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`Groupon, Inc.
`Exhibit 1019
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`Ex. 1019 - Page 1 of 38
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`Ex. 1019 - Page 1 of 38
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`Groupon, Inc.
`Exhibit 1019
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`

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`K
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`(awe '<»/
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`7%
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`U8/255649
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`. ...i_. w..........
`_“ —.____....__._..-..._....___...____.__.____..._.
`!INliQVRMATION DISTRIBUTION AND PROCESSING SYSTEM
`
`Background of the Invention
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`This application is a continuation in part of application Serial No. 08/224,280
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`filed April '7, 1994.
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`The present invention relates to method and apparatus for distributing and
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`processing information, and more specifically relates to method and
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`apparatus for preventing unauthorized use of information by partially
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`encrypting such information.
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`With the advance of electronic and communication technology, information
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`conveyed in electronic form ("electronic content") is fast becoming the most
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`economic and reliable way of distributing information. However, many
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`information providers are reluctant to distribute electronic content because it
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`is very easy to copy and use the information without authorization. In spite
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`of the existence of copyright law, experience shows that electronic content are
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`often copied and used without paying any royalties to copyright holders.
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`Thus, in order to promote the use of electronic conveyance of information,
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`means must be develop to prevent unauthorized usage and copying of
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`electronic content.
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`Ex. 1019- Page2o
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`Ex. 1019 - Page 2 of 38
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`

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`Hark Chan; June 8, 94
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`1 Methods have been developed to prevent unauthorized copying of electronic
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`content. Several years ago, these methods were used by many software
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`developers. However, these copy protection methods do not find acceptance
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`in the market place. Consequently, the majority of computer software are
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`currently marketed without copy protection.
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`Recently, attention has been turned towards preventing unauthorized uses.
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`For example, several companies market "dongles," or hardware keys, which
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`are attached to a port of a computer. A protected software would not execute
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`in a computer without an appropriate key. Thus, the protected software
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`could be copied but cannot be used in an unauthorized computer. However,
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`many users found that these software and hardware keys cause much
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`inconvenience. For example, when a user wishes to remove the software
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`from one computer and execute the software in another computer, the
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`associated hardware key has to be moved. So far, no mass marketed
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`software uses hardware key to protect against unauthorized uses.
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`Other methods have been developed to prevent unauthorized usage of
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`electronic content. One of the methods is disclosed in U.S. Pat. No. 5,010,571
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`issued to Katznelson. It discloses a system for controlling and accounting for
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`retrieval of data from an optical storage medium containing encrypted data
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`files from which retrieval must be authorized. The optical storage medium is
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`distributed to customers at nominal or no charge. However, in order to
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`decrypt the data files, a customer must obtain a decryption key from a remote
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`authorization and key distribution station. As a result, unauthorized uses
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`Ex. 1019- Page 30
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`Ex. 1019 - Page 3 of 38
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`

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`Hark Chan; June 8, 94
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`can be prevented. A similar system is disclosed in U.S. Pat. No. 4,827 ,508
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`issued to Shear.
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`In Shear, the decryption key is stored in a secure device in
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`the customer site. The secure device also stores accounting data relating to
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`usage of the electronic content. The accounting data is periodically sent to a
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`billing station.
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`In the above methods disclosed by Katznelson and Shear, vast amount of
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`distributed information is encrypted using a single key (or a small number of
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`keys). Thus, if the decryption key is inadvertently made public, all these
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`information can be used without paying the information providers.
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`Naturally, information providers are reluctant to rely on these methods to
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`distribute their valuable asset (i.e., information).
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`Another problem with these prior art methods is that information providers
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`cannot match the security level of encryption to the value of the information.
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`Typically, the security of encryption is directly related to the complexity of
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`encryption algorithm and the length of keys. The choice of encryption
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`algorithms and the length of keys requires an analysis of the value of the
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`information and the costs of encryption. In the methods disclosed by
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`Katznelson and Shear, all information are encrypted using the same key.
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`Thus, this key may not match the requirements of many information
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`providers.
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`A further problem of these prior art method is that the encryption algorithm
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`is fixed at the time encrypted information is initially distributed. As the
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`Ex. 1019- Page4o
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`Ex. 1019 - Page 4 of 38
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`

