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) FAX 415 394 0134 KEKE R & VAN NEST LLP ©002 


OLLIAM L. ANTHONY (State Bar No. 106908) 
RIC L. WESENBERG (State Bar No. 139696) 
[ARK R. WEINSTEIN (State Bar No. 193043) 
iRRlCK, HERRINGTON & SUTCLIFFE LLP 
000 Marsh Road 
lenloPark,CA 94025 
elephone: (650)614-7400 
acsimile: (650) 614-7401 

TEVEN ALEXANDER (admitted Pro Hac Vice) 
JUSTIN L. CLEVELAND (admitted Pro Hac Vice) 
AMES E. GERTNGER (admitted Pro Hac Vice) 
OHN D. VANDENBERG (admitted Pro Hac Vice) 
1LARQUIST SPARKMAN, LLP 
tae World Trade Center, Suite 1600 
21 S.W. Salmon Street 
'ortland.OR 97204 
elephone: (503)226-7391 
•acsimile: (503)228-9446 

attorneys for Defendant 
/HCROSOFT CORPORATION 


UNITED STATES DISTRICT COURT 
NORTHERN DISTRICT OF CALIFORNIA 
OAKLAND DIVISION 


NTERTRUST TECHNOLOGIES 
CORPORATION, a Delaware corporation, 

Plaintiff; 


MICROSOFT CORPORATION, a 
Vashington Corporation, . 

Defendant 


CASE NO: C 01-1640 SBA 

MICROSOFT CORPORATION'S 
FIRST AMENDED ANSWER AND 
COUNTERCLAIMS TO THE SECOND 
AMENDED COMPLAINT 


Defendant Microsoft Corporation ("Microsoft") answers the Second Amended 
:omplaint of InterTrust Technologies Corporation ("mterTrust") as follows: 

1 . Microsoft admits that the Second Amended Complaint purports to state a 
iause of action under the patent laws of the United States, 35 United States Code, §§ 271 and 
281 . Microsoft denies that it has infringed or now infringes the patents asserted agitaa Microsoft 


DOCSSViil60WU 


MICROSOFT COWOIUTION-S FIRST AMENDED ANSWER 
^ COW^FCVAiMS. CASE No. C 01-1640 SBA 


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the Second Amended Complaint. Microsoft denies any and all remaining allegations of 
aragraph 1 of the Second Amended Complaint. 

2. Microsoft admits that the Second Amended Complaint purports to state a 
ause of action over which this Court has subject matter jurisdiction under 28 U.S.C. §§ 1331 and 
338(a). 

3 . Microsoft admits, for purposes of this action only, that venue is proper in 
his judicial district. Microsoft denies any and all remaining allegations of paragraph 3 of the 

Jecond Amended Complaint. 

4. Upon information and belief, Microsoft admits the allegations of paragraph 

\ of the Second Amended Complaint. 

5. Microsoft admits the allegations of paragraph 5 of the Second Amended 

Complaint. 

6 . Microsoft admits, for purposes of this action only, that it transacts business 
n this judicial district. Microsoft denies any and all remaining allegations of paragraph 6 of the 
Jecond Amended Complaint. 

7. Microsoft admits that on its face the title page of US. Patent No. 6,1 85,683 
31 ("the *683 Patent") states that it was issued February 6, 2001, is entitled "Trusted and secure 
echniques, systems and methods for item delivery and execution," and lists "LiterTrust 
rechnologies Corp." as the assignee.. Microsoft admits that a copy of the '683 Patent was 
ittached to the copy of the Second Amended Complaint delivered to counsel for Microsoft, but 
lenies that such cppy was full and complete insofar as it did not include any material purportedly 
ncorporated by reference therein. Microsoft denies that the *683 Patent was duly and lawfully 
ssued. Microsoft further denies any and all remaining allegations of paragraph 7 of the Second 

\mended Complaint. 

8. Microsoft admits that on its face the title page of U.S. Patent No. 6,253,193 
31 ("the '193 Patent") states that it was issued June 26, 2001, is entitled "Systems and methods 
for the secure transaction management and electronic rights protection," and lists "InterTrust 
Technologies Corporation" as the assignee. Microsoft admits that a copy of text associated with 

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the '193 Patent was attached to the copy of the Second Amended Complaint delivered to counsel 
for Microsoft, but denies that such copy was mil and complete as it did not include, among other 
things, any of the drawings or figures. Microsoft further denies such copy was full and complete 
insofar as it did not include any material purportedly incorporated by reference therein. Microsoft 
denies that the '193 Patent was duly and lawfully issued. Microsoft further denies any and all 
remaining allegations of paragraph 8 of the Second Amended Complaint. 

9. Microsoft admits that on its face the title page of U.S. Patent No. 5,940,504 
("the '504 Patent") states that it was issued August 17, 1999 and is entitled "Licensing 
management system and method in which datagrams including an addressee of a licensee and 
indicative of use of a licensed product are sent from the licensee's site." Microsoft admits that a 
copy of the '504 Patent was attached to the copy of the Second Amended Complaint delivered to 
counsel for Microsoft. Microsoft denies that the '504 Patent was duly and lawfully issued. 
Microsoft further denies any and all remaining allegations of paragraph 9 of the Second Amended 
Complaint. 

10. Microsoft admits that on its face the title page of U.S. Patent No. 5,920,861 
("the '861 Patent") states that it was issued July 6, 1999, is entitled "Techniques for defming, 
using and manipulating rights management data structures," and lists "mterTrust Technologies 
Corp." as the assignee. Microsoft admits that a copy of the '861 Patent was attached to the copy 
of the Second Amended Complaint delivered to counsel for Microsoft, but denies that such copy 
was full and complete insofar as it did not include any material purportedly incorporated by 
reference therein. Microsoft denies that the '861 Patent was duly and lawfully issued. Microsoft 
further denies any and all remaining allegations of paragraph 10 of the Second Amended 
Complaint. 

1 1 . Microsoft repeats and reasserts its responses to paragraphs 1 -7 of the 
Second Amended Complaint, as if fully restated herein. 

12. Microsoft admits that the Second Amended Complaint purports to state a 
cause of action under 35 U.S.C. §§ 271 and 2B1. Microsoft denies that it has infringed or now 


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| denies any and all remaining allegations of paragraph 12 of the Second Amended Complaint 
13. Microsoft denies any and all allegations of paragraph 13 of the Second 


3 | Amended Complaint. 

14. Microsoft denies any and all allegations of paragraph 14 of the Second 


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Amended Complaint 

15. Microsoft denies any and all. allegations of paragraph 15 of the Second 

Amended Complaint. 

16. Microsoft denies any and all allegations of paragraph 16 of the Second 

Amended Complaint. 

17. Microsoft denies any and all allegations of paragraph 17 of the Second 


Amended Complaint 

1 8. Microsoft repeats and reasserts its responses to paragraphs 1-6 and 8 of the 

Second Amended Complaint, as if fully restated herein. 

1 9. Microsoft admits that the Second Amended Complaint purports to state a 
cause of action under 35 U.S.C. §§ 271 and 281 . Microsoft denies that it has infringed or now 
infringes the patents asserted against Microsoft in the Second Amended Complaint Microsoft 
denies any and all remaining allegations of paragraph 19 of the Second Amended Complaint. 

20. Microsoft denies any and all allegations of paragraph 20 of the Second 

19 | Amended Complaint. . 

20 2 1 . Microsoft denies any and all allegations of paragraph 2 1 of the Second 

21 | Amended Complaint 
22. Microsoft denies any and all allegations of paragraph 22 of the Second 


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Amended Complaint 

23. Microsoft denies any and all allegations of paragraph 23 of the Second 

Amended Complaint. 

24. Microsoft denies any and all allegations of paragraph 24 of the Second 


Amended Complaint. 


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25. Microsoft repeats and reasserts its responses to paragraphs 1-6 and 9 of the 
Second Amended Complaint, as if fully restated herein. 

