Apple Inc. v Achates Reference Publishing, Inc.

Patent Trial and Appeal Board

Jun 2, 2014

08845805 (P.T.A.B. Jun. 2, 2014)

Trials@uspto.gov Paper 80
571-272-7822 Entered: June 2, 2014

UNITED STATES PATENT AND TRADEMARK OFFICE
____________

BEFORE THE PATENT TRIAL AND APPEAL BOARD
____________

APPLE INC.
Petitioner

v.

ACHATES REFERENCE PUBLISHING, INC.
Patent Owner
____________

Case IPR2013-00081
Patent 5,982,889

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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Patent 5,982,889

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I. BACKGROUND
Petitioner Apple Inc. (“Apple”) filed a Petition (Paper 1) (“Pet.)
seeking inter partes review of claims 1-4 of U.S. Patent No. 5,982,889 (“the
’889 patent”) pursuant to 35 U.S.C. §§ 311-19. On June 3, 2013, we
instituted an inter partes review of claims 1-4 on four grounds of
unpatentability (Paper 21) (“Dec. on Inst.”).
Patent Owner Achates Reference Publishing, Inc. (“Achates”) filed a
Patent Owner Response (Paper 36) (“PO Resp.”), which included a
statement of material facts. Apple filed a Reply (Paper 49) (“Pet. Reply”)
and a response (Paper 50) (“Pet. SOF Resp.”) to the statement of material
facts.
Achates filed a Motion to Exclude (Paper 57) (“Mot. to Exclude”)
certain testimony submitted by Apple in the proceeding. Apple filed an
Opposition to the Motion to Exclude (Paper 61) (“Exclude Opp.”), and
Achates filed a Reply (Paper 62) (“Exclude Reply”).
Apple filed a Motion for Observation (Paper 64) (“Obs.”) on certain
email communications between Achates’ two declarants, Mr. Dmitry Radbel
and Dr. Xin Wang. Achates filed a response (Paper 69) (“Obs. Resp.”).
Achates also filed a Motion to Seal (Paper 68) (“Mot. to Seal”) the email
communications, and Apple filed an opposition (Paper 74) (“Seal Opp.”).
An oral hearing was held on February 26, 2014, and a transcript of the
hearing is included in the record (Paper 79) (“Tr.”).
We have jurisdiction under 35 U.S.C. § 6(c). This final written
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
preponderance of the evidence that claims 1-4 of the ’889 patent are
unpatentable.

A. The ’889 Patent
The ’889 patent
1
relates to “distributing and installing computer
programs and data.” Ex. 1001, col. 1, ll. 6-9. The ’889 patent describes a
need in the art to prevent piracy of information products, such as, for
example, when a user obtains a computer program improperly or when a
user purchases one copy of a program and installs it on multiple computers
without authorization. Id. at col. 1, ll. 12-60. The ’889 patent discloses
methods of “distributing one or more information products together . . .
while reserving to the publisher the ability to control which products are
actually installed on an end-user’s computer.” Id. at col. 1, l. 66-col. 2, l. 4.

1
U.S. Patent No. 6,173,403 B1 (“the ’403 patent”), a continuation-in-part of
U.S. Patent Application No. 08/845,805, which issued as the ’889 patent, is
the subject of related Case IPR2013-00080.
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Figure 1 of the ’889 patent, reproduced below, depicts the interaction
between a publisher and end-user (e.g., an individual purchasing a piece of
software).

As shown in Figure 1, in steps 101-102, the publisher creates a set of
information products and other files. Id. at col. 3, ll. 34-40; col. 5, ll. 45-50.
The ’889 patent describes a “plurality of web pages that constitute some of
the legislative, administrative and judicial materials associated with patent
law,” where the web pages include hyperlinks to each other, as an exemplary
information product. Id. at col. 2, l. 64-col. 3, l. 1; col. 4, ll. 9-15. In step
103, the publisher encrypts the information products with a string as the
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encryption key. Id. at col. 8, ll. 36-45. In step 104, the information products
are distributed to the end-user (e.g., on a CD-ROM or electronically over the
Internet) along with an “installer” program that runs on the end-user’s
computer and allows the publisher to “control how and under what
circumstances the information products are installed on the end-user’s
computer.” Id. at col. 2, ll. 39-48; col. 8, l. 65-col. 9, l. 3. The installer
knows the cryptosystem and key for decrypting the information products.
Id. at col. 8, ll. 57-59.
In steps 105-106, the end-user receives the information products and
runs the installer. Id. at col. 9, ll. 4-15. In step 107, the installer checks to
see whether the end-user’s computer has a previously-stored, encrypted
“token” indicating that the publisher granted authorization earlier to install
the information products (e.g., when an end-user has a subscription to
receive multiple products over time). Id. at col. 9, ll. 16-31. In step 108, the
end-user is asked whether he or she wants to subscribe to the information
products. Id. at col. 10, ll. 56-62. If so, in steps 109-110, the end-user
“acquires the installer[’]s cooperation to decrypt and install the respective
information products” by transmitting information to the publisher, receiving
a “launch code” from the publisher in response, and entering the “launch
code” into the installer. Id. at col. 10, l. 63-col. 11, l. 9; Fig. 4. Specifically,
the end-user contacts the publisher (e.g., via telephone or the Internet) and
provides (1) the end-user’s name and address; (2) the end-user’s method of
payment; (3) the name of the requested information products; and (4) a serial
number R generated by the installer. Id. at col. 11, ll. 10-33.
After verifying the payment, the publisher provides to the end-user a
“launch code” comprising “(1) a[n] authentication code; (2) an indication of
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the name of the end-user; (3) a list of the information products to which the
end-user has been granted access; and (4) an indication of when the
authorization for each information product expires,” encrypted using R as
the key. Id. at col. 11, ll. 34-49. The end-user enters the launch code into
the installer, and the installer decrypts the launch code using R as the key to
extract the authentication code contained therein. Id. at col. 11, ll. 47-54.
If the authentication code matches what the installer expects, the launch
code is authentic. Id. at col. 11, ll. 50-65; col. 12, ll. 25-49. The information
products can be installed in step 111 and, if necessary, the encrypted “token”
on the end-user’s computer is updated in step 112 (the “token” contains the
same four pieces of information as the launch code). Id.; col. 9, ll. 40-47.
By generating a new R each time the installer requests a launch code, the
disclosed method “prevent[s] the end-user from using a single launch code
to install the information products on multiple computers.” Id. at col. 11,
l. 66-col. 12, l. 2.

B. Illustrative Claim
Claim 1 of the ’889 patent is the only independent claim at issue:
1. A method comprising the steps of:
generating a string, R;
encrypting a first authentication code, an indicium of an
end-user’s identity, an indicium of a first information product,
and an indicium of a second information product with said
string, R, as the key to create a launch code;
decrypting said launch code with said string, R, to
recover said authentication code, said indicium of said
end-user’s identity, said indicium of said first information
product and said indicium of said second information product;
and
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installing said first information product and said second
information product onto a computer associated with said
end-user.

C. Prior Art
The pending grounds of unpatentability in this inter partes review are
based on the following prior art:
1. U.S. Patent No. 5,864,620, filed Apr. 24, 1996, issued
Jan. 26, 1999 (“Pettitt”) (Ex. 1006);
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); and
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).

