Trials@uspto.gov
`571-272-7822
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`Paper 90
`Entered: June 2, 2014
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`UNITED STATES PATENT AND TRADEMARK OFFICE
`____________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`____________
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`APPLE INC.
`Petitioner
`
`v.
`
`ACHATES REFERENCE PUBLISHING, INC.
`Patent Owner
`____________
`
`Case IPR2013-00080
`Patent 6,173,403 B1
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`
`
`Before HOWARD B. BLANKENSHIP, JUSTIN T. ARBES, and
`GREGG I. ANDERSON, Administrative Patent Judges.
`
`ARBES, Administrative Patent Judge.
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`
`
`FINAL WRITTEN DECISION
`35 U.S.C. § 318(a) and 37 C.F.R. § 42.73
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`
`571-272-7822
`
`Paper 90
`Entered: June 2, 2014
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`
`
`UNITED STATES PATENT AND TRADEMARK OFFICE
`____________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`____________
`
`APPLE INC.
`Petitioner
`
`v.
`
`ACHATES REFERENCE PUBLISHING, INC.
`Patent Owner
`____________
`
`Case IPR2013-00080
`Patent 6,173,403 B1
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`
`
`Before HOWARD B. BLANKENSHIP, JUSTIN T. ARBES, and
`GREGG I. ANDERSON, Administrative Patent Judges.
`
`ARBES, Administrative Patent Judge.
`
`
`
`FINAL WRITTEN DECISION
`35 U.S.C. § 318(a) and 37 C.F.R. § 42.73
`
`
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`Case IPR2013-00080
`Patent 6,173,403 B1
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`I. BACKGROUND
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`Petitioner Apple Inc. (“Apple”) filed a Petition (Paper 2) (“Pet.)
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`seeking inter partes review of claims 1-12 and 17-19 of U.S. Patent No.
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`6,173,403 B1 (“the ’403 patent”) pursuant to 35 U.S.C. §§ 311-19. On June
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`3, 2013, we instituted an inter partes review of claims 1-12 and 17-19 on six
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`grounds of unpatentability (Paper 22) (“Dec. on Inst.”).
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`Patent Owner Achates Reference Publishing, Inc. (“Achates”) filed a
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`Patent Owner Response (Paper 39) (“PO Resp.”), which included a
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`statement of material facts. Apple filed a Reply (Paper 58) (“Pet. Reply”)
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`and a response (Paper 59) (“Pet. SOF Resp.”) to the statement of material
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`facts.
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`Achates filed a Motion to Exclude1 (Paper 69) (“Mot. to Exclude”)
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`certain testimony and evidence submitted by Apple in the proceeding, and
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`included a statement of material facts. Apple filed an Opposition to the
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`Motion to Exclude (Paper 70) (“Exclude Opp.”) and a response (Paper 71)
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`(“Exclude SOF Resp.”) to the statement of material facts. Achates filed a
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`Reply (Paper 72) (“Exclude Reply”).
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`Apple filed a Motion for Observation (Paper 74) (“Obs.”) on certain
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`email communications (Exhibits 1067 and 1068) between Achates’s two
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`declarants, Mr. Dmitry Radbel and Dr. Xin Wang. Achates filed a response
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`(Paper 79) (“Obs. Resp.”). Achates also filed a Motion to Seal (Paper 78)
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`(“Mot. to Seal”) the email communications, and Apple filed an opposition
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`(Paper 84) (“Seal Opp.”).
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`1 Achates’s original motion was improper, and Achates was permitted to
`re-file its motion. See Paper 68.
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`2
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`Patent 6,173,403 B1
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`An oral hearing was held on February 26, 2014, and a transcript of the
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`hearing is included in the record (Paper 89) (“Tr.”).
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`We have jurisdiction under 35 U.S.C. § 6(c). This final written
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`decision is issued pursuant to 35 U.S.C. § 318(a) and 37 C.F.R. § 42.73.