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`Hark Chan; June 8, 94
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`installed base of encrypted information increases, it becomes difficult to
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`change the encryption algorithm. Thus, these method cannot use new
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`cryptographic methods which may be developed in-future.
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`Another method is disclosed in U.S. Pat. No. 5,247,575 issued to Sprague et
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`al. It discloses that encrypted information may be electronically transmitted
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`from a remote site to a receiving device in a customer site via wired or
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`wireless means. It also discloses that the decryption key could be stored in a
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`removable "key" card. The card can be inserted into the receiving device to
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`decrypt the received and encrypted data. This method suffers the same
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`defects described above in connection with Katznelson and Shear. In
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`addition, this method requires a communication channel having a large
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`bandwidth for transmitting the encrypted information.
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`§fln__n_1_ary of the Invention
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`Broadly stated, the invention involves a method and system for distributing
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`and processing digital information. The digital information is separated into
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`two portions. The first portion is a clear portion and the second (residual)
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`portion is encrypted. The clear and the encrypted portions are sent to a
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`processing system which decrypts the encrypted portion. The clear and
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`decrypted portion is combined to obtain a result which is substantially the
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`same as the original digital information.
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`Ex. 1019- Page 50
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`Ex. 1019 - Page 5 of 38
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`

`
`Hark Chan; June 8, 94
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`In one embodiment of the present invention, the clear portion is distributed
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`to customers at no or nominal cost. The residual portion will be stored in a
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`central station. When a customer wishes to use the digital information, the
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`central station encrypts the residual portion using an encryption-decryption
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`key—p air generated at that time. The encrypted portion and the decryption
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`key are sent to the processing system in a secure manner. As a result,
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`different keys can be used to encrypt and decrypt the same information at
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`different times.
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`One feature of the present invention is that the clear portion is selected in a
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`way to render the reconstruction of the original digital information difficult if
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`the residual portion is not known. Thus, a customer will not be able to
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`reconstruct the original digital information based on the clear portion. As a
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`result, unauthorized use of the digital information is prevented.
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`In the present invention, the information providers control the choice of
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`encryption algorithms and keys. Further, algorithms and keys can be
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`changed at will.
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`These and other features and advantages of the present invention will be
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`fully understood by referring to the following detailed description in
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`conjunction with the accompanying drawings.
`
`Brief Description of the Drawings
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`Ex. 1019- Page6o
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`Ex. 1019 - Page 6 of 38
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`

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`Hark Chan; June 8, 94
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`Fig. 1 is a block diagram of an information distribution and processing
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`system in accordance with the present invention
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`Fig. 2 is a flow chart showing the application of the present invention to
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`JPEG.
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`Fig. 3 is a schematic diagram showing the application of the prese t
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`invention to video data.
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`E
`Fig. 4 is a block diagram of a software distribution and processingisystem of
`the present invention.
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`Detailed Description of the Invention
`
`Fig. 1 is a block diagram of an information distribution and processing
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`system 300 in accordance with the present invention. System 300 contains a
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`central station 302 which is connected via a communication ].ink 303 to a
`plurality of processing units located in subscriber sites, such as uriits 310 and
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`340. Processing units 310 and 340 are also connected to communication links
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`306 and 307, respectively. Communication links 306 and 307 are preferably
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`not connected to central station 302, but may be connected thereto‘ when
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`needed. Communication links 303, 306, and 307 could be wired or wireless,
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`remote or local, point-to-point or broadcasting.
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`\
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`]
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`I Ex. 1019- Page 7of
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`Ex. 1019 - Page 7 of 38
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`

`
`Hark Chan; June 8, 94
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`Digital information to be distributed is separated into clear (i.e.,
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`unencrypted) portions and residual portions in accordance with methods
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`described below. The residual portions are essentially the digital information
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`with the clear portions removed. The clear portions are sent to processing
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`units 310 and 340 via links 306 and 307, respectively. The residual portions
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`are stored in central station 302 and will be encrypted before sending to
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`processing units 310 and 340 upon demand. Central station 302 also takes
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`care of various accounting and bookkeeping functions.
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`The structure of the processing units are substantially the same. Thus, only
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`one of the units, in this case, unit 310, will be described in detail. Unit 310
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`contains a general processor 312 connected to a secure processor 314 through
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`a communication link 316 (which could be wired or wireless). Secure
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`processor 314 is connected to communication link 303 through a line 318.
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`Secure processor 314 is enclosed by a protective mechanism so that
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`unauthorized access (physical and electrical) to the internal circuitry can be
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`prevented. Secure processor 314 is used to decrypt encrypted portions and
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`temporarily store secret information (such as decryption keys and usage
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`data). Unlike secure processor 314, general processor 312 does not have to be
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`placed in a secure enclosure. Thus, it could be a conventional computer.
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`In system 300, general processor 312 is used to process the unencrypted data
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`(e.g'., decompression, filtering, and error correction) received from
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`communication link 306 while secure processor 314 is used to process
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`encrypted data (e.g., decryption and decompression) received from
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`EX. 1019-
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`Page 8 o
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`Ex. 1019 - Page 8 of 38
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`