26. Microsoft admits ujat the Second Amended Complaint purports to state a 
cause of action under 35 U.S.C. §§ 271 aid 281. Microsoft denies that it has infringed or now 
infringes the patents asserted against Microsoft in the Second Amended Complaint. Microsoft 
denies any and all reroaining allegations 6f paragraph 26 of the Second Amended Complaint 

27. Microsoft denies any and all allegations of paragraph 27 of the Second 

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Amended Complaint. | 

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28 Microsoft denies any and all allegations of paragraph 28 of the S econd 

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10 | Amended Complaint. j 

29. Microsoft denies ky and all allegations of paragraph 29 of the Second 

12 | Amended Complaint. 

30. Microsoft denies any and all allegations of paragraph 30 of the Second 

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Amended Complaint. 

3 1 . Microsoft denies any and all allegations of paragraph 3 1 of the Second 

Amended Complaint. 

32. Microsoft repeatsjand reasserts its responses to paragraphs 1-6 and 10 of 

the Second Amended Complaint, as if fiilly restated herein. 

33 . Microsoft admits that the Second Amended Complaint purports to state a 
20 cause ofaction under 35 U.S.C. §§ 271 jud 281. Microsoft denies that it has infringed or now 

infringes the patents asserted against Microsoft in the Second Amended Complaint. Microsoft 
denies any and all remaining allegations! of V**^ ^ &e Second Amended Complaint. 

34. Microsoft denies [my and all allegations of paragraph 34 of the Second 

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Amended Complaint. j 

35. Microsoft denies |any and all allegations of paragraph 35 of the Second 

Amended Complaint. 

36. Microsoft denies any and all allegations of paragraph 36 of the Second 

Amended Complaint. 

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microsoft Corporation' s First amended answer 
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37. ' Microsoft denies any and all allegations of paragraph 37 of the Second 

Amended Complaint. 

38. Microsoft denies any and all allegations of paragraph 38 of the Second 

Amended Complaint. 

AFFIRMATIVE ANT) OTHER D EFENSES 
Further answering the Second Amended Complaint, Microsoft asserts the 
following defenses. Microsoft reserves the right to amend its answer with additional defenses as 

further information is obtained. 

First Defense: Noninfringement of the Asserted Patents 

1. Microsoft has not bfringed, cbntributed to the infringement of, or induced 
the infringement of U.S. Patent No. 6,185,683 Bl ("the '683 Patent"), U.S. Patent No. 6,253,193 
Bl ("the '193 Patent"), U.S. Patent No. 5,940,504 ("the '504 Patent") or U.S. Patent No. 
5,920,861 ("the '861 Patent"), and is not liable for irifringement thereof. 

2. Any and all Microsoft products or actions that are accused of infringement 

15 have substantial uses that do not infringe and therefore cannot induce or contribute to the 

16 I infringement of the '683 Patent, the '193 Patent, the '504 Patent or the '861 Patent. 

Second Defense: Invalidity of the As serted Patents 

3. On information and belief, the '683 Patent, the "193 Patent, the '504 Patent 
and the '861 Patent are invalid for failing to comply with the provisions of the Patent Laws, Title 
35 U.S.C., including without limitation one or more of 35 U.S.C. §§ 102, 103 and 112. 

Third Defense: Unavailability of Relief 

4. On information and belief, Plaintiff has failed to plead and meet the 
requirements of 35 U.S.C. § 271(b) and is not entitled to any alleged damages prior to providing 
any actual notice to Microsoft of the '683 Patent, the ' 193 Patent, the '504 Patent or the '861 
Patent. 

Fourth Defense: Unavailability of Relief 

5. On information and belief, Plaintiff has failed to plead and meet the 
requirements of 35 U.S.C § 284 for enhanced damages and is not entitled to any damages prior to 

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providing any actual notice to Microsoft of the '683 Patent, the '193 Patent, the '504 Patent, 
and/or the '861 Patent, and any alleged infijngement thereof. 

Fifth Defense: Unavailability of Relief 

6. On information and belief, Plaintiff has failed to plead and meet the 
requirements of 35 U.S.C § 287, and has otherwise failed to show that it is entitled to any 
damages. 

SiYth Defense: Prosecution H istory Estoppel 

7. Plaintiffs alleged causes of action for patent infringement are barred under 
the doctrine of prosecution history estoppel, and Plaintiff is estopped from claiming that the '683 

10 1 Patent, the 1 193 Patent, the '504 Patent, and/or the '861 Patent covers or includes any accused 

11 I Microsoft product or method- 

Seventh Defense: Dedic ation to the Public 

8 . Plaintiff has dedicated to the public all methods, apparatus, and products 

disclosed in the '683 Patent, the '193 Patent, the '504 Patent, and/or the '861 Patent, but not 

literally claimed therein, and is estopped from claiming infringement by any such public domain 

1 g methods, apparatus, and products. 

tti plirti Defense: Use/Manufacture By/For Unite d States Government 

9. To the extent that any accused product has been used or manufactured by 
or for the United States, Plaintiffs claims and demands for relief are barred by 28 U.S.C. § 1498. 

Ninth Defense: License 

1 0. To the extent that any of Plaintiffs allegations of infringement are 
premised on the alleged use, sale, or offer for sale of products that were manufactured by or for a 
licensee of InterTrust and/or provided by or to Microsoft to or by a licensee of InterTrust, such 
allegations are barred pursuant to license. 

Tenth Defense; Acquiescence 

1 1 . Plaintiff has acquiesced in at least those acts of Microsoft that are alleged 
to infringe the '861 Patent, the '683 Patent, and the '193 Patent. 


DOCS$Vl:tWW0>-l 


Microsoft Corporation's F.rst amended answer 
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Eleventh Defense: Laches 

12 Plaintiffs claims forrelief are barred, in whole or hi part, by the equitable 

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loctrine of laches. ! 

Twelfth Defense: Ine quitable Conduct 
13. The '861 Patent claims are unenforceable due to inequitable conduct, 
ncluding those acts and failures to act setforth in Microsoft's Counterclaim for Declaratory 
rudgment of Unenforceability of the *861 Patent, set forth below. 

miJNTERCLAlMS 

COUNT I - DECLARATORY 
■nmGMENT OF NONINFRINGEMENT 

1 . This action arises under the patent laws of the United States, Title 35 
U.S.C. §§ 1, et seq. This Court has isubjek matter jurisdiction over this counterclaim under 28 

U.S.C. §§ 1338, 2201, and 2202. . ; 

2. Microsoft Corporation ("Microsoft") is a Washington corporation with its 

principal place of business in Redmond, Washington. 

3. Upon information and belief, Plaintiff /Counterclaim Defendant InterTrust 
Technologies Corporation CTnterTfust") is a Delaware corporation with its principal place of 
business in Santa Clara, California. 

4. InterTrust purports to be the owner of U.S. Patent Nos. 6,185,683 Bl ("the 
'683 Patent"), 6,253,193 Bl ("the '|193 Patent"), 5,940,504 ("the '504 Patent"), and 5,920,861 


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("the '861 Patent"). ! j 

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5. InterTrust alleges that Microsoft has infringed the '683 Patent, the 4 193 
Patent, the '504 Patent, and the l 861 Patent. 

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6. No Microsoft product has infringed, either directly or indirectly, any claim 
of the '683 Patent, the '193 Patent,'the '504 Patent, or the «861 Patent, and Microsoft is not liable 
for infringement thereof. 

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7. An actual controversy, within the meaning of 28 U.S.C. §§ 2201 and 2202, 

2 I exists between Microsoft, on the one hand, and InterTrust, on the other hand, with respect to the 

3 infringement or noninfringement of the '683 Patent, the '193 Patent, the '504 Patent, and/or the 


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'861 Patent. 


COUNT II - DECLARATORY 
JimflMENT Pig TNVALIDITV ™ TWV 'fiM PATENT 


8. Microsoft repeats and realleges paragraphs 1-5 of its Counterclaims, as if 

fully restated herein. 

9. The '683 Patent, and each claim thereof; is invalid for failing to comply 

with the provisions of the Patent Laws, including one or more of 35 U.S.C. §§ 102, 103 and 112. 

