) FAX 415 384 0134 KEKE R & VAN NEST LLP ©002
TLLIAM L. ANTHONY (State Bar No. 106908)
RIC L. WESENBERG (State Bar No. 139696)
[ARK R. WEINSTEIN (State Bar No. 193043)
IRRICK. HERJRINGTON & SUTCLIFFE LLP
OOO Marsh Road
lenlo Park, CA 94025
elephone: (650) 614-7400
TEVEN ALEXANDER (admitted Fro Hac Vice)
JUSTIN L. CLEVELAND (admitted Pro Hac Vice)
AMES E. GERINGER (admitted Pro Hac Vice)
OHN D. VANDENBERG (admitted Pro Hac Vice)
XARQUIST SPARKMAN, LLP
)ne World Trade Center, Suite 1600
21 S.W. Salmon Street
iLttomeys for Defendant
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF CALIFORNIA
::ORPORAT10N, a Delaware corporation.
ACROSOFT CORPORATION, a
CASE NO: C 01-1640 SBA
FIRST AMENDED ANSWER AND
COUNTERCLAIMS TO THE SECOND
Defendant Microsoft Corporation ("Microsoft") answers the Second Amended
:oraplaim of Int«rTrust Technologies Corporation ("Int^rTrusf) as follows:
1 . Micrtssoft admits that the Second Amended Complaint purports to state a
;ause of action under the patent laws of the United States, 35 United States Code, §§ 271 and
Z81 . Microsoft denies that it has infringed or now infringes the patents asserted against Microsoft
MIC^OSO^ COKWR.T,OS-8 FIRST AMEN^D -^NS^
^Covmt«:uMMS. Case No. C 010640 SBA
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KEKER & VAN NEST LLP
I 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
3. Microsoft admits, for purposes of this action only, that venue is proper in
tiis judicial district. Microsoft denies any and all remaining allegations of paragraph 3 of the
;econd 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
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
Second Amended Complaint
7. Microsoft admits that on its face the tiUe page of U.S. Patent No. 6, 1 85,683
31 ("the '683 Patent") states that it was issued Fd)iuary 6, 2001, is entitled "Trusted and secure
echniques, systems and methods for item delivery and execution," and lists "InterTrust
rechnologies Corp." as the assignee.. Microsoft admits that a copy of ttie "683 Patent was
ittached to the copy of the Second Amended Complaint delivered to counsel for Microsoft, but
lenies that such copy 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 lawfiilly
ssued. Microsoft ftulher denies any and all remaining allegations of paragraph 7 of the Second
8. Microsoft admits that on its face the title page of U.S. Patent No. 6,253,193
Bl ("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 "InterTmst
Technologies Corporation" as the assignee. Microsoft admits that a copy of text associated with
DOCS5vi:i60i«6.l Microsoft Cobporation's First amended answer
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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 fiill and complete as it did not include, among other
things, any of the drawings or figures. Microsoft further denies such copy was fiiU 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 fiirther 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 Ucensee and
10 I indicative of use of a licensed product are sent from the Ucensee's site." Microsoft admits that a
11 B copy of the '504 Patent was attached to the copy of the Second Amended Complaint delivered to
12 counsel for Microsoft. Microsoft denies that the '504 Patent was duly and lawfully issued.
1 3 Microsoft further denies any and all remainmg allegations of paragraph 9 of the Second Amended
14 I Complaint.
10. Microsoft admits that on its face the title page ofU.S. Patent No. 5.920,861
("the '861 Patent") states that it was issued July 6. 1999, is entitled "Techniques for defining,
using and manipulating rights management data structures," and lists "InteiTrust 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 fiill 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
22 further denies any and all remaining allegations of paragraph 10 of the Second Amended
1 1 . Microsoft repeats and reasserts its responses to paragraphs 1-7 of the
Second Amended Complaint, as if fiilly restated herein.
12. Microsoft admits that the Second Amended Complaint purports to state a
cause ofaciion under 35 U.S.C. §§271 and 281. Microsoft denies that it has infringed or now
28 I infringes the patents asserted against Microsoft in the Second Amended Complaint. Microsoft
M-cRosOFT Corporation- s First amesdw Ans>-er
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1 I denies any and aU remainmg allegations of paragraph 12 of the Second Amended Complaint
2 J 13. Microsoft denies any and all allegations of paragraph 13 of the Second
14. Microsoft denies any and all allegations of paragraph 14 of the Second
15. Microsoft denies any and allaUegations of paragraph 15 of the Second
16. Microsoft denies any and all allegations of paragraph 16 of tiie Second
1 7. Microsoft denies any and all allegations of paragraph 17 of the Second
11 I Amended Complaint
18. Microsoft repeats and reasserts its responses to paragraphs 1-6 and 8 of the
Second Amended Complaint, as if fully restated herein.
1 9. MiCTOsoft admits that the Second Amended Complaint purports to state a
cause of action under 35 U.S.C. §§ 271 and 28 1 . Microsoft denies that it has inftinged or now
infringes the patents asserted against Microsoft in the Second Amended Complaint. Microsoft
denies any and all remainmg allegations of paragraph 19 of the Second Amended Complaint
20. Microsoft denies any and all allegations of paragraph 20 of tiie Second
2 1 . Microsoft denies any and all allegations of paragraph 2 1 of tiie Second
22. Microsoft denies any and all allegations of paragraph 22 of the Second
23. Microsoft denies any and all allegations of paragraph 23 of tiie Second
24. Microsoft denies any and all allegations of paragraph 24 of tiie Second
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25. Microsoft repeats aiid reasserts its responses to paragraphs 1-6 and 9 of the
Second Amended Complaint, as if fully restated herein.
26. Microsoft admits tiat the Second Amended Complaint purports to state a
cause ofaction under 35 U.S.C. §§ 271 ajid 281. Microsoft denies that it has infringed oi now
infringes the patents asserted against Microsoft in the Second Amended Complaint Microsoft
denies any and all remaining allegations j)f paragraph 26 of the Second Amended Complaint
27. Microsoft denies any and all allegations of paragraph 27 of the Second
28. Microsoft denies ^y and all allegations of paragraph 28 of the Second
Amended Complaint |
29. Microsoft d^es ^y and all allegations of paragraph 29 of the Second
30. Microsoft denies any and all allegations of paragraph 30 of the Second
3 1 . Microsoft denies any and all allegadons of paragraph 3 1 of the Second
32. Microsoft repeats|and reasserts its responses to paragraphs 1-6 and 10 of
tiie Second Amended Complaint, as if fiilly restated herein.