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`For the reasons that follow, we determine that Apple has shown by a
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`preponderance of the evidence that claims 1-12 and 17-19 of the ’403 patent
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`are unpatentable.
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`
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`A. The ’403 Patent
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`The ’403 patent2 relates to “distributing and installing computer
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`programs and data.” Ex. 1039, col. 1, ll. 10-13. The ’403 patent describes a
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`need in the art to prevent piracy of information products, such as, for
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`example, when a user obtains a computer program improperly or when a
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`user purchases one copy of a program and installs it on multiple computers
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`without authorization. Id. at col. 1, ll. 16-64. The ’403 patent discloses
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`methods of “distributing one or more information products together . . .
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`while reserving to the publisher the ability to control which products are
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`actually installed on an end-user’s computer.” Id. at col. 2, ll. 2-7.
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`2 The ’403 patent is a continuation-in-part of U.S. Patent Application
`No. 08/845,805, which issued as U.S. Patent No. 5,982,889 (“the ’889
`patent”). The ’889 patent is the subject of related Case IPR2013-00081.
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`Figure 1 of the ’403 patent, reproduced below, depicts the interaction
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`between a publisher and end-user (e.g., an individual purchasing a piece of
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`software).
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`
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`As shown in Figure 1, in steps 101-102, the publisher creates a set of
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`information products and other files. Id. at col. 3, ll. 32-38; col. 5, ll. 29-34.
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`The ’403 patent describes a “plurality of web pages that constitute some of
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`the legislative, administrative and judicial materials associated with patent
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`law,” where the web pages include hyperlinks to each other, as an exemplary
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`information product. Id. at col. 2, l. 64-col. 3, l. 1; col. 4, ll. 4-9. In step
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`103, the publisher encrypts the information products with a string as the
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`encryption key. Id. at col. 7, ll. 33-42. In step 104, the information products
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`are distributed to the end-user (e.g., on a CD-ROM or electronically over the
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`Internet) along with an “installer” program that runs on the end-user’s
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`computer and allows the publisher to “control how and under what
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`circumstances the information products are installed on the end-user’s
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`computer.” Id. at col. 2, ll. 37-47; col. 7, ll. 61-67. The installer knows the
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`cryptosystem and key for decrypting the information products. Id. at col. 7,
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`ll. 53-57.
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`In steps 105-106, the end-user receives the information products and
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`runs the installer. Id. at col. 8, ll. 1-12. In step 107, the installer checks to
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`see whether the end-user’s computer has a previously-stored, encrypted
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`“token” indicating that the publisher granted authorization earlier to install
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`the information products (e.g., when an end-user has a subscription to
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`receive multiple products over time). Id. at col. 8, ll. 13-27. In step 108, the
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`end-user is asked whether he or she wants to subscribe to the information
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`products. Id. at col. 9, ll. 51-57. If so, in steps 109-110, the end-user
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`“acquires the installer’s cooperation to decrypt and install the respective
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`information products” by transmitting information to the publisher, receiving
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`a “launch code” from the publisher in response, and entering the “launch
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`code” into the installer. Id. at col. 9, l. 58-col. 10, l. 4; Fig. 4. Specifically,
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`the end-user contacts the publisher (e.g., via telephone or the Internet) and
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`provides (1) the end-user’s name and address; (2) the end-user’s method of
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`payment; (3) the name of the requested information products; and (4) a serial
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`number R generated by the installer. Id. at col. 10, ll. 5-28.
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`After verifying the payment, the publisher provides to the end-user a
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`“launch code” comprising “(1) an authentication code; (2) an indicium of the
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`name of the end-user; (3) a list of the information products to which the
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`end-user has been granted access; and (4) an indicium of when the
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`authorization for each information product expires,” encrypted using R as
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`the key. Id. at col. 10, ll. 29-44. The end-user enters the launch code into
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`the installer, and the installer decrypts the launch code using R as the key to
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`extract the authentication code contained therein. Id. at col. 10, ll. 42-49. If
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`the authentication code matches what the installer expects, the launch code
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`is authentic. Id. at col. 10, ll. 45-60; col. 11, ll. 16-37. The information
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`products can be installed in step 111 and, if necessary, the encrypted “token”
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`on the end-user’s computer is updated in step 112 (the “token” contains the
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`same four pieces of information as the launch code). Id.; col. 8, ll. 36-43.