10. An actual controversy, witnin the meaning of 28 U.S.C. §§ 2201 and 2202, 

exists between Microsoft, on the one handj and InterTrust. on the other hand, with respect to 

whether the claims of the '683 Patent are Valid or invalid. 

COUNT m - DECLARATORY 
nmCMENT Off INVALIDITY OF THE '19 3 PATENT 

1 1 . Microsoft repeats and realleges paragraphs 1-5 of its Counterclaims as if 

fully restated herein. 

12. The ' 1 93 Patent, and each claim thereof, is invalid for failing to comply 
with the provisions of the Patent Laws, including one or more of 35 U.S.C. §§ 102, 103 and 1 12. 

1 3. An actual controversy, within the meaning of 28 U.S.C. §§ 2201 and 2202, 
exists between Microsoft, on the=one handl and InterTrust, on the other hand, with respect to 
whether the claims of the '193 Patent are valid or invalid. 

. COUNT TV - DECLARATORY 

24 JUDGMENT OF INVALIDITY TBTE '504 PATENT 

25 | 14. MicrosoftVepeatsandreaUegespa^ 

26 fully restated herein. 

?? 15 , The '504 Patent, and each claim thereof, is invalid for failing to comply 

28 Lhtheprov^^ 

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16. An actual controversy, within the meaning of 28 U.S.C §§ 2201 and 2202, 


ists between Microsoft, on the one hand | 


and InterTrust, on the other hand, with respect to 


nether foe claims of the '504 Patent are valid or invalid. 

COUNT^ - DECLARATORY 
nmr.MF.NT OF INVALIDTTV OF THE '861 PATENT 


'ill 

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17. Microsoft repeats a§d realleges paragraphs 1-5 of its Counterclaims as if 
illy restated herein. 

18: The '861 Patent, and each claim thereof, is invalid for failing to comply 
rith the provisions of the Patent Laws, including one or more of 35 U.S.C. §§ 102, 103 and 112. 

19. An actual controversy, within the meaning of 28 U-S.C. §§ 2201 and 2202, 
xists between Microsoft, on the one haniji and InterTrust, on the other hand, with respect to 
whether the claims of the '861 Patent are' valid or invalid. 


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COUNT VI - DECLARATORY JUDGMENT 
OF TINF.NFORCEABILITY OF THE '8 61 PATENT 

20. Microsoft repeats knd realleges paragraphs 1 -5 of its Counterclaims, as if 

ully restated herein. . j. 

21 . Claims 1-129 of the '861 Patent application (SN 08/805,804), and claims 

-101 of the '861 Patent, were ndt.and are 1 not entitled to benefit of any application filing date 

!•! 

dor to February 25, 1 997, under 35 U.SJC. § 120 or otherwise. 

22. Exhibit A]hereto is' a reprint of an article entitled "Digibox: A Self- 

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'rotecting Container for Information Conunerce." The article shown in Exhibit A (hereafter, 

' !' i|' 

the Sibert article") was publishedin July 1995 in the Proceedings of the First USENLX 


Workshop on Electronic Commerce. 

23 On information md belief, the content of pages 2-1 4 of Exhibit A was 

jresented at a public conference in the United States in July 1995. 

24. Exhibit B hereto is a copy of a page from an International Application 
,ublished under the Patent Cooperation Treaty (PCT), bearing International Publication Number 
WO 96/27155. 


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25. ' On informaticjn and belief, Intetnatioiial Application WO 96/27155 has, at 
all times since its filing date, been ofned ipd controlled by InterTmst or its predecessors in 

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interest. i; ; » 

26. International kpplidation WO 96/27155 (hereafter "the WO 96/271 55 

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(PCT) publication") was published on September 6, 1996. 

27. United States' Patent No. 5,910,987 ("the '987 Patent") issued on June 8, 
1999, from a continuation of an applicaticjn filed on February 13, 1995. 

28. The Sibert article is prior art to claims 1-129 of the '861 Patent application 
(SN 08/805,804), and claims 1-101 jof the! '861 Patent, under 35 U.S.C. §§ 102(b), 103. 

29. The WO 96/271 55;(PCT) publication is prior art to claims 1-129 of the 
'861 Patent application (SN 08/805j,804)jand claims 1-101 of the '861 Patent, under 35 U.S.C. §§ 

102(a), 103. J 

30. The '987 Palent is jirior art to claims 29-129 of the '861 Patent application 

14 I (SN 08/805,804), and claims 1-lO^of thi!j 4 861 Patent, under 35 U.S.C. §§ 102(e), 103. 

15 I 3i. The Sibert article wjas material to the patentability of claim 1 ofthe '861 

16 I Patent application (SN 08/805,804). ; 

17 I 32. The Sibert article vas material to the patentability of claims 2-129 ofthe 

18 I '861 Patent application (SN 08/805,804)1; 

33. The WO 96/271 55 |(PCT) publication was material to the patentability of 

claim 1 ofthe '861 Patent application (SN 08/805,804). 

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34. The WO 96if27l55i(PCT) publication was material to the patentability of 

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claims 2-129 ofthe '861 Patent ap'pUcation (SN 08/805,804). 

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35. The '987 Patent was material to the patentability of claims 29-129 ofthe 

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'861 Patent application (SN 08/8dj,804).j- 

36. One or more ofthe '861 Patent applicants knew, while the '861 Patent 
application (SN 08/805,804) was pending, ofthe July 1995 publication ofthe Sibert article. 

37. On information and belief, one or more ofthe '861 Patent applicants knew, 
while the "861 Patent application (SN 08/805,804) was pending, ofthe September 1996 

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ublication of The WO 96/27155 (PCT) publication. 

38. One or more of the 1 861 Patent applicants knew, while the '861 Patent 
pplication (SN 08/805,804) was pending of the June 8, 1999 issuance of the '987 patent 

39. On information and belief, one or more of the attorneys who prosecuted or 
ssisted in prosecuting the '861 Patent application (SN 08/805,804) knew, while that application 
vas pending, of the July 1995 publication of the Sibert article. 

40. One or more of the attorneys who prosecuted or assisted in prosecuting the 
861 Patent application (SN 08/805,804) knew, while that application was pending, of the 
September 1996 publication of the WO 95/27155 (PCT) publication. 

41 . One or more of the attorneys who prosecuted or assisted in prosecuting the 
861 Patent application (SN 08/805,804) knew, while that application was pending, of the June 8, 

L999 issuance of the '987 patent 

42. The applicants for the '861 Patent did not cite the Sibert article, the WO 
)6/27155 (PCT) publication, or the '987 Patent to the Patent Office as prior art to any of claims 1- 
L29 of the '861 Patent application (SN 08/805,804). 

43. The applicants for the '861 Patent did not cite to the Patent Office as prior 
irt to any of claims 1-129 of the '861 Paient application (SN 08/805,804) any reference having 
he same or substantially the same disclosure as the Sibert article, the WO 96/27155 (PCT) 

Duplication, or the '987 Patent 

44. None of the Sibert article, the WO 96/27155 (PCT) publication, or the '987 
Parentis merely cumulative over any reference cited as prior art during the prosecution of the 
861 Patent application (SN 08/805,804). 

45. On information and belief, one or more of the '861 Patent applicants 
believed, during pendency of clainvl of the '861 Patent application (SN 08/805,804), that the 
Sibert article disclosed an embodiment of claim 1 of the '861 Patent application (SN 08/805,804). 

46. On information and belief, one or more of the '861 Patent applicants 
believed, during pendency of claim 1 of the '861 Patent application (SN 08/805,804), that the 
WO 96/27155 (PCT) publication disclosed an embodiment of claim 1 of the '861 Patent 

DOCSSVHM09&.1 Microsoft corporation's First amended answer 

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1 I application (SN 08/805,804). 


