critical and a skilled person will understand that the terminals, data processing sys-
`
`tems and the like can all take a variety of forms.” Ex. 1001 12:29-32. Moreover, as
`
`or may at minimum determine to coordinate the schedules of this proceeding and
`
`CBM2015-00018.
`
`2
`
`

`
` Covered Business Method Patent Review
`United States Patent No. 7,942,317
`
`confirmed by the Supreme Court’s recent decision in Alice Corp. Pty, Ltd. v. CLS Bank
`
`Int’l, 134 S. Ct. 2347 (2014), claim 8, like the other claims challenged herein, repre-
`
`sents nothing more than an attempt to patent a well-known and unpatentable abstract
`
`idea ineligible for patenting under § 101: payment for and controlling access to data.
`
`Claim 8 recites four rudimentary steps relating to these abstract ideas—(A) receiving
`
`a request for data, (B) receiving payment data relating to the data, (C) reading the
`
`requested data, and (D) transmitting requested data:
`
`8. A method of providing data to a data requester comprising:
`[A] receiving a request for a data item from the requester;
`[B] receiving payment data from the requester relating to payment
`for the requested data;
`[C] reading the requested data from a content provider responsive
`to the received payment data; and
`[D] transmitting the read data to the requester.
`Ex. 1001, cl. 8.3 But at the patent’s earliest claimed priority date, these simple ele-
`
`ments and their combination were well-known to any person of ordinary skill
`
`(“POSA”4). See Section II; Ex. 1017 ¶¶ 75, 80, § VI.5 Indeed, the patent acknowledges
`
`
`3 All emphasis herein added unless otherwise noted.
`
`4 All references to a POSA refer to the knowledge or understanding of a person of
`
`ordinary skill in the art as of October 25, 1999, unless specifically noted. A POSA
`
`would have at least a B.S. in E.E., computer science or a telecommunications related
`
`3
`
`

`
` Covered Business Method Patent Review
`United States Patent No. 7,942,317
`
`that the idea of providing access to data in exchange for a payment (e.g., purchase of
`
`music on a CD) was already well known, as were e-payment systems. See, e.g., id. 5:4-7
`
`(“the purchase outright option may be equivalent to the purchase of a compact disc (CD)”);
`
`Id. 13:35-38. And, as demonstrated herein, the prior art was teeming with disclosures
`
`of this basic concept and its straightforward implementation in physical systems. See,
`
`e.g., Section II; Ex. 1005 5:41-56.
`
`Moreover, claim 8 clearly involves no “technology” at all other than, at most, a
`
`“data requester” and “content provider,” which are, respectively merely an entity that
`
`may make a data request and an entity that provides content. See, e.g., Ex. 1001 5:27;
`
`6:38-40, 6:52, 6:61-66; 7:9, 7:26-27, 7:52-53, 7:55-57; 9:62; 10:16, 10:25-26, 10:36,
`
`10:44; 12:29-32, 12:60-67; 13:2-5, 13:14-17, 13:65-67; 15:28-29, 15:36-37, 15:43, 15:45,
`
`15:49-50; 17:62-63 Figures 5, 6, 12(d), (e); Ex. 1017 ¶¶ 75, 80, § VI. Thus, as the in-
`
`trinsic record reflects, Claim 8 recites nothing more than a method for receiving a re-
`
`field, and at least three years of industry experience that included client-server
`
`data/information distribution and management architectures. See Ex. 1017 ¶¶ 15-17.
`
`5 In further support of the Petitioner’s grounds, the Declaration of technical expert
`
`John P.J. Kelly, Ph.D., is attached as Exhibit 1017. Dr. Kelly qualifies as a person of
`
`ordinary skill in the art (Ex. 1017 §§ I, III) and has analyzed whether the challenged
`
`claims are unpatentable based on the grounds in this petition (Ex. 1017 §§ I-II and
`
`IV-VIII).
`
`4
`
`

