Covered Business Method Patent Review
`United States Patent No. 7,334,720
`
`IN THE UNITED STATES PATENT AND TRADEMARK OFFICE
`
`Petitioner: Apple Inc.
`
`Attorney Docket No.:
`
` 104677-5008-825
`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
`
`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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`Covered Business Method Patent Review
`United States Patent No. 7,334,720
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`TABLE OF CONTENTS
`
`(b)
`
`B.
`
`INTRODUCTION ....................................................................................................... 1
`I.
`II. OVERVIEW OF FIELD OF THE CLAIMED INVENTION ......................... 7
`III. OVERVIEW OF CHALLENGED CLAIMS ....................................................... 20
`IV. PETITIONER HAS STANDING .......................................................................... 24
`A.
`The ’720 Patent Is A Covered Business Method Patent ........................... 24
`1.
`Exemplary Claim 16 Is Financial In Nature .................................... 25
`2.
`Claim 16 Does Not Cover A Technological Invention ................. 29
`(a)
`Claim 16 Does Not Recite A Technological
`Feature That Is Novel And Unobvious ............................. 30
`Claim 16 Does Not Solve A Technical Problem
`Using A Technical Solution ................................................. 33
`Related Matters And Mandatory Notice Information; Petitioner Is
`A Real Party In Interest Sued For And Charged With
`Infringement ..................................................................................................... 35
`V. DETAILED EXPLANATION OF REASONS FOR RELIEF
`REQUESTED, SHOWING IT IS MORE LIKELY THAN NOT
`THAT AT LEAST ONE CHALLENGED CLAIM IS
`UNPATENTABLE .................................................................................................... 37
`A.
`Claim Construction .......................................................................................... 39
`B.
`The Challenged Claims Are Unpatentable Under 35 U.S.C. § 101 .......... 43
`1.
`The Challenged Claims Are Directed To Abstract Ideas .............. 44
`2.
`The Challenged Claims Do Not Disclose An “Inventive
`Concept” That Is “Significantly More” Than An Abstract
`Idea ......................................................................................................... 51
`(a)
`Field Of Use Limitations Cannot Create Patent
`Eligibility ................................................................................. 52
`Generic Computer Implementation Cannot
`Transform Abstract Ideas Into Patent Eligible
`Inventions ............................................................................... 53
`(i) Generic Computer Functions Cannot
`Transform Abstract Ideas Into Patent
`Eligible Inventions ..................................................... 56
`
`(b)
`
`
`
`i
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`

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`Covered Business Method Patent Review
`United States Patent No. 7,334,720
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`(ii) Generic Computer Hardware Cannot
`Transform Abstract Ideas Into Patent
`Eligible Inventions ..................................................... 59
`(iii) Challenged Claims Are Analogous To Those
`Found Patent-Ineligible In Alice ............................. 61
`(iv) Challenged Claims Are Analogous To Those
`Found Patent-Ineligible In Accenture .................... 68
`Functional Nature Confirms Preemption and
`Ineligibility .............................................................................. 70
`Machine-or-Transformation Test Confirms Patent
`Ineligibility .............................................................................. 73
`Claim 17 Is Indefinite Under § 112 ............................................................... 74
`C.
`VI. CONCLUSION........................................................................................................... 75
`
`(d)
`
`(c)
`
`
`
`ii
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`Covered Business Method Patent Review
`United States Patent No. 7,334,720
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`EXHIBIT LIST
`1001
`U.S. Patent No. 7,334,720
`
`1002
`
`1003
`
`1004
`
`1005
`
`1006
`
`1007
`
`1008
`
`1009
`
`1010
`
`1011
`
`1012
`
`1013
`
`1014
`
`1015
`
`1016
`
`1017
`
`
`
`Plaintiffs’ First Amended Complaint
`
`U.S. Patent No. 5,925,127
`
`U.S. Patent No. 5,940,805
`
`August 2014 Emails Titled “RE: Smartflash: Meet and Confer Re-
`garding Further Claim/Prior Art Limits.”