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47. On information and 
believed, while the '861 Patent application 
was material to the patentability of claims 


48. On information and 


belief, one or more of the '861 Patent applicants 
(SN 08/805,804) was pending, that the Sibert article 
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but, with deceptive intent, failed to disclosL that reference as prior art to the Patent Office. 


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belief, one or more of the '861 Patent applicants 
believed, while the '861 Patent application (SN 08/805,804) was pending, that the WO 96/27155 
(PCD publication was material to the patentability of claims 1-129 of the '861 Patent application 
9 (SN 08/805,804), but, with deceptive intent, failed to disclose that reference as prior art to the 
10 I Patent Office. 

49. On information and belief, one or more of the '861 Patent applicants 
believed, while the '861 Patent application" (SN 08/805,804) was pending, that the '987 Patent 

29-129 of the '861 Patent application (SN 08/805,804), 
14 | but, with deceptive intent, failed to disclose that reference as prior art to the Patent Office. 

50. The ' 861 Patent is unenforceable due to the inequitable conduct of the '861 
Patent applicants before the Patent and Trademark Office in connection with the '861 Patent 

application (SN 08/805,804). 

51. An actual controversy, within the meaning of 28 U.S.C. §§ 2201 and 2202, 
exists between Microsoft, on the one hank and InterTiust, on the other hand, with respect to 

Ji 

whether the claims of the '861 Patent arelenforceable. 


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QRRICK 
HEfcRINGTON 
& Si TCLIFfE LLP 


COUNT ]Wtt - INFRINGEMENT 
OF U.S. PATENT NO. 6»049,671 

I* i 

52. Microsoft repeats and realleges paragraphs 2-3 of its Counterclaims, as if 
fully restated herein. 

53. This Court has exclusive subject matter jurisdiction over Microsoft's cause 
of action for patent infringement under ijitle 28, United States Code, Sections 1331 and 1338, and 
under the patent laws of the United States, Title 35 of the United States Code. 


DOCSSVMMW 6 - 1 


Microsoft Corporation's First amended answer 
■13- Counterclaims. CasiNo. C 01-1640 sba 


09/28/2001 09:24 FAX 415 394 013 4 


KEKER & VAN NEST LLP 


El 015 


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& sncurFt LLP 


54. U.S. Patent No: 6,049,671 ("the '671 Patent") issued to Microsoft 
Corporation as tbe assignee of Benjamin W. Slivka and Jeffrey S. Webber on April 1 1, 2000. 

55. A true copy of foe '671 Patent is attached as Exhibit C hereto, and is 
incorporated herein by reference. ; 

56. Microsoft owns all right, title and interest in the '671 Patent 

I; 

5 7 . InterTrust has had actual notice of the * 67 1 Patent. 

58. InterTmst has infiiged one or more claims of the '671 Patent, in violation 

i 

of at least 35 U.S.C. § 271<a, b, c). f 

59. InterTrusfs rnfiingisrnent of the '671 Patent has caused and will continue to 
cause Microsoft damage, including urepJrable harm for which it has no adequate remedy at law. 

COUNT ym - INFRINGEMENT 
OF U.S. PATENT NO. 6.256.668 

60. Microsoft repeats and realleges paragraphs 2-3 and 51 of its Counterclaims, 

as if fully restated herein. jj 

61 . U.S. Patent No. 6,256,668 Bl ("the '668 Patent") issued to Microsoft 

W. Slivka and Jeffrey S . Webber on July 3, 2001 . 
!'668 Patent is attached as Exhibit D hereto, and is 


Corporation as the assignee of Benjamin 

62. A true copy of the 
incorporated herein by reference 

63. Microsoft owns al 

64. InterTrust has had 


right, title and interest in the '668 Patent, 
actual notice of the '668 Patent. 

i 

65. InterTrust hak infringed one or more claims of the '668 Patent, in violation 

of at least 35 U.S.C. § 27l(a, b, c). 

66. InterTrusfs inrrirjgeroent of the '668 Patent has caused and will continue to 
cause Microsoft damage, including irrep|rable harm for which it has no adequate remedy at law. 

PR A VF.R FOR RELIEF 
WHEREFORE, Microsoft prays for the following relief: 
A. • The Court enter judgment against InterTrust on, and dismiss with 


DOCSSVl:lfc0096.1 


Microsoft Corporation's First amended Answer 
-H- ^ndColnterclaims. C>sse No. c 01-1640 SBA 


09/28/2001 09:24 FAX 4 15 394 0134 


KEKER & VAN NEST LLP 


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©016 


prejudice, any and all claims of the Secondj Amended Complaint; 

B. The Court enter jud; pent declaring that Microsoft has not infringed, 
contributed to infringement of, or induced Infringement of the '683 Patent; 

C. The Court enter jud| pent declaring that Microsoft has not infringed, 

, i 

contributed to infringement of, or induced infringement of the '193 Patent; 

D. The Court enter judgment declaring that Microsoft has not infringed, 
contributed to infringement of, or inducec .infringement of the '504 Patent; 

E. . The Court enter judgment declaring that Microsoft has not infringed, 
contributed to infringement of, or inducetj: infringement of the '861 Patent; 

F. The Court enter judgment declaring that the '683 Patent is invalid; 

G. The Court enter judgment declaring that the ' 1 93 Patent is invalid; 

H. The Court enter jui Igment declaring that the '504 Patent is invalid; 
L The Court enter jui jgment declaring that the '861 Patent is invalid; 

J. The Court enter judgment that the '861 Patent is unenforceable due to 


inequitable conduct; 

K. 
L. 
M. 


& s; 


HERHIV-T0N 

-f LLP 


The Court enter judgment that InterTrust has infringed the '671 patent; 
The Court enter ju igment that InterTrust has infringed the '668 patent; 
A permanent injurlction prohibiting InterTrust, its officers, agents, servants, 
employees, and all persons in active, conejert or participation with them from infringing the '671 
and '668 Patents; 

N. An award against InterTrust of damages and attorney fees, pursuant to the 

provisions of 35 U.S.C §§ 284, 285. 

O. An award to Micr|soft of prejudgment interest and the costs of this action. 
P. The Court award ib Microsoft its reasonable costs and attorneys' fees; and 
Q. The Court grant to 1 Microsoft such other and further relief as may be 
deemed just and appropriate. 
/// 

DOCSSV1.-16D096.1 

Microsoft Coworation' s First amended answer 

" 1 5- aS d COOVTERCLAJMS. CaS£ No. C 0 1 -1 640 SBA 


nfl/28/200109:25_FAI 415 3 94 0134 


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& 1CLIFFE LLP 


Pursuant to Fed. R. Ciy. 

trial by jury. 

DATED: September 17, 2001 


DOCSSV1:160096.1 


@017 


JTBRY'DEMANI) 


1| | 

}8(b), Defendant Microsoft Corporation demands a 


By- 


WILLIAM L. ANTHONY 
ERIC L. WESENBERG 
MARK. R. WEINSTEIN 
ORRICK HERRINGTON & SUTCLIFFE, LLP 
;1000 Marsh Road 
Menlo Park, CA 94025 
.Telephone: 650-614-7400 

ISTEVEN ALEXANDER 
I KRISTIN L. CLEVELAND 
:JAMES E. GERINGER 
iJOHN D. VANDENBERG 
;KLARQUIST SPARKMAN, LLP 
iOne World Trade Center, Suite 1600 
!l21 S.W. Salmon Street 
[Portland, OR 97204 
Telephone: (503)226-7391 

| Attorneys for Defendant 
I Microsoft Corporation 


Microsoft Corporation's First amended answer 
■16- and Counterclaims. Case No. C 01-1640 SBA 


09/28/2001 09:25 FAI 415 394 0134 


KEKER & VAN NEST LLP 


0018 


BMW * 


. t 


I ! 


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KEKER & VAN NEST LLP 


@019 



The following paper was originally published to the 
Proceedings of the First USENDC Workshop on Electronic Commerce 
New YorkjNew York, July 1995. 