D. Pending Grounds of Unpatentability
This inter partes review involves the following grounds of
unpatentability:
Reference(s) Basis Claims
Ginter 35 U.S.C. § 102(e) 1-3
Pettitt and Beetcher 35 U.S.C. § 103(a) 1-4
Beetcher and Ginter 35 U.S.C. § 103(a) 1-4
2

2
As explained below, Apple asserts that claim 4 is unpatentable based on
the combination of Beetcher and Ginter in two respects: one relying on
Beetcher as teaching the majority of the claim limitations, and one relying
on Ginter as teaching the majority of the claim limitations. See infra Section
II.G.2. A trial was instituted on both bases. See Dec. on Inst. 22-23, 30.
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II. ANALYSIS
A. Claim Interpretation
In the Decision on Institution, we interpreted various claim terms of
the ’889 patent as follows:
Term Interpretation
“authentication code” (claim 1) a code for authenticating data
“installing” (claim 1) placing in a position so as to be
ready for use
“launch code” (claim 1) password
“token” (claim 2) a data structure indicating that
an end-user’s computer is
granted access to certain
information products
Dec. on Inst. 7-11. The parties agree with these interpretations, see PO
Resp. 1, and we incorporate our previous analysis for purposes of this
decision.

B. Section 315(b)
Achates argues in its Patent Owner Response that Apple’s Petition is
time-barred under 35 U.S.C. § 315(b), which provides that an inter partes
review may not be instituted based on a petition “filed more than 1 year after
the date on which the petitioner, real party in interest, or privy of the
petitioner is served with a complaint alleging infringement of the patent.”
PO Resp. 44-51. Achates contends that QuickOffice, Inc. (“QuickOffice”),
one of Apple’s co-defendants in Achates Reference Publishing, Inc. v.
Symantec Corp., Case No. 2:11-cv-00294-JRG-RSP (E.D. Tex.) (“the
related litigation”), was served with a complaint alleging infringement of the
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’889 patent on June 20, 2011—more than one year before December 14,
2012, the filing date of the Petition in this proceeding. PO Resp. 45, 56.
Achates made a substantially similar argument in its Preliminary Response,
and we concluded that the Petition was not time-barred. See Paper 14 at
6-21; Dec. on Inst. 12-18. We reach the same conclusion now.
3

Whether a non-party is a “privy” for purposes of an inter partes
review proceeding is a “highly fact-dependent question” that takes into
account how courts generally have used the term to “describe relationships
and considerations sufficient to justify applying conventional principles of
estoppel and preclusion.” Office Patent Trial Practice Guide, 77 Fed. Reg.
48,756, 48,759 (Aug. 14, 2012) (“Trial Practice Guide”). Whether parties
are in privity depends on whether the relationship between a party and its
alleged privy is “sufficiently close such that both should be bound by the
trial outcome and related estoppels.” Id. Depending on the circumstances,
a number of factors may be relevant to the analysis, including whether the
non-party “exercised or could have exercised control over a party’s
participation in a proceeding” or whether the non-party is responsible for
funding and directing the proceeding. Id. at 48,759-60. We also find
guidance in the Supreme Court’s decision in Taylor v. Sturgell, 553 U.S. 880
(2008), which sets forth the general rule under federal common law that a
person not a party to a lawsuit is not bound by a judgment in that suit,
subject to certain exceptions, including the following:
[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

3
Also, in an earlier Order, we denied Achates’s request for additional
discovery on the Section 315(b) issue. Paper 17.
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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.”
553 U.S. at 894 (citations omitted); see Trial Practice Guide at 48,759 (citing
Taylor).
Achates contends that QuickOffice had a pre-existing substantive
legal relationship with Apple and, therefore, is a privy of Apple under
Taylor. PO Resp. 44-51. In support of its position, Achates cites a publicly
available software development kit (SDK) agreement that Apple allegedly
enters into with iPhone application developers like QuickOffice. Id. at
46-47. The SDK agreement includes a clause requiring the developer to
indemnify Apple for third party patent infringement claims:
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.
. . .
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
co-defendant QuickOffice would be obligated to indemnify Apple for
infringement claims against the “same accused instrumentality” (i.e., a
QuickOffice application), and would be prevented from settling in the
litigation without Apple’s consent, means that QuickOffice and Apple are in
privity with each other. PO Resp. 44-51. Apple acknowledges that it
entered into “at least one form of an agreement related to app[lication]
development with [QuickOffice],” but does not admit that the agreement
included the indemnification provision cited by Achates. Pet. SOF Resp.
¶¶ 129-30.
We first note that Achates provides no evidence that QuickOffice had
any role in the filing or funding of the Petition in this proceeding, or that
QuickOffice exercised control or could have exercised control over Apple’s
participation in this proceeding. See Trial Practice Guide, 77 Fed. Reg. at
48,759. Achates’s sole evidence is the indemnification language in the SDK
agreement and the fact that Apple and QuickOffice were co-defendants.
Even assuming that the specific indemnification provision of the SDK
agreement applies to QuickOffice (and Achates has not shown that it does),
we are not persuaded that the provision is indicative of QuickOffice being a
privy of Apple. The agreement does not give the developer the right to
intervene or control Apple’s defense to any charge of patent infringement,
nor has Achates argued that to be the case for QuickOffice in the related
litigation. Notably, indemnification is not one of the “substantive legal
relationships” cited in Taylor (e.g., assignee-assignor), and is significantly
different from those relationships, which involve successive interests in the
same property.
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Further, as Apple points out, Achates’s actions in the related litigation
refute its allegations of privity. See Pet. Reply 14. Achates accuses Apple
of infringing the ’889 patent based on Apple’s own actions as well as those
of QuickOffice, and likewise accused QuickOffice of infringement based on
activities relating to the Apple App Store as well as other systems (e.g., the
Amazon Appstore for Android). See Ex. 1037 ¶¶ 51-52; Ex. 1038 at 84-90.
Achates also is continuing to assert the ’889 patent against Apple in the
related litigation even after settling with the co-defendant application
developers, including QuickOffice. See PO Resp. 57. Thus, at least
according to Achates, there is a distinct basis for liability against Apple,
different from that against the developers. As such, it does not appear that
Apple would be estopped by any judgment against the developers. For
instance, even if a judgment were obtained against one or more of the
developers, Apple would still be exposed to an adverse judgment based on
its own actions and would assert its own defenses independent of the
developers. This further indicates that the relationship between Apple and
the developers, such as QuickOffice, is not of the type that would make the
developers privies of Apple.
We are not persuaded that the Petition is time-barred under Section
315(b) on the basis that QuickOffice is a privy of Apple.

C. Credibility of Mr. Schneier
As an initial matter, Achates in its Patent Owner Response challenges
the credibility of Apple’s declarant, Bruce Schneier. PO Resp. 51-55.
Mr. Schneier provided testimony regarding the ’889 patent and the prior art
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in a declaration submitted with Apple’s Petition. Ex. 1003.
4
Achates argues
that Mr. Schneier is not credible for two reasons. First, Mr. Schneier billed
Apple for less than 45 hours of work, which is “nowhere near enough time
to read and analyze all of the references cited in his declarations at the level
of diligence that this proceeding requires,” according to Achates. PO Resp.
51-53. For instance, Achates points to the size of Ginter (324 pages) and the
declarations themselves (931 numbered paragraphs) to argue that Mr.
Schneier “could not have performed his obligation to this matter
conscientiously in the time spent.” Id. Achates’s estimate of 45 hours,
however, is based on an estimate from Mr. Schneier as to the total amount
Mr. Schneier billed to Apple. Ex. 1045 at 63:15-24; see PO Resp. 52.
Achates does not point to any statement from Mr. Schneier regarding the
number of hours he actually spent reviewing the prior art and performing the
analysis in his declaration. Mr. Schneier testified that he read the prior art
references at issue (Ginter, Pettitt, and Beetcher) multiple times and fully
understood them. Ex. 1045 at 76:16-22, 77:21-78:5. Moreover, Achates’s
contention is not that Mr. Schneier lacks knowledge of the prior art or did
not in fact perform the analysis in his declaration—just that Mr. Schneier did
not spend sufficient time on the matter. We decline Achates’s invitation to
give Mr. Schneier’s testimony less weight on that basis.