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`By generating a new R each time the installer requests a launch code, the
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`disclosed method “prevent[s] the end-user from using a single launch code
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`to install the information products on multiple computers.” Id. at col. 10,
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`ll. 61-64.
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`
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`B. Illustrative Claims
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`Claims 1 and 17 of the ’403 patent are the only independent claims at
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`issue:
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`1. A method comprising:
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`receiving an encrypted launch code;
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`decrypting said encrypted launch code with a string, R, as
`the key to recover a first candidate authentication code and an
`indicium of a first information product; and
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`installing said first information product onto said
`computer when said candidate authorization code matches a
`first known authorization code.
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`17. A method comprising:
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`reading an encrypted token from a computer;
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`decrypting said encrypted token with a string, T, as the
`key to recover a token that comprises an indicium of a first
`information product;
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`modifying said token to comprise an indicium of a
`second information product;
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`encrypting said token with said string, T, as the key to
`create a newly encrypted token; and
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`storing said newly encrypted token on said computer.
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`C. Prior Art
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`The pending grounds of unpatentability in this inter partes review are
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`based on the following prior art:
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`1. U.S. Patent No. 5,864,620, filed Apr. 24, 1996, issued
`Jan. 26, 1999 (“Pettitt”) (Ex. 1006);
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`2. U.S. Patent No. 5,933,497, filed Jan. 29, 1993, issued
`Aug. 3, 1999 (“Beetcher”) (Ex. 1007) (claims priority to U.S.
`Patent Application No. 07/629,295, filed Dec. 14, 1990);
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`3. U.S. Patent No. 5,949,876, filed Jan. 8, 1997, issued
`Sept. 7, 1999 (“Ginter”) (Ex. 1005) (claims priority to U.S.
`Patent Application No. 08/388,107, filed Feb. 13, 1995); and
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`4. U.S. Patent No. 6,134,324, filed May 29, 1997, issued
`Oct. 17, 2000 (“Bohannon”) (Ex. 1008) (claims priority to U.S.
`Patent Application No. 07/739,206, filed July 31, 1991).
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`D. Pending Grounds of Unpatentability
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`This inter partes review involves the following grounds of
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`unpatentability:
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`Reference(s)
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`Basis
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`Claim(s)
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`Pettitt
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`35 U.S.C. § 102(e) 1
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`Pettitt and Beetcher
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`35 U.S.C. § 103(a) 2, 4, 5, 7, and 9
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`Beetcher
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`35 U.S.C. § 102(e) 17-19
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`Beetcher, Ginter, and
`Bohannon
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`Ginter
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`35 U.S.C. § 103(a) 1-12
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`35 U.S.C. § 102(e) 1-7, 9-12, and
`17-19
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`Ginter and Beetcher
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`35 U.S.C. § 103(a) 8
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`II. ANALYSIS
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`A. Claim Interpretation
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`In the Decision on Institution, we interpreted various claim terms of
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`the ’403 patent as follows:
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`Term
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`Interpretation
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`“authentication code” (claim 1)
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`a code for authenticating data
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`“candidate authorization code”
`(claim 1)
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`“known authorization code”
`(claim 1)
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`“installing” (claim 1)
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`candidate authentication code
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`known authentication code
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`placing in a position so as to be
`ready for use
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`“launch code” (claim 1)
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`password
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`“token” (claims 4 and 17)
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`a data structure indicating that
`an end-user’s computer is
`granted access to certain
`information products
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`Dec. on Inst. 8-14. The parties agree with these interpretations, see PO
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`Resp. 1, and we incorporate our previous analysis for purposes of this
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`decision.
