Covered Business Method Patent Review
`United States Patent No. 8,061,598
`
`IN THE UNITED STATES PATENT AND TRADEMARK OFFICE
`
`Petitioner: Apple Inc.
`
`Attorney Docket No.:
`
` 104677-5008-829
`Customer No. 28120
`
`§
`Inventor: Racz et al.
`United States Patent No.: 8,061,598 §
`Formerly Application No.: 13/012,541 §
`Issue Date: November 22, 2011
`§
`Filing Date: January 24, 2011
`§
`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. 8,061,598 PURSUANT TO 35 U.S.C. § 321,
`37 C.F.R. § 42.304
`
`

`
`Covered Business Method Patent Review
`United States Patent No. 8,061,598
`
`TABLE OF CONTENTS
`
`B.
`
`INTRODUCTION ....................................................................................................... 1
`I.
`II. OVERVIEW OF FIELD OF THE CLAIMED INVENTION ......................... 6
`III. OVERVIEW OF CHALLENGED CLAIMS ....................................................... 18
`IV. PETITIONER HAS STANDING .......................................................................... 23
`A.
`The ’598 Patent Is A Covered Business Method Patent ........................... 23
`1.
`Exemplary Claim 8 Is Financial In Nature ...................................... 25
`2.
`Claim 8 Does Not Cover A Technological Invention ................... 30
`(a)
`Claim 8 Does Not Recite A Technological Feature
`That Is Novel And Unobvious .............................................. 30
`(b) Claim 8 Does Not Solve A Technical Problem Using
`A Technical Solution................................................................ 34
`Related Matters And Mandatory Notice Information; Petitioner Is
`A Real Party In Interest Sued For And Charged With
`Infringement ..................................................................................................... 37
`V. DETAILED EXPLANATION OF REASONS FOR RELIEF
`REQUESTED, SHOWING IT IS MORE LIKELY THAN NOT
`THAT AT LEAST ONE CHALLENGED CLAIM IS
`UNPATENTABLE .................................................................................................... 38
`A.
`Claim Construction .......................................................................................... 40
`B.
`Challenged Claims Are Unpatentable Under § 101 .................................... 43
`1.
`Challenged Claims Are Directed To Abstract Ideas ....................... 45
`2.
`Challenged Claims Do Not Disclose An “Inventive
`Concept” That Is “Significantly More” Than An Abstract
`Idea ......................................................................................................... 53
`(a)
`Field Of Use Limitations Cannot Create Patent
`Eligibility .................................................................................... 54
`(b) Generic Computer Implementation Cannot
`Transform Abstract Ideas Into Patent Eligible
`Inventions .................................................................................. 55
`(i) Generic Computer Functions Cannot
`Transform Abstract Ideas Into Patent Eligible
`Inventions ...................................................................... 56
`
`
`
`i
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`Covered Business Method Patent Review
`United States Patent No. 8,061,598
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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 ................................ 63
`(iv) Challenged Claims Are Analogous To Those
`Found Patent-Ineligible In Accenture ....................... 73
`Functional Nature Of The Challenged Claims
`Confirms Preemption And Patent Ineligibility .................... 76
`(d) Machine-or-Transformation Test Also Confirms
`Patent Ineligibility ..................................................................... 78
`VI. CONCLUSION........................................................................................................... 79
`
`
`(c)
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`
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`ii
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`Covered Business Method Patent Review
`United States Patent No. 8,061,598
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`U.S. Patent No. 8,061,598
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`Plaintiffs’ First Amended Complaint
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`U.S. Patent No. 5,925,127
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`U.S. Patent No. 5,940,805
`
`August 2014 Emails Titled “RE: Smartflash: Meet and Confer
`Regarding 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
`
`U.S. Patent No. 7,334,720
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`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 (transla-
`tion)
`
`iii
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`EXHIBIT LIST
`1001
`
`1002
`
`1003
`
`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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`

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`Covered Business Method Patent Review
