Covered Business Method Patent Review
`United States Patent No. 8,118,221
`
`
`IN THE UNITED STATES PATENT AND TRADEMARK OFFICE
`
`Petitioner: Apple Inc.
`
`Attorney Docket No.:
`
` 104677-5008-823
`Customer No. 28120
`
`§
`Inventor: Racz et al.
`United States Patent No.: 8,118,221 §
`Formerly Application No.: 12/943,872 §
`Issue Date: February 21, 2012
`§
`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. 8,118,221 PURSUANT TO 35 U.S.C. § 321,
`37 C.F.R. § 42.304
`
`i
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`

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`Covered Business Method Patent Review
`United States Patent No. 8,118,221
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`TABLE OF CONTENTS
`
`(b) 
`
`B. 
`
`I. 
`INTRODUCTION ....................................................................................................... 1 
`II.  OVERVIEW OF FIELD OF THE CLAIMED INVENTION ......................... 6 
`III.  OVERVIEW OF THE CHALLENGED CLAIMS ............................................ 19 
`IV. 
`PETITIONER HAS STANDING .......................................................................... 22 
`A. 
`The ’221 Patent Is A Covered Business Method Patent ........................... 22 
`1. 
`Exemplary Claim 12 Is Financial In Nature .................................... 23 
`2. 
`Claim 12 Does Not Cover A Technological Invention ................. 26 
`(a) 
`Claim 12 Does Not Recite A Technological
`Feature That Is Novel And Unobvious ............................. 27 
`Claim 12 Does Not Solve A Technical Problem
`Using A Technical Solution ................................................. 30 
`Related Matters And Mandatory Notice Information; Petitioner Is A
`Real Party In Interest Sued For And Charged With Infringement .......... 32 
`V.  DETAILED EXPLANATION OF REASONS FOR RELIEF
`REQUESTED, SHOWING IT IS MORE LIKELY THAN NOT THAT
`AT LEAST ONE CHALLENGED CLAIM IS UNPATENTABLE .............. 33 
`A. 
`Claim Construction .......................................................................................... 36 
`B. 
`The Challenged Claims Are Unpatentable Under 35 U.S.C. §101 ........... 39 
`1. 
`The Challenged Claims Are Directed To Abstract Ideas .............. 41 
`2. 
`The Challenged Claims Do Not Disclose An “Inventive
`Concept” That Is “Significantly More” Than An Abstract
`Idea ......................................................................................................... 49 
`(a) 
`Field Of Use Limitations Cannot Create Patent
`Eligibility ................................................................................. 50 
`Generic Computer Implementation Cannot
`Transform Abstract Ideas Into Patent Eligible
`Inventions ............................................................................... 50 
`(i)  Generic Computer Functions Cannot Transform
`Abstract Ideas Into Patent Eligible Inventions ....... 52 
`(ii)  Generic Computer Hardware Cannot Transform
`Abstract Ideas Into Patent Eligible Inventions ....... 55 
`
`(b) 
`
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` Covered Business Method Patent Review
`United States Patent No. 8,118,221
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`(c) 
`
`(iii)  Challenged Claims Are Analogous To Those
`Found Patent-Ineligible In Alice ................................. 60 
`(iv)  Challenged Claimed Are Analogous To Those
`Found Patent-Ineligible In Accenture .......................... 70 
`Functional Nature Confirms Preemption and
`Ineligibility .............................................................................. 72 
`Machine-Or-Transformation Test Also Confirms
`Patent Ineligibility .................................................................. 75 
`Claims 6, 22, And 29 Are Indefinite Under § 112 ...................................... 76 
`C. 