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`B. Section 315(b)
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`Achates argues in its Patent Owner Response that Apple’s Petition is
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`time-barred under 35 U.S.C. § 315(b), which provides that an inter partes
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`review may not be instituted based on a petition “filed more than 1 year after
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`the date on which the petitioner, real party in interest, or privy of the
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`petitioner is served with a complaint alleging infringement of the patent.”
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`PO Resp. 46-52. Achates contends that QuickOffice, Inc. (“QuickOffice”),
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`one of Apple’s co-defendants in Achates Reference Publishing, Inc. v.
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`Symantec Corp., Case No. 2:11-cv-00294-JRG-RSP (E.D. Tex.) (“the
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`related litigation”), was served with a complaint alleging infringement of the
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`’403 patent on June 20, 2011—more than one year before December 14,
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`2012, the filing date of the Petition in this proceeding. PO Resp. 46, 57.
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`Achates made a substantially similar argument in its Preliminary Response,
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`and we concluded that the Petition was not time-barred. See Paper 14 at
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`6-21; Dec. on Inst. 14-21. We reach the same conclusion now.3
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`Whether a non-party is a “privy” for purposes of an inter partes
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`review proceeding is a “highly fact-dependent question” that takes into
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`account how courts generally have used the term to “describe relationships
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`and considerations sufficient to justify applying conventional principles of
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`estoppel and preclusion.” Office Patent Trial Practice Guide, 77 Fed. Reg.
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`3 Also, in an earlier Order, we denied Achates’s request for additional
`discovery on the Section 315(b) issue. Paper 18.
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`48,756, 48,759 (Aug. 14, 2012) (“Trial Practice Guide”). Whether parties
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`are in privity depends on whether the relationship between a party and its
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`alleged privy is “sufficiently close such that both should be bound by the
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`trial outcome and related estoppels.” Id. Depending on the circumstances,
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`a number of factors may be relevant to the analysis, including whether the
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`non-party “exercised or could have exercised control over a party’s
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`participation in a proceeding” or whether the non-party is responsible for
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`funding and directing the proceeding. Id. at 48,759-60. We also find
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`guidance in the Supreme Court’s decision in Taylor v. Sturgell, 553 U.S. 880
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`(2008), which sets forth the general rule under federal common law that a
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`person not a party to a lawsuit is not bound by a judgment in that suit,
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`subject to certain exceptions, including the following:
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`[N]onparty preclusion may be justified based on a variety of
`pre-existing “substantive legal relationship[s]” between the
`person to be bound and a party to the judgment. Qualifying
`relationships include, but are not limited to, preceding and
`succeeding owners of property, bailee and bailor, and assignee
`and assignor. These exceptions originated “as much from the
`needs of property law as from the values of preclusion by
`judgment.”
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`553 U.S. at 894 (citations omitted); see Trial Practice Guide at 48,759 (citing
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`Taylor).
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`Achates contends that QuickOffice had a pre-existing substantive
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`legal relationship with Apple and, therefore, is a privy of Apple under
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`Taylor. PO Resp. 46-52. In support of its position, Achates cites a publicly
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`available software development kit (SDK) agreement that Apple allegedly
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`enters into with iPhone application developers like QuickOffice. Id. at 48.
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`The SDK agreement includes a clause requiring the developer to indemnify
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`Apple for third party patent infringement claims:
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`To the extent permitted by law, You agree to indemnify,
`defend and hold harmless Apple, its directors, officers,
`employees, independent contractors and agents (each an
`“Apple Indemnified Party”) from any and all claims, losses,
`liabilities, damages, expenses and costs (including without
`limitation attorneys
`fees and court costs)
`(collectively
`“Losses”) incurred by an Apple Indemnified Party as a result
`of Your breach of this Agreement, a breach of any certification,
`covenant, representation or warranty made by You in this
`Agreement, any claims that Your Applications violate or
`infringe any third party intellectual property or proprietary
`rights, or otherwise related to or arising from Your use of the
`SDK, Your Application(s) or Your development of
`Applications.
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`. . .