`U.S. Patent No. 4,999,806
`
`U.S. Patent No. 5,675,734
`
`U.S. Patent No. 4,878,245
`
`File History for U.S. Patent No. 7,334,720
`
`U.S. Patent No. 7,942,317
`
`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 (translation)
`
`iii
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`

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`Covered Business Method Patent Review
`United States Patent No. 7,334,720
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`EXHIBIT LIST
`Eberhard von Faber, Robert Hammelrath, and Frank-Peter Heider,
`1018
`“The Secure Distribution of Digital Contents,” IEEE (1997)
`Declaration of John P. J. Kelly In Support of Apple Inc.’s Petition for
`Covered Business Method Patent Review
`U.S. Patent No. 8,033,458
`
`1019
`
`1020
`
`1021
`
`1022
`
`1023
`
`1024
`
`1025
`
`1026
`
`1027
`
`1028
`
`1029
`
`1030
`
`1031
`
`1032
`
`1033
`
`
`
`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 Peti-
`tion for Covered Business Method Patent Review
`Claim Construction Memorandum Opinion from Smartflash LLC v.
`Apple Inc., No. 6:13cv447 (Dkt. 229)
`File History for U.S. Patent No. 8,061,598
`
`U.S. Patent No. 4,337,483
`
`U.S. Patent No. 7,725,375
`
`International Publication No. WO 95/34857
`
`JP Patent Application Publication No. H10-269289 (translation)
`
`File History for U.S. Patent No. 7,942,317
`
`File History for U.S. Patent No. 8,033,458
`
`U.S. Patent No. 8,061,598
`
`U.S. Patent No. 8,118,221
`
`File History for U.S. Patent No. 8,118,221
`
`iv
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`Covered Business Method Patent Review
`United States Patent No. 7,334,720
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`EXHIBIT LIST
`1034
`U.S. Patent No. 8,336,772
`
`1035
`
`1036
`
`1037
`
`1038
`
`1039
`
`1040
`
`1041
`
`1042
`
`1043
`
`1044
`
`1045
`
`File History for U.S. Patent No. 8,336,772
`
`U.S. Patent No. 5,646,992
`
`U.S. Patent No. 5,953,005
`
`U.S. Pat. No. 5,970,479
`
`R. Mohan, J.R. Smith, C.S. Li, “Adapting Multimedia Internet Con-
`tent for Universal Access,” IEEE Transactions on Multimedia, Vol.
`1, No. 1, 1999, pp. 104-114
`Apr. 8-9, 2015 Deposition Transcript of Jonathan Katz, CBM2014-
`00102/106/108/112
`J. Taylor, “DVD-Video: Multimedia for the Masses,” IEEE Multime-
`dia, Vol. 6, No. 3, July-September 1999, pp. 86-92
`U.S. Patent No. 5,903,721
`
`U.S. Patent No. 5,761,485
`
`International Publication No. WO99/13398
`
`Excerpt of Transcript of Trial Afternoon Session, February 16, 2015
`from Smartflash LLC v. Apple Inc., No. 6:13cv447
`
`
`
`v
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`

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`Covered Business Method Patent Review
`United States Patent No. 7,334,720
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`I.
`
`INTRODUCTION
`
`Pursuant to § 321 and Rule § 42.304,1 the undersigned, on behalf of and in a
`
`representative capacity for Apple Inc. (“Petitioner”), petitions for covered business
`
`method review of claims 4-12 and 16-18 (“challenged claims”) of U.S. Pat. No.
`
`7,334,720 (“the ’720 Patent” or “’720”), issued to Smartflash Limited and assigned to
`
`Smartflash LLC (“Patent Owner”). Petitioner asserts that it is more likely than not
`
`that the challenged claims are unpatentable for the reasons herein and requests review
`
`of, and judgment against, claims 4-12 and 16-18 as unpatentable under § 101, and
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`claim 17 as unpatentable under § 112.