`
` Covered Business Method Patent Review
`United States Patent No. 7,942,317
`
`quest for data, receiving payment data, reading requested data in response to payment,
`
`and transmitting data. Independent claims 1, 16, and 17 are nothing but variations on
`
`this same simple theme, with the addition, in the challenged system claims, of equally
`
`well-known components (e.g., computer systems with a communication interface, data
`
`access data store, program store, and processor). See, e.g., Ex. 1001 12:29-32 (“The
`
`physical embodiment of the system is not critical and a skilled person will understand
`
`that the terminals, data processing systems and the like can all take a variety of
`
`forms.”). And independent claim 12 requires only “A data access system compris-
`
`ing . . .a data supply computer system . . . an electronic payment system . . . a data ac-
`
`cess terminal . . . and a data carrier,” which are all described as generic in the specifica-
`
`tion. Id. cl. 5; Ex. 1001 at 3:66-4:8, 6:24-27, 11:28-31, 13:35-38, 15:63-16:5, 16:31-53,
`
`17:8-29, 18:5-27. In institution decisions on the ’317 Patent and related patents, the
`
`Board correctly found that “the Specification treats as well-known all potentially tech-
`
`nical aspects of [certain challenged claims] including” “data store,” “payment system,”
`
`“interface,” “content data memory,” “data memory,” “use rule memory,” “program
`
`store,” “processor,” “data carrier,” and code to receive, retrieve, evaluate, provide,
`
`store, write, and access data. See CBM2015-00015, Pap. 23 at 17; CBM2015-00018,
`
`Pap. 15 at 11-12; CBM2015-00017, Pap. 22 at 16; CBM2015-00016, Pap. 23 at 19;
`
`CBM2014-00190, Pap. 9 at 15; CBM2014-00192, Pap. 7 at 15; CBM2014-00193, Pap.
`
`7 at 13; CBM2014-00194, Pap. 9 at 15.
`
`5
`
`

`
` Covered Business Method Patent Review
`United States Patent No. 7,942,317
`
`Indeed, as confirmed by the Supreme Court’s recent decision in Alice Corp. Pty,
`
`Ltd. v. CLS Bank Int’l, 134 S. Ct. 2347 (2014)—decided after Petitioner filed its first
`
`petitions challenging the ’317 patent—claim 8 and the remaining challenged claims are
`
`also directed to patent-ineligible subject matter under § 101. This Board has already
`
`recognized that claim 18 of the ’317 Patent, which is strikingly similar to claim 8 (and
`
`19) of the ’317 Patent, recites patent ineligible subject matter, stating that “the claimed
`
`process is directed to an abstract idea,” and the Board is “not persuaded that the chal-
`
`lenged claim of the ’317 Patent adds an inventive concept sufficient to ensure that the
`
`patent in practice amounts to significantly more than a patent on the abstract idea it-
`
`self.” CBM2015-00018, Pap. 15 at 9-13 (citations omitted). The Board has also recog-
`
`nized in connection with similar claims of related patents that “the . . . patent makes
`
`clear that the asserted novelty of the invention is not in any specific improvement of
`
`software or hardware, but in the method of controlling access to data,” CBM2014-00112,
`
`Paper 8, at 11; see also CBM2014-00102/103, Pap. 8; at 11; CBM2014-00104, Pap. 9, at
`
`12; CBM2014-00106, Pap. 8, at 12; CBM2014-00108, Pap. 8, at 10; CBM2014-00110,
`
`Pap. 7, at 13; CBM2014-00190, Pap. 9, at 10; CBM2014-00192, Pap. 7, at 10-11;
`
`CBM2014-00194, Pap. 9, at 10-11; CBM2015-00015, Pap. 23, at 14; CBM2015-00016,
`
`Pap. 23, at 15. Further, the challenged claims are directed to nothing more than the
`
`unpatentable abstract idea of payment for and controlling access to data, with at most
`
`the addition of well-known, routine and conventional features that do not render it
`
`6
`
`