33. 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 Mtorosoft in the Second Amended Complaint. Microsoft
denies any and all remaining allegations! of paragraph 33 of the Second Amended Complaint.
34. Microsoft denies jany and all allegations of paragraph 34 of the Second
35. Microsoft denies ,any and all allegations of paragraph 35 of the Second
Microsoft denies any and all allegations of paragraph 36 of the Second
MICROSOFT Cow>oRATiON's First amended answer
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37. ' Microsoft denies any and all allegations of paragraph 37 of the Second
38. Microsoft denies any and all allegations of paragraph 38 of the Second
AFFIRMATIVE AlSTH OTHER DEFENSES
Further answering the Secbnd Amended Complaint, Microsoft asserts the
following defenses. Microsoft reserves the right to amend its answer with additional defenses as
g further information is obtained.
First Defense: Noninfringement of the Asser ted Patents
1 . Microsoft has not infringed, contributed to the infiringcment of, or induced
the infiingement 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 infiingement thereof.
2. Any and all Microsoft products or actions that are accused of infiingement
1 5 I have substantial uses that do not infifinge and therefore cannot induce or contribute to the
16 I injftingement of the '683 Patent, the *193 Patent, the '504 Patent or the '861 Patent.
Second Defense; Invalidity of th e Asserted Patents
3. On information and belief, the '683 Patent, tlie ' 1 93 Patent, the '504 Patent
and the *86 1 Patent are invalid for fidlinig 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 1 12.
Third Defense; Unavailability of Relief
4. On informatioA and belief. Plaintiffhas 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
Fourth Defense: Unavailahilitv of Relief
5 . On infomiation and belief, Plaintiffhas failed to plead and meet the
requirements of 3 5 U.S.C § 284 for enhanced damages and is not entitled to any damages prior
MKROSOTT Col*PO^ATlO^^-s First Amended >^s^^'ER
2 FAX 415 394 0134 KEKER & VAN NEST LLP ElOOS
roviding any actual notice to Microsoft of the '683 Patent, the '193 Patent, the *504 Patent,
nd/or the '861 Patent, and any alleged infringement thereof.
Fifth Defettse: Tin availability of Relief
6. On information and beUef, Plaintiff has failed to plead and meet the
squirements of 35 U.S.C § 287. arid has 'otherwise failed to show that it is entitled to any
Sixth Defense! Prosecution Histor v Estoppel
7. Plaintiffs alleged causes of action for patent infringeroent are baited under
he doctrine of prosecution history estoppel, and Plaintiff is estopped from claiming that the '683
>atent, the ' 193 Patent, the '504 Patent, and/or the '861 Patent covers or inchides any accused
itficrosofl product or method.
Seventh Defense: DedicatioD to th e Public
8. Plaintiff has dedicated to the pubUc all methods, apparatus, and products
lisclosed in the '683 Patent, the '193 Patent, the *504 Patent, and/or the *861 Patent, but not
iterally claimed tberein,.and is estopped from claiming infringement by any such public domain
nethods, j^paratus, and products.
Eighth Defense: Use/Mannfacture Bv/For Unit ed States Goverpment
9. To the extent that any accused product has been used or manufactured by
5r for the United States, PlaintifiTs claims and demands for relief are barred by 28 U,S.C. § 1498.
Nitith Defense: License
10. To the extent that any of Plaintiffs allegations of infringement are
jremised 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
illegations are barred pursuant to license.
Tenth Defense! Acouiescepce
1 1 . Plaintiffhas acquiesced in at least those acts of Microsoft that are alleged
to infringe the '86 1 Patent, the "683 Patent, and the '193 Patent.
22 FAX 415 394 0134 KEKER & VAN NEST LLP 121009
Eleventh Defense: Laches
1 2. PlaintifTs claims for relief are barred, in whole or in part, by the equitable
locmne of laches. !
Twplfth Defense; Inequitable Conduct
13. The '861 Patent claims are anenforceable due to inequitable conduct,
jicluding those acts and failures to act set.forth in Microsoft's Counterclaim for Declaratory
rudgroent of UnenforceabUity of the '861 patent, set forth below.
COUNT I - DECLARATORY
nmnlvreNT OF NnNINFRINGEMENT
1 . This action arises under the patent laws of the United States, Title 35
U.S.C. §§ 1, et seq. TMs Court has isubject matter jurisdiction overthis counterclaim under 28
U.S.C.§§ 1338, 2201, and 2202. .
2. Microsoft Corporation CMicrosoft") is a Washington corporation with its
principal place of business in Redmond, Washington.
3. Upon infomiation W belief, Plaintiff /Counterclaim Defendant InterTrust
Technologies Corporation ("InterTrust") is a Delaware coiporation with its principal place of
business in Santa Clara, California.
4. InterTrust purports to be the owner of U.S . Patent Nos. 6,1 85,683 B 1 ("the
'683 Patent"), 6,253.193 Bl ("the '1193 p'atenfO. 5.940,504 Cthe '504 Patent"), and 5,920,861
("die '861 Patent"). !
5. InterTrust alleges that Microsoft has inftinged the '683 Patent, the ' 193
Patent, the '504 Patent, and the '86il Patent.
6. No Microsoft product has inftinged, 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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1 . 7. At actual controversy, within the meaning of 28 U.S.C. §§ 2201 and 2202,
2 exists between Microsoft, on the one hand, and InterTrust, on the other hand, with respect to the
I infringement or noninfringement of the '683 Patent, the '193 Patent, the '504 Patent, and/or the
I '861 Patent.
i: SvTCLIffE LLP
COUNT ii - DECLARATORY
TTmr.MTr>JT (IF INVALT mrV OF THE 'Hft^ 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 taws, including one or more of 35 U.S.C §§ 102, 103 and 112.
1 0. An actual controversy, within the meaning of 28 U.S.C. §§2201 and 2202,
exists between Microsoft, on the one handi and InterTnist. on the other hand, with respect to
whether the claims of the '683 Patent are valid or invalid.