4
Apple submitted its Petition, and Exhibits 1003 and 1041 (declarations
from Mr. Schneier regarding the ’889 patent and related ’403 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 5. To ensure the clarity of the record,
the original versions filed on December 14, 2012 will be expunged.
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Second, Achates argues that Mr. Schneier has “hostility towards the
patent system” and is a member of the Electronic Frontier Foundation (EFF),
which shows a “level[] of bias that should be more than sufficient to raise
concerns about his qualifications to serve as an unbiased technology expert.”
PO Resp. 53-55 (citing a book co-authored by Mr. Schneier, Ex. 2016, and
various EFF web pages, Exs. 2017-2020). We have reviewed Mr.
Schneier’s curriculum vitae (Exhibit 1004) and find that he is well qualified
to testify regarding the matters addressed in his declaration (Exhibit 1003).
Indeed, Achates’s declarant, Mr. Radbel, testified that Mr. Schneier is a “top
cryptologist” and has a “great reputation as a cryptologist.” Ex. 2032 at
167:9-25. As explained herein, we find Mr. Schneier’s testimony persuasive
and give it substantial weight. We do not give it less weight based on a
purported bias against patents in general.

D. Level of Ordinary Skill in the Art
In its Petition, Apple contends that a person of ordinary skill in the art
at the time when the application that issued as the ’889 patent was filed
(April 1997) would have had “extensive familiarity with cryptographic
techniques published in the literature and known in the field,” and “would
have gained this level of familiarity through graduate level studies in
mathematics, engineering or computer science, or through work experience
in academia (either as a professor or a graduate student), for a technology
company or for a government,” relying on the testimony of Mr. Schneier.
Pet. 4 (citing Ex. 1003 ¶¶ 36-38). Achates does not dispute this argument in
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its Patent Owner Response.
5
Mr. Radbel, however, concludes that a person
of ordinary skill in the art would have had “the ability to select and make use
of well-known cryptographic techniques at a high level,” but not
“comprehensive knowledge of cryptography, including Mr. Schneier’s book
on the subject.” Ex. 2013 ¶¶ 17, 19. Mr. Radbel further testifies that a
person of ordinary skill in the art would have had “an undergraduate degree
in engineering or computer science plus two years of experience in software
engineering,” but not necessarily “graduate level training.” Id. Dr. Wang
agrees with Mr. Radbel’s assessment of the level of ordinary skill. Ex. 2014
¶ 8.
The parties’ declarants appear to agree that the person of ordinary
skill in the art would have been familiar with the basic cryptographic
techniques of the time, but dispute the depth of that knowledge. A skilled
artisan would have been aware of basic cryptographic techniques and also
the predominant literature on cryptography of the time. See In re GPAC
Inc., 57 F.3d 1573, 1579 (Fed. Cir. 1995) (“The person of ordinary skill in
the art is a hypothetical person who is presumed to know the relevant prior
art.”). As to that person’s level of education or equivalent experience, we
are persuaded that Mr. Radbel understates the appropriate level of skill. The
’889 patent describes various problems with software piracy and various
technical solutions to such problems. Ex. 1001, col. 1, ll. 12-60. It also

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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assumes a fairly deep knowledge of encryption, decryption, and the use of
keys for performing those functions. See id. at col. 8, l. 35-col. 12, l. 49.
Contrary to Mr. Radbel’s assertion that a person of ordinary skill only would
have needed a “high level” knowledge of cryptographic techniques,
sufficient, for example, to call software routines “without necessarily
understanding how such routines work,” see Ex. 2013 ¶ 17, a skilled artisan
would need some knowledge of how the cryptographic techniques work to
choose the appropriate techniques and properly use them. We also take into
account the sophistication of the technology at the time, as exemplified by
the prior art references of record and Mr. Schneier’s book from 1996
(Exhibit 1024). Based on all of the evidence, we conclude that a person of
ordinary skill in the art at the time of the ’889 patent would have been
familiar with the basic cryptographic techniques and literature of the time,
and would have had some graduate-level or equivalent experience working
with such techniques.

E. Ground Based on Ginter
With respect to the alleged ground of unpatentability based on Ginter,
we have reviewed Apple’s Petition, Achates’s Patent Owner Response, and
Apple’s Reply, as well as the evidence discussed in each of those papers.
We are persuaded, by a preponderance of the evidence, that claims 1-3 are
anticipated by Ginter under 35 U.S.C. § 102(e).

1. Ginter
Ginter discloses computer systems providing a “distributed virtual
distribution environment (VDE)” that “help[s] to ensure that information is
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accessed and used only in authorized ways.” Ex. 1005, Abstract. Electronic
content is stored in “objects” (also called “containers”) for distribution to
users, and access to the content is regulated via a permissions record (PERC)
associated with the content and provided to the user (separately or with the
object). Id. at col. 13, l. 46-col. 14, l. 20; col. 58, l. 61-col. 59, l. 11; Fig.
5A; col. 147, ll. 33-59 (“no end user may use or access a VDE object unless
a permissions record 808 has been delivered to the end user”). PERC 808
“specifies the rights associated with the object 300 such as, for example,
who can open the container 302, who can use the object’s contents, who can
distribute the object, and what other control mechanisms must be active.”
Id. at col. 58, l. 67-col. 59, l. 5. “For example, permissions record 808 may
specify a user’s rights to use, distribute and/or administer the container 302
and its content.” Id. at col. 59, ll. 5-7. For certain types of objects, the
PERC is encrypted along with the object using a symmetric key and later
decrypted on the user’s machine. Id. at col. 199, ll. 1-6; col. 129, ll. 50-54;
col. 133, ll. 50-53; col. 208, l. 65-col. 209, l. 20. Ginter discloses that the
PERC can contain an “Object ID” that identifies the VDE object, as well as
multiple “key blocks” that store decryption keys utilized to access content in
“data blocks” within the object. Id. at col. 127, l. 45-col. 128, l. 2; col. 151,
ll. 9-35; Fig. 26A. Ginter also discloses the use of a “validation tag” for
“confirming the identity and correctness of received, VDE protected,
information,” and a “digital signature” to be verified against an expected
digital signature. Id. at col. 12, ll. 27-33; col. 151, ll. 9-35; col. 215, ll. 7-63.

