Record of Oral Hearing Held: October 26, 2017 ______

Home , Cable converter box

UNITED STATES PATENT AND TRADEMARK OFFICE ______

BEFORE THE PATENT TRIAL AND APPEAL BOARD ______

APPLE INC., Petitioner,

PERSONALIZED MEDIA COMMUNICATIONS LLC, Patent Owner. ______

Case IPR2016-01520 Patent 8,559,635 B1 ______

Record of Oral Hearing Held: October 26, 2017 ______

ORDER Amended Trial Hearing 37 C.F.R. § 42.70

Before KARL D. EASTHOM, KEVIN F. TURNER, and GEORGIANNA W. BRADEN, Administrative Patent Judges.

Case IPR2016-01520 Patent 8,559,635 B1

APPEARANCES:

ON BEHALF OF THE PETITIONER:

MARCUS E. SERNEL, ESQUIRE Kirkland & Ellis LLP 300 North LaSalle Street 1300 I Street, N.W. Chicago, IL 60654

ON BEHALF OF THE PATENT OWNER:

DOUGLAS J. KLINE, ESQUIRE Goodwin Proctor LLP 100 Northern Avenue Boston, MA 02210

The above-entitled matter came on for hearing on Thursday, October 26, 2017, at 1 p.m., at the U.S. Patent and Trademark Office, Madison Building East, 600 Dulany Street, Alexandria, Virginia.

Case IPR2016-01520 Patent 8,559,635 B1

P R O C E E D I N G S 1 - - - - - 2 JUDGE EASTHOM: Welcome to the Patent Trial & Appeal Board. 3 This is IPR2016-01520, U.S. patent No. 8,559,635, Personalized Media 4 Communications LLC v. Apple, Inc. We have Judge Braden in Dallas and 5 Judge Turner over to the – on the screen. He’s in San Jose. So if you would 6 just remember when you’re speaking to try to reference the slide numbers. 7 We have some slidesin this case. 8 Why don’t we start out with introducing yourselves for the record, and 9 start with Petitioner, please. 10 MR. SERNEL: Your Honors, my name is Marc Sernel. I represent 11 Apple. With me today is Joel Merken (phonetic) – 12 JUDGE BRADEN: I’m sorry, counselor. Could we remind you to 13 please go to the podium and please speak into the microphone for the remote 14 judges. 15 MR. SERNEL: My apologies. My name is Marc Sernel. I represent 16 Petitioner Apple Incorporated. With me today are Joel Merken and Alan 17 Rabinowitz. 18 MR. KLINE: Good afternoon, Your Honors. My name is Doug 19 Kline. I represent Personalized Media Communications, LLC, the Patent 20 Owner in this matter. With me are Steve Schreiner, Fong Den (phonetic), 21 Tom Scott, Jennifer Albert. Thank you. 22 JUDGE EASTHOM: Welcome. Okay. Just a couple of 23 preliminaries. We’ve scheduled 45 minutes per side. We understand 24 Petitioner – well Patent Owner raised an issue with respect to another

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1 proceeding IPR2016-00754, I believe claims 4, 7 and 13 in that case where - 2 - in a final written decision so it raises a 315 issue here and I understand the 3 Parties want to address that issue preliminarily or do you want to wait until - 4 - I think, why don’t we just get that over with. It looks like Petitioner, from 5 your slides, it looks like you’re not going to discuss those here; is that 6 correct? 7 MR. SERNEL: That’s correct. We don’t intend to present any 8 argument with respect to those three claims. 9 JUDGE EASTHOM: Okay. And Patent Owner? 10 MR. KLINE: We should be able to accomplish the same thing, Your 11 Honor. 12 JUDGE EASTHOM: Okay. 13 MR. KLINE: Thanks. 14 JUDGE EASTHOM: Thank you. So are you going to withdraw your 15 motion to – 16 MR. KLINE: Well no. I mean we think they should be dismissed 17 from the case, from this proceeding, and I understand that the request to file 18 the motion came in recently so it hasn’t been able to -- the Board hasn’t been 19 able to consider it and resolve it yet today, but I think for purposes of this 20 hearing I don’t think it’s going to influence significantly how this hearing 21 proceeds. But we would like to file the motion because we do think those 22 claims should be dismissed from this proceeding. 23 JUDGE EASTHOM: It’s Mr. Kline, right? 24 MR. KLINE: Yes, I’m sorry, yes.

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1 JUDGE EASTHOM: Okay, okay. Mr. Kline, I understand your 2 argument. 3 MR. KLINE: Right. 4 JUDGE EASTHOM: The way I think the panel views it is that 5 Petitioner cannot proceed on those claims but we’ve gone so far now that -- 6 and because Petitioner can’t proceed, they can’t maintain it -- they’re not 7 going to present argument here and that’s their view of it. 8 MR. KLINE: Right. 9 JUDGE EASTHOM: I think that’s a reasonable view. So we can go 10 ahead and proceed on those claims -- 11 MR. KLINE: Right. 12 JUDGE EASTHOM: -- and the way we look at it without any more 13 input from Petitioner on them. But you’re free to make an argument if you 14 want to about your motion and then we’ll entertain it probably later. 15 MR. KLINE: Sure. I mean the argument I would make about the 16 motion is the Statute provides that when the claims are subject to a final 17 written decision, they’re -- Petitioner is estopped from proceeding here, so -- 18 JUDGE EASTHOM: Okay. 19 MR. KLINE: -- that’s the argument. 20 JUDGE EASTHOM: I understand. Thank you, Mr. Kline. 21 MR. KLINE: Right, thank you. 22 JUDGE EASTHOM: Okay. 23 JUDGE BRADEN: Actually, Judge Easthom, I have a question for 24 the Patent Owner. Looking at the Rule it specifically says that Petitioner 25 may not maintain the claims within the IPR proceeding. Do you have