`VI.  CONCLUSION........................................................................................................... 79 
`
`
`(d) 
`
`ii
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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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`1020
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` Covered Business Method Patent Review
`United States Patent No. 8,118,221
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`U.S. Patent No. 8,118,221
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`Plaintiffs’ First Amended Complaint
`
`File History for U.S. Patent No. 8,061,598
`
`File History for U.S. Patent No. 8,336,772
`
`U.S. Patent No. 5,675,734
`
`U.S. Patent No. 4,999,806
`
`U.S. Patent No. 4,878,245
`
`U.S. Patent No. 7,334,720
`
`U.S. Patent No. 7,942,317
`
`U.S. Patent No. 5,940,805
`
`File History for U.S. Patent No. 8,118,221
`
`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)
`International Publication No. WO 95/34857
`
`Eberhard von Faber, Robert Hammelrath, and Franz-Peter
`Heider, “The Secure Distribution of Digital Contents,” IEEE
`(1997)
`
`iii
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`

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`EXHIBIT LIST
`1021
`
`1022
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`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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`1036
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`1037
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`1038
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`1039
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`1040
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` Covered Business Method Patent Review
`United States Patent No. 8,118,221
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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
`International Publication No. WO99/13398
`
`U.S. Patent No. 8,033,458
`
`U.S. Patent No. 8,061,598
`
`U.S. Patent No. 8,336,772
`
`File History for U.S. Patent No. 7,334,720
`
`File History for U.S. Patent No. 7,942,317
`
`File History for U.S. Patent No. 8,033,458
`
`Claim Construction Memorandum Opinion from Smartflash
`LLC v. Apple Inc., No. 6:13cv447 (Dkt. 229)
`U.S. Patent No. 4,337,483
`
`U.S. Patent No. 7,725,375
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`U.S. Patent No. 5,925,127
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`JP Patent Application Publication No. H10-269289 (transla-
`tion)
`U.S. Patent No. 5,953,005
`
`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
`J. Taylor, “DVD-Video: Multimedia for the Masses,” IEEE
`Multimedia, Vol. 6, No. 3, July-September 1999, pp. 86-92
`U.S. Patent No. 5,646,992
`
`Rakesh Mohan, John R. Smith and Chung-Sheng Li , “Adapt-
`
`iv
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`EXHIBIT LIST
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`1041
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`1042
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`1043
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`1044
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` Covered Business Method Patent Review
`United States Patent No. 8,118,221
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`ing Multimedia Internet Content for Universal Access” IEEE
`(March 1999)
`U.S. Patent No. 5,761,485
`
`U.S. Patent No. 5,903,721
`
`Excerpt of Transcript of Trial Afternoon Session, February
`16, 2015 from Smartflash LLC v. Apple Inc., No. 6:13cv447
`Declaration of Megan F. Raymond In Support of Apple Inc.’s
`Petition for Covered Business Method Patent Review
`
`v
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`Covered Business Method Patent Review
`United States Patent No. 8,118,221
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`I.
`
`INTRODUCTION
`Pursuant to 35 U.S.C. § 321 and 37 C.F.R. § 42.304,1 the undersigned, on be-
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`half of and acting in a representative capacity for Apple Inc. (“Petitioner”), petitions
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`for review under the transitional program for covered business method (“CBM”) pa-
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`tents of claims 3-10, 12-31, and 33 (“challenged claims”) of U.S. Pat. No. 8,118,221
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`(“’221”), issued to Smartflash Technologies Limited and assigned to Smartflash LLC
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`(“PO”). Petitioner asserts it is more likely than not that the challenged claims are un-
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`patentable for the reasons herein and requests review of, and judgment against the
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`challenged claims 3-10, 12-31, and 33 as unpatentable under § 101, and challenged
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`claims 6, 22, and 29 as unpatentable under § 112.
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`As discussed in IV.B, infra, Petitioner previously filed CBM2014-00102/103
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`and CBM2015-00015 seeking CBM review of certain claims of the ’221. Those peti-
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`tions were instituted (and CBM2014-00102/103 consolidated) with respect to claims 1,
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`2, and 11-14 on §103 grounds and claim 1 on §101 grounds. 2 See CBM2014-
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`1 Petitioner is demonstrating, in pending litigation, that these claims are invalid for
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`numerous additional reasons. All section cites herein are to 35 U.S.C. or 37 C.F.R., as
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`the context indicates.
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`2 The Board instituted review of petitions filed by Samsung on the ’221 with respect
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`to claims 2, 11, and 32 on § 101 grounds, and claims 2 and 11 on § 102 grounds. See
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`CBM2014-00194, Pap. 9 at 20; CBM2014-00199, Pap. 9 at 13.
