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) 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 
acsimile: (650)614-7401 

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 
'orUaiid,OR 97204 
elephone: (503)226-7391 
•acsimile: (503)228-9446 

iLttomeys for Defendant 
/aCROSOFT CORPORATION 


UNITED STATES DISTRICT COURT 
NORTHERN DISTRICT OF CALIFORNIA 
OAKLAND DIVISION 


o 
o 


NTERTRUST TECHNOLOGIES 
::ORPORAT10N, a Delaware corporation. 

Plaintiff 


ACROSOFT 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 
: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 


DOCSSVI;160096.1 


MIC^OSO^ COKWR.T,OS-8 FIRST AMEN^D -^NS^ 

^Covmt«:uMMS. Case No. C 010640 SBA 


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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 

338(a). 

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 

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 
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 
\mended Complaint. 

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 
Complaint. 

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 

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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 


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Amended Complaint 

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

Amended Complaint 

15. Microsoft denies any and allaUegations of paragraph 15 of the Second 

Amended Complaint. 

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

Amended Complaint. 

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


11 I Amended Complaint 


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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 
Amended Complaint 

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

Amended Complaint 

22. Microsoft denies any and all allegations of paragraph 22 of the Second 

Amended Conqjlaint 

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

Amended Complaint. 

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

Amended Complaint 


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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 

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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 

Amended Compl3int 

28. Microsoft denies ^y and all allegations of paragraph 28 of the Second 

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Amended Complaint | 

29. Microsoft d^es ^y and all allegations of paragraph 29 of the Second 

Amended Complaint. 

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

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Amended Complaint. 

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3 1 . Microsoft denies any and all allegadons of paragraph 3 1 of the Second 
Amended Complaint. 

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 


Amended Complaint. 


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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. 

DOCSSVV.1M096.1 


MICROSOFT Cow>oRATiON'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 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. 


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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 
Patent. 

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 

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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 
.amages- 

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. 


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Eleventh Defense: Laches 

1 2. PlaintifTs claims for relief are barred, in whole or in part, by the equitable 

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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. 

rniTNTERCLAlMS 

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 

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("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. 


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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. 

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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. 

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jand InterTrust, on the other hand, with respect to 


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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 

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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- 

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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 

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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 
WO 96/27155. 


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-1 0- .KtiD COUNTERCLAIMS. CASE No. C 01-16*0 SBA 


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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 

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3 [iiiteresL i| ;< 

26. International Xpplidation WO 96/27155 (hereafter "the WO 96/27155 

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(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. 


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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. §§ 


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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 

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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). 

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34. The WO 9^27l55i(PCT) publication was material to the patentability of 

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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 


DOCSS\' 1:160096.1 


MICROSOFT CORf ORATION'S FIRST AMENDED ANSWER 
•12- ^COUNTERCLAIMS. CASENO.C01-1640SBA 


09/28/2001 g9j24 F AX 415 394 0134 


KEKER & VAN NEST LLP 


1014 


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. 
11 


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). 


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ORKICK 
HERtltNCTON 
& 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 

ji 

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. 


DOC5SVl:16009t 1 


MlCROSOf=T CORPORATION'S FIRST AMENDED ANS^'ER 
-13- ^oVOCOL-NTERCL-^lMS. Case No. C 0M640 SBA 


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4 FAS 415 394 013 4 KEKER A^VAN NEST LLP ©015 


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. 

1; 

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 

r 

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 

'• i' 

: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 

-14- ANDCOUVreR«:UMMS.CiSSENO.C 01-1640 SBA 


09/28/2001 09:24 FAI 415 394 


KEKER & VAN NEST LLP 


@016 


1 prejudice, any and all claims of the Secondj /amended Complaint; 


2 
3 
4 
5 
6 
7 
8 


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 


E.. 


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. 


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F. 

G. 

H. 

L 

J. 

inequitable conduct; 

K. 
L- 
M. 


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 


1 

interTrust of damages and attorney fees, pursuant to the 


ORRKi: 
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. 