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`Hark Chan; June 8, 94
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`communication link 303. Secure processor 3 14 and general processor 312 can
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`communicate with each other using communication link 316. This link does
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`not have to he a secure communication link.
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`Secure processor 314 preferably contains a unique device ID. This device ID
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`is preferably permanently stored in a nonvolatile memory 319, such as a
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`ROM. The device ID allows secure processor 3 14 to identify itself to other
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`devices, Such as central station 302.
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`A typical operation of system 300 is now described. Information data is
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`’
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`separated in residual data and unencrypted data according to methods
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`' described below. The residual data is preferably a small percentage of the
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`unencrypted data. Unencryptcd data 326 preferably contains an information
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`ID 327 and a content portion 328. Content portion 328 could contains data
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`relating to video, text, audio, or their combination.
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`Unencrypted data 326 is sent to general processor 312 of processing unit 310
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`through communication link 306. General processor 312 sends the
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`information ID 327 to secure processor 314, which in turn forwards it to
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`central station 302 via communication link 303. At the same time, the device
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`ID stored in memory 319 is also sent to central station 302 so that it can keep
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`track of usage and billing information. Central station 302 encrypts the
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`corresponding residual data and sends the encrypted data to secure processor
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`314 via communication link 303. Because link 303 is not a secure link, special
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`methods, described below, need. to be used for central station. 302 to securely
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`Ex. 1019 - Page 9 of
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`Ex. 1019 - Page 9 of 38
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`

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`Hark Chan; June 8, 94
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`send the corresponding decryption key to secure processor 314.. Secure
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`processor 314 decrypts the received encrypted data and combines the result
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`with the unencrypted data so as to reconstruct the full digital information.
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`The key used for encrypting and decrypting the encrypted data coul dbe
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`different for each processing and communication session described above.
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`Thus, it is more difficult for unauthorized persons to obtain the decryption
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`key to decrypt the encrypted data. Even assuming that a few decryption keys
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`are inadvertently disclosed to unauthorized persons, only a few pieces of
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`information is compromised. This is different from the system disclosed in the
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`prior art, where inadvertent disclosure of a single decryption key may
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`compromise vast amount of information.
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`Processing unit 310 also contains an output unit 322, which may be
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`connected to general processor 312 or secure processor 314. Depending on
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`the information processed, output unit 322 may be a printer, loudsp eaker,
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`TV, or LCD display. In situations where it is not desirable to expose the
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`reconstructed information, output unit 322 should be securely connected to
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`secure processor 3 14.
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`Even though Fig. 1 shows secure processor 314 as a single block, the function
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`of secure processor 314 could be carried out in several components.
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`For
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`example, the device ID could be stored in a smart card 332 which is
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`removably connected to processing unit 310. Smart card 332 should be
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`protected from unauthorized intrusion.
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`Ex. 1019- Page 10 of
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`Ex. 1019 - Page 10 of 38
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`

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`Hark Chan; June 8, 94
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`2 Methods for separating information into unencrypted and residual portions
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`are now described. It has been observed that information generally has a
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`certain degree of correlation. At one extreme is information that is highly
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`correlated. An example is video information which Consists of a series of
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`pictures depicting time progression of a scene. Each picture typically differs
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`slightly from an adjacent picture in the series because the time difference in
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`the scene depicted by adjacent pictures is typically less than 0.1 second. As a
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`result, video information contains many pictures which are substantially the
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`same. Consequently, it is easy to construct a picture missing from the series
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`by interpolating from the pictures prior and subsequent to the missing
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`picture. This type of information is considered to have a high degree of
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`temporal correlation.
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`Video information also has another type of correlation. The spatial variation
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`of a picture is typically very gentle. For example, if the picture is a human
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`swimming in water, there is little variation (in terms of color and intensity)
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`in the portion of the picture relating to water. Consequently, it may be easy
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`to recreate a missing portion of a picture by interpolating from portions of the
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`picture surrounding the missing portion. This type of information is
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`considered to have a high degree of spatial correlation.
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`At the other extreme is information for which it is difficult to create a
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`missing portion from other portions. This type of information has a low
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`degree of correlation. An example of this type of information is the binary
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`Ex. 1019- Page 11 of
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`Ex. 1019 - Page 11 of 38
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`