`
` Covered Business Method Patent Review
`United States Patent No. 7,942,317
`
`patentable—in particular, features that, even if assumed to suggest a generic computer
`
`implementation, cannot confer patentability on this patent-ineligible abstraction. See,
`
`e.g., Alice, 134 S. Ct. at 2359-60.
`
`Because claims 1-17 and 19 recite patent ineligible subject matter, they should
`
`be found unpatentable. Further, the limitations of “the card” in claim 13 and “the
`
`read data” claim 19 render these claims unpatentable for this additional reason.
`
`II. OVERVIEW OF FIELD OF THE CLAIMED INVENTION
`By October 25, 1999, the sale, distribution, and protection of digital content
`
`were well-known to a POSA. See, e.g., Ex. 1017 ¶¶ 23-25, 29-30, 46, 75.6 A POSA
`
`would have been aware of computer-based systems for providing digital content, in-
`
`cluding software, audio, and video content, for a fee. See, e.g., id. ¶¶ 25-30, 34, 43, 46,
`
`48-50, 53-56, 58, 61, 75; Ex. 1028 at 14:21-15:15, 16:6-17:9; see also Ex. 1019 at 4:27-35,
`
`
`6 In further support of the Petitioner’s grounds, the Declaration of technical expert
`
`John P.J. Kelly, Ph.D., is attached as Exhibit 1017. Dr. Kelly qualifies as a person of
`
`ordinary skill in the art (Ex. 1017 §§ I, III) and has analyzed whether the challenged
`
`claims are unpatentable based on the grounds in this petition (Ex. 1017 §§ I-II and
`
`IV-VIII).
`
`7
`
`

`
` Covered Business Method Patent Review
`United States Patent No. 7,942,317
`
`6:49-7:6.7 Such systems included servers, computers, e-payment systems, and user de-
`
`vices connected over known wired and wireless communications networks to distrib-
`
`ute content from content owners to users. See, e.g., Ex. 1017 ¶¶ 23-25, 29, 30, 34-38,
`
`43-46, 48, 71-73, 75; see also Ex. 1028 at 19:3-18; Ex. 1006 at Figure 1, 9:50-68.
`
`Indeed, the ’317 Patent explains that the physical embodiment of the system is
`
`“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-
`
`ample, the patent concedes that various claimed components and functionalities were
`
`conventional and well-known in the art (see Ex. 1017 ¶ 22), such as:
`
` Internet users paying for goods and/or services by credit card transaction
`
`(2:13-14; 19:5-9)
`
` Encrypting/decrypting content for security (2:60-3:3)
`
` Data access terminal or content access terminal hardware: “conventional com-
`
`puter” or “mobile phone,” “home personal computer,” “mobile communica-
`
`tions device,” “set top box” (3:66-67, 15:63-16:5)
`
` WAP and i-mode allowing mobile phones to access the internet and download
`
`data (3:67-4:4)
`
`7 Exhibit 1028 is the April 8-9, 2015 Deposition Transcript of Jonathan Katz, Patent
`
`Owner’s expert, for CBM2014-00102/106/108/112 regarding the ’317 Patent as well
`
`as other related patents (see Section IV.B infra describing related matters).
`
`8
`
`