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2. Claims 1-3 are Anticipated by Ginter
Ginter discloses generating a “string, R” (the symmetric key),
encrypting an “indicium of an end-user’s identity” (the PERC specifying
“who” can open the container, use the object’s contents, etc.) and an
indicium of a first “information product” (the Object ID or key block) to
create the PERC, decrypting the PERC, and installing the first information
product onto the end-user’s computer, as recited in claim 1. See Pet. 24-30;
Ex. 1003 ¶¶ 121-75.
Achates does not argue these limitations, but makes three arguments
regarding the remaining limitations of claim 1. First, Achates argues that
Ginter does not disclose “decrypting said launch code . . . to recover said
authentication code,” as recited in claim 1. PO Resp. 4-9. Achates contends
that the first item in Ginter identified by Apple as an “authentication code”
(the digital signature) is not contained in the PERC and, therefore, the PERC
cannot be decrypted to recover it, and the second item identified by Apple
(the validation tag) is not an “authentication code.” Id. at 5-9; see Pet.
25-26; Ex. 1003 ¶ 141. Ginter expressly discloses a PERC including a
digital signature. Ex. 1005, col. 12, ll. 27-33. Figure 75D depicts user rights
table (URT) 3160 as including a digital signature, and Ginter states that URT
3160 “may itself be a PERC 808.” Id. at col. 248, ll. 36-38, Fig. 75D. Thus,
Achates’s factual assertion that the PERC in Ginter lacks a digital signature
is not correct. See Tr. 47:24-48:5 (acknowledging the description of Figure
75D in Ginter). Mr. Radbel also acknowledged that the PERC could have a
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digital signature in the “particular construct” shown in Figure 75D. Ex.
2032 at 279:14-18.
6

Second, Achates contends that the PERC in Ginter is not a “launch
code” comprising indicia of multiple “information product[s],” as recited in
claim 1. PO Resp. 9-15 (citing Ex. 2013 ¶¶ 55-64). Apple’s position is that
the Object ID and key blocks in the PERC both satisfy the “indici[a]”
limitations of claim 1. Pet. 25-26. As to the Object ID, Achates contends
that (1) Object ID field 940 in Ginter is a single field that identifies the VDE
object and, therefore, cannot be both an indicium of a first information
product and an indicium of a second information product, (2) Object ID field
940 identifies the “totality” of elements in the VDE object container, not
“just” information content 304, and (3) Object ID field 940 has the same
datum regardless of whether the container’s content is changed or deleted,
which shows that Object ID field 940 is not an “indicium” of a particular
information product. PO Resp. 9-13. As to the key blocks, Achates argues
that (1) the VDE accesses the datum in the key block to use as a key to
decrypt the corresponding data blocks, not “as a pointer to—or indicium
of—the data block,” and (2) Ginter permits two key blocks to have the same
key, which shows that the key block is not an “indicium” of a particular
information product. Id. at 13-15.
Achates’s arguments are not persuasive, as they are based on two
incorrect premises. See Pet. Reply 3-4. The first incorrect premise is that an
“indicium” of an information product can only identify content within a file

6
Because we agree with Apple as to the PERC in Ginter having a digital
signature, we need not determine whether the validation tag also is an
“authentication code.”
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and must uniquely identify only one information product. See id. There is
no prohibition in claim 1 on the indicium indicating other things, and the
indicium need not be a “pointer.” See Ex. 2032 at 304:18-305:2 (Mr. Radbel
stating that he does not “consider indicium to be a pointer”). The only
requirement is that it be an “indicium,” or “indication,” of an information
product. Mr. Radbel acknowledged that the Object ID in Ginter is used to
find the correct content, Ex. 2031 at 45:12-17, and the key blocks are
associated with and used to access the data in the correct data block, Ex.
1005 at 127:45-128:2. Achates’s second incorrect premise is that each
information product must have a unique indicium. Again, claim 1 does not
require that the particular content of the “indici[a]” be different from each
other. We are persuaded by Mr. Schneier’s testimony that the key blocks
and Object ID in Ginter are “indici[a]” of information products. See Pet. 25;
Ex. 1003 ¶¶ 146-51, 168.
Third, Achates is incorrect in its assertion that Apple’s analysis is
based on “disjoint parts of Ginter without regard to their relationship.” PO
Resp. 3-4. Achates does not develop this argument with respect to the
particular limitations of claims 1-3 or explain sufficiently why the particular
portions of Ginter cited for the limitations of these claims relate to different
embodiments, rather than the same preferred embodiment.
We are persuaded, by a preponderance of the evidence, that claim 1,
as well as dependent claims 2 and 3, which Achates does not argue
separately in its Patent Owner Response, are anticipated by Ginter.

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3. Conclusion
Based on the record evidence, in light of the arguments presented,
Apple has shown, by a preponderance of the evidence, that claims 1-3 are
anticipated by Ginter.

F. Ground Based on Pettitt
With respect to the alleged ground of unpatentability based on Pettitt,
we have reviewed Apple’s Petition, Achates’s Patent Owner Response, and
Apple’s Reply, as well as the evidence discussed in each of those papers.
We are persuaded, by a preponderance of the evidence, that claims 1-4 are
unpatentable over Pettitt and Beetcher under 35 U.S.C. § 103(a).

1. Pettitt
Pettitt discloses a system for “controlling distribution of software in a
multitiered distribution chain” and “distinguishing authorized users from
unauthorized users.” Ex. 1006, col. 1, ll. 7-10.
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Figure 2 of Pettitt is reproduced below.

Figure 2 depicts the entities involved in providing software 13: author 12,
license clearing house (LCH) 14, distributor 16, reseller 17, and user 18.
Software 13 is packed into a digital shipping container 20, encrypted with a
master key, and provided to user 18 (e.g., sold by reseller 17 to the public).
Id. at col. 3, ll. 28-56. To purchase a license and unlock the container, user
18 sends authorization request 30, which includes information identifying
the software, user, and desired method of payment. Id. at col. 4, ll. 10-19.
The distribution entities communicate with each other to validate the user’s
payment and authorize the transaction. Id. at col. 4, ll. 20-62. If authorized,
LCH 14 creates a reply envelope 34 including:
1. information identifying the software,
2. information identifying the user,
3. the digital signature of the reseller,
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4. the digital signature of the distributor,
5. a master key that unlocks the software container 20 (if the
transaction has been authorized), and
6. a digital authorization certificate.
Id. at col. 4, l. 63-col. 5, l. 5.
LCH 14 encrypts the contents of the reply envelope with the reseller’s
public key and “digitally signs the envelope with the signature of LCH 14 by
hashing the contents of the reply envelope and encrypting the result of the
hash with the LCH’s private key.” Id. at col. 5, ll. 14-24. LCH 14 then
sends the reply envelope back through the distribution chain. Id. at col. 5,
ll. 24-28. Reseller 17 authenticates the digital signature, decrypts the reply
envelope using the reseller’s public key, and sends the contents of the reply
envelope to user 18. Id. at col. 5, ll. 45-55. User 18 then “uses the
authorization certificate and the master key to unlock the software container
20 and install the software.” Id. at col. 5, ll. 56-63. Because the digital
authorization certificate is derived from the user’s information and,
therefore, is different for each user, possession of the digital authorization
certificate is “the user’s proof of purchase, and proof that s/he is an
authorized user.” Id. at col. 5, ll. 58-63.