`
`As discussed in Section IV.B, infra, Petitioner previously filed CBM2014-
`
`00104/105 seeking review of the ’720 under §§ 102 and 103, and CBM2015-00028/29
`
`seeking review of certain claims of the ’720 under §§ 101 and 103. Petitions
`
`CBM2014-00104/105 were not instituted, and institution decisions in CBM2015-
`
`00028/29 (on claims 1-3 and 13-15) are still pending. 2 The previous petitions were
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`generally directed towards claims asserted in a first litigation filed by Smartflash
`
`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 deter-
`
`mine after institution that consolidation of this proceeding with CBM2015-00028/29
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`may be appropriate, or may at minimum decide to coordinate the schedules of this
`
`proceeding and CBM2015-00028/29.
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`
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`1
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`Covered Business Method Patent Review
`United States Patent No. 7,334,720
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`against Petitioner as of the time those petitions were filed. Since that time, Smartflash
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`has filed a second litigation against Petitioner in which it again asserts the ’720 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 in the
`
`new litigation. In addition, Samsung Electronics America (“Samsung”) previously
`
`filed CBM2014-00190 and CBM2014-00196 seeking CBM review of the ’720 Patent.
`
`CBM2014-00190 was instituted for trial with respect to claims 13 and 14 on § 101
`
`grounds. On April 30, 2015, Petitioner filed a Motion for Joinder with pending Cov-
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`ered Business Method review CBM2014-00190 (Attorney Docket No 104677-5008-
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`824). The Board has not yet rendered a decision on this motion. None of the chal-
`
`lenged claims herein has previously been challenged by Petitioner or Samsung on
`
`§§ 101 or 112 grounds, and the challenged claims were not being asserted against Peti-
`
`tioner by Smartflash at the time Petitioner filed the CBM2015-00028/029 petitions.
`
`The challenged claims are merely directed to steps and corresponding systems
`
`well-known in the field of data storage and access, including use of a “portable data
`
`carrier for storing and paying for data and to computer systems for providing access
`
`to data to be stored.” E.g., Ex. 1001 1:5-8. Independent claim 16, for example, re-
`
`cites eight rudimentary steps relating to data storage and access—(A) reading pay-
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`ment data from a data carrier, (B) forwarding that data, (C) retrieving data, (D) writ-
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`ing the retrieved data, (E) receiving at least one access rule, (F) writing that rule; (G)
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`2
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`Covered Business Method Patent Review
`United States Patent No. 7,334,720
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`receiving payment validation data, and (H) transmitting payment validation data:
`
`14. A method of providing data from a data supplier to a data carrier,
`the method comprising:
`reading payment data from the data carrier;
`forwarding the payment data to a payment validation system;
`retrieving data from the data supplier;
`writing the retrieved data into the data carrier;
`receiving at least one access rule from the data supplier; and
`writing the at least one access rule into the data carrier, the at least one
`access rule specifying at least one condition for accessing the retrieved
`data written into the data carrier, the at least one condition being de-
`pendent upon the amount of payment associated with the payment data
`forwarded to the payment validation system.
`15. A method of providing data from a data supplier according to claim
`14 further comprising:
`receiving payment validation data from the payment validation
`system; and
`transmitting at least a portion of the payment validation data to the
`data supplier.
`16. A method of providing data as claimed in claim 15, wherein the
`payment validation system comprises a payment processor at the
`data supplier.
`Ex. 1001.3 But at the ’720 Patent’s earliest claimed priority date, these simple ele-
`
`ments and their combination were all well-known. See Section II; Ex. 1019 ¶¶ 77-83,
`
`
`3 All emphasis herein is added unless otherwise noted.
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`
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`3
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`Covered Business Method Patent Review
`United States Patent No. 7,334,720
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`§ VI.4 The patent itself acknowledges that the idea of providing access to data in ex-
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`change for a payment (e.g., purchase of music on a CD) was well-known at the time,
`
`e.g., Ex. 1001 5:4-7 (“where the data carrier stores … music, the purchase outright op-
`
`tion may be equivalent to the purchase of a compact disc (CD), preferably with some form of
`
`content copy protection such as digital watermarking”). The idea of purchasing digital
`
`data for payment was similarly well-known. See, e.g., Ex. 1007 5:41-56; Ex. 1040
`
`14:21-15:14.5 And, as shown herein, the prior art was teeming with disclosures of this
`
`basic concept. See, e.g., Section II.