`United States Patent No. 8,061,598
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`Eberhard von Faber, Robert Hammelrath, and Frank-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
`U.S. Patent No. 8,033,458
`
`Declaration of Michael P. Duffey In Support of Apple Inc.’s
`Petition for Covered Business Method Patent Review
`Declaration of Megan F. Raymond In Support of Apple Inc.’s
`Petition for Covered Business Method Patent Review
`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
`
`U.S. Patent No. 5,970,479
`
`U.S. Patent No. 5,646,992
`
`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. 5,903,721
`
`iv
`
`EXHIBIT LIST
`1018
`
`1019
`
`1020
`
`1021
`
`1022
`
`1023
`
`1024
`
`1025
`
`1026
`
`1027
`
`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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`
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`

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`Covered Business Method Patent Review
`United States Patent No. 8,061,598
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`EXHIBIT LIST
`1033
`
`1034
`
`1035
`
`1036
`
`1037
`
`1038
`
`R. Mohan, J.R. Smith, C.S. Li, “Adapting Multimedia Internet
`Content for Universal Access,” IEEE Transactions on Multi-
`media, Vol. 1, No. 1, 1999, pp. 104-114
`JP Patent Application Publication No. H10-269289 (transla-
`tion)
`U.S. Patent No. 5,761,485
`
`International Publication No. WO99/13398
`
`U.S. Patent No. 5,953,005
`
`Excerpt of Transcript of Trial Afternoon Session, February
`16, 2015 from Smartflash LLC v. Apple Inc., No. 6:13cv447
`
`
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`v
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`Covered Business Method Patent Review
`United States Patent No. 8,061,598
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`I.
`
`INTRODUCTION
`
`Pursuant to § 321 and Rule § 42.304,1 the undersigned, on behalf of and acting
`
`in a representative capacity for Apple Inc. (“Petitioner”), petitions for review under
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`the transitional program for covered business method (“CBM”) patents of claims 3-6,
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`8-14, 16-30, and 32-41 (“challenged claims”) of U.S. Patent No. 8,061,598 (“the ’598
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`Patent” or “’598”), issued to Smartflash Technologies Limited and assigned to Smart-
`
`flash LLC (“Patent Owner”). Petitioner asserts that it is more likely than not that the
`
`challenged claims are unpatentable for the reasons herein, and respectfully requests
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`review of, and judgment against the challenged claims as unpatentable under § 101.
`
`As discussed in Section IV.B, infra, Petitioner previously filed CBM2014-00108
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`and CBM2014-00109 seeking CBM review of certain claims of the ’598 Patent on
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`§§ 102 and 103 grounds, and CBM2015-00017, seeking review of certain claims on
`
`§§ 101 and 103 grounds. Those petitions were instituted (and CBM2014-00108/109
`
`were consolidated) with respect to claim 26 on § 103 grounds, and claims 1, 2, 15, and
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`31 on § 101 grounds.
`
`The previous petitions were generally directed towards claims asserted in a first
`
`litigation filed by Smartflash against Petitioner as of the time those petitions were filed.
`
`Since that time, Smartflash has filed a second litigation against Petitioner in which it
`
`
`
` 1
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` All section cites herein are to 35 U.S.C. or 37 C.F.R., as the context indicates.
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`1
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`again asserts the ’598 Patent. Although Smartflash has not yet identified the asserted
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`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 CBM2014-00193/198 seeking CBM review of
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`the ’598 Patent. CBM2014-00193 was instituted for trial with respect to claim 7 on
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`§ 101 grounds. However, none of the challenged claims herein has previously been
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`challenged by Petitioner or Samsung on § 101 grounds, and the challenged claims
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`were not being asserted against Petitioner at the time Petitioner filed the CBM2015-
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`00017 petition.
`
`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 use of a “portable data
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`carrier” and a “data access terminal.” See, e.g., Ex.1001 1:20-24, Abstract, claim 1.