2. Claims 1-4 are Unpatentable Over Pettitt and Beetcher
Claim 1
Pettitt teaches generating a “string, R” (the reseller’s public key),
encrypting an “indicium of an end-user’s identity” (information identifying
the user) and an “indicium of a first information product” (information
identifying the software) to create a “launch code” (the reply envelope),
decrypting the “launch code,” and installing the first information product
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onto the end-user’s computer, as recited in claim 1. See Pet. 33-35. Apple
relies on Beetcher for the “second information product” limitations of claim
1, as Pettitt refers only to a user purchasing a single piece of software. See
id. at 36-38; Ex. 1006, col. 2, l. 59-col. 3, l. 1; col. 4, ll. 8-19.
In its Patent Owner Response, Achates makes two arguments
regarding claim 1. First, Achates argues that Pettitt does not teach
“decrypting said launch code . . . to recover said authentication code,” as
recited in claim 1. PO Resp. 19-27. Achates contends that Pettitt’s LCH
digital signature and digital authorization certificate, each cited by Apple in
the Petition as an “authentication code,” are not authentication codes
recovered by decrypting the reply envelope in Pettitt. Id. As to the digital
authorization certificate, Achates acknowledges that the certificate is part of
the reply envelope and that the “reseller does recover the certificate by
decrypting the encrypted reply envelope.” Id. at 23. Achates’s position,
however, is that the digital authorization certificate is not an “authentication
code” for two reasons: (1) the digital authorization certificate is used to
unlock and install the software and distinguish authorized from unauthorized
users, not to authenticate data, and (2) the digital authorization certificate is
not used to authenticate the reply envelope because the reseller authenticates
the encrypted reply envelope with the LCH digital signature before the
reseller decrypts the reply envelope. Id. at 23-27. In support of its position,
Achates relies on Dr. Wang, who explains why he believes that “Pettitt’s
digital authorization certificate is not an authentication code.” Ex. 2014
¶¶ 19-23.
We are persuaded that Pettitt’s decryption of the reply envelope to
recover the digital authorization certificate constitutes “decrypting said
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launch code . . . to recover said authentication code,” as recited in claim 1.
See Pet. 34; Ex. 1003 ¶¶ 207-208. As explained above, we interpret
“authentication code” to mean “a code for authenticating data.” See supra
Section II.A. The digital authorization certificate is generated by hashing
the other five items identified in Pettitt as being part of the reply envelope
and encrypting the result with the private key of the LCH. Ex. 1006, col. 5,
ll. 6-8. Therefore, the digital authorization certificate is a digital signature,
and a function of a digital signature is to authenticate data, as Dr. Wang
agrees. See Ex. 2034 at 254:15-21, 257:17-23. Pettitt specifies that the
digital authorization certificate is “use[d]” to unlock the software container
and install the software. Ex. 1006, col. 5, ll. 56-58. Specifically, the user
would validate the digital authorization certificate by decrypting the
originally encrypted hash (e.g., with the LCH’s public key), generating a
new hash from the same five elements used to create the original hash, and
comparing the new and original hashes. See Pet. Reply 6; Ex. 2034 at
193:3-194:8, 263:10-15. Thus, the digital authorization certificate
authenticates the data that has been “digitally signed” with it. Further, as
Achates acknowledges, the digital authorization certificate is part of the
encrypted reply envelope, and is recovered when the reply envelope is
decrypted. See Ex. 1006, col. 4, l. 63-col. 5, l. 8; col. 5, ll. 51-63 (“reseller
17 decrypts the reply envelope . . . and passes the contents onto the user
18”); PO Resp. 23. Therefore, we are persuaded that Pettitt teaches
“decrypting said launch code . . . to recover said authentication code,” as
recited in claim 1.
7

7
Because we agree with Apple that the digital authorization certificate in
Pettitt is an “authentication code” recovered by the decryption of a launch
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We also note that, in its Motion for Observation, Apple cites an email
communication between Dr. Wang and Mr. Radbel where Dr. Wang stated:
“I am still struggling with their statements like the authorization certificate
does not authenticate data. . . . I thought we agreed during the call that we
are not going to use this line of argument.” Obs. 1 (citing Ex. 1067 at 1).
Although the specific “statements” referenced in the email are unknown, we
agree with Apple that Dr. Wang’s statement that he was “struggling” with
“statements like the authorization certificate does not authenticate data” is
inconsistent with his later opinion in his declaration that “a person of
ordinary skill in the art would not consider the digital authorization
certificate to be . . . a code for authenticating data.” See id.; Ex. 2014
¶¶ 22-23. For this and the other reasons explained above, we find Mr.
Schneier’s testimony to be more credible than that of Dr. Wang.
Second, Achates argues that Pettitt and Beetcher do not teach the
limitations of claim 1 pertaining to multiple “indici[a]”—namely, decrypting
a launch code to recover indicia of first and second information products,
and installing the first and second information products. PO Resp. 27-32.
According to Achates, Mr. Schneier provides “no reason” why a skilled
artisan would modify Pettitt’s reply envelope to be “capable of authorizing
the installation of multiple information products.” Id. at 28.
We first note that claim 1 does not recite “authorizing” the installation
of any information products. The claim only recites “decrypting” the launch
code to recover the indicia of the first and second information products, and
“installing said first information product and said second information

code, as recited in claim 1, we need not determine whether the LCH digital
signature also is an “authentication code.”
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product onto a computer associated with said end-user.” Moreover, we
disagree that Mr. Schneier gives “no reason” for the proposed combination.
Mr. Schneier testifies as follows:
I also believe that including more specific indications of
more than one information product in the reply envelope of
Pettitt would have been obvious to a person of ordinary skill in
the art in 1997 because the inclusion of multiple such indicia
was well known at the time and well within the skill of the art.
A person of ordinary skill in the art also would have had
good reasons to include a list of multiple indicia of information
products in the same launch code, as doing so would more
efficiently identify multiple information products for which the
end-user was licensed.
For example, . . . Beetcher explains that multiple
software modules may be placed on a single distribution
medium, and “[e]ach customer will receive a unique entitlement
key enabling that customer to run only those software modules
to which he is licensed.”
In addition, a person of ordinary skill would have
recognized that the Pettitt scheme could have been easily
extended to authorize multiple software products. This could
have been done, for example, by including multiple “master
keys” and/or indicia corresponding to the different software
products within the reply envelope sent by the reseller. Such
master keys and indicia would be used in the same way as in
the example in the patent, which sends a master key for one
software product (e.g., it is used to unlock the software
container if the transaction has been authorized). Extending
Pettitt to include multiple indicia of software products, thus,
would have been an obvious alteration of the Pettitt scheme to a
person of ordinary skill in the art in April of 1997.
Ex. 1003 ¶¶ 218-21 (citations omitted, emphasis added); see Pet. 36-38.
We find Mr. Schneier’s analysis supported by the disclosures of the
references and persuasive. In addition, Dr. Wang acknowledges that “Pettitt
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leaves the illegal copying problem to others, and Beetcher addresses this
problem with runtime checks.” Ex. 2014 ¶ 67; see Pet. Reply 6-7. Thus,
Dr. Wang’s own analysis indicates a reason why a skilled artisan would have
looked to Beetcher to provide something that the Pettitt system lacks.
Achates also disputes Mr. Schneier’s conclusion that if the Pettitt
system were modified to handle multiple software products by including
multiple master keys and indicia in the reply envelope, the master keys and
indicia would be “used in the same way as in the example in the patent.”
PO Resp. 28-32 (citing Ex. 1003 ¶ 221). Achates contends that in Pettitt,
there “can be” more than one distributor and more than one reseller, which
may not carry all possible software products. Id. at 29. Achates then
describes a hypothetical situation where a user requests one software product
from one distributor/reseller pair and a second software product from a
different distributor/reseller pair, and the LCH generates and transmits the
reply envelope in response to the first request before the second request
arrives. Id. at 29-30. Then, when the second request arrives, the LCH
would create a new reply envelope, not a “consolidated reply envelope.”
Id. at 30. According to Achates, producing a consolidated reply envelope
with master keys and indicia for multiple software products would require a
“coordination function” at the LCH, as well as resolving various problems
with transmission through the distribution chain and decryption of the reply
envelope, all of which would amount to a “fundamental redesign” to the
Pettitt system. Id. at 30-32.
We are not persuaded that a person of ordinary skill in the art would
have been incapable of combining, or have had no reason to combine, the
teachings of Pettitt and Beetcher in the manner alleged. Pettitt discloses a
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multitiered software distribution system comprising “one or more
distributors” and “one or more optional resellers.” Ex. 1006, col. 3,
ll. 28-32. Thus, the system may have only a single distributor and a single
reseller (or even no reseller, as it is “optional”), and Achates’s hypothetical
situation is not guaranteed to occur. In addition, as Apple points out,
Achates’s hypothetical situation is merely attorney argument, unsupported
by any testimony from Dr. Wang or Mr. Radbel or other evidence. See Pet.
Reply 7-8. Dr. Wang also acknowledges that it would be possible to modify
the Pettitt system to handle multiple information products. See id.; Ex. 2014
¶ 67 (“if desired, Beetcher’s prepared software could be distributed on
Pettitt’s system”); Ex. 2034 at 314:7-22. Thus, we are persuaded that
combining the teachings of Pettitt and Beetcher is proper and that a person
of ordinary skill in the art would have had reason to do so in the manner
asserted by Apple and Mr. Schneier to arrive at the method of claim 1.