`
`Moreover, as its language makes clear, claim 16 involves no “technology” at all
`
`other than “a payment validation system” (comprising a payment processor) and “a
`
`data carrier”—both of which the patent concedes were well-known and entirely
`
`commonplace at the time. E.g., Ex. 1001 3:29, 8:64-66, 9:2-7, 11:36-53, 13:46-58, 14:1-
`
`4 In further support of the Petitioner’s grounds, the Declaration of technical expert
`
`John P.J. Kelly, Ph.D., is attached as Exhibit 1019. Dr. Kelly qualifies as a person of
`
`ordinary skill in the art (Ex. 1019 §§ I, III) and has analyzed whether the challenged
`
`claims are unpatentable based on the grounds in this petition (Ex. 1019 §§ I-II and
`
`IV-VIII).
`
`5 Exhibit 1040 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 ’720 Patent as well
`
`as other related patents (see Section IV.B infra describing related matters).
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`4
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`2, 14:19-24, 14:52-54, 15:44, 17:23-18:23, 18:38, 19:35, 19:65-20:7, Figures 2, 6, 9, 11b;
`
`Ex. 1019 ¶¶ 77-83, § VI. Thus, as the intrinsic record reflects, claim 16 recites noth-
`
`ing more than a method for retrieving and storing data from a data supplier while
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`reading and forwarding payment data for validation, receiving and writing an access
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`rule for the stored data, and receiving and transmitting payment validation data.
`
`The other challenged claims are only variations on this same simple and well-
`
`known theme. Claim 17 depends from claim 16 and recites the additional steps of
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`reading a stored value, comparing the stored value with value data, and outputting the
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`result. Claim 18 depends from claim 14 and recites the additional limitations of re-
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`trieving and writing a stored data item identifier and associated value data. The chal-
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`lenged “system” claims 4-12 all depend from previously instituted claim 3, which re-
`
`cites equally well-known components (e.g., data access terminals with interfaces, pro-
`
`cessors, program stores and code).6 E.g., Ex. 1001 12:38-41 (“The physical embodiment
`
`of the system is not critical and a skilled person will understand that the terminals, data processing
`
`6 Claim 3, for example, simply recites a “data access terminal” with interfaces, a pro-
`
`cessor, a program store and “code” to perform similar steps, along with the pro-
`
`cessing of data access requests and various data (e.g., payment data and payment vali-
`
`dation data) via the application of access and use rules. See Ex. 1001. Claims 4-11
`
`merely recite additional types of code, and claim 12 recites a cash input device and as-
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`sociated code.
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`5
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`Covered Business Method Patent Review
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`systems and the like can all take a variety of forms.”); Figure 4b. See also Section II, infra; Ex.
`
`1019 ¶¶ 77-82, § VI.
`
`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’s first chal-
`
`lenges to the ’720 Patent were filed—the challenged claims are also directed to patent-
`
`ineligible subject matter under § 101. As the Board noted in its previous Institution
`
`Decisions, “the ’720 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 control-
`
`ling access to data,” CBM2014-00104, Pap. 9 at 12; CBM2014-00190, Pap. 9 at 10, and
`
`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 them patentable—in
`
`particular, generic computer implementation that cannot confer patentability on these
`
`patent-ineligible abstractions. E.g., Alice, 134 S. Ct. at 2359-60. Further, claim 17
`
`lacks a clear or definite antecedent basis and is thus also unpatentable under § 112. In
`
`summary, each challenged claim recites ineligible subject matter, and claim 17 is indef-
`
`inite; thus, each is unpatentable.
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`
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`6
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`Covered Business Method Patent Review
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`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.7 See, e.g., Ex. 1019 ¶¶ 23-25, 29-30, 46, 75. 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. 1040 14:21-15:15, 16:6-17:9; see also Ex. 1008 at 4:27-35,
`
`6:49-7:6. 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. 1019 ¶¶ 25-30, 34, 43, 46, 48-
`
`50, 53-56, 58, 61, 75; Ex. 1040 19:3-18; see also Ex. 1025 at Figure 1, 9:50-68; Ex. 1039.