COUNT in - DECLARATORY
■nmnMENT OP INVALIDITY OF THE «19 3 PATENT
11. Microsoft repeats and realleges paragraphs 1-5 of its Counterclaims as if
fiiUy restated herein.
12. The '193 Patent, and each claim thereof, is invalid for failing to comply
with the provisions of the Patent Uws, 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 hani and InterTnist. on the other hand, with respect to
whether the claims of the '193 Patent are valid or invalid.
. COUNT iv - DECLARATORY
■TUDGMENT OF TNVALIDITY OF THE '5 04 PATENT
14. Microsoft-repeats akd realleges paragraphs 1 -5 of its Counterclaims as if
fully restated herein.
15. The '504 Patent, and each claim thereof, is invalid for failing to comply
28 I wUh Ihe provisions of the Patent Laws, including one or more of 35 U.S.C. §§ 102, 103 and 112.
DOCSSVi:iM096,i . ^,,_.osofT CORPORATION- s First AMEbroto answer
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16. An actual controversy, within the meaning of 28 U.S.C. §§ 2201 and 2202,
exists between Microsoft, on the one hand^,
3 whether the claims of the '504 Patent are valid or invalid.
jand InterTrust, on the other hand, with respect to
4: Si -Cliff E LLP
COUNTii^' - DECLARATORY
JUDGMENT OFlNVALmTTV OF THE «861 PATENT
17. Microsoft repeats Md realleges paragraphs 1-5 of its Counterclaims as if
fiiUy restated herein. j [ '
18; The '861 Patent, aisji each claim thereof, is invalid for failing to comply
with the provisions of the Patent Laws, iric^uding one or more of 35 U.S.C. §§ 102. 1 03 and 112.
19. An actual controversy, within the meaning of 28 U.S.C. §§ 2201 and 2202,
exists between Microsoft, on the one hand[ and InterTrust, on the other hand, with respect to
whether the claims of the '861 Patent ar© valid or invalid.
COUNT VI - DECLARATORY JUDGMENT
OF UNENFORCEABILITY OF TTTF '861 PATENT
20. Microsoft repeats knd realleges paragraphs 1 -5 of its Counterclaims, as if
fully restated herein. . j.
21 Claims 1-129 of thfe '861 Patent application (SN 08/805,804). and claims
1-101 of the '861 Patent, were notand ar^ not entitled to benefit of any application filing date
prior to February 25, 1 997, under 35 U.S.C. § 120 or otherwise.
22. Exhibit A^hereto is a reprint of an article Mititled "Digibox: A Self-
Protecting Container for Infoiroatipn Cornmerce." The article shown in Exhibit A (hereafter,
•the Sibert article") was published'in Juft 1995 in the Proceedings of the First USENK
Workshop on Electronic Commerce. i
23 . On infoTTBaiion anid belief, the content of pages 2- 1 4 of Exhibit A was
i '■ i-
presented at a public conference in the United States m July 1995.
24. Exhibit B hereto is' a copy ofa page from an International Application
published under the Patent Cooperation Treaty (PCT). bearing International Publication Number
Microsoft Comoration-s First amended answer
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25. " On mformati(in andbeUef, International Application WO 96/27155 has, at
2 I all times since its filing date, been ofned ijid controlled by InterTmst or its predecessors in
3 [iiiteresL i| ;<
26. International Xpplidation WO 96/27155 (hereafter "the WO 96/27155
(PCT) publication") was published on September 6. 1996.
27. United States' PateritNo. 5,910.987 ("the '9il Patent") issued on June 8,
1999, from a continuation of an applicaticjn filed on February 13, 1995.
28. The Sibert a^de is prior art to claims 1-129 of the '861 Patent appUcation
9 (SN 08/805,804), and claims 1-I0l|bf thei ^861 Patent, under 35 U.S.C. §§ 102(b), 103.
29. The WO 96/27155;(PCT) publication is prior art to claims 1-129 of the
'861 Patent application (SN 08/805,804),iand claims 1-101 of the '861 Patent, under 35 U.S.C. §§
12 102(a), 103.
& S'.'TCl.iF?f LLP
30. The '987 Paient is jirior ait to claims 29-129 of the '861 Patent application
(SN 08/805.804), and claims l-lOljof the;'861 Patent, under 35 U.S.C. §§ 102(e). 103.
31 . The Sibert aiiticle vjas material to the patentability of claim 1 of the '861
Patent application (SN 08/805,804)1. ;
32. The Sibert article was material to the patentability of claims 2-129 of the
•861 Patent application (SN 08/805,804)|.:
33. The WO 96/i271 55 i(PCT) publication was material to the patentability of
claim 1 of the '861 Patent application (STjl 08/805,804).
34. The WO 9^27l55i(PCT) publication was material to the patentability of
claims 2-129 of the '861 Patent ajipUcatiijm (SN 08/805,804).
35. The '987 Patent was material to the patentability of claims 29-129 of the
'861 Patent application (SN 08/805,804) ••
36. One or morfe of the '861 Patent appUcants knew, while the '861 Patent
application (SN 08/805,804) was pending, of the July 1995 publication of the Sibert aiticle.
37. On information and beUef. one or more of the '861 Patent applicants taiew.
while the ' 861 Patent application (SN 08/805,804) was pending, of the September 1996
°OC55Vl:i6Ca96.1 Microsoft Corporation's First amended Answer
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iibiication of the WO 96/27155 (PCT) publication
38. One or more of the
pplication (SN 08/805,804) was pending,
39. On infoimation anc
861 Patent applicants knew, while the '861 Patent
of the June 8, 1999 issuance of the '987 patent
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
/as 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) Imew, while that application was pending, of the
leptember 1996 publication of the WO 96/27155 (PCT) publication.
41. One or more of the attorneys who prosecuted or assisted in prosecuting the
861 Patait application (SN 08/805,804) knew, while that application was pending, of the June 8,
999 issuance of die ' 987 patent, i
42. The applicants for the '861 Patent did not cite the Sibert article, the WO
16/27155 (PCT) publication, or the '987 Patent to the Patent Office as prior art to any of claims 1-
29 of the *861 Patent application (SN 08/805,804).