Claim 2
As to claim 2, Achates argues that a person of ordinary skill in the art
would not have had reason to combine the teachings of Pettitt and Beetcher.
PO Resp. 32-35. Claim 2 recites, inter alia, “creating a token,” “encrypting
said token,” and “storing said encrypted token on said computer.” As
explained above, we interpret “token” to mean “a data structure indicating
that an end-user’s computer is granted access to certain information
products.” See supra Section II.A. In the Petition, Apple contends that
when the reseller in Pettitt decrypts the reply envelope, it recreates the
unencrypted reply envelope and sends the contents of the reply envelope
(a “token”) to the user. Pet. 37-38. The contents of the unencrypted reply
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envelope (e.g., the master key and digital authorization certificate) are stored
in the memory of the user’s computer because they are used to unlock the
software. Id. (citing Ex. 2003 ¶ 244). Apple further contends that although
Pettitt does not teach encrypting the contents of the reply envelope in
memory on the user’s computer, doing so would have been an obvious,
logical step based on Beetcher and would have been obvious given the fact
that Pettitt teaches encrypting the reply envelope at various stages for
security. Id. Mr. Schneier testifies that a “person of ordinary skill would
recognize that encrypting a locally stored token would help protect the
contents of the token from theft.” Ex. 1003 ¶ 243 (citing Beetcher, Ex.
1007, col. 10, ll. 27-31, which teaches local storage of an encrypted
entitlement key).
Achates contends that storing the encrypted reply envelope on the
user’s computer would not make sense because the encrypted reply envelope
is encrypted with the public key of the reseller, so only the reseller, not the
user, can decrypt it. PO Resp. 33. Pettitt, however, does not teach that the
user ever receives the encrypted reply envelope. See Pet. Reply 8. Rather,
the reseller decrypts the reply envelope and sends the contents to the user in
unencrypted form. Ex. 1006, col. 5, ll. 51-55. Thus, it is the contents of the
reply envelope that are stored on the user’s computer, and we agree that it
would have been obvious based on Beetcher to encrypt those contents when
they are stored there.
Achates also asserts that because the reseller sends the master key
(along with the other contents of the reply envelope) to the user, there is no
reason for the user to back up the reply envelope locally once the user has
used the master key to install the software. PO Resp. 33-34. In addition,
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according to Achates, there is no need to save the encrypted reply envelope
because the user can back up the software itself. Id. at 34-35. Again,
Achates misstates Apple’s position, focusing on the encrypted reply
envelope rather than the contents of the envelope that the user receives. In
Pettitt, all of the contents are sent to the user, the master key and digital
authorization certificate are used to unlock and install the software, and
thereafter “the possession of the authorization certificate is the user’s proof
of purchase, and proof that s/he is an authorized user.” Ex. 1006, col. 5,
ll. 56-63. Thus, there are reasons for the user in Pettitt to store the token,
including the digital authorization certificate, locally—namely, to install and
unlock the software and provide proof of purchase. See Pet. Reply 8-9;
Ex. 1003 ¶¶ 240-44.
We also note that Achates does not dispute the underlying reasons
provided by Mr. Schneier for why a person of ordinary skill in the art would
have combined the teachings of Pettitt and Beetcher in the manner proposed.
Mr. Schneier testifies that encrypting locally stored tokens was well known
at the time and that a skilled artisan would have had reason to encrypt the
token in Pettitt to ensure its security. Ex. 1003 ¶¶ 242-44. Dr. Wang agrees
that it generally is a good practice to encrypt a file stored in nonvolatile
storage to “protect the confidentiality of the file.” Ex. 2035 at 395:3-15,
400:1-6. We give Mr. Schneier’s analysis regarding the combination of
Pettitt and Beetcher substantial weight, and conclude that Apple has shown
“‘some articulated reasoning with some rational underpinning to support the
legal conclusion of obviousness.’” See KSR Int’l Co. v. Teleflex Inc., 550
U.S. 398, 417-18 (2007) (citation omitted).
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We are persuaded, by a preponderance of the evidence, that claims 1
and 2, as well as dependent claims 3 and 4, which Achates does not argue
separately in its Patent Owner Response, would have been obvious over
Pettitt and Beetcher.

3. Conclusion
Based on the record evidence, in light of the arguments presented,
Apple has shown, by a preponderance of the evidence, that claims 1-4 are
unpatentable over Pettitt and Beetcher.

G. Ground Based on Beetcher
With respect to the alleged ground of unpatentability based on
Beetcher, we have reviewed Apple’s Petition, Achates’s Patent Owner
Response, and Apple’s Reply, as well as the evidence discussed in each of
those papers. We are persuaded, by a preponderance of the evidence, that
claims 1-4 are unpatentable over Beetcher and Ginter under 35 U.S.C.
§ 103(a).

1. Beetcher
Beetcher discloses a system for “restricting the ability of a computer
user to use licensed software in a manner inconsistent with the license.” Ex.
1007, col. 1, ll. 9-12.
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Figure 1 of Beetcher is reproduced below.