`
`Indeed, the ’720 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 12:38-41. For example,
`
`the patent concedes that various claimed components and functionalities were con-
`
`ventional and well-known in the art (see Ex. 1019 ¶ 22), such as:
`
`7 All references to a person of ordinary skill in the art (“POSA”) refer to the
`
`knowledge or understanding of a POSA as of October 25, 1999. A POSA would
`
`have at least a B.S. in E.E., C.S., or a telecommunications related field, and at least
`
`three years of industry experience that included client-server data/information distri-
`
`bution and management architectures. See Ex. 1019 ¶¶ 15-17.
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`7
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` Internet users paying for goods and/or services by credit card transaction (2:5-
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`6; 19:25-29)
`
` Encrypting/decrypting content for security (2:56-66)
`
` Data access terminal or content access terminal hardware: “conventional com-
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`puter” or “mobile phone,” “home personal computer,” “mobile communica-
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`tions device,” “set top box” (3:64-65, 16:11-20)
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` WAP and i-mode allowing mobile phones to access the internet and download
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`data (3:65-4:2)
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` SIM cards including a user identification means (4:2-6)
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` Non-volatile memory, including EEPROM, Flash memory, optical memory
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`(4:35-44, 17:41-48)
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` Purchasing digital music equivalent to the purchase of a CD (5:4-7)
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` Data carrier hardware: “IC card,” “smart card,” “memory stick,” “standard
`
`smart card” (6:26-29, 11:37-40, 17:24-48)
`
` Electronics Point of Sale Systems (EPoSS) functionality for smart cards (11:46-
`
`50)
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` E-payment systems and standards (13:46-49)
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` Data access terminal as a “general purpose computer” with standard compo-
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`nents (Figure 8, 16:47-17:2)
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`8
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` Data access device hardware: “portable audio/video player,” “conventional
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`dedicated computer system” with standard components (18:24-44)
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` Use control routines including digital watermarking and content protection
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`from the SDMI specification (18:47-54)
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` “Standard transmission protocols” used to transmit content data items (21:66-
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`22:3)
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` Communication network whose detailed implementation is not essential, and
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`can be “internet,” “web-based technology,” “any electronic communications
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`network,” “wide area network,” “local area network,” “wireless network,”
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`“conventional land line network,” “extranet” (26:5-12)
`
`A POSA would have known, for example, multiple systems for selling and dis-
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`tributing digital content to remote user devices. See, e.g., Ex. 1019 ¶¶ 25-30, 34-44, 48-
`
`50, 53-54, 61, 64-65, 67-69; see also Ex. 1040 19:3-18. 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. 1007 Abstract. Hair describes 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 second party for a fee. Id. 5:41-44. In a first
`
`step, money is transferred from the second party to the first party via telecommunica-
`
`tions line for an electronic sale. Id. 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
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`9
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`digital or audio signals are transmitted from the first memory to the second memory.
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`Id. 5:47-56. See, e.g., Ex. 1019 ¶ 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. 1006 2:22-36. The seller
`
`computer answers calls from buyers, verifies credit card information, transmits pur-
`
`chased software to buyers, and performs accounting functions to ensure proper billing
`
`and record keeping. Id. 2:37-47. A POSA would have understood that delivery of the
`
`purchased content could be conditioned on successful payment, as the system de-
`
`scribed in Chernow ensures that the customer is able to pay for the purchase, for ex-
`
`ample, by verifying credit card approval for the sale amount, before providing re-
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`quested software. Id. 6:48-65, 7:53-63; see also Ex. 1040 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 and provide an appropriate warning (see, e.g., Ex. 1027 discussed be-
`
`low), in view of Chernow’s description of software that renders itself unusable or
`
`erases itself at the conclusion of the leased use. Ex. 1006 5:10-18. See, e.g., Ex. 1019
`
`¶¶ 25-28.