DigiBox: A 
for 


Self-Protecting Container 
Information Commerce 


Olin Sibert, David 
Electronic 


1. Phone: 

2. FAX: 

3. Email: 


] Jemstein, and David Van Wie 
Publishing Resources, Inc. 
Sunnyvale, California 


For more information about USENDC Association contact: 


510 528-8649 
510 548-5738 
office@usenix.org 


4. WWW URL: http://www.usenix.org 


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KEKER & VAN NEST LLP 


@O20 


TheDigiBox: 

A Self-Protecting Container for Information Commerce 


Olin Sibert 
David Bernstein 
David Van Wie 


Electronic Publishing Resources, Inc. 
460 Oakmead Parkway 
Sunnyvale, California 
1408 774 6100 
info®epr»com 

Abstract 

Information Commerce is a business activity carried out among several parties in which 

rZ Zueand is treated as a product The information may be content, it may be returned usage and mar- 

keting data, and it may be representative of financial transactions. 

In each of these cases the information is valuable and must be kept secure and private, ^adiUon-l 
the transmlsion of that information from one point to another; there are no percent 
jCctoZ. Paction of all of th J components of information commerce for all parties » a transaction 
value chain is necessary for a robust electronic infrastructure. 

A urereaxasite to such an environment is a. cryptographicalfy protected container for P*<*"f»S 
tnfoZZZd controls that enforce information rights. This paper describes suck . c«W*j 
TgWor^.EPRhassubmittedinitialspecifu^onsfor^ 

Publishing Task Force (EPUB) within the User/Content Provider Standards Working Group (W04). 

, y ^j.,„*s«« truly support electronic commerce. These tools 

1 Introduction for the flow of products and services 

As services and products in modem commerce through creators', providers', and users' hands. 

mcrSS Se electronic form, traditional com- Tbey enable the creation, negouauon and crforce- 

meS " evolving mto electronic commerce. This meat of electronic agreements, includmg the cvo- 

toSboft cation and enforcement of variqus lution of controls that manage both the use and 

w£*Z between parties in an electronic cdn- consequences of use of electronic content or ser- 

S^aSmp. It also includes enforcing the vice, In addition, these too s support _ < :volv** 

riS" of these parties with aspect to me secure agreements that progressively reflect therc^re- 

Sagement of electronic content or services ments of further pamcpants m a conanercud 

usage, billing* payment, and related activities. model. 

„ Participants in electronic commerce [3>4] will need 
To save money, to be competitive, and to be effi- ^ ^ mechanisms such that: 
cient [ J ,2], members of modern society will shortly 
bt U$mg new information technology tools that 


09/28/2001 09:25 FAX 415 394 0134 


KEKER & VAN NEST LLP 


©021 


1 . Information providers can be assured thartheir 
content is used only in authorized ways; 

2. Privacy rights of users of content are pre- 
served; and 

3. Diverse business models related to content can 
be electronically implemented. 

i 

The Internet and other information commerce 
infrastructures will require a management compo- 
nent that enforces such rules, ensuring a- safe, 
coherent, fair, and productive community. This 
management component will be critical to the elec- 
tronic highway's acceptance. Without rules to pro- 
tect the rights of content providers and 'Other 
electronic community members, the electronic 
highway will comprise nothing more than a collec- 
tion of limited, disconnected applications. 

Analysts have concluded that content will consti- 
tute the largest revenue-generating component of 
the information superhighway [5]. It is also clear 
that unfettered access to content requires that con- 
tent providers be able to maintain control over lit- 
erary or copyrighted assets. Many analysts 
conclude that this will be one of the key bottle- 
necks in die implementation and deployment of 
New Media, \ 


requires a substantial manufacturing investment 
Figure 1 illustrates a simplified traditional informa- 
tion economy; physical goods flow from a pub- 
lisher (manufectorer) to a customer, in response to 
orders and followed by payments. The author's 
relationship with the publisher may be more light* 
weight, but the author is nonetheless dependent on 
the publisher to report sales and make royalty pay- 
ments in accordance with the author's contract In 
addition, a financial institution provides payment 
processing and clearing services for all parties. 


Financial 
Institution 



2 Information Commerce and Digital 
Value Chains 

Information commerce is often considered' a 
wholly new concept, made possible only through 
the use of networks and computers. In fact/ a 
robust information economy has existed forjeerrtu- 
ries, involving trafficking in physical representa- 
tions of information such as books, newspapers, 
and so on. Because such commerce involves! physi- 
cal goods, there is a non-negligible floor to the cost 
of handling information goods. The new aspects jof 
the electronic information economy are that the 
information itself is the entire product and that jthe 
product can be distributed at negligible marginal 
cost. 

The traditional information economy in physical 
goods is publisher-centric, because creation' of 
information goods— particularly low-cost goods- 


Figure 1 . Traditional information economy. 

Because of the flexibility afforded by electronic 
mechanisms, information commerce is evolving 
from indirect, advertiser-supported, mass-audi- 
ence media to a new, niche-audience-oriented busi- 
ness model In this system, members of the 
electronic community, with. or without the eco- 
nomic support of advertising, pay providers 
directly for what they want to receive. Business-to- 
business purchasing is steadily evolving into a 
direct electronic ordering model 

Figure 2 illustrates the flexibility possible in new 
electronic information commerce models. 
Although there is still a role for publishers, this 
role no longer involves physical goods. Rather, the 
publisher is responsible for packaging and aggre- 
gating information goods and control information, 


09/28/2001 09:26 FAX 415 394 0134 


_VAN NEST LLP 


13022 


then making them available to customers. Similar 
to a maimfecturiiig/distTibution/retail chain for 
physical goods, the electronic model permits infor- 
mation retailers, and even end customers, to re- 
package and redistribute different aggregations .of 
information while ensuring that the appropriate 
control rules are maintained. A clearinghouse 
ensures that usage information and payments are 
provided directly to authors and publishers; the 
payments themselves are made through traditional 
financial institutions. Because control rules are 
associated with information, a variety of payment 
and other business models can be associated with 
the same content (e.g., purchase versus pay-per- 
use). 


Author 


Creates 



Financial 
Institution 


0 


Aggregated T&ymeni, 
UBagc Information 


Pa; 


Publisher 
Distribute 



Clearinghouse 


5" 



Qutomer 

Extracted 

Customer 

Pays per Use 

ComeriT 

Purchases 


Usage Report* 


Contcnlt 


Retailer 

Content 


Redistributes 



Customer 
Purchoses 


ii 
1! 


Figure 2. Electronic information economy. Ij 

1 

The conversion from traditional commercial distri- 
bution channels requires key foundation technolo- 
gies and results in a fundamental shift in existing 
infrastructures. This channel transformation jwill 
create a new electronic digital distribution industry. 
Digital distribution employing the DigiBox con- 
tainer architecture and its associated support envi- 
ronment, IntcrTrust™, can play a critical role in 
this transformation of the communication, m^dia, 
and information technology markets. 


2 J Protecting All the Information in 
Information Commerce 

The very properties that make 4< the net* 7 attractive 
as a distribution medium — ease of manipulating 
information in electronic form — also appear to 
make these protections'intractable. Addressing this 
dichotomy requires a paradigm shift in computer 
architecture to introduce the concept of a "secure 
processing" environment in which protected infor- 
mation can be manipulated without being subject 
to external tampering or disclosure. A prerequisite 
to such an environment is a cryptographically pro- 
tected "container** for seamlessly packaging infor- 
mation and controls that enforce information use 
rights. 

The DigiBox described by this paper is such a con- 
tainer. 

The need for various information commerce com- 
puters and appliances to interoperate requires that 
tins container format and its access methods be 
standardized. EPR has submitted initial specifica- 
tions for the DigiBox container to the American 
National Standards Institute (ANSI) Information 
Infrastructure Standards Panel (US?) through the 
Electronic Publishing Task Force (BPUB) in the 
User/Content Provider Standards Working Group 
(WG4). 