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`Hark Chan‘, June 8, 94
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`code of a piece of software. Typically, it is difficult to recreate a missing byte
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`(or a series of missing bytes) from other bytes in the binary code.
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`In the middle of this spectrum of correlation is text information. The
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`structure of many languages dictates that redundant words or letters be used
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`at predetermined positions of a sentence. Thus, it is possible to guess
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`missing Words and letters in a sentence. For example, the grammar of the
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`English language imposes a set of rules which includes putting the letter “s"
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`at the end of a noun to designate plural quantity. In many sentences, the
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`noun is not the only place where plural quantity is indicated. For example,
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`the sentence "there are two birds" uses the word "two" to indicate the
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`existence of more than one bird, in addition to the letter ‘'5'’ attached to the
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`word "bird." Thus, the letter "s" at the end of the word ”bird" is correlated to
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`the word “two" in the above sentence. Similarly, the word "are" is correlated
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`with the word ‘‘two.''
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`Information can also be classified according to its effect on intended uses if a
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`portion of the information is missing. At one extreme is information which
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`would be useless if a small portion is missing. An example is the binary code
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`of a piece of software. A computer is unlikely to successfully execute the
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`software if the binary code has a few erroneous bytes. This type of
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`information is considered to be error intolerant. At the other extreme is
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`information that degrades gracefully. For example, when noise of TV signal
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`increases (i.e., portions of video information is missing or has erroneous
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`values), color TV pictures often become monochrome. However, it is still
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`Ex. 1019- Page 12 of
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`Ex. 1019 - Page 12 of 38
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`

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`Hark Chan; June 8, 94
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`possible to watch and comprehend the TV pictures, even though they are less
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`pleasing to the eyes. This type of information is considered to be error
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`tolerant. Error toleration can also be different depending on spatial or
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`temporal types of errors.
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`It should be pointed out that even though the degree of error tolerance has
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`some relationship to the degree of correlation of information, it does not
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`depend solely on the degree of correlation. For example, a person typically
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`does not tolerate a small distortion in a familiar song while may tolerate a
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`large distortion in a new song, even though the degree of correlation of these
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`two songs are the same. As another example, a reader is likely to tolerate a
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`large number of missing words in a newspaper article. On the other hand,
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`the same reader probably would not tolerate the same percentage of missing
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`words in a poem. Thus, even though the degree of correlation of the
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`newspaper article and poem may be the same (because they follow essentially
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`the same grammar rules), the degree of error tolerance is different. This is
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`because error tolerance depends, to a certain extent, on subjective
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`considerations.
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`In the prior art information distribution and processing systems using
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`cryptography, every bit of information is encrypted. One aspect of the
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`present invention is the realization that it may not be necessary to
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`completely encrypt the information, especially when it has a low degree of
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`correlation. This is because it is often difficult to reconstruct the residual
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`portions based on the clear portions of information. In addition, information
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`Ex. 1019- Page 13 of
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`Ex. 1019 - Page 13 of 38
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`

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`Hark Chan; June 8, 94
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`that has a low degree of error tolerance may only need to be encrypted at a
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`few critical places (e.g., the destination address of a jump op code, or the last
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`name field of a customer database). This is because a user would not accept
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`the information if a small portion is missing or erroneous. Thus, even though
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`most of the information is in the clear, it is still not commercially useful if
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`isolated portions are unavailable because they cannot be decrypted (i.e.,
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`people are still willing to pay a high price to obtain the full information, even
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`though they already have 99 percent of the information). Since only a small
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`portion of information need to be decrypted, the amount of computation
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`power required to decrypt the information is reduced.
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`Encrypting a portion of information may also help to reduce the computation
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`power required for other signal processing tasks. As an example, information
`
`which is massive and highly correlated (e.g., video information) is often
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`compressed in order to reduce the amount of memory space used for storing
`
`and the bandwidth used for transmitting the information. Many
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`compression methods make extensive use of the correlative nature of
`
`information. However, many encryption methods have a tendency to
`
`randomize information. For example, if the plain text is a string of identical
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`letters, the encrypted text using algorithms such as DES may be a string of
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`letters in which every letter is different. Consequently, it may be more
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`difficult to compress the encrypted text.
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`The word "encryption" is used broadly in the present invention to include
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`different ways of transforming information so that it is difficult for an
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`Ex. 1019- Page 14 of
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`Ex. 1019 - Page 14 of 38
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`