`
`In addition to systems for providing purchased content to users after confirm-
`
`ing payment, a POSA also would have been aware of systems allowing users to pur-
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`10
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`Covered Business Method Patent Review
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`chase content that is locally stored, but not yet accessible, by distributing decryption
`
`keys after confirming a purchase. For example, The Secure Distribution of Digital
`
`Contents (“von Faber,” published 1997) disclosed a “system for distribution of en-
`
`crypted digital contents via freely accessible distribution media.” Ex. 1018 Abstract.
`
`A POSA would have appreciated the importance of ensuring that goods were paid for
`
`before being accessed, as von Faber acknowledged the need to “couple the use of the
`
`provided digital goods with a prior payment for the goods in a way which cannot be
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`bypassed.” Id. 7; see also Ex. 1040 27:4-9. The solution proposed by von Faber was to
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`freely distribute encrypted digital contents and focus on key management, by provid-
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`ing the decryption key required to gain access to the digital content only after it is
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`“guaranteed that payment has been authorised.” Ex. 1018 at 8. See, e.g., Ex. 1019 ¶¶
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`43-45.
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`A POSA also would have known that a central vending system could be used
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`to provide multiple vendors with a mechanism to market, distribute, and receive pay-
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`ment for electronic data, as described for example in EP Patent Application Publica-
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`tion No. 0809221 (“Poggio,” published November 26, 1997). Ex. 1015 Figure 1,
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`2:32-36; see also Ex. 1040 19:3-18. Poggio described a vending machine that manages
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`distribution of electronic data on a variety of license terms by providing information
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`about the products for a purchaser to browse, obtaining payment for a product, and
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`distributing purchased products to users’ computers. Id. 4:35-49. The vending ma-
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`United States Patent No. 7,334,720
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`chine includes “a digital cash interface 116 for obtaining point-of-sale electronic pay-
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`ment for the license fee associated with a particular vendor product.” Id. Figure 1,
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`6:13-16. The digital cash interface confirms successful payment of the required li-
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`cense fee with an electronic banking network before the virtual vending machine pro-
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`vides a product to a user. Id. Figure 7, 10:7-20. Poggio disclosed a variety of existing
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`payment schemes for purchasing a vendor product that would have been known to a
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`POSA, including “credit card payment transactions,” “digital cash,” “debit transac-
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`tions,” and “electronic funds transfers.” Id. 6:25-36. See, e.g., Ex. 1019 ¶¶ 34-42.
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`A POSA also would have known that different product options could be pro-
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`vided for a buyer to choose from, with different limits on the buyer’s access associat-
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`ed with each choice and different fee schedules for the products. For example,
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`Poggio disclosed providing a purchaser with a choice between purchasing a perma-
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`nent license for a vendor product and renting the product with a license limited to a
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`rental time period. Ex. 1015 Figure 6, 9:25-33. Product sales information stored at
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`the virtual vending machine includes fee schedules indicating license fees for the
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`product on a purchase and/or rental basis. Id. Figure 3B, 7:12-16. Rented products
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`are “formatted to include a time bomb or other disabling device which will disable the
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`product at the end of the rental period” before being transmitted to the user. Id.
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`10:25-28. See, e.g., Ex. 1019 ¶¶ 34-42.
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`A POSA would have understood that the user’s rights to purchased or rented
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`content could be “attached” such that the rights remain with the content, like the us-
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`age rights disclosed in U.S. Patent No. 5,629,980 (“’980 Stefik,” published May 13,
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`1997). Ex. 1013 6:51-56. The ’980 Stefik specification described attaching usage
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`rights to content to “define how that digital work may be transferred, used, performed,
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`or played.” Id. 19:14-15. A work could have multiple versions of a right with differ-
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`ent prices, such that a purchaser may choose which option best fits the rights he or
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`she needs. Id. 18:9-16. The works and their associated descriptions, including the us-
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`age right descriptions that define how the work may be used, are stored in separate
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`memories on a repository device, and those memories may be different memory types
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`or may be physically separate memory devices. Id. Figure 12, 14:28-39. See, e.g., Ex.
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`1019 ¶¶ 30-33.