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`United States Patent No. 8,118,221
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`00102/103, Pap. 8 at 24; CBM2015-00015, Pap. 23 at 21. With respect to §101, the
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`Board has stated that claims 1, 2, 11, and 32 are “directed to patent-ineligible subject
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`matter under 35 U.S.C. 101.” See CBM2014-00194, Pap. 9 at 12; CBM2015-00015,
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`Pap. 23 at 15. However, none of the challenged claims herein has previously been
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`challenged by Petitioner or Samsung on §§ 101 or 112 grounds, and the challenged
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`claims were not being asserted against Petitioner at the time it filed CBM2015-00015.
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`Apple’s previous petitions were directed towards claims asserted in a first litigation
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`filed by Smartflash against Apple as of the time the petitions were filed. See Ex.1036.
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`Since that time, Smartflash has filed a second litigation against Apple in which it again
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`asserts the ’221. Although Smartflash has not yet identified the asserted claims at issue
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`in the second litigation, this petition is directed towards the additional claims that
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`Smartflash may now assert in the new litigation.
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`The challenged claims are merely directed to steps and corresponding systems
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`well-known in the field of data storage and access, including the use of a “portable da-
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`ta carrier for storing and paying for data and to computer systems for providing ac-
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`cess to data to be stored.” E.g., Ex.1001 1:20-23. Claim 12, e.g., recites four rudimen-
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`tary steps relating to data storage and access—(A) reading payment data from a data
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`carrier, (B) forwarding that data to a payment validation system, (C) retrieving data
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`from a data supplier, and (D) writing the retrieved data to the data carrier:
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`12. A method of providing data from a data supplier to a data carrier, the
`method comprising:
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`United States Patent No. 8,118,221
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`reading payment data from the data carrier;
`forwarding the payment data to a payment validation system;
`retrieving data from the data supplier; and
`writing the retrieved data into the date carrier.
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`Ex.1001, cl. 12.3 But at the patent’s earliest claimed priority date, these simple ele-
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`ments and their combination would have been all well known to any person of ordi-
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`nary skill in the art (“POSA” 4). See Sect. II; Ex.1021 ¶¶ 82-86, § VI.5 Indeed, the pa-
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`tent acknowledges that the idea of providing access to data in exchange for a payment
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`(e.g., purchase of music on a CD) was well known at the time. E.g., Ex.1001 5:9-12
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`(“where the data carrier stores, for example, music, the purchase outright option may
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`be equivalent to the purchase of a compact disc (CD), preferably with some form of con-
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`3 All emphasis herein added unless otherwise noted.
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`4 All references to a POSA refer to the knowledge or understanding of a person of
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`ordinary skill in the art as of October 25, 1999. A POSA would have at least a B.S. in
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`E.E., computer science or a telecommunications related field, and at least three years
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`of industry experience that included client-server data/information distribution and
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`management architectures. See Ex.1021 ¶¶ 15-17.
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`5 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 1021. Dr. Kelly qualifies as a POSA (Ex.
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`1021 §§ I, III) and has analyzed whether the challenged claims are unpatentable based
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`on the grounds herein (Ex. 1021 §§ I-II and IV-VIII).
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`United States Patent No. 8,118,221
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`tent copy protection such as digital watermarking”). The idea of purchasing digital da-
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`ta for payment was similarly well known. See, e.g., Ex.1005 5:41-56; Ex.1037 14:21-
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`15:14.6 The prior art was teeming with disclosures of this basic concept. See Sect. II.
`
`Further, claim 12, for example, clearly involves no “technology” at all other than “a
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`payment validation system” and “a data carrier”—both of which the patent concedes
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`were well known and entirely commonplace at the time. E.g., Ex.1001 3:36-37, 8:63-
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`65, 11:27-44, 13:35-47, 13:56-57, 17:6-18:4, 18:20, Figs. 2, 9; Ex.1021 ¶¶ 77, 79, 81,
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`§ VI. Thus, as the intrinsic record reflects, claim 12 recites no more than a method for
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`retrieving and storing data from a data supplier while reading and forwarding payment
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`data for validation. And the other challenged claims are nothing but variations on this
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`same basic theme, with the addition, in the challenged “system” claims, of equally
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`well-known components (such as data terminals with interfaces, processors, program
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`stores and code). See, e.g., Ex.1001 12:29-32 (“The 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.”); Fig. 4(b). In institution decisions on
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`the ’221 and related patents, the Board correctly found that “the Specification treats as
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`well-known all potentially technical aspects of [certain challenged claims] including”
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`6 Ex. 1037 is the April 8-9, 2015 Deposition Transcript of Jonathan Katz, PO’s expert,
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`for CBM2014-00102/106/108/112 regarding the ’221 Patent as well as other related
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`patents (see Section IV.B infra describing related matters).