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`In no event may You enter into any settlement or like
`agreement with a third party that affects Apple’s rights or binds
`Apple in any way, without the prior written consent of Apple.
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`Ex. 2006 § 6 (emphasis added). According to Achates, the fact that
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`co-defendant QuickOffice would be obligated to indemnify Apple for
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`infringement claims against the “same accused instrumentality” (i.e., a
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`QuickOffice application), and would be prevented from settling in the
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`litigation without Apple’s consent, means that QuickOffice and Apple are in
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`privity with each other. PO Resp. 47-52. Apple acknowledges that it
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`entered into “at least one form of an agreement related to app[lication]
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`development with [QuickOffice],” but does not admit that the agreement
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`included the indemnification provision cited by Achates. Pet. SOF Resp.
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`¶¶ 129-30.
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`We first note that Achates provides no evidence that QuickOffice had
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`any role in the filing or funding of the Petition in this proceeding, or that
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`QuickOffice exercised control or could have exercised control over Apple’s
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`participation in this proceeding. See Trial Practice Guide, 77 Fed. Reg. at
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`48,759. Achates’s sole evidence is the indemnification language in the SDK
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`agreement and the fact that Apple and QuickOffice were co-defendants.
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`Even assuming that the specific indemnification provision of the SDK
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`agreement applies to QuickOffice (and Achates has not shown that it does),
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`we are not persuaded that the provision is indicative of QuickOffice being a
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`privy of Apple. The agreement does not give the developer the right to
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`intervene or control Apple’s defense to any charge of patent infringement,
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`nor has Achates argued that to be the case for QuickOffice in the related
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`litigation. Notably, indemnification is not one of the “substantive legal
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`relationships” cited in Taylor (e.g., assignee-assignor), and is significantly
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`different from those relationships, which involve successive interests in the
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`same property.
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`Further, as Apple points out, Achates’s actions in the related litigation
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`refute its allegations of privity. See Pet. Reply 15. Achates accuses Apple
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`of infringing the ’403 patent based on Apple’s own actions as well as those
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`of QuickOffice, and likewise accused QuickOffice of infringement based on
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`activities relating to the Apple App Store as well as other systems (e.g., the
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`Amazon Appstore for Android). See Ex. 1037 ¶¶ 51-52; Ex. 1038 at 84-90.
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`Achates also is continuing to assert the ’403 patent against Apple in the
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`related litigation even after settling with the co-defendant application
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`developers, including QuickOffice. See PO Resp. 58. Thus, at least
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`according to Achates, there is a distinct basis for liability against Apple,
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`different from that against the developers. As such, it does not appear that
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`Apple would be estopped by any judgment against the developers. For
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`instance, even if a judgment were obtained against one or more of the
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`developers, Apple would still be exposed to an adverse judgment based on
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`its own actions and would assert its own defenses independent of the
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`developers. This further indicates that the relationship between Apple and
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`the developers, such as QuickOffice, is not of the type that would make the
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`developers privies of Apple.
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`We are not persuaded that the Petition is time-barred under Section
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`315(b) on the basis that QuickOffice is a privy of Apple.
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`C. Credibility of Mr. Schneier
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`As an initial matter, Achates in its Patent Owner Response challenges
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`the credibility of Apple’s declarant, Bruce Schneier. PO Resp. 52-56.
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`Mr. Schneier provided testimony regarding the ’403 patent and the prior art
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`in a declaration submitted with Apple’s Petition. Ex. 1041.4 Achates argues
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`that Mr. Schneier is not credible for two reasons. First, Mr. Schneier billed
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`Apple for less than 45 hours of work, which is “nowhere near enough time
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`to read and analyze all of the references cited in his declarations at the level
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`of diligence that this proceeding requires,” according to Achates. PO Resp.