43. The ^licants for the '861 Patent did not cite to the Patent Office as prior
rt to any of claims 1-129 of the '861 Patent appUcation (SN 08/805,804) any reference having
he same or substantially the same disclosure as the Sibert article, the WO 96/27155 (PCT)
lublication, or the '987 Patent.
44. None of the Sibert article, the WO 96/27155 (PCT) publication, or the '987
>aient is merely cumulative over any reference cited as prior art during the prosecution of the
861 Patent application (SN 08/805,804).
45. On infonnatibn and belief, one or more of the '86 1 Patent applicants
)elieved, during pendency of claim'l 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 infoimation and belief, one or niore of the '861 Patent applicants
jdieved, 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
MICROSOFT CORf ORATION'S FIRST AMENDED ANSWER
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48. On infoimatioil and
believed, while the '861 Patent application
application (SN 08/805,804)
47. On infotmation and beUef. one or more of the '861 Patent applicants
believed, while the '861 Patent appUcation^SN 08/805.804) was pending, that the Sibert article
was material to the patentability of claims M29 of the '861 Patent application (SN 08/805.804).
but. with deceptive intent, failed to disclose that reference as prior art to the Patent Office.
beUef, one or more of the '861 Patent applicants
(SN 08/805,804) was pending, that the WO 96/27155
(PCT) pubUcation was material to the patentabiUty of claims 1-129 of the '861 Patent application
(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 appficants
believed, while the '861 Patent applicatio i (SN 08/805,804) was pending, that the '987 Patent
.29-129 of the '861 Patent application (SN 08/805.804),
but, with deceptive intent, failed to disclose that reference as prior art to the Patent Office.
50. The '861 Patent is unenforceable due to tiie inequitable conduct of the '861
Patent appUcants before the Patent and Tiademark Office in connection witii tiie '861 Patent
17 I application (SN 08/805,804).
& Si.TC'-IFfE LLP
5 L An actual controv^y, 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
whether the claims of the '861 Patent are enforceable.
COUNT jm - INFRINGEMENT
OF U.S. PATKNT NO. 6.049.671
52. Microsoft repeats and realleges paragraphs 2-3 of its Counterclaims, as if
folly restated herein.
53. This Couixhas exclusive subject matter jurisdiction over Microsoft's cause
of action for patent in&ingeraent under Tjitie 28. United States Code. Sections 1331 and 1338. and
under the patent laws of tiie United Stati. Title 35 of the United States Code.
MlCROSOf=T CORPORATION'S FIRST AMENDED ANS^'ER
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54. U.S. Patent No; 6,049,671 ("the '671 Patent") issued to Microsoft
orporation as the assignee of Benjamin Slivka and Jeffiey S. Webber on April 1 1, 2000.
55. A true copy of itbe •(571 Patent is attached as Exhibit C hereto, and is
icoiporatcd harein by reference. ji
56. Microsoft owns all light, title and interest in the '671 Patent.
57. inteiTnist has bad actual notice ofthe '671 Patent.
58. InterTnist has 'inftinged one or more claims ofthe '671 Patent, in violation
f at least 35 U.S.C. § 271(a, b, c).
59. InterTrusfs infiing'ement ofthe '671 Patent has caused and will continue to
ause Microsoft damage, including iirepJrable harm for which it has no adequate remedy at law.
COUNT yin - INFRINGEMENT
OF tj.S. PATRNT NO. 6.2S6.668
60. Microsoft repeats and reaUeges paragraphs 2-3 and 51 of its Counterclaims.
IS if fully restated herein. j
61 . U.S. Patent No. 6,256,668 Bl ("the '668 Patent") issued to Microsoft
:orporation as the assignee of Benjaminjy. Slivka and Jef&ey S. Webber on July 3, 2001.
62. A true copy of tiieji^668 Patent is attached as Exhibit D hereto, and is
ncoiporated herein by reference. j'
63. Microsoft owns allt ri^t, title and interest fai the '668 Patent
64. InterTmst has hadl;actual notice of the '668 Parent.
65. InterTrust hai infi|nged one or more claims ofthe '668 Parent, in violation
Df at least 35 U.S.C. § 27 1 (a, b, c). , jj
66. InterTrust's infiinfeement ofthe '668 Patent has caused and will continue to
:ause Microsoft damage, inchiding irreifable harm for which it has no adequate remedy at law.
PRAYER FOR RELIEF
WHEREFORE, Microsoft prays for the following relief:
A. The Court enter judgment against InterTrusi on, and dismiss with
DOCSSVl:1fc0096.1 ■ MICROSOFT COMORAT.ON-S FIRST A-MESDED ANSWER
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1 prejudice, any and all claims of the Secondj /amended Complaint;
B. The Coun enter jodlm^t declaring that Microsoft has not infringed,
contributed to infiingement of, or induced|nfringement of the '683 Patent;
C. The Conit enter jud|in«it declaring that Microsoft has not infiringed,
contributed to infringement of. or induceddnfiingement of the '193 Patent;
D. The Court enter j
contributed to infringement of, or induced
9 contributed to infringement of, or induced! infiingement of the '861 Patent;
lent declaring that Microsoft has not infringed,
^infringement of the '504 Patent;
The Court enter judjgmmt declaring that Microsoft has not infringed.
The Court enter ju^ment declaring that the '683 Patent is invalid;
The Coun enter juigraent declaring that the '193 Patent is invalid;
The Court enter judgment declaring that the '504 Patent is invalid;
The Court enter julgment declaring that the '861 Patent is invaUd;
The Court enter ju igment that the '861 Patent is unenforceable due to
The Court enter ju lgment that InterTnist has infringed the '671 patent;
The Court enter jutgment that InterTnist has infringed the '668 patent;
A peraianent injwfction prohibiting InterTnist, its officers, agents, servants,
employees, and all persons in active. con< iert or participation with them from infringing the •671
interTrust of damages and attorney fees, pursuant to the
i: S; :r: = ^-= LLP
and '668 Patents;
N. An award against
provisions of 35 U.S.C |§ 284, 285.
0. An award to Miclsoft of prqudgment interest and the costs of this action.
P. The Court award i o Microsoft its reasonable costs and attorneys' fees; and
Q. The Cotirt grant to' Microsoft such other and fiirther relief as may be
deemed just and appropriate.