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`“data store,” “payment system,” “interface,” “content data memory,” “data memory,”
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`“use rule memory,” “program store,” “processor,” “data carrier,” and code to receive,
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`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-
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`00016, Pap. 23 at 19; CBM2014-00190, Pap. 9 at 15; CBM2014-00192, Pap. 7 at 15;
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`CBM2014-00193, Pap. 7 at 13; CBM2014-00194, Pap. 9 at 15.
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`Indeed, as confirmed by Alice Corp. Pty, Ltd. v. CLS Bank Int’l, 134 S. Ct. 2347
`
`(2014)—decided after Petitioner filed its first set of petitions challenging the ’221 Pa-
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`tent—claim 12 and the remaining challenged claims are also directed to patent-
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`ineligible subject matter under § 101. This Board has already recognized that claims 1,
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`2, 11, and 32 of the ’221, which are strikingly similar to claims 3-10 and 33 of the ’221,
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`recite patent ineligible subject matter, stating that “the claimed ‘data access terminal’ is
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`directed to an abstract idea,” and the Board is “not persuaded that the challenged
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`claims of the ’221 patent add an inventive concept sufficient to ensure that the patent
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`in practice amounts to significantly more than a patent on the abstract idea itself.” See
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`CBM2015-00015, Pap. 23 at 15-17 (citations omitted); see also CBM2014-00194, Pap. 9
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`at 13-15. The Board also correctly recognized that “the ’221 patent makes clear that
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`the asserted novelty of the invention is not in any specific improvement of software
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`or hardware, but in the method of controlling access to data,” see CBM2014-00102/103,
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`Pap. 8 at 11; CBM2014-00194, Pap. 9 at 10-11; CBM2015-00015, Pap. 23 at 14, and
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`5
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`United States Patent No. 8,118,221
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`the challenged claims are directed to no more than the unpatentable abstract idea of
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`payment for and/or controlling access to data, with at most the addition of well-
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`known, routine, and conventional features—in particular, features that, even if as-
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`sumed to suggest a generic computer implementation, cannot confer patentability on
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`these patent-ineligible abstractions. E.g., Alice, 134 S. Ct. at 2359-60. In addition to the
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`challenged claims being unpatentable under § 101, claims 6, 22, and 29 are also un-
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`patentable as indefinite under § 112.
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`II. OVERVIEW OF FIELD OF THE CLAIMED INVENTION
`By October 1999, the sale, distribution, and protection of digital content would
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`have been well-known to a POSA. See, e.g., Ex.1021 ¶¶ 23-25, 29-30, 46, 75. A POSA
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`would have been aware of computer-based systems for providing digital content, in-
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`cluding software, audio, and video content, for a fee. See, e.g., id. ¶¶ 25-30, 34, 43, 46,
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`48-50, 53-56, 58, 61, 75; Ex.1037 14:21-15:15, 16:6-17:9; see also Ex.1009 at 4:27-35,
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`6:49-7:6. Such systems included servers, computers, e-payment systems, and user de-
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`vices connected over known wired and wireless communications networks to distrib-
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`ute content from content owners to users. See, e.g., Ex.1021 ¶¶ 23-25, 29, 30, 34-38,
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`43-46, 48, 71-73, 75; Ex.1037 19:3-18; see also Ex.1031 at Fig. 1, 9:50-68.