`
` SIM cards including a user identification means (4:4-8)
`
` Covered Business Method Patent Review
`United States Patent No. 7,942,317
`
`
` Non-volatile memory, including EEPROM, Flash memory, optical memory
`
`(4:36-42, 17:22-29)
`
` Purchasing digital music equivalent to the purchase of a CD (5:4-7)
`
` Data carrier hardware: “IC card,” “smart card,” “memory stick,” “standard
`
`smart card” (6:24-27, 11:28-31, 17:8-29)
`
` Electronics Point of Sale Systems (EPoSS) functionality for smart cards (11:37-
`
`41)
`
` E-payment systems and standards (13:35-38)
`
` Data access terminal as a “general purpose computer” with standard compo-
`
`nents (Figure 8, 16:31-53)
`
` Data access device hardware: “portable audio/video player,” “conventional
`
`dedicated computer system” with standard components (18:5-27)
`
` Use control routines including digital watermarking and content protection
`
`from the SDMI specification (18:29-35)
`
` “Standard transmission protocols” used to transmit content data items (21:44-
`
`47)
`
` Communication network, whose detailed implementation is “not essential,”
`
`and can be the “Internet,” “web-based technology,” “any electronic communi-
`
`cations network,” “wide area network,” “local area network,” “wireless net-
`
`9
`
`

`
` Covered Business Method Patent Review
`United States Patent No. 7,942,317
`
`
`work,” “conventional land line network,” “extranet” (25:41-48)
`
`A POSA also would have known, for example, systems for selling and distrib-
`
`uting digital content to remote user devices. See, e.g., Ex. 1028 at 14:21-15:15, 16:6-
`
`17:9. For example, U.S. Patent No. 5,675,734 (“Hair,” published October 7, 1997)
`
`disclosed a system for selling digital video or audio content. Ex. 1005 at Abstract.
`
`Hair described a distribution system that transmits digital video or audio signals stored
`
`on a first memory belonging to a first party to a second memory belonging to a sec-
`
`ond party for a fee. Id. 5:41-44. In a first step, money is transferred from the second
`
`party to the first party via telecommunications line for an electronic sale. Id. at 5:44-
`
`47. Then, the memory of the second party is connected to the memory of the first
`
`party over a telecommunications line, and the digital or audio signals are transmitted
`
`from the first memory to the second memory. Id. at 5:47-56. See, e.g., Ex. 1017 ¶ 29.
`
`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
`
`system in which a seller computer communicates with buyers over a telephone line for
`
`the buyers to browse and purchase or lease software. Ex. 1004 at 2:22-36. The seller
`
`computer holds a “library of the software programs available for lease or sale, an in-
`
`dex file to permit buyers to browse through the names, brief descriptions and prices
`
`for leasing or purchasing of the available software,” and software executed to run the
`
`selling functions of the computer. Id. at 2:32-36. The seller computer answers calls
`
`10
`
`

`
` Covered Business Method Patent Review
`United States Patent No. 7,942,317
`
`from buyers, verifies credit card information, transmits purchased software to buyers,
`
`and performs accounting functions to ensure proper billing and record keeping. Id. at
`
`2:37-47. A POSA would have understood that delivery of the purchased content
`
`could be conditioned on successful payment, as the system described in Chernow en-
`
`sures that the customer is able to pay for the purchase, for example by verifying credit
`
`card approval for the sale amount, before providing requested software. Id. at 6:48-65,
`
`7:53-63; see also Ex. 1028 at 24:2-11, 27:4-9. A POSA also would have appreciated the
`
`need to limit leased software to a period of time or a number of runs, in view of
`
`Chernow’s description of software that renders itself unusable or erases itself at the
`
`conclusion of the leased use. Id. at 5:10-18. See, e.g., Ex. 1017 ¶¶ 25-28.
`
`A POSA would have understood that digital content distribution systems also
`
`provided digital content to portable systems to be enjoyed anywhere while still ensur-
`
`ing adequate protection against unauthorized use, as disclosed, for example, in Japa-
`
`nese Patent Application Publication No. H10-269289 (“Maari,” published October 9,
`
`1998). Ex. 1022 ¶ 5; see also Ex. 1014 at 2-3, Ex. 1015 at ¶¶ 5-6. Maari described a
`
`system that distributes encrypted digital content with encrypted content keys, tracks
`
`billing, and “distributes to digital content proprietors the digital content usage fees
`
`collected based on digital content usage information.” Id. ¶ 6. An “administration
`
`company” in Maari’s system installs a “virtual store” on a network that sells the digital
`
`contents by providing descriptive information like titles, advertisements, names of art-
`
`11
`
`