`
`Claim 8, for example, recites six rudimentary components of a portable data carrier—
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`(A) an interface, (B and C) content data and use rule memory, (D) a program store
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`storing code implementable by a processor, (E) a processor … for implementing
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`code, and (G) payment data memory. The recited code is similarly conventional and
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`well-known: (F) storing content data and a use rule in memory and (H) providing payment
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`data, including identification data identifying the user of the carrier, to a payment vali-
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`dation system.
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`2
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`Covered Business Method Patent Review
`United States Patent No. 8,061,598
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`1. A portable data carrier comprising:
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`[A] an interface for reading and writing data from and to the portable
`data carrier;
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`[B] content data memory, coupled to the interface, for storing one or
`more content data items on the carrier;
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`[C] use rule memory to store one or more use rules for said one or more
`content data items;
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`[D] a program store storing code implementable by a processor;
`
`[E] and a processor coupled to the content data memory, the use rule
`memory, the interface and to the program store for implementing code
`in the program store,
`
`[F] wherein the code comprises code for storing at least one content data
`item in the content data memory and at least one use rule in the use rule
`memory.
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`7. A portable data carrier as claimed in claim 1, further comprising
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`[G] payment data memory to store payment data and [H] code to
`provide the payment data to a payment validation system.
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`8. A portable data carrier as claimed in claim 7, wherein
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`[H] code to provide payment to the payment validation system com-
`prises code to provide the identification data identifying the user of the
`portable data carrier to the payment validation system.
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`Ex.1001.2 But at the patent’s earliest claimed priority date, these simple elements and
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`their combination were all well-known. See Section II; Ex.1019 ¶ 77.3 The patent
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`acknowledges that the idea of providing access to data in exchange for a payment (e.g.,
`
`purchase of music on a CD) was well-known at the time. E.g., Ex.1001 5:9-12 (“where
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`the data carrier stores … music, the purchase outright option may be equivalent to the
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`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
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`similarly well-known. See, e.g., Ex.1007 5:41-56; Ex.1030 14:21-15:14.4 And, as shown
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`herein, the prior art was teeming with disclosures of this basic concept and its
`
`
`
` 2
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` All emphasis herein is added unless otherwise noted.
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`3 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 1019. Dr. Kelly qualifies as a person of
`
`ordinary skill in the art (“POSA”) (Ex.1019 §§ I, III) and has analyzed whether the
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`challenged claims are unpatentable based on the grounds in this petition (Ex.1019
`
`§§ I-II and IV-VIII).
`
`4 Exhibit 1030 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 ’598 Patent as well
`
`as other related patents (see Section IV.B infra describing related matters).
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`straightforward implementation, including the ability to store and provide payment
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`data. See, e.g., Section II.
`
`As its language makes clear, claim 8 involves no “technology” at all other than a
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`“portable data carrier” with an interface, memory, program store, and a processor—which the
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`patent itself concedes was well-known and commonplace at the time. See e.g., Ex.1001
`
`11:28-29 (“standard smart card”), 3:37, 4:7-13, 6:19-21, 11:27-44, 17:6-18:4, Figs. 2, 9.
`
`The use rules of claim 8 “may be linked to payments made from the card to provide
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`payment options such as access to buy content data outright; [or] rental access ….” Id.
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`5:1-8. Thus, as the intrinsic record reflects, claim 8 recites nothing more than a system
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`for reading and writing data while restricting access to that data. Indeed, the ’598 Pa-
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`tent states that “[t]he 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.”
`
`See, e.g., Ex.1001 Fig. 1, 12:29-32. And the variations presented in the other challenged
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`system claims add nothing that was not already well-known. It is thus no surprise that
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`each element of the challenged claims were known in the prior art. See, e.g., Section II.