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`A POSA also would have known that a user could also be provided with an op-
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`tion to specify the extent of utilization needed, so that the price paid is dependent on
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`the amount of usage desired, and the content is released only to that extent of utiliza-
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`tion, as disclosed in U.S. Patent No. 5,940,805 (“Kopp,” published August 17, 1999).
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`Ex. 1004 2:61-3:2, 5:47-55. Kopp disclosed storing “data records” purchased by users
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`on chip cards with “data regarding the extent of utilization” such as “number of pos-
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`sible utilizations of the data record, the length of time during which the data record
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`can be used, or the time limit up to which the data record may be used.” Id. 5:16-21.
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`The extent of utilization is specified by the user during the purchase process, and a
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`vending apparatus control device calculates a fee based on the specified extent. Id.
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`5:47-55. The user then makes payment to a payment device, for example by inserting
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`bills and coins or by electronically transferring money, before the data record is re-
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`leased. Id. 4:25-42, 5:56-58. See, e.g., Ex. 1019 ¶¶ 58-60.
`
`U.S. Patent No. 5,530,235 (“’235 Stefik,” published June 25, 1996) disclosed a
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`transportable data carrier, a DocuCard “used for storing digital information which
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`may be accessed by a system that is capable of playing or rendering the digital infor-
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`mation, such as a computer system, digital copier, audio CD player and the like.” Ex.
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`1012 Abstract, 4:21-31. The ’235 Stefik specification described implementing the
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`DocuCard as a card “in accordance with standards promulgated by the Personal
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`Computer Memory Card International Association (PCMCIA),” which may be “desir-
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`able because of their small size and support for plug and play applications.” Id. 4:55-
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`5:12. A user accesses documents from a repository using the DocuCard by logging in
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`to the DocuCard, for example by entering a PIN, which may “activate credit ac-
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`counts,” assigning payment of any fees, and then selecting a desired document and
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`function before confirming the transaction. Id. Figure 3, 6:60-7:13. See, e.g., Ex. 1019
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`¶ 30.
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`The DocuCard disclosed in ’235 Stefik implements the functionality of a repos-
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`itory, described in more detail in ’980 Stefik. See Ex. 1012 2:48-52 (incorporating ’980
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`Stefik by reference), 4:35-40. A POSA would have appreciated the importance of en-
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`suring that fees paid for use of repository documents were properly distributed to
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`content creators and copyright owners who were concerned not only with flexibility
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`in distribution, but also with making sure they were paid for that distribution, as dis-
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`cussed in ’980 Stefik. Ex. 1013 2:66-3:1. The ’980 Stefik specification described a so-
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`lution that attached “usage rights” to works so that fee descriptions remain with the
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`work, and “all uses of copies are potentially controlled and billable.” Id. 6:62-7:5. As
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`Stefik disclosed, attaching fee specifications to digital content allows a variety of fee
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`structures. Examples of possible fee specifications include discounts, incentives paid
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`to users, or best price specifications (e.g., reward data) that “accommodate special
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`deals, rebates, and pricing that depends on information that is not available to the re-
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`pository.” Id. 23:56-24:25, 24:34-57. The fee specifications “can be combined with
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`tickets or authorizations that could indicate that the consumer is a wholesaler or that
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`he is a preferred customer” in which case when the transaction is reconciled “any ex-
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`cess amount will be returned to the consumer in a separate transaction.” Id. 24:39-47.
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`See, e.g., Ex. 1019 ¶¶ 30-33. A POSA would have understood that these fee specifica-
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`tions (e.g., reward data) could be modified in response to other data. See, e.g., Ex. 1019
`
`¶ 31.
`
`U.S. Patent No. 5,915,019 (“Ginter,” published June 22, 1999) also disclosed a
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`system distributing content with a set of “rules and controls” to prevent unauthorized
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`use of protected information and specify how much usage is to be paid for. Ex. 1014
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`56:25-57:16. The VDE protects content distributed among appliances by implement-
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`ing flexible “rules and controls” that are used to grant users specific rights, specify
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`how much is to be paid for content usage, and establish usage reporting requirements.
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`Id. 56:25-61. The rules and controls either travel with the content to which they apply
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`or are delivered to a user separately from c