The primary goal of information protection is to 
permit proprietors of digital information (i,e., the 
artists, writers, distributor packagers, market 
researchers, etc.) to have the same type and degree 
of control present in the "paper world." Because 
digital information is intangible and easily dupli- 
cated, those rights are difficult to enforce with con- 
ventional information processing technology. 
Many types of rights (compensation, distribution, 
modification, etc.) are associated with the various 
elements of information commerce, and these 
information property rights take many fonns. At a 
high level, there is the legal definition of "copy- 
right/* codified in U.S. law [6-9] and the Berne 
Convention. This gives copyright holders a legal 
right to control how copyrighted infbmiation is 
handled. In addition, various high-level rights are 
conferred by contractual arrangements between 
primary' rightsholders and other parties. 


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KEKER & VAN NEST LLP 


@023 


For example, the protections needed for content 
elements incorporate the licensing provisions for 
the intellectual property rights of the content right- 
scolders. In a broader sense, these rights include 
control over several activities: the right to be com- 
pensated for use of the property; the right to con- 
trol how content is distributed; the right to prevent 
modification of content by a distributor, "fair use" 
rights; the rights to the usage data, privacy rights tof 
individuals, and so on. ;j 

:i 

In the realm of physical goods, these rights aye 
enforced by a combination of legal and technical 
means. However, the technical means can be (and 
are) unsophisticated because the technology for 
violating rights is relatively expensive and tiinfe- 
consuming— in comparison to equivalent activities 
with respect to digital information. Photocopying a 
book or copying a video cassette is inherently more 
labor intensive and costly man copying a file. 1 ^o, 
while defeating technical means of enforcementjis 
(relatively) expensive, it can be done — and often 
the legal means to deter this are inadequate. .j 

2,2 Information Commerce — Not Just ij 
Payment : 

Rights protection is also a fundamental aspect jof 
commerce. Commerce is not just a way for two 
parties to pay each other for something. Rather; it 
is an extraordinarily rich web of relationships 
among parties that concerns payment, negotiation, 
control, advertising, reporting, auditing, and a vari- 
ety of other activities. These activities are impor- 
tant aspects of the transaction relationships. Oijfeen 
the information carried in these reports, audits^ fltad 
the like is highly valuable and highly ccnfidentSal, 
perhaps even more valuable than the content mat is 
the subject of the information commerce at haind 
These activities too are performed and controlled 
in the "paper world" by legal and technical means, 
but there are no widely used models for their elec- 
tronic equivalents. , I 

Figure 3 shows some of the operations that could 
occur in true electronic commerce, using the Inter- 
net World-Wide Web [10] mechanisms as an exam- 
ple. Creators originate content and apply rules 
(e.g., "pay author SLOO/use") for its use. Distribu- 
tor 'ttp*& a 6 e content, applying additional itfes 


(e.g„ **pay $5.00 for the collection, then pay the 
creator," "report use of each item")- Users receive 
content and operate on it, generating billing reports 
and usage reports that are delivered to a clearing- 
house and paid or summarized back for the origi- 
. nating parties. This structure is very rich and is 
capable of supporting many business models. 
There are multiple flows of information in many 
different directions amongst the parties involved in 
the transactions. 

Another example is that of an advertiser (acting as 
distributor, or with a distributor). The advertiser 
might have a rule mat offers a discount, or no 
charge at all, but only if the user views the adver- 
tisement and agrees to have that fact reported to the 
advertiser. 

It is relatively simple to devise schemes for parties 
to pay each other electronically (for example, Digi- 
Cash [11], NetBiD [12], Open Market [13], SNPP 
[14], NetChcque [15], First Virtual [16], etc.). Pay- 
ment, however, constitutes only one — and perhaps 
the simplest one — of the means in which parties in 
commerce interact All the other information com- 
merce components must be accomplished with the 
same needs for security, privacy, and integrity. In 
fact, these aspects of electronic commerce, includ- 
ing rights protection, are strongly intertwined in 
the digital economy, because much digital com- 
merce concerns information and innovative busi- 
ness models for information commerce. 

3 Existing Approaches to Information 
Commerce 

Information proprietors employ a variety of tech- 
nological protection approaches today. These 
approaches are generally "point solutions," in that 
they protect a specific type of property in a specific 
context and enforce only specifically defined 
rights — typically only the right to compensation 
for use. Because the technologies are limited, the 
market is fragmented, and there are no general pro- 
tection solutions.' 


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@024 


Registrar/ 
Repository Managers 


Content 
Servers 


Repository 
Administration 


WWW 
Server 


Content 



Business 
Rules 


DigiBox 
Packaging 
Application 



Authors 


Figure 3. Muki-party Internet information wnrun^rce. 


3-1 No Protection 


Much digital property is distributed without any 
technological enforcement for property rights, an 
the assumption that legal means suffice. This 
approach works well enough for many low-value 
properties, but it has the disadvantage of raising the 
price to legitimate users who must pay for both 


5 


Transaction 
Server 


P rivate Transaction 
Networks 


Clearinghouses 


Clearinghouse 
Interface 



DigiBox- 
Aware 
Browser 



Users 


their own and illegitimate use. In many cases, how- 
eyer; this cost is negligible, and no protection is an 
economically sound choice. Even for content that 
is free, however, a creator may wish to impose 
some rules for reporting or some access control Of 
course, privacy rights of users will be a concern to 
many. 


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3.2 License Managers 

For some valuable software properties, license 
managers are used. Because a software property is 
dynamic (executable), it is feasible to restrict it so 
that it functions properly only through kteraction 
with a license manager process. In general, there t$ 
no protection of usage data in these schemes. La 
some cases this technique has been applied to cori- 
tent protection, but only with limited success [1% 
18]. ! i 

3.3 Cryptographic Unlock 

Some static properties (fonts, for example; also 
some installable software) are protected by a sim- 
ple ''unlock" scheme: a purchaser makes a pur- 
chase, for example by telephone with a credit canjL 
and receives a cryptographic key in return. This 
key can then be used to "unlock" one property 
from some widely distributed medium (e.g^ CI£- 
ROM or network download). This mechanism ds 
relatively inflexible, and its inherently manual 
nature makes it expensive. 

3.4 Billing Schemes 


Various billing schemes (as mentioned above) per- 
mit purchase of information following what ;ts 
essentially an electronic check or electronic credit 
draft model. These methods are suitable for con- 
ventional transactions, but not for the enormous 
volumes of Cmdividually) very low-value transap 
tions that would be generated using a complex di ; » 
ital property. 


3-5 Secured Delivery 


Various secured delivery systems (e.g., SSL [19], 
SHTTP [20]) share the same problems as crypto- 
graphic unlock, but in a network context They are 
only point-to-point solutions, with the information 
(content, usage data, etc.) at each site being left 
unprotected once the delivery has occurred. Fur- 
thermore, they are inherently online systems: it is 
not practical to decouple the delivery of informa- 
tion from payment for its use. 


4 : Information protection Architecture: 
' InterTr^t and DigiBox 

EPR has produced the InterTrust Virtual Distribu- 
tion Architecture to solve unmet, critical needs of 
electronic commerce. Almost any imaginable 
information transaction can be supported by Inter- 
Trust A few examples include distribution of con- 
tent (e.g.» text, video, audio) over networks, 
selective release of data from a database, con- 
trolled release of sensitive information, and so on. 
InterTrust can also support the secure communica- 
tion of private information such as EDI and elec- 
tronic financial transactions, as well as delivery of 
thfr "back channel 0 marketing and usage data 
resulting from transactions. 

DigiBox is a foundation technology within Inter- 
Trust It provides a secure container to package 
information so that the mfotmation cannot be used 
except as provided by the rules and controls associ- 
ated with the content InterTrust rules and controls 
specify what types of content usage are permitted, 
as well as the consequences of usage such as 
reporting and payment 

Within InterTrust, DigiBox containers can enforce 
a "distributed electronic contract" for value-chain 
activities functioning within an electronic distribu- 
tion environment This unique approach underlies 
EPR's information metering and digital rights pro- 
tection technology. Electronic commerce infra- 
structure participants can use InterTrust to 
substantially enhance their network, security, or 
payment method solutions. 