D(X3SVlil5X96.1 [ MICROSOFT COWORA-nON-S First AMENDED ANSWER
■15- ^SDCOUN'TERCIAIMS. CaSE NO. C 01-1640 SBA
09/28/2 q01_09 :25 FAI 415 3 94 0134
KEKER & VAN NEST LLP
Pursuant to Fed. R. Ciy. P
trial by jury.
DATED: September 17, 2001
& SlTCLtFFE LLP
38(1)), Defendant Microsoft Corpoiation demands a
WILLIAM L. ANTHONY
MARK R. WEINSTEIN
ORRJCK HERRINGTON & SUTCLIFFE, LLP
;1000 Marsh Road
Menlo Park, CA 94025
IKRISTIN L. CLEVELAND
:JAMES E. GERINGER
iJOHN D- VANDENBERG
KLARQUIST SPARKMAN, LLP
iOne World Trade Goiter, Suite 1600
!l21 S.W. Salmon Street
IPortland, OR 97204
I Attorneys for Defendant
I Microsoft Corporation
Microsoft Corporation's First amended answer
-16- urn Counterclaims. Casi No. C 01-1640 SBA
09/28/2001 09:25 FAI 415 394 0134
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09/28/2001 09:25 FAI 415 394 0134 KEK?R & VAN NEST LLP
The following paper was originally published in the
Proceedings of the First USENK Workshop on Electronic Commerce
New YorkjNew York, July 1995.
Olin Sibert, David
: Semstein^ and David Van Wie
Piblishing Resources, Inc.
For more information ibout USENK Association contact:
1. Phone: 510 528-8649
2. FAX: 510 548-5738
3 . Email: firstname.lastname@example.org
4. WWW URL: http://www.usenix.org
09/28/2001 09:25 FAX 415 394 0134
raiKER & VAN NEST LLP
A Self-Protecting Container for Information Commerce
David Van Wie
Electronic Publishing Resources, Inc.
460 Oakmead Parkway
1408 774 6100
Information Commence is a business activity carried cut among several parties in which information car-
ries value and is treated as a product The infomiation may be content it may be returned usage and mar-
keting data, and it may be representative a/financial transactions-
In each of these cases the information is valuable and must be kept secure and private- Traditional
approaches secure the transmission of that informaHonfrom one point to another: there are no persistent
protections. Protection of all of these components of information commerce for all parties m a transacnon
value chain is necessary for a robust electronic infrastructure.
A prerequisite to such an environment is a, cryptographically protected container for packa^ng
information and controls that enforce information rights. Hits paper describes such a contamen called the
DigiBox^. EPR has submitted initial specifications for the DigiBox container to the ANSI HSP Electronic
Publishing Task Force (EPUB) within the User/Content Provider Standards Working Group (WC4).
As services and products in modem cominerce
increasingly take electronic fonn, traditional com-
merce is evolving into elecntmic commerce. This
includes both creation and enforcement of varicjus
agreements between parties in an electronic com-
mercial relationship. It aliso includes enforcing me
rights of these parties with respect to the secnre
management of electronic content or services
usage, billingt payment, and related activities.
To save money, to be competitive, and to be effi-
cient [1,2], members of modem society will shortly
bt using Tvew information technology tools that
truly support electronic commerce. These tools
provide for the flow of products and services
through creators', providers*, and users* hands-
Tbey enable the creation, negotiation, and enforce-
ment of electronic agreements, including the evo-
lution of controls that manage both tiic use and
consequences of use of electronic content or ser-
vices. In addition, these tools support "evolving"
agreements that progressively reflect the require-
ments of further participants in a conunercial
Participants in electronic commerce [3,4] will need
rules and mechanisms such that:
09/28/2001 09:25 FAX 4 15 394 0134
KEKER & VAN NEST LLP
1 . Information providers can be assured that;their
content i$ used only in authorized ways;
2. privacy rights of users of content are pre-
3. Diverse business models related to content can
be electronically implemented.
The Internet and other hifonnation 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 tp 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 compotient of
the information superhighway . It is also clear
that imfettcred 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 bottte-
necks in the implementation and deployni'ent of
requires a substantial manufacturing investment
Figure 1 illustrates a simplified traditioiial informa-
tion economy; physical goods flow from a pub-
lisher (manufactoer) 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.
2 Information Commerce and Digital
Information commerce is often considered' a
wholly new concept, made possible only through
the use of networks and computers. In facti' a
robust information economy has existed forjccirtu-
ries, involving traificking in physical representa'
lions of information sudi 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 aspectsjof
the electronic information economy are that the
information itself is the entire product and that jtbe
product can be distributed at negligible margina]
The traditional information economy in physical
goods is publisher-centric, because creation' of
irvfonnation goods— particularly low-cost goods-
Figure 1, Traditional raformation 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 modcL In this system, members of the
electronic corrmmnity, wjth.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 09:2 6 FAX 415 394 0134 KmRA_YAN. NEST LLP ^022
then making them available to customers. Similar
to 3 manufecturing/distribution/retail chain for
physical goods, the electronic model permits infor-
roatioD retailers, and even end customers, to r^
package and redistribute different aggregations -of
information while ensuring that the approprii^tc
control rules are maintained A clearinghouse
ensures that usage information and payments ate
provided directly to authors and publishers; tije
payments themselves are made through traditional
financial institutions. Because coufrol rules are
associated with infoiroation, a variety of payment
and other business models can be associated with
the same content (e.g^ purchase versus pay-per-
lA Protecting All the Information in
The very properties that make **the net*' atcractive
as a distribution medium — case of roan^ulatjng
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 wifliout bemg subject
to external tampering or disclosure. A prerequisite
to such an enviroimient is a cryptographically pro-
tected "container** for seamlessly packaging infor-
mation and controk that enforce information use
Payi per Use
\ The DigiBox described by this paper is such a con-
The need for various information commerce com-
puten and appliances to interoperate requires that
this 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 (IISI^ ^ugh the
Electronic Publishing Task Force (BPUB) in the
User/Content Provider Standards Working Group
Figure 2. Electronic mfonnation economy Ij
The conversion from traditional commercial disp-
bution channels requires key foundation technojlo-
gies and results in a fundamental shift in existing
infrastructures. This channel transformation hyill
create a new electronic digital distribution industry.