Figure 1 depicts various distributor and customer devices. The customer’s
computer has machine serial number 105. Id. at col. 5, ll. 17-23. A “generic
set of software modules” stored on software media 112 is distributed to the
customer separately from encrypted entitlement key 111, which “contains
information enabling system 101 to determine which software modules are
entitled to execute on it.” Id. at col. 5, l. 65-col. 6, l. 7. The customer
“load[s] the desired software modules from [software media 112 and] unit
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110 into system 101, and store[s] the software modules on storage devices
106-108.” Id. at col. 6, ll. 11-15. Entitlement key 111 includes certain
information, such as software version field 202, machine serial number field
204, and product entitlement flags 205, “each corresponding to a product
number” for a product that the customer may be authorized to use. Id. at col.
6, ll. 20-40; Fig. 2. Entitlement key 111 is encrypted using a machine key
derived from machine serial number 105. Id. at col. 5, ll. 44-50; col. 9,
ll. 55-60.
The customer receives encrypted entitlement key 111 and enters it
into the computer. Id. at col. 9, ll. 51-52. The customer’s computer then
decodes encrypted entitlement key 111 using the machine key, stores the key
in an encoded product key table, and stores the key and software version
number in a product lock table. Id. at col. 6, l. 66-col. 7, l. 42. The encoded
product key table and product lock table both are stored in random access
memory (RAM), and the encoded product key table also is stored on a
non-volatile storage device so that it can be recovered when the system is
powered down and then re-initialized (i.e., the encoded product key table is
persistent). Id. at col. 8, ll. 23-27, 43-46. Products are unlocked “on
demand.” Id. at col. 10, ll. 20-39. “Upon first execution of a previously
unentitled software product,” an unlock routine “fetches the encrypted
entitlement key from the appropriate entry in [the] encoded product key
table,” “obtains the machine key,” “decodes the entitlement key,” and sets
the product lock table accordingly if the entitlement key indicates that the
user is entitled to use the software. Id. Upon subsequent executions of the
software product, the system checks the product lock table to determine if
the software is entitled to execute. Id. at col. 10, ll. 48-62.
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2. Claims 1-4 are Unpatentable Over Beetcher and Ginter
Claims 1-3
Beetcher teaches generating a “string, R” (the machine key),
encrypting an “indicium of an end-user’s identity” (the machine serial
number) and indicia of first and second “information product[s]” (the
entitlement flags) to create a “launch code” (the entitlement key), decrypting
the “launch code,” and installing the first information product onto the
end-user’s computer, as recited in claim 1. See Pet. 8-11. Apple relies on
Ginter’s use of a digital signature for the “authentication code” limitations of
claim 1 because the version number and machine serial number in Beetcher
are used for purposes other than authenticating data. See id. at 10; Ex. 1007,
col. 10, ll. 2-5, 56-60.
Achates makes three arguments regarding claim 1. First, Achates
argues that Beetcher and Ginter do not teach “decrypting said launch code
. . . to recover said authentication code,” as recited in claim 1, because
Ginter’s permissions record (PERC) does not include a digital signature that
can be recovered by decrypting the PERC. PO Resp. 36-40. We disagree,
for the reasons explained above. See supra Section II.E.2. In addition,
Achates’s argument is directed to Ginter individually, but Apple’s position
regarding the recited “decrypting” step is premised on the combination of
Beetcher and Ginter. Apple relies on Beetcher for the underlying teaching
of decrypting an encrypted “launch code” (the entitlement key) to recover
the software version number and machine serial number, and, because those
two values are not authentication codes, relies on Ginter’s teaching of a
digital signature within an encrypted “launch code” (the PERC). See Pet.
13-14; Ex. 1003 ¶¶ 275-78. Given Ginter’s teaching of a digital signature
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within a PERC, Achates does not explain sufficiently why the substitution
proposed by Apple would not result in the recited “decrypting” step. See
In re Merck & Co., Inc., 800 F.2d 1091, 1097 (Fed. Cir. 1986)
(“Non-obviousness cannot be established by attacking references
individually where the rejection is based upon the teachings of a
combination of references.”).
Second, Achates argues that a person of ordinary skill in the art in
1997 would not have been motivated to include a digital signature in the
entitlement key of Beetcher. PO Resp. 41-42. Achates contends that
“public key cryptography was patented and the owner of the dominant patent
was known to be litigious and the cost of its licenses high,” citing a 1997
article regarding U.S. Patent No. 4,405,829. Id. (citing Ex. 2015). Achates
also points to the following testimony from Mr. Schneier:
Q. Does the fact that the digital signatures were all
patents in the 1997 time frame create a motivation not to use
digital signatures?
A. Of course.
Ex. 1046 at 484:5-9.
We first note that Mr. Schneier later testified during redirect
examination that he “may have made a mistake” regarding the testimony
cited above because at least one digital signature algorithm of the time was
in the public domain. Id. at 494:4-495:7. Moreover, even assuming that
Achates is correct, Achates’s argument is not that it would have been
technically infeasible, or even technically difficult, for a person of ordinary
skill in the art to use a digital signature in the context of Beetcher—just that
the financial cost of doing so would have been high. We do not consider
this to be a sufficient impediment to dissuade a skilled artisan from using
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digital signatures. Indeed, Mr. Schneier testifies that digital signatures were
“widely used in April 1997” in systems analogous to that of Beetcher, and
provides detailed reasons why a person of ordinary skill in the art would
have wanted to use a digital signature. See Ex. 1003 ¶¶ 275-78. Achates
gives no basis for believing that testimony to be incorrect.
Third, relying on its other arguments addressed above, Achates argues
that “[t]he nature and number of mistakes that [Apple] and Mr. Schneier
make in their interpretation of the reference[s] betrays the[] fact that their
propositions are based almost entirely on hindsight.” PO Resp. 43. Achates
further contends that a person of ordinary skill in the art would not have
considered combining the references, citing Mr. Schneier’s testimony that if
he were tasked with solving the problem of small-scale software piracy in
1997, he would not have “bother[ed]” with Ginter. Id. at 43-44 (citing Ex.
1045 at 350:17-352:3, Ex. 1046 at 392:7-18). As explained above, we do
not agree that Apple and Mr. Schneier misread Ginter or the other
references, and are persuaded by Mr. Schneier’s reasons as to why a person
of ordinary skill in the art would have combined the teachings of Beetcher
and Ginter. The cited portions of Mr. Schneier’s testimony, which address
how Mr. Schneier would have built a system and only show that he would
not have looked to Ginter because it is “long” and “complex” and has many
“unnecessary things,” do not refute those reasons. See Ex. 1045 at
350:17-352:3; Ex. 1046 at 392:7-18.
We are persuaded, by a preponderance of the evidence, that claim 1,
as well as dependent claims 2 and 3, which Achates does not argue
separately in its Patent Owner Response, would have been obvious over
Beetcher and Ginter.
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Claim 4
As to claim 4, Apple argues that claim 4 is unpatentable based on the
combination of Beetcher and Ginter in two respects. First, as explained
above, Apple relies on Beetcher as teaching all limitations of claim 4 other
than the “authentication code” limitations, and relies on Ginter as teaching
the use of an “authentication code.” Pet. 9-16. Second, Apple relies on
Ginter as teaching all limitations of claim 4 other than “identical” strings R
(for encrypting items to create a launch code) and T (for encrypting a token),
and relies on Beetcher as teaching that limitation. Id. at 32-33. In the
Decision on Institution, we determined that Apple had established a
reasonable likelihood of prevailing based on Beetcher and Ginter for both
reasons. Dec. on Inst. 22-23, 30. Achates does not argue claim 4 separately
in its Patent Owner Response on either basis, instead relying on its
arguments as to independent claim 1. See PO Resp. 15-16, 40, 42. After
reviewing Apple’s arguments in the Petition, and Mr. Schneier’s supporting
testimony, we are persuaded, by a preponderance of the evidence, that claim
4 would have been obvious over Beetcher and Ginter on both bases. See
Pet. 9-16, 32-33; Ex. 1003 ¶¶ 194-99, 294-96, 298.

3. Conclusion
Based on the record evidence, in light of the arguments presented,
Apple has shown, by a preponderance of the evidence, that claims 1-4 are
unpatentable over Beetcher and Ginter.