The DigiBox is a container for both digital prop- 
erty (content) and controls. It is used in conjunc- 
tion with a locally secured rights protection 
application (discussed further below) to make con- 
tent available as governed by arbitrarily flexible 
controls. 

The DigiBox container mechanism is implemented 
in; a set of platform-independent class libraries that 
provide access to objects in the container and 
extensions to OpenDoc and OLE object technolo- 
gies. DigiBox allows rights management compo- 
nents to be integrated with content in highly 
flexible and configurable control structures. Dig)- 


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I 


@026 


Box rights management components can be mte 
gmted with content in a single deliverable, or some* 
or aU of the components can be delivered indepen^ 
dently. DigiBox rights management components] 
enable true superdistribution [21] and can supportj 
virtually any network topology and any number ofj 
participants, including distributors, redistributorsj 
information retailers, corporate content users, anq 
consumers. 

4.1 Content 

The digital information in a DigiBox (one or more 
'"properties") is information in any form, it may be 
mapped to a specific compound object format (e.g.| 
OpenDoc, OLE, PDF), or may be application spe|j 
cific J 

Further, it may be delivered in stream or other 
communication-oriented forms, not just in a files 
like container. 

4.2 Controls 

Controls specify rules and consequences for opcraj 
tions on content. Controls are also delivered in ja 
DigiBox, and the controls for a property may tot 
delivered either with the property or independently, 
Controls are tied to properties by cryptographi): 
means. 

Because controls can be delivered with properties 
in a container, the DigiBox supports Buperdistribtj- 
tion. h 


4,3 Commerce 


3 

,-nSs 


Commerce takes place governed by controls 
may involve metering, billing for use, reporting pf 
usage, and so on. These operations take plade 
locally in a secure environment, and they generate 
audit trails and reports that must be reported per; 
odically to clearinghouses. 

5 DigiBox Implementation 

The DigiBox is a structure (hat can hold, in a pro- 
tected manner, information commerce elements of 
all fcmdS' content, usage information, representa- 


tion of financial transactions (e.g., electronic cash), 
and! other digital elements of information com- 
merce. 

| 

5.1 1 Container Logical Structure 

Figure 4 shows the logical structure of properties 
and' control sets in two containers. Container Cy 
holis'two properties, P, and and one control set, 
CSj, that applies to property Prf container C^ con- 
tains two control sets and no properties. As shown 
in the example, each of these elements .has a title 
attribute to provide a human-readable description 
of the element and, for control sets, an attribute 
indaca^g to what other elements the control set 
applies. 

A control set specifies rules and consequences, 
sudh as pricing, reporting, and so on, for the prop- 
erties to which H applies. A user holding just this 
container could use (e.g., view, print) content from 
PjJ-though only as specified by CSj. Because 
there is no control set applying to P 2 in that con- 
tainer, P2 would not be usable in any way. 
j 

A user holding both containers could use property 
pj as specified by CS 2 * and in addition has the 
choice of whether to designate CSi or CS 3 when 
using Pj. CS 3 , which describes itself as "discount," 
is likely to be the user's preferred choice. 

The DigiBox includes several elements: organiza- 
tional' structures, properties, controls, and support- 
ing data items. Almost all the information in a 
DigiBox is encrypted, as described below, and 
access to the encrypted form is provided through a 
storage manager as appropriate, depending on how 
the DigiBox is delivered (e.g., as a file or as a data 
sujeaxn). 

Sip Container Physical Structure 

Figure 5 is a schematic picture illustrating the 
physical structure of a DigiBox container. (Some 
elements have been omitted for clarity.) It begins 
wjth a container header structure containing 
descriptive and organizational information about 
the container. Part of the container header is 
encrypted (both for secrecy and for integrity pro- 
tection); .the rest is public organizational infonna- 


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Property 

Pi 


Title - giraffe 


@027 



Control Set 


Applies to = Pj 


Title = regular 


Property 
P 2 


Title - elephant 


Container C\ 


• Control Set 
CS 3 


Applies to = Pi 


Title - discount 



Control Set 
CS 2 


Applies to = P 2 


Title = discount 


Container C2 


Figure 4. Container logical structure. 


tion. The header is followed by additional 
container-wide structures such as the transport kev 
block (TKB) and the container table of contents 
(TOC) s some of which arc encrypted and others 
not. . j 

These organizational elements are followed by the 
structures defining the container's content (e.g., 
properties and control sets). As shown in the fig- 
ure, a property is represented by a property header, 
property attributes, and data blocks composing the 
property. As shown, the header is encrypted and 


liie attributes are not; the data blocks may be 
wholly or partly encrypted, or not at all, depending 
on security requirements. 

The figure shows an example property consisting 
of a jmultimedia property formed from a pair of 
synchronized data streams for audio and video. In 
this 'example, each video block is mostly unen- 
crypted so that access can be rapid while still main- 
taining reasonable security — encrypting even 10 
percent of an MPEG stream renders it effectively 
useless for illicit copying. On the other hand, the 
audio is entirely encrypted, and each audio block 


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VAN NEST LLP 


@028 


Container Container 
Header TKB 



Shading indicates encryption: 

Unencrypted 
<- Encrypted by Key 1 
Encrypted by Key 2 


Figure 5. Container physical format 


uses four distinct keys, because the content propri- 
etor requires much stronger security for audio tha i 
for video. 

A property is represented as one or more property 
sections, each of which is independently associate^ 
w jth control information, and which may also be 
stored and accessed independently. A property, fc r 
example, might be a collection of clip-art images, 
and each image might be a property "chunk/ 1 wi|h 
its own control specifying how that image's creator 
is compensated. 

Controls can map to property chunks at arbitrary 
granularity and can enforce arbitrary organiza- 
tional structures within the property (such as a file 
. hierarchy). Controls can apply to individual bytes, 


fcanieL of a movie, segments of a musical piece, 
arid so on, because the mapping is performed by a 
control process specified by the control structure, 
not simply via a table-driven data structure. 


I ! 


Cryptographic Techniques 

IJiei • high-level elements in a DigiBox are 
encrypted with a transport key that is normally 
dpriyfed (by exclusive OR) from two parts: one that 
isj delivered in the DigiBox itself, encrypted with a 
ppblic key algorithm, and the other that is stored in 
protected storage locally. The locally stored part is 
snared among all the local nodes capable of pro- 
cessing that DigiBox, but the part in the DigiBox is 
unique. This separation provides protection against 
accidental or malicious disclosure of either part 


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In Container 


Transport Key 
Block (TKB) 


ID- 1 


ID = 5 


ID = 31 

Partial TK 

ID ~ 36 


ID =40 


ID = 61 




@ 029 


In Protected 
Local Storage 


TKEK 
Storage 


ID = 6 

TKEK* 

TD*1 

TXEK 7 

ID = 8 

TKEK 8 

ID = 30 

TKEKao 

ID^31 

TKBC 3l 

ED = 32 

TKEK32 

ID = 33 

TKEK33 


Partial TK 
Storage 


ID»73 

. Partial TK73 

ID = 81 

Partial TK^ 

ID "90 

Partial TK90 

ID =142 

Partial TK M2 

ID =176 

Partial TK t76 

XO = 177 

Partial TK177 


Decrypted Header Information 

Figure 6. Container transport security. 

Figure 6 illustrates how the transport key (TK) is transport key encrypted under a different transport 
derived. The transport key block (TKB) contains key encrypting key (TKEK). Each TKB dotidenti- 
one or more slots, each of which contains a partial As the TKEK used, and a matching TKEK is 


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selected from local protected storage. Decrypting 
the slot yields a partial TK, which is combined 
with its corresponding partial TK again from^ro- 
tected local storage to yield the actual TK for 
decrypting the container header, 

i: 
i, 

The data for the property itself is encrypted "with 
other keys ("content keys") that are fcemselve^ 
delivered in encrypted high-level structures; this 
approach permits the keys for a property to be 
delivered entirely separately from the property ot 
its controls. Multiple keys, in a wide variety of 
key-mapping schemes, are used to encrypt the 
data, limiting the loss that would occur from dis- 
closure of any one key. j 

I 

All DigiBox control structures are both encrypted 
and verified for integrity with a cryptographic hash 
function. Several cryptographic .algorithms are 
supported for these control structures (principal] j 
for export control reasons), and arbitrary ! algo 
rithms are supported for encryption of the data. 