I 

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 


■TTTOYDEMAW) 


Pursuant to Fed. R. Ciy. P 

trial by jury. 

DATED: September 17, 2001 


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ORIIICK 
& SlTCLtFFE LLP 


DOCSSV1:160096.1 


121017 


38(1)), Defendant Microsoft Corpoiation demands a 


1 1\ 


I ■ 


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

ISTEVEN ALEXANDER 
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 
Telephone: (503)226-7391 

I Attorneys for Defendant 
I Microsoft Corporation 


! I 


Microsoft Corporation's First amended answer 
-16- urn Counterclaims. Casi No. C 01-1640 SBA 


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


KEKER & VAN NE ST LLP 


@01$ 


I i 


I ! 


09/28/2001 09:25 FAI 415 394 0134 KEK?R & VAN NEST LLP 


@019 



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


DigiBox: A 
for 


Sdf-Protecting Container 
Information Commerce 


Olin Sibert, David 
Electronic 


: Semstein^ and David Van Wie 
Piblishing Resources, Inc. 
Sunnyvale, California 


For more information ibout USENK Association contact: 

1. Phone: 510 528-8649 

2. FAX: 510 548-5738 

3 . Email: office@usenix.org 

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


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


raiKER & VAN NEST LLP 


@020 


The DigiBox: 

A Self-Protecting Container for Information Commerce 

Olin Sibert 
Davi^ Bernstein 
David Van Wie 

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


Abstract 

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). 


1 Introduction 

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 
model. 

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 


il021 


1 . Information providers can be assured that;their 
content i$ 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. 

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 [5]. 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 
New Media, 


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. 


Financial 
Insntution 



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 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] 
cost. 

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. 


i :!! 


09/28/2001 09:2 6 FAX 415 394 0134 KmRA_YAN. NEST LLP ^022 

y 


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- 
use). 


lA Protecting All the Information in 
Information Commerce 

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 
rights. 


Insdti^oo 



Outomer 


Custom^ 

Payi per Use 

Comeni 

Purchases 


Contenll 


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


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 
(WG4). 


Usage Re]:i9ns 



Conicni 



Redistributes 


PurchosK 


Figure 2. Electronic mfonnation economy Ij 

jS. 

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. 


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


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- 
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. .( 

'i 

2,2 Information Commerce — ^Not Just '-j 
Payment : 

.'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 [10] 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 
the transactions. 

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 
advertiser. 

It is relatively simple to devise schemes for parties 
to pay each other electronically (for example, Digi- 
Casb [11], NetBflJ [12], Open Market [13], SNPP 
[14], NetGbcque [15], Fixst Virtual [16], 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 
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 fi^gmented, and tiiere are no general pro- 
tection solutions.' 


09/28/2001 09:27 FAX 415 394 0134 


KERER & VAN NEST LLP 


<i024 


Registrar/ 
Repository Managers 


Content 
Servers 


1 


Repository 
Administration 


Content 



WWW 

Server 
I 



Internet 


Business 
Rules 


DigiBox 
Packagiag 
Application 


Y — 

Authors 


Figure 3, Muhi-paity Internet infonnalion cotnmepcc. 


3 J No Protection I 

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 


Transaction 
Server 


P rivate Transaction 
Networks 


Clearinghouses 


Clearinghouse 
Int^face 


1 


DigiBox- 
Aware 
Browser 


Users 


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 
many. 


09/28/2001 09:27 FAX 415 394 0134 


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@025 


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, 
18]. 


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 


:l 


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- 
ital property. 


3-5 Secured Delivery 


Various secured delivery systeros (e.g., SSL [19], 
SHTTP [20]) 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 
controls. 

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- 


09/28/2001 09:27FAI 415 394 0134 


KEKER & VAN NEST LLP 

I • 


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 [21] and can suppor^ 
virtually any network topology and any number ofi 
participants, including distributors, redistribntorsj 
information retailers, corporate content users, and 
consumers. 

4.1 Content 

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- 
cij&c. 