`
` Covered Business Method Patent Review
`United States Patent No. 7,942,317
`
`ists, or audio and video samples of the content and by receiving orders from users. Id.
`
`¶ 26. The administration company controls the transfer of information, including
`
`confirming “information such as the bank account number, credit card number, name,
`
`contact address, and the like for the user” to process a request and “determine wheth-
`
`er or not a transaction is possible with the user.” Id. ¶ 18. See, e.g., Ex. 1017 ¶ 70.
`
`A user’s player in Maari allows access to installed content as long as the user
`
`has purchased sufficient “points” to access the content and requests replenishment of
`
`those points if a shortage is detected. Ex. 1022 ¶¶ 32-33. The administration center
`
`confirms with a financial organization that the user’s account allows the purchase and
`
`provides the points to the user. Id. ¶ 34. The administration center also notifies the
`
`content provider the amount of money to be paid to the proprietor and the copyright
`
`holder. Id. ¶ 35. The fees paid by the user are then divided into a “copyright fee” paid
`
`to the content provider, a “store commission” paid to the virtual store, a “content
`
`manipulation commission” paid to the system administration company, a “settlement
`
`commission” paid to the system administration company and the financial organiza-
`
`tion, and a “system administration commission” paid to the system administration
`
`company. Id. ¶ 39. See, e.g., Ex. 1017 ¶ 70.
`
`A POSA would have appreciated the importance of ensuring that fees were
`
`properly distributed to content creators and copyright owners, as discussed for exam-
`
`ple in U.S. Patent No. 5,629,980 (“Stefik,” published May 13, 1997). Stefik acknowl-
`
`12
`
`

`
` Covered Business Method Patent Review
`United States Patent No. 7,942,317
`
`edged that owners of content were concerned not only with flexibility in distribution,
`
`but also with making sure they were paid for that distribution. Ex. 1011 at 2:66-3:1.
`
`Stefik disclosed a solution that attached “usage rights” to works so that fee descrip-
`
`tions remain with the work, and “all uses of copies are potentially controlled and bill-
`
`able.” Id. at 6:62-7:5. The content in Stefik is distributed by “repositories” that store
`
`digital works in content storage and associated description trees in descriptor storage,
`
`which may or may not be in the same physical device as the content storage. Id. at
`
`14:28-35. The description trees include unique identifiers for the content, pointers to
`
`the content in memory, and rights portions that maintain granted usage rights and
`
`their status data. Id. at 9:54-10:1. The identifier includes both a number identifying
`
`the work and a unique number identifying the repository that is assigned upon manu-
`
`facture of the device. Id. Fig. 7, 9:62-66. A POSA would have understood that a
`
`pointer could be used to refer to an address in memory or to refer to the address of a
`
`remote server. See, e.g., Ex. 1028 at 27:10-28:19. See also, e.g., Ex. 1017 ¶¶ 30-33.
`
`As Stefik disclosed, attaching fee specifications to digital content allows a varie-
`
`ty of distribution and fee schemes to be created, including specifying the recipients of
`
`fee payments and creating special deals or rebates for specified users. Ex. 1011 at
`
`43:46-49. For example, a fee could be collected for a content creator each time a con-
`
`sumer copies a work (id. at 43:51-67), a fee could be paid to the creator and also to the
`
`immediate distributor for each copy (id. at 44:2-22), distribution fees could be paid on-
`
`13
`
`