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`Indeed, the ’221 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
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`systems and the like can all take a variety of forms.” Ex.1001 12:26-32. And, the pa-
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`tent concedes that various claimed components and functionalities were conventional
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`and well-known in the art (see Ex.1021 ¶ 22), such as:
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`United States Patent No. 8,118,221
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` Internet users paying for goods and/or services by credit card transaction
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`(Ex.1001 at 2:17-18; 19:5-9)
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` Encrypting/decrypting content for security (id. 2:64-3:7)
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` Data access terminal or content access terminal hardware: “conventional comput-
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`er” or “mobile phone,” “home personal computer,” “mobile communications de-
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`vice,” “set top box” (id. 4:4-5, 15:63-16:5)
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` WAP and i-mode allowing mobile phones to access the internet and download da-
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`ta (id. 4:5-9)
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` SIM cards including a user identification means (id. 4:9-13)
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` Non-volatile memory, including EEPROM, Flash memory, optical memory (id.
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`4:41-47, 17:22-29)
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` Purchasing digital music equivalent to the purchase of a CD (id. 5:9-12)
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` Data carrier hardware: “IC card,” “smart card,” “memory stick,” “standard smart
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`card” (id. 6:28-30, 11:28-31, 17:8-29)
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` Electronics Point of Sale Systems (EPoSS) functionality for smart cards (id. 11:37-
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`41)
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` E-payment systems and standards (id. 13:35-38)
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` Data access terminal as a “general purpose computer” with standard components
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`(id. Fig. 8, 16:31-53)
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`7
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` Data access device hardware: “portable audio/video player,” “conventional dedi-
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`cated computer system” with standard components (id. 18:5-27)
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` Use control routines including digital watermarking and content protection from
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`the SDMI specification (id. 18:29-35)
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` “Standard transmission protocols” used to transmit content data items (id. 21:44-
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`47)
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` Communication network, whose detailed implementation is “not essential,” and
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`can be the “Internet,” “web-based technology,” “any electronic communications
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`network,” “wide area network,” “local area network,” “wireless network,” “con-
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`ventional land line network,” “extranet” (id. 25:33-39)
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`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.1021 ¶¶ 25-30, 34-44, 48-
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`50, 53-54, 61, 64-65, 67-69; see also Ex.1037 19:3-18. U.S. Pat. No. 5,675,734 (“Hair,”
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`pub’d Oct. 7, 1997) disclosed a system for selling digital video or audio content.
`
`Ex.1005 Abstract. Hair described 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. 5:41-44. In a first step, money is transferred
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`from the second party to the first party via telecommunications line for an electronic
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`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 digital or audio signals are
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`8
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`

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`transmitted from the first to the second memory. Id. 5:47-56. See, e.g., Ex.1021 ¶ 29.
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`U.S. Pat. No. 4,999,806 (“Chernow,” pub’d Mar. 12, 1991) also disclosed a sys-
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`tem for digital content sales. Chernow described a software distribution system in
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`which a seller computer communicates with buyers over a telephone line for the buy-
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`ers to browse and purchase or lease software. Ex.1006 2:22-36. The seller computer
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`answers calls from buyers, verifies credit card information, transmits purchased soft-
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`ware to buyers, and performs accounting functions to ensure proper billing and rec-
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`ord keeping. Id. 2:37-47. A POSA would have understood that delivery of the pur-
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`chased content could be conditioned on successful payment, as the system described
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`in Chernow ensures that the customer is able to pay for the purchase, for example by
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`verifying credit card approval for the sale amount, before providing requested soft-
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`ware. Id. 6:48-65, 7:53-63; see also Ex.1037 24:2-11, 27:4-9. A POSA also would have
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`appreciated the need to limit leased software to a period of time or a number of runs,
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`in view of Chernow’s description of software that renders itself unusable or erases it-
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`self at the conclusion of the leased use. Ex.1006 5:10-18. See, e.g., Ex.1021 ¶¶ 25-28.
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`In addition to systems for providing purchased content to users after confirm-
`
`ing payment, a POSA would have also been aware of existing systems allowing users
`
`to purchase content that is locally stored, but not yet accessible, by distributing de-
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`cryption keys after confirming a purchase. For example, The Secure Distribution of
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`Digital Contents (“von Faber,” pub’d 1997) disclosed a “system for distribution of
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`encrypted digital contents via freely accessible distribution media.” Ex.1020 Abstract.