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`52-54. For instance, Achates points to the size of Ginter (324 pages) and the
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`declarations themselves (931 numbered paragraphs) to argue that
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`Mr. Schneier “could not have performed his obligation to this matter
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`conscientiously in the time spent.” Id. Achates’s estimate of 45 hours,
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`4 Apple submitted its Petition, and Exhibits 1003 and 1041 (declarations
`from Mr. Schneier regarding the ’403 patent and related ’889 patent), on
`December 14, 2012. In response to an instruction from Board administrative
`staff that documents should be in portrait rather than landscape orientation,
`Apple submitted revised copies on December 17, 2012, also numbered as
`Exhibits 1003 and 1041. See Paper 4. To ensure the clarity of the record,
`the original versions filed on December 14, 2012 will be expunged.
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`however, is based on an estimate from Mr. Schneier as to the total amount
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`Mr. Schneier billed to Apple. Ex. 1045 at 63:15-24; see PO Resp. 53.
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`Achates does not point to any statement from Mr. Schneier regarding the
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`number of hours he actually spent reviewing the prior art and performing the
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`analysis in his declaration. Mr. Schneier testified that he read the prior art
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`references at issue (Ginter, Pettitt, Beetcher, and Bohannon) multiple times
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`and fully understood them. Ex. 1045 at 76:16-22, 77:21-78:5. Moreover,
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`Achates’s contention is not that Mr. Schneier lacks knowledge of the prior
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`art or did not in fact perform the analysis in his declaration—just that
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`Mr. Schneier did not spend sufficient time on the matter. We decline
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`Achates’s invitation to give Mr. Schneier’s testimony less weight on that
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`basis.
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`Second, Achates argues that Mr. Schneier has “hostility towards the
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`patent system” and is a member of the Electronic Frontier Foundation (EFF),
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`which shows a “level[] of bias that should be more than sufficient to raise
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`concerns about his qualifications to serve as an unbiased technology expert.”
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`PO Resp. 54-56 (citing a book co-authored by Mr. Schneier, Ex. 2016, and
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`various EFF web pages, Exs. 2017-2020). We have reviewed Mr.
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`Schneier’s curriculum vitae (Exhibit 1004) and find that he is well qualified
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`to testify regarding the matters addressed in his declaration (Exhibit 1041).
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`Indeed, Achates’s declarant, Mr. Radbel, testified that Mr. Schneier is a “top
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`cryptologist” and has a “great reputation as a cryptologist.” Ex. 2032 at
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`167:9-25. As explained herein, we find Mr. Schneier’s testimony persuasive
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`and give it substantial weight. We do not give it less weight based on a
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`purported bias against patents in general.
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`D. Level of Ordinary Skill in the Art
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`In its Petition, Apple contends that a person of ordinary skill in the art
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`at the time of the ’403 patent (April 1997, when the application that issued
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`as the parent ’889 patent was filed) would have had “extensive familiarity
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`with cryptographic techniques published in the literature and known in the
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`field,” and “would have gained this level of familiarity through graduate
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`level studies in mathematics, engineering or computer science, or through
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`work experience in academia (either as a professor or a graduate student),
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`for a technology company or for a government,” relying on the testimony of
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`Mr. Schneier. Pet. 4 (citing Ex. 1041 ¶¶ 37-39). Achates does not dispute
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`this argument in its Patent Owner Response.5 Mr. Radbel, however,
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`concludes that a person of ordinary skill in the art would have had “the
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`ability to select and make use of well-known cryptographic techniques at a
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`high level,” but not “comprehensive knowledge of cryptography, including
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`Mr. Schneier’s book on the subject.” Ex. 2013 ¶¶ 17, 19. Mr. Radbel
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`further testifies that a person of ordinary skill in the art would have had “an
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`undergraduate degree in engineering or computer science plus two years of
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`experience in software engineering,” but not necessarily “graduate level
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`training.” Id. Dr. Wang agrees with Mr. Radbel’s assessment of the level of
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`ordinary skill. Ex. 2014 ¶ 8.
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`5 Achates argued in its Preliminary Response that “the proper level of
`skill should be a person with at least five years of experience and[/]or
`academic training in professional software development having experience
`with client-server software and operating systems, and at least a basic
`working knowledge of computer security and cryptography.” Paper 14
`at 23.