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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 two petitions challenging the ’598 Pa-
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`tent—the challenged claims are also directed to patent-ineligible subject matter under
`
`§ 101. As the Board noted in its previous Institution Decision, “the ’598 Patent makes
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`clear that the asserted novelty of the invention is not in any specific improvement of
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`5
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`Covered Business Method Patent Review
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`software or hardware, but in the method of controlling access to data,” CBM2014-00108,
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`Pap. 8, at 10, and the challenged claims are directed to nothing more than the un-
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`patentable abstract idea of payment for and/or controlling access to data, with at
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`most the addition of well-known, routine and conventional features that do not ren-
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`der them patentable—in particular, generic computer implementation that cannot
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`confer patentability on these patent-ineligible abstractions. E.g., Alice, 134 S. Ct. at
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`2359-60; Ex.1019 § VII.A. In summary, each challenged claim recites ineligible subject
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`matter and is thus unpatentable.
`
`II. OVERVIEW OF FIELD OF THE CLAIMED INVENTION
`By October 25, 1999, electronic sale, distribution, and content protection for
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`digital products all were well-known to a POSA.5 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, including software, audio, and video content, for a fee. See, e.g., id. ¶¶ 29-30,
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`46, 75; Ex.1030 14:21-15:14, 16:6-17:9; see also Ex.1008 at 4:27-35, 6:49-7:6; Ex.1029 at
`
`
`
` 5
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` All references to a POSA refer to the knowledge or understanding of a POSA as of
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`October 25, 1999. A POSA would have at least a B.S. degree in E.E., C.S., or a tele-
`
`communications-related field, and at least three years of industry experience that in-
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`cluded client-server data/information distribution and management architectures. See,
`
`e.g., Ex.1019 ¶¶ 15-17.
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`1:42-60; Ex.1037 at 5:9-17; Ex.1036 at 4:9-5:3. Such systems included servers, com-
`
`puters, e-payment systems, and user devices connected over known wired and wire-
`
`less communications networks to distribute content from content owners to users. See,
`
`e.g., Ex.1019 ¶¶ 23-25, 29-30, 34-38, 43-46, 48, 71-73, 75; Ex.1030 19:3-18; see also
`
`Ex.1025 at Figure 1, 9:50-68.
`
`Indeed, the ’598 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 12:26-32. 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:
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` Internet users paying for goods and/or services by credit card transaction (2:17-18;
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`19:5-9)
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` Encrypting/decrypting content for security: “The skilled person will be aware of a
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`range of suitable encryption/decryption techniques,” “using a conventional en-
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`cryption system,” “in a conventional manner as is well known to those skilled in
`
`the art (for example, using public key data encryption)” (2:64-3:7; 18:65-19:2;
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`21:33-38)
`
` 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” (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 (4:5-9)
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` SIM cards including a user identification means (4:9-13)
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` Non-volatile memory, including EEPROM, Flash memory, optical memory (4:41-
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`47, 17:22-29)
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` Purchasing digital music equivalent to the purchase of a CD (5:9-12)
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` Data carrier hardware: “IC card,” “smart card,” “memory stick,” “standard smart
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`card” (6:28-30, 11:28-31, 17:8-29)
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` Electronics Point of Sale Systems (EPoSS) functionality for smart cards (11:37-41)
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` E-payment systems and standards (13:35-38)
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` Data access terminal as a “general purpose computer” with standard components
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`(Fig. 8, 16:31-53)
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` Data access device hardware: “portable audio/video player,” “conventional dedi-
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`cated computer system” with standard components (18:5-27)
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` Use control routines including digital watermarking and content protection from
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`the SDMI specification (18:29-35)
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` “Standard transmission protocols” used to transmit content data items (21:44-47)
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` Communication network whose detailed implementation is not essential, and can
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`be “Internet,” “web-based technology,” “any electronic communications net-
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`work,” “wide area network,” “local area network,” “wireless network,” “conven-
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`tional land line network,” “extranet” (25:41-48)
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`A POSA also would have known, for example, that content could be provided
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`to, and played on, mobile phones, as disclosed in Japanese Patent App. Pub. No.