Digital distribution employing the DigiBox con-
tainer architecture and its associated support envi-
ronment, InterTrust"^, can play a critical role in
this transformation of the corrunxmication, m^a,
and infoTmation technology markets.
The primary goal of information protection is to
permit proprietors of digital information (i.e.p the
artists, writers, distributors, packagers, market
researchers, etc.) to have the same type and degree
of control present in the "paper worid." Because
digital information is intangible and easily dupli-
cated, those rights are difficult to enforce with con-
ventional information processing tecJmology.
Many types of rights (compensatiott, distribution,
modification, etc.) are associated with the various
elements of information commerce, and these
information property rights take many forms. 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 bow copyrighted information 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
For example, the protections needed for content
elements incorporate the licensing provisions for
the intellectual property rights of the content right-
sholders. 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.
In the realm of physical goods, these rights ap
enforced by a combination of legal and techniral
means. However, the technical means can be (and
are) unsophisticated because the technology for
violating rights is relatively expensive and tii^fe-
coDsuming— in comparison to equivalent activities
With respect to digital information. Photocopying a
book or copying a video cassette is inherently m^
labor intensive and costly than copying a file; sjo,
while defeating technical means of enforcemrotjis
(relatively) expensive, it can be done — and often
the legal means to deter this are inadequate. .(
2,2 Information Commerce — ^Not Just '-j
Rights protection is also a fundamental aspect ^of
conuncrce. 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 irnpor-
tani aspects of the transaction relationships. Often
the information carried in these reports, audits^ &d
the like is highly valuable and highly confidential,
perhaps even more valuable than the content feat is
the subject of the information commerce at hakid.
These activities too are perforaied and controlled
in the "paper worltf ' by legal and technical means,
but there are no widely used models for their elec-
tronic equivalents. . !
Figure 3 shows some of the operations that could
occur in true electronic commerce, using the Inter-
net World-Wide Web  mechanisms as an exam-
ple. Creators originate content and apply rules
(e.g., '*pay author $1.00/use") for its use. Distribu-
^Q^s'tepadage content, applying additional xiltz
(e.g., **pay $5.00 for the coUecrion, then pay the
creator*** "rq)oit use of each item")- Users receive
content and operate on it, generating billing reports
and usage reports tiial are delivered to a clearing-
house and paid or sumaiarized back for the origi-
. natxng parties. This structure is very rich and is
capable of siqjporting many business models.
There arc multiple flows of information in many
different directions amongst the parties involved in
Anofljcr example is that of an advertiser (acting as
distributor, or with a distributor). The advertiser
might have a rule ttiat 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
It is relatively simple to devise schemes for parties
to pay each other electronically (for example, Digi-
Casb , NetBflJ , Open Market , SNPP
, NetGbcque , Fixst Virtual , etc.)- Pay-
ment, however, constitutes only one — and perhaps
the simplest one — of the means in which parties b
commerce interact All the other infonnation com^
meme 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 Approaclies to Informatioii
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 fi^gmented, and tiiere are no general pro-
09/28/2001 09:27 FAX 415 394 0134
KERER & VAN NEST LLP
Figure 3, Muhi-paity Internet infonnalion cotnmepcc.
3 J No Protection I
Much digital property is distributed without ary
technological enforcement for property rights, on^
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
P rivate Transaction
their own and illegitimaie use. In many cases, how-
ever, 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
cours^ privacy lights of users will be a coneem to
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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 interactiim
with a license manager process. In general, tiiere
no protection of usage data in these schemes. In
some cases this technique has been applied to con|-
tent protection, but only with limited success [llj,
33 Cryptographic Unlock
Some static properties (fonts, for example; also
some installable software) are protected by a sim-
ple '^lnlock" scheme: a purchaser makes a pur-
chase, for example by telephone with a credit carfl,
and receives a cryptographic key in retunL Tins
key can then be used to "unlock" one property
from some widely distributed medium (e.g^ CD-
ROM or network download). This mechanism jis
relatively inflexible, and its inherently msnxi^]
nature makes it expensive.
3 A Billing Schemes
Various billing schemes (as mentioned above) per-
mit purchase of information following what Is
essentially an electronic check or electronic credit
draft modcL These methods are suitable for con-
ventional transactions, but not for the cnomaoiis
volumes of individually) very low-value transaj>-
tions that would be generated using a complex dig-
3-5 Secured Delivery
Various secured delivery systeros (e.g., SSL ,
SHTTP ) share the same problems as cryjA)-
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 deliveiy of informa-
tion from payment for its use.
4 = Infonnation Protection Architecture:
' InterlVust 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-
Tnist A few examples include distribution of con-
tent (eg., 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 wmmunica-
tion of private information such as EDI and elec-
tronic finandal transactions, as well as delivery of
the' "back channel" marketing and usage data
resulting from transactions.
DigiBox is a foundation technology within Inter-
Trust It provides a secure cont^er to package
information so that the information cannot be used
except as provided by the rules and controls associ-
aked with the content InterTrust rules and controls
specify what ^es of content usage are pemiitted,
as well as the consequences of usage such as
reporting and payment
Within InterTrust, DigiBox containers can enforce
i "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
The DigiBox container mechanism is implemented
in! a set of platfonn-indcpendent 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 higjily
flexible and configurable control structures. Digi-
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KEKER & VAN NEST LLP
Box rights management components can be inte
grtled with content in a single deliverable, or sonw
or aU of the components can be delivered indepen-^
dentiy. DigiBox rights management components]
enable true superdistribution  and can suppor^
virtually any network topology and any number ofi
participants, including distributors, redistribntorsj
information retailers, corporate content users, and
The digital information in a DigiBox (one or more
''properties") is information in any form. It maybe
mapped to a specific compoimd object format (e.g.]
OpenDoc, OLE, PDF)» or may be application spe-
Further, it may be delivered in stream or othM
communication-oriented forms, not jtist in a filej
Controls specify rules and conseqiicnces for opcraj-
tions on content Controls are also delivered in ^
DigiBox, and ttie controls for a property may bje
delivered either with the property or independently
Controls are tied to properties by ciypiogr^hii
Because controls can be delivered with properties
in a container, the DigiBox supports superdistrib^
Commerce takes place governed by controls. -—
may involve metering, billing for use, reporting fif
usage, and so on. These operations take plade
locally in a secure environment, and they generm
audit trails and reports that must be reported pe"
odically to clearinghouses.