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`An example of distributing graphic images using the above described method
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`In another embodiment of the present invention, information is encrypted in
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`different levels of security. In this embodiment, most of the information is
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`encrypted using a method having a low level of security (instead of no
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`encryption, as are the embodiments described above) and a portion of the
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`information is encrypted using a method having a high level of security.
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`Typically, the amount of computational power needed for decryption is
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`positively related to the level of security. Thus, information encrypted using
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`a method having a low level of security requires less time to decrypt.
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`is now described. Because of the rich information content of graphic images,
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`they require a large number of bytes to digitize. Consequently, it is common
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`to compress the digitized graphic images. One of the most popular methods
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`is JPEG (Joint Photographic Experts Group). An application of the present
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`Ex. 1019- Page 15 o
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`Hark Chan; June 8, 94
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`unauthorized person to correctly understand the information. It includes
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`transformation in which a key is required, such as public key and secret key
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`encryption methods. It also includes scrambling information according to a
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`secret algorithm without using a particular parameter which may be
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`classified as a "key."
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`The word "information“ is used broadly in the present invention to include
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`data that is organized in some logical manner. Examples of information
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`include video signal, audio signal, picture, graphic, computer software, text,
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`database, and multimedia composition.
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`Ex. 1019 - Page 15 of 38
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`Hark Chan; June 8, 94
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`invention to JPEG is now described. It should be appreciated that the same
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`principle can be applied to other methods of processing graphic images.
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`It is known that human eye is less sensitive to color changes than to
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`brightness changes. Thus, the chrominance component can be coded with
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`more loss than the luminance component. For example, a widely used color
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`scheme is CCIR 601, in which three components, Y, Cb, and Cr, are used.
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`Under this color scheme, the Y component roughly represents the brightness
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`of a color image, and can be used as a black-and-white version of the color
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`image. The Cb and Cr components roughly represent the blueness and
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`redness, respective, of the image.
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`JPEG works best when applied to color data expressed as luminance
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`(brightness) and chrominance components because it allows these
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`components to be sampled at different rate (i.e., subsampling). When JPEG
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`is used to compress an YCbCv image, a fair common choice is to use one Ch
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`and Cr sample for each four Y samples. Each of the sampled component is
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`discrete cosine transformed and then quantized in accordance with a
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`quantization table. The results of quantization are compressed using either
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`a modified Hufiman code or arithmetic coding.
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`If color fidelity is an important element of the images, it may be sufficient to
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`encrypt only the Cb or Cr component in order to prevent unauthorized uses.
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`In this case, only a small portion of the digital data needs to be encrypted.
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`Ex. 1019- Page 160
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`Ex. 1019 - Page 16 of 38
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`

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`Hark Chan; June 8, 94
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`The quantization table is stored in an JPEG file. In some situations, it may
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`be sufficient to only encrypt the quantization table. Again, only a small
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`portion of the digital data needs to be encrypted.
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`Fig. 2 is a flow chart 350 showing a method of using the information
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`distribution and processing system 300 of Fig. 1 to distribute and process
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`graphic images in JPEG form. The JPEG data is separated into unencrypted
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`and residual portions according to the method described above. The
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`unencrypted portion of the JPEG file is sent to processing unit 310 through
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`communication link 306 (step 354). For example, the unencrypted portion
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`could be stored in an on-line bulletin board system and downloaded to
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`processing unit 310 through a regular phone line. Alternatively, the
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`unencrypted portion could be recorded in a portable memory medium (e.g.,
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`floppy diskettes, tapes, or CD—ROMs) and distributed to potential customers.
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`General processor 312 reads the information ID 327 and causes the secure
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`processor 314 to send the information ID and its device ID to central station
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`302 (step 356). Central station 302 then encrypts the residual portions and
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`sends the encrypted portion (e.g., quantization table) to secure processor 314.
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`Central station 302 also sends the decryption key to secure processor 314
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`using one of the well known secure communication protocols (step 358).
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`Secure processor 314 decrypts the data and causes general processor 312 to
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`send the unencrypted JPEG portion thereto for generating a complete image
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`(step 360). The image is sent to the output unit 322 for display (step 362).
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`Ex. 1019- Page 170
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`Ex. 1019 - Page 17 of 38
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`