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`H11-164058 (“Sato,” pub’d June 18, 1999). See also Ex.1033; Ex.1034 at ¶ 5; Ex.1035
`
`at Figure 1, 5:65-7:16. Sato disclosed a mobile phone connected to a music distribu-
`
`tion center server via a public communications network. Ex.1017 Fig. 1, Abstract, ¶ 3.
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`Using the phone, a user accesses a distribution center, enters a song selection, and re-
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`ceives the selected music on the mobile phone. Id. ¶¶ 12, 14. The downloaded music
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`is stored either in a local “storage device” in the mobile phone or in a “removable
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`storage device,” such as “a memory card similar to, for example, a magnetic card, a
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`magnetic tape, a CD, a DVD, or an IC card” for later playback on the mobile phone.
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`Id. ¶¶ 8-9. Sato also discloses performing a billing process after transmission from the
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`distribution center. Id. ¶ 15. See, e.g., Ex.1019 ¶ 73.
`
`International Pub. No. WO99/43136 (“Rydbeck,” pub’d August 26, 1999) also
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`disclosed a cellular telephone that stores and plays music through the telephone’s
`
`headset. Ex.1016 Fig. 1, Abstract. Rydbeck disclosed a “digital entertainment module”
`
`that includes “RAM and/or removable memory cartridges for storing music or other
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`audio signals which can be played back through the headset” of the cellular phone. Id.
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`6. Rydbeck discloses a bus or input port on the entertainment module for interfacing
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`with a source of the music, or the music may be obtained “from the transceiver unit
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`12 in an ‘internet-enabled’ phone.” Id. The digital entertainment module integrated
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`with the cellular phone advantageously shares components already present in the cel-
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`lular phone. Id. at 3. In addition to the hardware components disclosed in Rydbeck
`
`and Sato, a POSA would have understood that the cellular phone devices discussed in
`
`both references contained SIM cards that were well-known and common by 1999, or
`
`at a minimum would have appreciated that such a SIM card could be installed in the
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`phone. See, e.g., Ex.1019 ¶¶ 72-73; see also Ex.1030 41:19-42:10. Indeed, as conceded
`
`in the ’598 specification, SIM cards were already known: “The data storage means can,
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`if desired, incorporate the functionality of a mobile phone SIM (Subscriber Identity
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`Module) card, which cards already include a user identification means, to allow user
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`billing through the phone network operator.” Ex.1001 4:9-13. See, e.g., Ex.1019 ¶ 22.
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`U.S. Patent No. 5,530,235 (“’235 Stefik,” pub’d June 25, 1996) disclosed a
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`transportable DocuCard “used for storing digital information which may be accessed
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`by a system that is capable of playing or rendering the digital information, such as a
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`computer system, digital copier, audio CD player and the like.” Ex.1012 Abstract,
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`4:21-31. The ’235 Stefik specification described implementing the DocuCard as a card
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`“in accordance with standards promulgated by the Personal Computer Memory Card
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`International Association (PCMCIA),” which may be “desirable because of their small
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`size and support for plug and play applications.” Id. 4:55-5:12. A user accesses docu-
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`ments from a repository using the DocuCard by logging in to it, for example by enter-
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`ing a PIN, which may “activate credit accounts,” assigning payment of any fees, and
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`then selecting a desired document and function before confirming the transaction. Id.
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`Fig. 3, 6:60-7:13. A POSA would have understood that the PIN can be stored in
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`memory. See, e.g., Ex.1019 ¶ 30.
`
`The DocuCard disclosed in ’235 Stefik implements the functionality of a “re-
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`pository,” described in more detail in U.S. Patent No. 5,629,980 (“’980 Stefik,” pub’d
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`May 13, 1997). See Ex.1012 2:48-52 (incorporating ’980 Stefik by reference), 4:35-40.
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`The ’980 Stefik specification disclosed a repository having a processing means that
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`provides the functions of the repository by executing code stored in a processor
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`memory. Ex.1013 Fig. 12, 14:15-27. The repository also includes a content storage for
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`storing content and a description storage, which may be the same memory or a physi-
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`cally different memory device, for storing description trees for the associated content.