5 DigiBox Implementation
The DigiBox is a structure that can hold, in a pro-
tected manner, information commerce elements of
all VdTVds; content, usage information, representa-
tion of financial transactions (e.g., electronic cash),
and! other digital elements of infonnatioafl com-
5 A i Container Logical Stmctnre
Figiire 4 shows the logical structure of properties
and' control sets in two containers. Container Ci*
holcis two properties, P, and Pj* and one control set,
CSj. that applies to property P|; container Cj con-
taiiis two control sets and no properties. As shown
in the example, each of these elements .has a title
atttibute to provide a human-readable description
of the clement and* for control sets, an attribute
indicating to >*1iat other elements the control set
A control set specifies rules and consequences,
sudh as pricing, reporting, and so on, for the prop-
erties to which it applies, A user holding just this
container could use (e.g., view, print) content fiom
PjJ-though only as specified by CSj. Because
&ere is no control set applying to P^ in that con-
tamer, Pj would not be usable in any way.
A user holding bdh containers could use property
pj a$ specified by CSj, and in addition ha$ the
ch6ice of whether to designate CS| or CSj when
using P). CSj, which describes itself as "discount."
is likely to be the user's preferred choice.
; I *
The (DigiBox includes several elements: mganiza-
ticinal' structures, properties, controls, and support-
ing data items. Almost all the information in a
Dig^ox is enciypted, as described below, and
accKs to the encrypted foma Is provided through a
storage manager as appropriate, depending on how
the DigiBox is delivered (e.g.. as a file or as a data
5;2 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
with a container header structure containing
descriptive and organizational information about
th'e container. Part of the container header is
encrypted (both for secrecy and for integrity pro-
tection); the rest is public organizational informa-
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KEKER & VAN NEST LLP
Title = giraffe
Applies to = P,
Title = regular
Title = elephant
Figure 4. Container logical structure.
tioiL The header is followed by
container- wide stnictuies such as the transport kpf
block (TKBJ and the container table of contents
(TOQ, some of which arc encrypted and others
These organizational elements are followed by the
structures defining the container's content (e^g.
properties and control sets). As shown in the
lire, a property is represented by a property header,
property attributes, and data blocks composing die
property. As shown, the header is encrypted and
: Control Set
Applies to = Pj
Applies to = P2
Title = discount
additional the attributes are not; the data blocks may be
wholly or partly encrypted, or not at all, dcpendmg
on security requirements.
The figure shows an example propeny 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-
ciyp^*i s*> access can be r^pid 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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Shading iodicates encryption:
Encrypted by Key 1
^ Enciypied by Key 2
Figure 5. Container physical format
uses four distinct keys, because the content propii •
dor requires much stronger security for audio than
A property is represented as one or more propen/
sections, each of which is independently associatdi
with control information, and which may also le
stored and accessed independently. A property, fcr
example, might be a collection of clip-art images,
and each image might be a property "chunk,'' with
its own control speci^g how that image's creator
Controls can map to property chunks at aibitraiy
granularity and can enforce arbitrary organiza-
tional structures within the property (such as a file
hierarchy). Controls can apply to individual bytes,
femaJs of a movie, segments of a musical piece,
add so on, because the mapping is performed by a
coniol process specified by the control structure,
not simply via a tabl^^riven data structure.
I j !
53 : Cryptographic Techniques
*,MWj high-level elements in a DigiBox
encrypted with a transport tey that is normally
dpriyed (by exclusive OR) from two parts: one that
isj delivered in the DigiBox itself, encrypted with a
pjiblic key algorithm, and the other that is stored in
protebted storage locally. The locally stored part is
siared among all the local nodes capable of pro-
cessing that DigiBox, but the part in the DigiBox is
uhique. This separation provides protection against
accidental or malicious disclosure of either part
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ID = 5
ID = 61
ID « 142
Partial TjK Value
Decrypted Header Information
Figure 6. Container transport security.
ID = 6
ID = 8
ID = 30
ID = 32
. Partial TK73
ID = 81
ID = 142
ID = 177
Figure 6 illuslraies how the transport key (TK) is
derived. The transport key block (TKB) contains
one or more slots, each of which contains a partial
transport key encrypted under a dijEfcrent transport
key encrypting key (TKEK). Each TKB slot identi-
fies the TKEK used, and a matching TKEK is
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KEKER & VAN NEST LLP
selected from local protected storage. Dccryptmg
the slot yields a partial TK, which is combbed
with its corresponding partial TK again froiD:!pn)-
tected local storage to yield the actual TK for
decrypting the container header,
The data for the property itself is encrypted -with
other keys ("content keys") that are thcmselvc^
delivered in encrypted high-level structuresj this
approach permits the keys for a property tjO be
delivered entirely separately from (he property or
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 diS7
closure of any one key. [
All DigiBox control structures are botid encrypted
and verified for integrity with a cryptographic hash
function. Several cryptographic algorittmis are
supported for these control stiucmies (principall j
for export control reasons), and arbitrary ! algo-
rithms are supported for encryption of the data.
5.4 Security Characteristics !
The DigiBox cryptographic structures are designei
to be secure even in ttie face of loss of individual
key components, and to minimize the damage in
case a key or processing environment is ccnnprc-
nwscd. The system is designed to provide commer-
cially acceptable risks and losses for a variety of
business models. I
The basic algorithms are strong: Triple 
and RSA  are preferred. This security, is, of
course, only as strong as the tamper-resistiice of
the local processing environment The preferred
implementation of DigiBox processing relics on|a
"secure processing unit" (SPU) that con^s |a
CPU, memory, program storage, and key storage in
a single tamper-resistant hardware packa^.
Although these are not widely available today, the
variety of applications they might support makesjit
likely thai such SPUs will become widely inte-
grated into common computing platforms. When
running in an SPU, &e DigiBox processing and
control mechanisms are sufficiently well protected
to support most coiruncrce applications.