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H. Apple’s Motion for Observation on Email Communications and
Achates’s Motion to Seal
Apple’s Motion for Observation on email communications between
Mr. Radbel and Dr. Wang pertains to certain statements the witnesses made
regarding the term “authentication code” used in the claims (citing Exs.
1067, 1068). See Obs. 1-3. We have considered Apple’s observations and
Achates’s response, and have addressed them above where relevant. See
supra Section II.F.2; Obs. 1-3; Obs. Resp. 1-4.
Achates also moves to seal the email communications (Exhibits 1067
and 1068), as well as Apple’s Motion for Observation (Paper 64)
8
and
Achates’s response (Paper 69). Mot. to Seal 2-4. In previous Orders, we
ordered Achates to produce the emails, authorized Apple to file them as
exhibits in this proceeding, and authorized Achates to file a motion to seal.
See Papers 43, 52, 58, 63.
There is a strong public policy in favor of making information filed in
an inter partes review open to the public, especially because the proceeding
determines the patentability of claims in an issued patent and, therefore,
affects the rights of the public. Under 35 U.S.C. § 316(a)(1) and 37 C.F.R.
§ 42.14, the default rule is that all papers filed in an inter partes review are
open and available for access by the public; a party, however, may file a
motion to seal and the information at issue is sealed pending the outcome of
the motion. It is, however, only “confidential information” that is protected
from disclosure. 35 U.S.C. § 316(a)(7). In that regard, the Trial Practice
Guide, 77 Fed. Reg. at 48,760, provides:

8
Apple’s exhibit list (Paper 65), filed with its Motion for Observation, also
was filed under seal.
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40
The rules aim to strike a balance between the public’s interest
in maintaining a complete and understandable file history and
the parties’ interest in protecting truly sensitive information.
. . .
Confidential Information: The rules identify confidential
information in a manner consistent with Federal Rule of Civil
Procedure 26(c)(1)(G), which provides for protective orders for
trade secret or other confidential research, development, or
commercial information. § 42.54.
The standard for granting a motion to seal is “for good cause.”
37 C.F.R. § 42.54(a). Achates, as movant, bears the burden of proof in
showing entitlement to the requested relief. 37 C.F.R. § 42.20(c). Achates
must explain why the information sought to be sealed constitutes
“confidential information.”
Achates has not met its burden to show that the emails, and the papers
citing the emails, contain “confidential information.” The emails contain
discussions between Achates’s two declarants, Mr. Radbel and Dr. Wang,
regarding their opinions on the prior art at issue in this proceeding. See Exs.
1067, 1068. They do not appear to contain any trade secrets, research
information, or information that would be commercially sensitive.
Achates makes three arguments in its Motion to Seal. First, Achates
argues that the parties agreed not to permit discovery regarding the
“process” of producing declarations and, therefore, had a “shared
expectation that such information would be maintained confidentially and
certainly not be made available to the public.” Mot. to Seal 2-3. We
addressed this issue in ruling on Apple’s motion for additional discovery,
and were not persuaded by Achates’s argument regarding an alleged
agreement between the parties. See Paper 58 at 8. For the same reasons, we
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are not persuaded that the emails should be sealed as “confidential
information” based on the alleged agreement.
Second, Achates argues that the emails contain “confidential
communications with and at the direction of counsel,” and are “immune
from discovery at least under the doctrine of work-product immunity.” Mot.
to Seal 3 & n.1. Similar to the argument it made in connection with Apple’s
motion for additional discovery, Achates does not cite any case law or
explain in any detail why it believes the emails are privileged. See Paper 58
at 8. Moreover, Achates did not seek rehearing of our decision granting the
motion for additional discovery, and produced the emails to Apple. We also
note that, contrary to Achates’s assertion that the emails are confidential
communications “with” counsel, the emails at issue are “directly” between
Mr. Radbel and Dr. Wang, in accordance with the limited additional
discovery we authorized. See id. at 9; Exs. 1067, 1068.
Third, Achates contends that because Apple’s observations are “rank
speculation and offer no insights into the credibility” of Mr. Radbel and
Dr. Wang, the Board should not review them in its analysis and “there is no
need to make [the emails] available to the public.” Mot. to Seal 3-4.
Whether an opposing party’s position regarding a document ultimately has
merit, however, is not the test for determining whether the document should
be sealed. The test is whether the material contains “confidential
information,” and Achates has not shown that the emails do.
As Achates provides no basis for deeming the emails to contain
“confidential information,” its Motion to Seal is denied. Papers 64, 65, and
69, and Exhibits 1067 and 1068, will be unsealed, and access to the
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materials in the Patent Review Processing System (PRPS) will be changed
from “Parties and Board Only” to “Public.”

I. Achates’s Motion to Exclude
In its Motion to Exclude, Achates seeks to exclude the declaration of
Mr. Schneier (Exhibit 1003) submitted by Apple with the Petition. For the
reasons discussed below, the motion is denied.
With few exceptions, the Federal Rules of Evidence apply to inter
partes review proceedings. 37 C.F.R. § 42.62(a). The rules governing inter
partes review set forth the proper procedure for objecting to, and moving to
exclude, evidence when appropriate. When a party objects to evidence that
was submitted during a preliminary proceeding, such an objection must be
served within ten business days of the institution of trial. 37 C.F.R.
§ 42.64(b)(1). The objection to the evidence must identify the grounds for
the objection with sufficient particularity to allow correction in the form of
supplemental evidence. Id. This process allows the party relying on the
evidence to which an objection is served timely the opportunity to correct,
by serving supplemental evidence within ten business days of the service of
the objection. See 37 C.F.R. §§ 42.64(b)(1), 42.64(b)(2). If, upon receiving
the supplemental evidence, the opposing party is still of the opinion that the
evidence is inadmissible, the opposing party may file a motion to exclude
such evidence. 37 C.F.R. § 42.64(c).
Achates alleges various reasons why Mr. Schneier’s declaration
(Exhibit 1003) should be excluded. Mot. to Exclude 1-8. The declaration,
however, was submitted by Apple with its Petition for inter partes review
(Paper 1). Because the evidence was submitted during a preliminary
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43
proceeding, any objection to such evidence must have been served within
ten business days of the institution of the trial. 37 C.F.R. § 42.64(b)(1).
Achates does not allege that Apple was served with any objection within ten
business days of the institution of trial (Paper 21, dated June 3, 2013) or at
any other time. Instead, Achates submits that 37 C.F.R. § 42.64 does not
apply “because the bases of the objections arose when [Apple] failed to
update Mr. Schneier’s declaration as part of its Reply.” Mot. to Exclude 7.
Achates does not point to any rule or authority in support of the theory that
Apple had a duty to “update” a declaration that was submitted with the
Petition for inter partes review. Moreover, Apple would have had the right
to serve supplemental evidence for the purpose of correcting any evidentiary
deficiencies in the declaration, had Apple been provided with proper and
timely notice, as required by 37 C.F.R. § 42.64. Thus, we are not persuaded
that Mr. Schneier’s declaration should be excluded.

III. ORDER
Apple has demonstrated, by a preponderance of the evidence, that:
(1) claims 1-3 are anticipated by Ginter under 35 U.S.C.
§ 102(e);
(2) claims 1-4 are unpatentable over Pettitt and Beetcher
under 35 U.S.C. § 103(a); and
(3) claims 1-4 are unpatentable over Beetcher and Ginter
under 35 U.S.C. § 103(a).
In consideration of the foregoing, it is hereby:
ORDERED that claims 1-4 of the ’889 patent have been shown to be
unpatentable;
FURTHER ORDERED that Achates’s Motion to Exclude is denied;
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44
FURTHER ORDERED that Achates’s Motion to Seal is denied;
FURTHER ORDERED that Papers 64, 65, and 69, and Exhibits 1067
and 1068, are unsealed; and
FURTHER ORDERED that the copies of Exhibits 1003 and 1041
filed on December 14, 2012, are expunged from the record of this
proceeding.
This is a final decision. Parties to the proceeding seeking judicial
review of the decision must comply with the notice and service requirements
of 37 C.F.R. § 90.2.

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PETITIONER:

Jeffrey P. Kushan
Joseph A. Micallef
SIDLEY AUSTIN LLP
jkushan@sidley.com
jmicallef@sidley.com

PATENT OWNER:

Brad D. Pedersen
Eric H. Chadwick
PATTERSON THUENTE PEDERSEN, P.A.
prps@ptslaw.com
chadwick@ptslaw.com

Jason Paul DeMont
KAPLAN BREYER SCHWARTZ & OTTESEN
jpdemont@kbsolaw.com

Vincent McGeary
GIBBONS, P.C.
vmcgeary@gibbonslaw.com