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`Id. Fig. 12, 14:28-35. A description file includes an identifier for its associated digital
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`work and a pointer to the starting address in memory at which the work is stored. Id.
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`Fig. 7, 9:54-58. The identifier includes both a number identifying the work and a
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`unique number identifying the repository that is assigned upon manufacture of the
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`device. Id. Fig. 7, 9:62-66. A POSA would have understood that a pointer could be
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`used to refer to an address in memory or to refer to the address of a remote server.
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`See, e.g., Ex.1030 at 27:10-28:19. A POSA also would have understood that the pointer
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`can also be a URL. See Ex.1014 287:36-58, discussed infra. See, e.g., Ex.1019 ¶¶ 30-33.
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`The stored digital work descriptions in ’980 Stefik also include a “rights portion”
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`that indicates the “granted usage rights and their status data….” Ex.1013 Figs. 7 and
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`10, 9:59-10:1, 10:24-33, Table 1. The usage rights associated with a digital work “de-
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`fine how that digital work may be transferred, used, performed, or played.” Id. 19:14-
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`15. The works and their associated descriptions, including the usage right descrip-
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`tions that define how the work may be used, are stored in separate memories on a re-
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`pository device, and those memories may be different memory types or may be physi-
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`cally separate memory devices. Id. Fig. 12, 14:28-39. When a digital work is transferred
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`between repositories or used, a “next set of rights” can track and update the rights
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`remaining on the digital work. Id. Fig. 15, 11:40-44, 19:58-20:2, 20:55-67. The updated
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`rights may limit usage of the digital work, for example by setting a limit on the num-
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`ber of copies of a digital work that may be loaned out or viewed at one time. Id.
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`21:10-24. See, e.g., Ex.1019 ¶¶ 30-33.
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`In another example, U.S. Patent No. 5,915,019 (“Ginter,” pub’d June 22, 1999)
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`disclosed a Virtual Distribution Environment (“VDE”) with flexibility to support dif-
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`ferent transactions among content producers and consumers wishing to obtain rights
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`to use programs from the producers. Ex.1014 Fig. 1, 53:38-59. The VDE distributes
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`content among “electronic appliances,” which include computers, set top boxes,
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`phones, and “smart” credit cards. Id. Fig. 8, 60:18-30. In some embodiments, the elec-
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`tronic appliance is portable, for example implemented as a PCMCIA card or “smart
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`card.” Id. Fig. 71, 228:36-54, 230:20-38. The portable appliance may contain memory
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`storing information which uniquely identifies each device for authentication and veri-
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`fication. Id. 229:12-17. The electronic appliances store VDE content and code for op-
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`erating VDE functions in a secondary storage of the appliance that is accessible by a
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`CPU or SPU (“Secure Processing Unit”). Id. Fig. 8, 62:56-67. VDE content provided
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`to users on an electronic appliance is stored either locally in content memory at a data
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`supplier or remotely, in which case the data supplier responds to a user request using
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`content references (e.g., “the network address where the content may be located, a
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`URL, a filesystem reference”) to retrieve the data for transmission to the user. Id.
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`287:36-58. For content stored remotely, a POSA would have understood that a point-
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`er could be used to refer the address of a remote server. See, e.g., Ex.1030 at 27:10-
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`28:19. Ex.1019 ¶¶ 48-51.
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`The VDE in Ginter protects content distributed among appliances by imple-
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`menting flexible “rules and controls” that are used to grant users specific rights, speci-
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`fy how much is to be paid for content usage, and establish usage reporting require-
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`ments. Id. 56:25-61. The rules and controls either travel with the content to which
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`they apply or are delivered to a user separately from content. Id. 57:27-40. See, e.g.,
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`Ex.1019 ¶¶ 48-51.