Further, it may be delivered in stream or othM 
communication-oriented forms, not jtist in a filej 
like container. 

4.2 Controls 

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 
means. 


Because controls can be delivered with properties 
in a container, the DigiBox supports superdistrib^ 
tion. 

4.3 Commerce 

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. 


@|026 


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- 
merce. 

I 

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 
applies. 

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. 
i 

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 * 
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 
stijBani). 

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- 


I 


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Property 


Title = giraffe 



Control Set 


Applies to = P, 


Title = regular 


Property 
P2 


Title = elephant 


Container C 


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 
not. 

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 


11! 


: Control Set 
CS3 


Applies to = Pj 


Title -discount 


Control Set 
CS2 


Applies to = P2 


Title = discount 


Container C2 


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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CoDtdner Coniainer 
Header TKB 


Shading iodicates encryption: 

Unencrypted 
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 
for video. 

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 
is compensated. 


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, 


11028 


ii; 


Video 
Block 2 



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 


IJie 


are 


*,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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In Container 


Transport Key 
Block (TKB) 


1D=1 


ID = 5 


ID-3I 

Partial TK 



ID =40 


ID = 61 



Container 
Header 


Public 
Header 
InfonnatLon 




ID « 142 


Partial TjK Value 



OR 


Transport Key 


Decrypted Header Information 
Figure 6. Container transport security. 


In Protected 
Local Storage 


TKEK 
Storage 


ID = 6 

TKEK^ 

ID«=7 

TXEK7 

ID = 8 

TKEKg 

ID = 30 

TKEK30 

ID-31 

TKEK3I 

ID = 32 

TKEK32 

ID^33 

TKEK33 


Partial TK 
Storage 


ID«73 

. Partial TK73 

ID = 81 

Partial TK^l 

ID "90 

Partial TK90 

ID = 142 

Partial TK142 

iD=176 

Partial 

ID = 177 

Partial TK177 


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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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, 

■i 
ii 

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. [ 

I 

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 [22] 
and RSA [23] 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. 


@030 


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 
frajud. 

Conclusions 

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. 


trols, 
win*ld 
siinply 
er 


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- 
;q)ants. 

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. 


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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 

i ! 

7 References ; 

[1] 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, ' 

\ 

[2] O. WDIiamson, 'The Modem Corporation: Or - 
gin. Evolution, Attributes," Journal of Eco- 
nomic Literature XDC (1981): 1537-1564 

I 

[3] Office of Technology Assessment, y4cceJJiMi(' 
and Integrity of Networked 'Information CpUec ■ 
tions. Washington, D.C.: Government 
Printing Office, July, 1993. , | 

• ..i 

[4] 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. ! ' 


[ 


[5] iL Benjamin and R Wgand, ♦'Electronic Mar- 
1 :cts and Virtual Wue Chains on the Infbima- 
lion Superhighway," Sloan Management 
JJevte>HVol.36No.2(1995). 

(61 U.S. Constitution. Article 1 . Section 8, Clause 8 
1787). 

[7] U.S. Copyright Act of 1978 
t8]17U.S.C.8l07 
[9]|l7U.S.Csl02(a) 

[id] T. Bcmers-Lee, R Caillian, and J,-F. Groff, 
'The World Wde Web," Computer Networks 
and ISDN Systems, Vol. 25 (Dec. 1992), pp 
454-459. 

[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. 

[15] 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. 



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[19] 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. 

[20] E. Rescorla and A. Schiffinan. "The Seaup 
HypcrText Transfer Protocol." Internet Draft 
draft-resorla-shttp-0.txt, 1 994. [ , ; 

[21] B. Cox. "Superdistribution," Wired, Stpu] 
1 994. pp 89-92. i - ' 

b •; 

[22] U.S. National Bureau of Standards, "Data; 
Encryption Standard," Federal Information] 
Processing Standnrds Publication, FTPS PUB 
46-l,JajJ. 1988. I '* 

[23] 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' 


fl, 

i :. 
\ ! 'i 

11 


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