`
` Covered Business Method Patent Review
`United States Patent No. 7,942,317
`
`ly to distributors licensed by the content creator (id. at 44:24-64), or licensed distribu-
`
`tors could be allowed to add fee specifications on their own (id. at 44:66-45:20). Ex-
`
`amples of fee specifications include discounts, incentives paid to users, or best price
`
`specifications that “accommodate special deals, rebates, and pricing that depends on
`
`information that is not available to the repository.” Id. at 23:60-24:25, 24:34-57. The
`
`fee specifications “can be combined with tickets or authorizations that could indicate
`
`that the consumer is a wholesaler or that he is a preferred customer” in which case
`
`when the transaction is reconciled “any excess amount will be returned to the con-
`
`sumer in a separate transaction.” Id. at 24:39-47. See, e.g., Ex. 1017 ¶¶ 30-33. A POSA
`
`would have understood that these fee specifications (e.g., reward data) could be modi-
`
`fied in response to other data. See, e.g., Ex. 1017 ¶¶ 31.
`
`In addition to changing fee specifications, Stefik disclosed that distributors may
`
`also change or create the digital works by editing or merging multiple digital works in-
`
`to a “composite work” that has distinguishable parts, each with its own rights and fees
`
`attached. Ex. 1011 at 50:41-44. An example of a composite work is a collection of
`
`digital works (e.g., two content items) combined into one content item. Id. 6:39-42.
`
`The repositories in Stefik support extraction, embedding, and editing functions that
`
`allow the user to add shells or portions of digital works to each other to create new
`
`works. Id. at 39:56-41:39. In another example, The Secure Distribution of Digital
`
`Contents (“von Faber,” published 1997) disclosed a system that “couple[s] the use of
`
`14
`
`

`
` Covered Business Method Patent Review
`United States Patent No. 7,942,317
`
`the provided digital goods with a prior payment for the goods in a way which cannot
`
`be bypassed.” Ex. 1016 at 7. The products distributed in von Faber include “content
`
`packages” created by companies combining “contents purchased electronically to cre-
`
`ate other products (packages, e.g. catalogues, books) which are then offered for sale
`
`on the market.” Id. 11. A customer who purchases the whole package gets the parts
`
`that make up the package, and each content provider that has content in a package
`
`receives money for a sale of the package. Id. See, e.g., Ex. 1017 ¶¶ 30-33, 43-45.
`
`A POSA also would have known that a central vending system could be used
`
`to provide multiple vendors with a mechanism to market, distribute, and receive pay-
`
`ment for electronic data, as described for example in EP Patent Application Publica-
`
`tion No. 0809221 (“Poggio,” published November 26, 1997). Ex. 1013 at Figure 1,
`
`2:32-36; see also Ex. 1028 at 19:3-18. Poggio described a vending machine that manag-
`
`es distribution of electronic data on a variety of license terms by providing infor-
`
`mation about the products for a purchaser to browse, obtaining payment for a prod-
`
`uct, and distributing purchased products to users’ computers. Id. at 4:35-49. The
`
`vending machine includes a library of vendor products with a vending information
`
`database that maintains product information for each vendor product, including
`
`product identifiers, pointers to the products in the library, and information identifying
`
`the particular vendor and category of the product. Id. at Figure 3, 6:37-7:39. The
`
`vending machine also includes “a digital cash interface 116 for obtaining point-of-sale
`
`15
`
`

`
` Covered Business Method Patent Review
`United States Patent No. 7,942,317
`
`electronic payment for the license fee associated with a particular vendor product.” Id.
`
`at Figure 1, 6:13-16. The digital cash interface confirms successful payment of the re-
`
`quired license fee with an electronic banking network before the virtual vending ma-
`
`chine provides a product to a user. Id. at Figure 7, 10:7-20. See, e.g., Ex. 1017 ¶¶ 34-42.
`
`Poggio disclosed a variety of existing payment schemes for purchasing a vendor
`
`product that would have been known to a POSA, including “credit card payment
`
`transactions,” “digital cash,” “debit transactions,” and “electronic funds transfers.”
`
`Ex. 1013 at 6:25-36. Poggio also disclosed payment methods in which payment in-
`
`formation is sent directly to an e-payment system instead of to the virtual vending
`
`machine, with the e-payment system forwarding a