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`Patent 6,173,403 B1
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`The parties’ declarants appear to agree that the person of ordinary
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`skill in the art would have been familiar with the basic cryptographic
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`techniques of the time, but dispute the depth of that knowledge. A skilled
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`artisan would have been aware of basic cryptographic techniques and also
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`the predominant literature on cryptography of the time. See In re GPAC
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`Inc., 57 F.3d 1573, 1579 (Fed. Cir. 1995) (“The person of ordinary skill in
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`the art is a hypothetical person who is presumed to know the relevant prior
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`art.”). As to that person’s level of education or equivalent experience, we
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`are persuaded that Mr. Radbel understates the appropriate level of skill. The
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`’403 patent describes various problems with software piracy and various
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`technical solutions to such problems. Ex. 1039, col. 1, ll. 16-63. It also
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`assumes a fairly deep knowledge of encryption, decryption, and the use of
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`keys for performing those functions. See id. at col. 7, l. 32-col. 11, l. 37.
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`Contrary to Mr. Radbel’s assertion that a person of ordinary skill only would
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`have needed a “high level” knowledge of cryptographic techniques,
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`sufficient, for example, to call software routines “without necessarily
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`understanding how such routines work,” see Ex. 2013 ¶ 17, a skilled artisan
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`would need some knowledge of how the cryptographic techniques work to
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`choose the appropriate techniques and properly use them. We also take into
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`account the sophistication of the technology at the time, as exemplified by
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`the prior art references of record and Mr. Schneier’s book from 1996
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`(Exhibit 1024). Based on all of the evidence, we conclude that a person of
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`ordinary skill in the art at the time of the ’403 patent would have been
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`familiar with the basic cryptographic techniques and literature of the time,
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`and would have had some graduate-level or equivalent experience working
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`with such techniques.
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`E. Grounds Based on Pettitt
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`With respect to the alleged grounds of unpatentability based on Pettitt,
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`we have reviewed Apple’s Petition, Achates’s Patent Owner Response, and
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`Apple’s Reply, as well as the evidence discussed in each of those papers.
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`We are persuaded, by a preponderance of the evidence, that claim 1 is
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`anticipated by Pettitt under 35 U.S.C. § 102(e), and claims 2, 4, 5, 7, and 9
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`are unpatentable over Pettitt and Beetcher under 35 U.S.C. § 103(a).
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`1. Pettitt
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`Pettitt discloses a system for “controlling distribution of software in a
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`multitiered distribution chain” and “distinguishing authorized users from
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`unauthorized users.” Ex. 1006, col. 1, ll. 7-10. Figure 2 of Pettitt is
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`reproduced below.
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`Patent 6,173,403 B1
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`Figure 2 depicts the entities involved in providing software 13: author 12,
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`license clearing house (LCH) 14, distributor 16, reseller 17, and user 18.
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`Software 13 is packed into a digital shipping container 20, encrypted with a
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`master key, and provided to user 18 (e.g., sold by reseller 17 to the public).
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`Id. at col. 3, ll. 28-56. To purchase a license and unlock the container, user
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`18 sends authorization request 30, which includes information identifying
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`the software, user, and desired method of payment. Id. at col. 4, ll. 10-19.
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`The distribution entities communicate with each other to validate the user’s
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`payment and authorize the transaction. Id. at col. 4, ll. 20-62. If authorized,
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`LCH 14 creates a reply envelope 34 including:
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`1. information identifying the software,
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`2. information identifying the user,
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`3. the digital signature of the reseller,
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`4. the digital signature of the distributor,
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`5. a master key that unlocks the software container 20 (if the
`transaction has been authorized), and
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`6. a digital authorization certificate.
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`Id. at col. 4, l. 63-col. 5, l. 5.