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`A POSA would have appreciated the importance of ensuring that goods were paid for
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`before being accessed, as von Faber acknowledged the need to “couple the use of the
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`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.1037 27:4-9. The solution of von Faber was to freely dis-
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`tribute encrypted digital contents and focus on key management, by providing the de-
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`cryption key required to gain access to the digital content only after it is “guaranteed
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`that payment has been authorised.” Ex.1020 at 8. See, e.g., Ex.1021 ¶¶ 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 Pat. App. Pub. No. 0809221
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`(“Poggio,” pub’d Nov. 26, 1997). Ex.1016 Fig. 1, 2:32-36; see also Ex.1037 19:3-18.
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`Poggio described a vending machine that manages distribution of electronic data on a
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`variety of license terms by providing information about the products for a purchaser
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`to browse, obtaining payment for a product, and distributing purchased products to
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`users’ computers. Ex.1016 4:35-49. The vending machine includes “a digital cash in-
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`terface 116 for obtaining point-of-sale electronic payment for the license fee associat-
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`ed with a particular vendor product.” Id. Fig. 1, 6:13-16. The digital cash interface
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`confirms successful payment of the required license fee with an electronic banking
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`network before the virtual vending machine provides a product to a user. Id. Fig. 7,
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`10:7-20. Poggio disclosed a variety of existing payment schemes for purchasing a ven-
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`United States Patent No. 8,118,221
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`dor product that would have been known to a POSA, including “credit card payment
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`transactions,” “digital cash,” “debit transactions,” and “electronic funds transfers.” Id.
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`6:25-36. See, e.g., Ex.1021 ¶¶ 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, Poggio
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`disclosed providing a purchaser with a choice between purchasing a permanent license
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`for a vendor product or renting the product with a license limited to a rental time pe-
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`riod. Ex.1016 Fig. 6, 9:25-33. Product sales information stored at the virtual vending
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`machines includes fee schedules indicating license fees for the product on a purchase
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`and/or rental basis. Id. Fig.3B, 7:12-16. Rented products are “formatted to include a
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`time bomb or other disabling device which will disable the product at the end of the
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`rental period” before being transmitted to the user. Id. 10:25-28. See, e.g., Ex.1021 ¶¶
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`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. Pat. No. 5,629,980 (“’980 Stefik,” pub’d May 13, 1997).
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`Ex.1014 6:51-56. The ’980 Stefik specification described attaching usage rights to con-
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`tent to “define how that digital work may be transferred, used, performed, or played.”
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`United States Patent No. 8,118,221
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`Id. 19:14-15. A work could have multiple versions of a right with different prices, such
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`that a purchaser may choose which option best fits the rights he or she needs. Id.
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`18:9-16. See, e.g., Ex.1021 ¶¶ 30-33.
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`A POSA also would have known that a user could be provided with an option
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`to specify the extent of utilization needed, so that the price paid is dependent on the
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`amount of usage desired, and the content is released only to that extent of utilization,
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`as disclosed in U.S. Pat. No. 5,940,805 (“Kopp,” pub’d Aug. 17, 1999). Ex.1010 2:61-
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`3:2, 5:47-55. Kopp disclosed storing “data records” purchased by users on chip cards
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`with “data regarding the extent of utilization” such as “number of possible utilizations
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`of the data record, the length of time during which the data record can be used, or the
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`time limit up to which the data record may be used.” Id. 5:16-21. The extent of utiliza-
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`tion is specified by the user during the purchase process, and a vending apparatus
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`control device calculates a fee based on the specified extent. Id. 5:47-55. The user then
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`makes payment to a payment device, for example by inserting bills and coins or by
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`electronically transferring money, before the data record is released. Id. 4:25-42, 5:56-
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`58. See, e.g., Ex.1021 ¶¶ 58-60.