11030 


5.4 Security Characteristics 


ed 


The DigiBox cryptographic structures are design 
to be secure even in the face of loss of mdwi" 1 
key components, and to minimize the damage 
case a key or processing environment is comprc- 
miscd. The system is designed to provide commer- 
cially acceptable risks and losses for a variety 
business models. 


in 


of 


The basic algorithms are strong: Triple D^S [22] 
and RSA [23] are preferred. This security, is. of 
course, only as strong as the tamper-resistance of 
the local processing environment The preferred 
implementation of DigiBox processing relies onja 
"secure processing unit" (SPU) that conteins ja 
CPU, memory, program storage, and key storage in 
a single tamper-resistant hardware packagf. 
Although these are not widely available tod>y, the 
variety of applications they might support makesjit 
likely that such SFUs will become widely inte- 
grated into common computing platforms. When 
running in an SPU, fhe DigiBox processing and 
control mechanisms are sufficiently well protected 
to support most commerce applications. 


In ^he absence of an SPU, other approaches are 
usdEul for many business models. In feet, a soft- 
ware-only implementation is sufficient for many 
app Bcations, because much content is of relatively * 
lov value and is used in a context (business to 
bus mess) where a modest level of fraud is both less 
likely and more tolerable. As long as the software 
Aioderately difficult to defeat and tools to defeat 
u t ave no legitimate purpose, business models can 
be supported where some risk of loss is acceptable. 
In I he world of electronic commerce, just as for tra- 
ditional commerce, security is not absolute: it is 
jus t a factor to balance against the cost of loss and 
fxajud. 

Conclusions 

The DigiBox is one component of a general-pur- 
pdse electronic commerce solution that rests on 
thi ee basic principles: rights protection, interopera- 
bfl ity, and strong security. 

Electronic commerce, and information commerce 
in! particular, needs a robust information protection 
m echanism, including rights protection and con- 
trols, not just payment systems. As the electronic 
wSrid evolves, however, and moves forward from 
sii nply emulating traditional transactions into 
ei tirely new business models, rights protection and 
cc ntrol will become the predominant issues. 

Protection of intellectual property rights in infor- 
mation requires strong cryptography as well as a 
flisdble infrastructure for controlling use of the 
information. A standard protected container for 
is formation is necessary to support interoperabil- 
^ most existing schemes tightly bind the creator 
o: : protected information and the software that pro- 
cesses it A standard container can rationalize 
ii formation commerce and reduce costs for all par- 
ticipants. 


iA the long term, general-purpose secure electronic 
cbmmerce will need pervasive deployment of 
U mper-resistant hardware devices to perform 
secure processing of protected content However, 
as these solutions are developed, many business 
models can be accommodated with weaker or less 
complete solutions because the risk and expected 
losses are commercially acceptable. 


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1031 


Busmess-to-business purchasing is steadily evolv- 
ing into a direct electronic ordering model. Future 
communications and media markets will become 
increasingly segmented and, specialized! . m 
response to customer preferences and needs; and 
involve increasing, and more sophisticated, direct 
interaction between consumers and providers. 
These markets and their value chains (with or with- 
out intermediary distributors) will require secure 
metering and control tools that enable a user to 
efficiently and economically tailor resources ^o fusj 
or her own desires. 

During the next decade, digital delivery of Jradi-j 
tional electronic products, such as mfonnatipri 
databases and software, will be joined by a rapidl) 
growing array of both New Media and electroni- 
cally distributed traditional content The cqnverjj 
sion from traditional models requires! kejij 
foundation technologies and will result in a fund>j 
mental shift in current mfrastructure. This transfer- 
rnation will create a new distribution industry 
Digital distribution employing a universal conten ; 
and commerce container can play a critical role i 
this broad economic transformation. i 

i 
j 

7 References ; 

[1] A. -Chandler and H. Daems, l4 Adnirnistrativc 
Coordination, Allocation, and Monitoring: A ! 
Comparative Analysis of Accounting and Orga^ 
nidation in the U.S A. and Europe, 4 * Accounting, 
Organizations and Society, 1979: 3-20. ' ! 

\ ' 

[2] O. Williamson, "The Modern Corporation: Or - 
gin, Evolution, Attributes " Journal of Eco- 
nomic Literature XK (1981): 1537-1568' i 

j 

[3] Office of Technology Assessment, Accessibtfit^ 
and Integrity of Networked information Cflle^- 
dons. Washington, D.C.: UJS. Government , \ 
Printing Office, July, 1993., j : j 

: .j j 

[4] E. Rollings, Communications Competitiyenes, 
and Infrastructure Modernization Act ofI99fi. 
Washington, D.C.: U.S. Government Prinrutg 
Office, report of the Senate Committee on Com- 
merce, Science, arid Transportation, 12 Septem- 
ber 1990. \ • 


[5] EL Benjamin and R Wigand, "Hectnmic Mar- 
t£ts and Virtual Value Chains on the Informa- 
tion Superhighway," Sloan Management 
Review, Vol 36 No. 2 (1995). 

[6]|U.S, Constitution, Article 1, Section 8, Clause 8 
1787). 

[7] U.S. Copyright Act of 1978 

[8]17U.S.C.sl07 

[9J 17US.Csl02(a) 

[10] T, Bemers-Lee, R Caillian, and J.-F. Groff, 
"The World Wide Web" Computer Networks 
and ISDN Systems, Vol. 25 (Dec. 1992), pp 
454-459. 


[1 


] D. Chaum, "Achieving Electronic Privacy" 
Scientific American, August 1992, pp 95-101. 


[li] M. Sirbu and J. D. TVgar, "NetBill: An Inter- 
net Commerce System," IEEE CompCon Pro- 
ceedings, March, 1995. pp 20-25. 

[lb] D. Giffbrd et aL, 'Tayment Switches for Open 
Networks" IEEE CompCon Proceedings, 
March, 1995. pp 26-31. 

[l|4] S- Dukach, "SNPP: A Simple Network Pay- 
ment Protocol," MIT Laboratory for Computer 
Science, Cambridge, MA, 1993. 

[15] B. C. Neuman and G. Medvinsky., "Require- 
ments for Network Payment," IEEE CompCon 
Proceedings, March, 1995, pp 32-36. 

[j 6] First Virtual, Inc. "mtroducing the First Vix- 
tual Internet Payment System,** 1 994. 

[il] A.K, Choudbury, et al„ "Copyright Protection 
for Electronic Publishing over Computer Net- 
works/* June 1994, IEEE Network Magazine. 

[1 i] J. Erickson, M A Copyright Management Sys- 
tem for Networked Interactive Multimedia," 
Proceedings of the 1995 Dartmouth Institute for 
Advanced Graduate Studies, 1995. 


I: 


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[19] K. Hickman, "SSL Reference Manual, . !f 
Netscape Corporation World Wide Web Site;. 
http://www.netscape.com/ j ;j 
newsref /std/eelref .html, 1994. f : |. 

Pi! 1 

[20] E. Rescorla and A. Schifiman, "The Secpp 
HyperText Transfer Protocol " Internet Draft 
draft-rcsorla-shttp-0.txt, 1994. [ 

Mi 

[21] B. Cox, "Superdistribution" Wired, $tpu\ 
1994, pp 89-92. { 

[22] U.S. National Bureau of Standards, "Dalai 
Encryption Standard," Federal Information] 
Processing Standards Publication, FIPS PUB 
46-1, Jan- 1988. i 


[23] R- Rivest, A- Shamir, and L. Adleman, ?On 
Digital Signatures and Public-key Cryptofeys- 
terns," Communications of the ACM, Voh2li 
(Feb. 1978), pp 120-126. \ " 


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