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`Hark Chan; June 8, 94
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`Fig. 3 is a diagram showing one embodiment in which information having a
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`high degree of correlation, such as video information 110, is processed with
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`an information distribution and processing system of the present invention.
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`Only three frame 1 12, 1 14 and 116 of video information 1 10 are shown,
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`although video information 1 10 typically contains a large number of frames.
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`Frames 112, 114, and 116 each has a centrally located region 122, 124, and
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`126, respectively, which are of similar size and shape. Only these regions are
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`encrypted while the rest of the frames are in the clear. The area of each of
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`these regions is preferably small compared to the size of a full frame.
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`Video information 110 is separated by a signal processor 120 into modified
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`video information 150 and central region information 130. The three frames
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`1 12, 1 14, and 116 of the video information 110 are transformed into three
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`frames 152, 154, and 156, respectively, of modified video information ‘150.
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`Frames in the modified video information 150 do not contain information in
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`the centrally located regions 162, 164, and 166 (which correspond to centrally
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`located regions 122, 124, and 126, respectively). On the other hand, the
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`frames 132, 134, and 136 in the central region information 130 contain only
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`information relating to the centrally located regions 122, 124, and 126.
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`In the method of the present invention, only the centrally region information
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`130 needs to be encrypted while the modified video information 150 can stay
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`in the clear. The modified video information 150 is sent to general processor
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`170, which corresponds to general processor 312 of Fig. 1. The central region
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`information 130 is sent to secure processor 140, which corresponds to secure
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`Ex. 1019- Page 180
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`Ex. 1019 - Page 18 of 38
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`

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`Hark Chan; June 8, 94
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`processor 314 of Fig. 1. The secure processor 140 decrypts the encrypted
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`frames 132, 134, and 136 and combine them with frames 152, 154, and 156 to
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`reconstruct the video images. These images are displayed by a display unit
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`142, which corresponds to output unit 322 of Fig. 1. In order to prevent
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`unauthorized recording of the analog signal, it may be desirable to include a
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`system of analog copy protection 144 in secure processor 140.
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`In this embodiment, substantially the same region of all the frames (i.e.,
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`frames corresponding to all times from beginning to end) are encrypted.
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`Thus, it is not possible for an unauthorized person to take advantage of
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`temporal correlation to reconstruct the centrally located regions because
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`there is no basis to perform interpolation. It is also difficult to take
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`advantage of spatial correlation near the center of the frame because there is
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`little unencrypted data available at areas surrounding the center.
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`Stated in a slightly different way, the method disclosed above encrypts
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`substantially all the correlated portions of the information. Since almost
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`none of the correlated portions are in the clear, it is impossible to bypass the
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`correlated portions by using techniques such as interpolation.
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`The size of the regions 122, 124 and 126 depends on the degree of error
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`tolerance. If spatial error tolerance is low (i.e., a user will not tolerate even a
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`small amount of erroneous spatial information), the size of the regions 122,
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`124 and 126 could be small. Further, for situations where temporal error
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`tolerance is low, it is not necessary to encrypt all the frame.
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`Ex. 1019- Page 190
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`Ex. 1019 - Page 19 of 38
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`

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`Hark Chan‘, June 8, 94
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`The reason for positioning the encrypted region at the center is to take
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`advantage of the fact that the most informative area of a picture is usually
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`the center. It may be advantageous to encrypt several regions (instead of
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`only one centrally located region). This is because the most informative
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`region in some cases may not be located at the center. Further, the size and
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`shape of the encrypted regions may vary from frame to frame, as long as
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`information relating to these sizes and shapes is transmitted to secure
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`processor 140. As a result, secure processor 140 is able to reconstruct the
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`video frames.
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`The encrypted region can also be selected using statistical methods. For
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`example, the correlation within and between frames can be determined by a
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`correlation coefficient r defined as
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`r = E [Oi-a)(Y—b)] /uv;
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`where X and Y are jointly distributed random variables with means a and b
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`and variances u2 and V2, respectively. A region is selected for encryption
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`when the corresponding correlation coefficient is higher than a certain value.
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`Various statistical methods for determining appropriate selection criteria are
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`well known in the art. These statistical methods can be used by signal
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`processor 120.
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`Ex. 1019 - Page 20 of 38
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`

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`Hark Chan; June 8, 94
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`Fig. 3 indicates that adjacent frames of video information 110 have the same
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`format and contain the same type of information. However, the system
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`shown in Fig. 3 is also applicable to video information in which adjacent
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`frames have different formats. An example is MPEG (Motion Picture
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`Experts Group), which contains JPEG-like frames along with information for
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`interpolating other frames between the JPEG-like frames. The interpolating
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`information is different from the JPEG-like frames. In one embodiment o

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