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`U.S. Pat. No. 5,530,235 (“’235 Stefik,” pub’d June 25, 1996) disclosed a trans-
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`portable data carrier, a DocuCard “used for storing digital information which may be
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`accessed by a system that is capable of playing or rendering the digital information,
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`such as a computer system, digital copier, audio CD player and the like.” Ex.1013 Ab-
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` Covered Business Method Patent Review
`United States Patent No. 8,118,221
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`stract, 4:21-31. ’235 Stefik described implementing the DocuCard as a card “in ac-
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`cordance with standards promulgated by the Personal Computer Memory Card Inter-
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`national Association (PCMCIA),” which may be “desirable because of their small size
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`and support for plug and play applications.” Id. 4:55-5:12. A user accesses documents
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`from a repository using the DocuCard by logging in to it, for example by entering a
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`PIN, which may “activate credit accounts,” assigning payment of any fees, and then
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`selecting a desired document and function before confirming the transaction. Id. Fig.
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`3, 6:60-7:13. See, e.g., Ex.1021 ¶¶ 30-33.
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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 ’980 Stefik.7 See Ex.1013 2:47-52 (incorporat-
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`ing ’980 Stefik by reference), 4:35-40. A POSA would have appreciated the im-
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`portance of ensuring that fees paid for use of repository documents were properly dis-
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`tributed to content creators and copyright owners who were concerned not only with
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`flexibility in distribution, but also with making sure they were paid for that distribu-
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`tion, as discussed in ’980 Stefik. Ex.1014 2:66-3:1. The ’980 Stefik specification de-
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`scribed a solution that attached “usage rights” to works so that fee descriptions re-
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`main with the work, and “all uses of copies are potentially controlled and billable.” Id.
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`6:62-7:5. Attaching fee specifications to digital content allows a variety of distribution
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`and fee schemes to be created. Id. 43:46-49. For example, a fee could be collected for a con-
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`7 ’235 Stefik incorporates ’980 Stefik by reference. See Ex.1013 2:47-52.
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`tent creator each time a consumer copies a work (id. 43:51-67), a fee could be paid to the cre-
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` Covered Business Method Patent Review
`United States Patent No. 8,118,221
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`ator and also to the immediate distributor for each copy (id. 44:2-22), distribution fees could
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`be paid only to distributors licensed by the content creator (id. 44:24-64), or licensed
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`distributors could be allowed to add fee specifications on their own (id. 44:66-45:20).
`
`See, e.g., Ex.1021¶¶ 30-33.
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`Examples of possible fee specifications include discounts, incentives paid to
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`users, or best price specifications that “accommodate special deals, rebates, and pric-
`
`ing that depends on information that is not available to the repository.” Ex.1014
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`23:60-24:25, 24:34-57. The fee specifications “can be combined with tickets or author-
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`izations that could indicate that the consumer is a wholesaler or that he is a preferred
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`customer” in which case when the transaction is reconciled and “any excess amount
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`will be returned to the consumer in a separate transaction.” Id. 24:39-47. See, e.g.,
`
`Ex.1021 ¶¶ 30-33. A POSA would have understood that these fee specifications (e.g.,
`
`reward data) could be modified in response to other data. See, e.g., Ex.1021 ¶ 31.
`
`A POSA would have understood that digital content distribution systems also
`
`provided digital content to portable systems while still ensuring adequate protection
`
`against unauthorized use, as disclosed, for example, in Japanese Pat. App. Pub. No.
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`H10-269289 (“Maari,” pub’d October 9, 1998). Ex.1034 ¶ 5; see also Ex.1040. Maari
`
`described a system that distributes encrypted digital content with encrypted content
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`keys, tracks billing, and “distributes to digital content proprietors the digital content
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` Covered Business Method Patent Review
`United States Patent No. 8,118,221
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`usage fees collected based on digital content usage information.” Ex.1034 ¶ 6. An
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`“administration company” in Maari controls the transfer of information, including
`
`confirming “information such as the bank account number, credit card number, name,
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`contact address, and the like for the user” to process a request and “determine wheth-
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`er or not a transaction is possible with the user.” Id. ¶ 18. See, e.g., Ex.1021 ¶¶ 66, 70.
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`A user’s player in Maari allows access to installed content as long as the user
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`has purchased sufficient “points” to access the content and requests replenishment of
`
`those points if a shortage is detected. Ex.1034 ¶¶ 32-33. The administration center
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`confirms with a financial organization that the user’s account allows the purchase and
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`provides the points to the user. Id. ¶ 34. The administration center also notifies the
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`content provider the amount of money to be paid to the proprietor and the copyright
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`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
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`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 administrati