In he absence of an SPU, other approaches are
useful for many business models. In feet, a soft-
ware-only implementation is sufficient fox many
apf Ucations, because much content is of relatively -
lov value and is used in a context (business to
bus iness) where a modest level of fraud is both less
likely and more tolerable. As long as tiie software
is I aoderately difficult to defeat and tools to defeat
it I ave no legitimate purpose, business models can
be supported where some risk of loss is acceptable.
In he worid of electronic commerce, just as for tra-
ditonal commerce, security is not absolute: it is
jus I a fector to balance against the cost of loss and
Tie DigiBox is one component of a general-pur-
pdse electronic commerce solution that rests on
thiee basic principles; rights protection, interopera-
bi] ity, and strong security.
Eikctronic commerce, and information coirmiercc
in particular, needs a robust information protection
litchamsm, including rights protection and con-
not just payment systems. As the electronic
evolves, however, and moves forward from
emulating traditional transactions mto
tircly new bxisiness models, rights protection and
cqntrol will become the predominant issues.
jtection of intellccmal property rights in infor-
ition requires strong cryptography as well as a
rible infrastructure for controlling use of the
TormatiorL A standard protected container for
formation is necessary to support intcroperabil-
r— ^ost existing schemes tightly bind the creator
protected information and the software that pro-
3SSCS it A standard container can rationalize
Formation commerce and rediice costs for all par-
L the long term, general-purpose secure electronic
aercc will need pervasive deployment of
per-resistant hardware devices to perform
bctore 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.
09/28/2001 09:29 FAX 415 394 0134_
KEKER & VAN NEST LLP
Business-to-busincss purchasing is steadily evolv-
ing into a direct electronic ordering model Future
commumcatigns and media markets wiU become
increasingly segmented and specialized! -in
response to customer preferences and netsds| and
involve increasing, and more sophisticated, direct
interaction between consmners and provideia.
These markets and their value chains (with or with-
out intermediaiy distributors) will require secure
metering and control tools that enable a user to
efficiently and economically taUor resources ^*i^
or her own desires.
During the next decadc» digital deliveiy of tadi^
tional electronic products, such as infonnati.on
databases and software, will be joined by a i^idl>
growing array of both New Media and electroni-
cally distributed traditional content The conver
sioD from traditional models requires! kej
foundation technologies and will result in a funda-
mental shift in current infrastructure. This transfer
mation will create a new distribution industT>
Digital distribution employing a univwsal contcn:
and commerce container can play a critical role ii i
this broad economic transformation. 1
7 References ;
 A, Chandler and H- Daems, Administrative
Coordination. Allocation, and Monitoring: A'
Comparative Arwlysis of Accounting and Orga
nization in theU.SA. and Europe." i4ccoun/?ng;
Or^nizations and Society, 1919: 3-20, '
 O. WDIiamson, 'The Modem Corporation: Or -
gin. Evolution, Attributes," Journal of Eco-
nomic Literature XDC (1981): 1537-1564
 Office of Technology Assessment, y4cceJJiMi('
and Integrity of Networked 'Information CpUec ■
tions. Washington, D.C.: Government
Printing Office, July, 1993. , |
 E. Hollings, Communications Competitiyenes,
and Infrastructure Modernization Act of J 99yO.
Washington, D.C.: U.S. Government Priritii^
Office, report of the Senate Committee on Com-
merce, Science, and Transportation, 12 Septem-
ber 1990. ! '
 iL Benjamin and R Wgand, ♦'Electronic Mar-
1 :cts and Virtual Wue Chains on the Infbima-
lion Superhighway," Sloan Management
(61 U.S. Constitution. Article 1 . Section 8, Clause 8
 U.S. Copyright Act of 1978
[id] T. Bcmers-Lee, R Caillian, and J,-F. Groff,
'The World Wde Web," Computer Networks
and ISDN Systems, Vol. 25 (Dec. 1992), pp
[ll] D. Cbaum, "Achicvmg Electronic Privacy,"
\ScientiJicAmencan, August 1992, pp 96-101.
[it] M. Sirbu and J, D. TVgar, •'NetBiU: An Inter-
net Commerce System," IEEE CompCon Pro-
ceedings, March, 1995, pp 20-25.
[ik] D. Gifford ct al.. "Taymtnt Switches for Open
Networks," IEEE CompCon Proceedings,
March, 1995, pp 26-31.
[ikj S. Dukach, "SNPP: A Simple Network Pay-
ment Protocol," MTT Laboratory for Computer
Science, Cambridge. MA, 1993.
 B. C. Neuman and G- Medvinsky., "Require-
ments for Network PayroenC IEEE CompCon
Proceedings, Marcsh. 1995, pp 32-36.
[1 6] First Virtual, Inc. 'Introducing the First Vir-
mal Internet Payment System,** 1 994.
A. Choudbury, et al., "Copyright Protection
for Electronic Publishing over Computer Net-
works " June 1994, IEEE Network Magazine.
8] J. Erickson, "A Copyright Management Sys-
tem for Networked Interactive Multimedia,"
Proceedings of the 1995 Dartmouth Institute for
Advanced Graduate Studies, 1995.
09/28/2001 09:29 FAX 415 394 0134
& VAN NEST LLP
 K. Hickman, "SSL Reference Manual." ! |i i
Netscape Coiporation World Wide Web Site;.
http://www.netscape.com/ | ij
newsref/std/Bslref .html, I994,f ij.
 E. Rescorla and A. Schiffinan. "The Seaup
HypcrText Transfer Protocol." Internet Draft
draft-resorla-shttp-0.txt, 1 994. [ , ;
 B. Cox. "Superdistribution," Wired, Stpu]
1 994. pp 89-92. i - '
 U.S. National Bureau of Standards, "Data;
Encryption Standard," Federal Information]
Processing Standnrds Publication, FTPS PUB
46-l,JajJ. 1988. I '*
 R. Rivest, A- Shamir, and L. Adleman, VOn
Digital Signatures and Public-key Cryptojsy^-
terns " Communications of the ACM, Volj.2l!
(Feb. 1978). pp 120-126. [ j'
\ ! 'i
09/28/2001 09:29 FAX 415 394 0134
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: . i
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KEKER & VAN NEST LLP
l_! 10404 <3rtATC«e-Bei»^Dk,;
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