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`LCH 14 encrypts the contents of the reply envelope with the reseller’s
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`public key and “digitally signs the envelope with the signature of LCH 14 by
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`hashing the contents of the reply envelope and encrypting the result of the
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`hash with the LCH’s private key.” Id. at col. 5, ll. 14-24. LCH 14 then
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`sends the reply envelope back through the distribution chain. Id. at col. 5,
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`ll. 24-28. Reseller 17 authenticates the digital signature, decrypts the reply
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`envelope using the reseller’s public key, and sends the contents of the reply
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`envelope to user 18. Id. at col. 5, ll. 45-55. User 18 then “uses the
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`authorization certificate and the master key to unlock the software container
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`18
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`20 and install the software.” Id. at col. 5, ll. 56-63. Because the digital
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`authorization certificate is derived from the user’s information and,
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`therefore, is different for each user, possession of the digital authorization
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`certificate is “the user’s proof of purchase, and proof that s/he is an
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`authorized user.” Id. at col. 5, ll. 58-63.
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`2. Claim 1 is Anticipated by Pettitt
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`Pettitt discloses receiving and decrypting an encrypted “launch code”
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`(the reply envelope) with a “string, R” (the reseller’s public key) to recover
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`an “indicium of a first information product” (information identifying the
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`software), and installing the first information product, as recited in claim 1.
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`See Pet. 26-28. Achates does not argue these limitations of claim 1, but
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`contends that Pettitt fails to disclose “decrypting said encrypted launch code
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`. . . to recover a first candidate authentication code.” PO Resp. 3-9. Achates
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`argues that the LCH digital signature, cited by Apple in the Petition as a
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`“first candidate authentication code,” is not recovered by decrypting the
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`reply envelope because (1) the LCH digital signature is not included within
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`the reply envelope, (2) the LCH digital signature is available to the reseller
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`before and independently of the decryption of the reply envelope, and (3) the
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`reply envelope is encrypted before the LCH digital signature of the reply
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`envelope is created. Id.
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`Apple responds that it identified two “first candidate authentication
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`codes” in Pettitt in its Petition—the LCH digital signature and the digital
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`authorization certificate—and Achates overlooks the latter. Pet. Reply 1-2.
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`The primary structure identified by Apple in the Petition is the LCH digital
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`signature, see, e.g., Pet. 27, and we referenced the LCH digital signature in
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`summarizing Apple’s allegations in the Decision on Institution, Dec. on Inst.
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`28. Achates argued at the oral hearing that Apple improperly asserted that
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`the digital authorization certificate was a “first candidate authentication
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`code” for the first time in its Reply, and that the “ground” of unpatentability
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`for this trial is based on the LCH digital signature alone. See Tr. 30:17-32:6.
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`We agree with Apple, however, that the Petition sufficiently identified
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`each of the digital authorization certificate and the LCH digital signature as
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`a “first candidate authentication code.” Apple included, as part of the
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`document identified as its Petition, a statement of material facts, two of
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`which are:
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`80. The digital signature of the LCH described in Pettitt
`is an “authentication code” within Patent Owner’s construction
`of the ’403 claims. Ex. 1041 at ¶ 446.
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`81. The digital authorization certificate described in
`Pettitt is an “authentication code” within Patent Owner’s
`construction of the ’403 claims. Ex. 1041 at ¶ 447.
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`Pet., Attachment C ¶¶ 80-81; see also 37 C.F.R. § 42.24(a)(1) (statements of
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`material facts, although not required, count against the page limit for the
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`petition). Apple explains in the Petition that the reply envelope includes
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`“information identifying the software, the user, the digital signature of the
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`LCH and a digital authorization certificate,” and that the reply envelope is
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`decrypted and its contents passed to the user for unlocking the software
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`product. Pet. 26-27. Apple further cites Mr. Schneier’s testimony that the
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`digital authorization certificate is an “authentication code” included in the
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`reply envelope. See Pet. 26-27; Ex. 1041 ¶¶ 440-41, 447. The applicable
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`ground of unpatentability in this inter partes review is the alleged
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`anticipation of claim 1 by Pettitt, based on the allegations of unpatentability
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`in the Petition. Dec. on Inst. 35-3
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