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`The secure data management functions of electronic appliances are performed
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`by a processing unit, such as an SPU. Ex.1014 Fig. 8, 63:27-31. The SPU functions
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`include “secure data management processes including governing usage of, auditing of,
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`and where appropriate, payment for VDE objects 300 (through the use of prepay-
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`ments, credits, real-time electronic debits from bank accounts and/or VDE node cur-
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`rency token deposit accounts).” Id. 63:34-41. The processes performed by the SPU,
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`and dictated by the rules and controls, include “events” processes, “meter” processes,
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`“billing” processes, and “budget” processes that track and control use of and payment
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`for VDE content. Id. 57:50-58:32. A VDE appliance employs a “usage map” (e.g., use
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`status data) to store usage history information, for example by mapping which content
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`or parts of a piece of content (e.g., chapters in a book) a user accesses. Id. 145:48-
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`146:22. See, e.g., Ex.1019 ¶¶ 48-51.
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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 App. Pub. No.
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`0809221 (“Poggio,” pub’d November 26, 1997). Ex.1015 Fig. 1, 2:32-36; see also
`
`Ex.1030 19:3-18. Poggio described a vending machine that manages distribution of
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`electronic data on a variety of license terms by providing information about the prod-
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`ucts for a purchaser to browse, obtaining payment for a product, and distributing pur-
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`chased products to users’ computers. Ex.1015 4:35-49. The vending machine includes
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`“a digital cash interface 116 for obtaining point-of-sale electronic payment for the li-
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`cense fee associated with a particular vendor product.” Id. Fig. 1, 6:13-16. The digital
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`cash interface confirms successful payment of the required license fee with an elec-
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`tronic banking network (e.g., payment validation system) before the virtual vending
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`machine provides a product to a user. Id. Fig. 7, 10:7-20; see also Ex.1001 13:35-47.
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`Poggio disclosed a variety of existing payment schemes for purchasing a vendor
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`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.”
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`Ex.1015 6:25-36. See, e.g., Ex.1019 ¶¶ 34-42.
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`A POSA would have also known additional methods for executing electronic
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`payments beyond those explicitly discussed in Poggio. See Ex.1030 16:6-19:2. For ex-
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`ample, U.S. Patent No. 5,903,721 (“Sixtus,” pub’d May 11, 1999) disclosed an elec-
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`tronic payment system in which a “user’s credit card number or other like sensitive
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`information is not transmitted between entities as part of the transaction approval
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`process.” Ex.1032 7:37-40. The system instead securely registers a user’s payment in-
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`formation, such as a credit card, in an initial transaction and then later uses that in-
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`formation for checking credit approval without requiring the user to transmit the sen-
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`sitive payment information. Id. 7:40-53; 8:21-31. The user sends only user identification in-
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`formation that is used to locate and check the registered payment information. Id.
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`10:19-31. See, e.g., Ex.1019 ¶¶ 64-65.
`
`A POSA would have appreciated the need to monitor and control usage of dis-
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`tributed digital content to ensure that usage was properly paid for and that the distrib-
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`uted content was protected from unauthorized use, and a POSA would have been
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`aware of existing systems designed to implement such monitoring, such as the “Soft-
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`Meter” system for requiring purchase of specified amounts of software use as dis-
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`closed in International Pub. No. WO95/34857 (“Smith,” pub’d December 21, 1995).
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`Ex.1027 Abstract. The SoftMeter system stores a user’s information, such as name,
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`address, charge card number, and password, for purchasing specified amounts of
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`software usage. Id. 8:10-14. The usage may be purchased by units of time, pages, key-
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`strokes, or records retrieved. Id. 9:15-28, 19:7-16. To purchase usage, the user speci-
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`fies an amount of desired usage, enters a password, and transmits the stored payment
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`information from memory of the SoftMeter device for approval by a financial transac-
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`tion center. Id. Fig. 5, 18:21-33. As Smith indicates, such purchases were well-known
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`with “absolutely nothing new” in the transaction process, as “there is no difference
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`between the telephonically transmitted message from a retail merchant’s card-swipe
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`terminal and an identical m