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1 anything to support your argument saying that the Board itself could not 2 maintain the claims within the proceeding? 3 MR. KLINE: I do not off the top of my head, Your Honor. 4 JUDGE BRADEN: All right. Thank you very much. 5 MR. KLINE: Thank you. 6 JUDGE EASTHOM: Okay. So, Mr. Sernel, are you going to proceed 7 with -- 8 MR. SERNEL: Yes, Your Honor, and I’d like to reserve I think ten 9 minutes for rebuttal, and I also have for people here hard copies of the slides 10 if that would be helpful? 11 JUDGE EASTHOM: That would help me at least. 12 MR. SERNEL: May I approach? 13 JUDGE EASTHOM: Please, please. 14 (Counsel approached the bench.) 15 MR. SERNEL: May I proceed, Your Honor? 16 JUDGE EASTHOM: Please do. Thank you. 17 MR. SERNEL: And certainly Judges Braden and Turner, please 18 interrupt at any time. I sometimes go quickly but I certainly welcome any 19 questions and please interrupt me when you have a question. 20 In terms of this proceeding, there are the following instituted grounds. 21 This is slide 1. As we’ve greyed out here and as we just discussed, I don’t 22 intend to address claims 4, 7 and 13 which were already found unpatentable 23 in the 754 proceeding. I plan to focus on claims 3, 18, 20, 32 and 33 and the 24 arguments with respect to Campbell and Chandra and the related arguments.

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1 So this is the 635 patent. The Board is very familiar with the PMC 2 patent family and in particular the 635 patent. Again, these are a set of pre- 3 GATT filed applications that date back to priority applications file in the 4 1981 and then in the 1987 time frame. One of the key issues in this 5 proceeding is whether the claims at issue are entitled to 1981 priority or not 6 and I will discuss that in detail in a few minutes. 7 Just to set the stage, again here’s the implicated claims. Not going to 8 touch 2, 4, 7 or 13, 2 was actually disclaimed back as a result of the 754 9 proceeding, 4, 7, and 13 we talked about. I’m going to focus on the 10 remaining five claims. 11 So the disputed issues that we will just tackle here today, there are 12 issues relating to the priority date and several issues there that we will 13 discuss. In terms of claim construction there are some issues that have been 14 briefed with respect to claim construction but as we’ll talk about in a few 15 minutes, I think many of those have been dealt with or the main ones have 16 already been dealt with in the 754 proceeding. We’ll then move into the 17 prior art and, as I said, Campbell and Chandra being the focus, and then I’ll 18 spend probably a few minutes on PMC’s motion to amend at the end. 19 So moving onto slide 5, this just sets forth the different issues with 20 respect to the priority date and you can see we’ve identified the claims that 21 each issue pertains to. I’m going to focus mostly on programming which 22 has already been dealt with, and then the fourth issue there is probably the 23 main issue that will get the most attention at this hearing which relates to 24 claims 18, 20, 32 and 33.

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1 JUDGE TURNER: Counsel, before you go on, while you’re on slide 2 5, let me ask you a quick question. I’m assuming you’re acquainted with 3 our IPR 2016 754 with respect to the same patent? 4 MR. SERNEL: Yes, absolutely. 5 JUDGE TURNER: Okay. And in terms of the arguments here with 6 respect to priority date, are there any that are subsequently different or can 7 you highlight -- I mean I’m assuming -- I’ll probably ask the same question 8 of the Patent owner -- but are there any things here that are particularly 9 different between those two so you’ve already considered a lot of these 10 arguments with respect to priority date? 11 MR. SERNEL: So I think the issues, and going back to slide 5, the 12 issues 2, 4 and 5 are different, have not been tackled directly in the 754 13 proceeding. Issue 1 with respect to programming has been dealt with in 14 detail in the 754 proceeding and so I think that one I’m not going to spend a 15 lot of time on. I think that’s already been dealt with. 16 JUDGE TURNER: Okay. Thank you. 17 MR. SERNEL: So moving on to slide 6, and again I don’t want to 18 spend a lot of time on this because the Board is familiar with this issue and 19 has already dealt with this issue. This is the issue of whether the 1981 20 specification, and we usually shorthand that by referring to the 490 patent 21 which reflects what was in the 1981 specification, whether the 1981 22 specification provides written description support for the concept of 23 programming as that term was defined in a much broader sense in the 1987 24 specification. Again, this has been dealt with and you can see there at the 25 bottom of slide 6 we call out Exhibit 1082 which is the final written decision

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1 in the 755 proceeding which actually related to a different patent, the 091 2 patent, but it was the same exact issue, same exact specification, question 3 being is this concept of programming described in 1981 and the decision 4 was it was not. And then it was also dealt with in a similar fashion in the 5 1527 proceeding, that’s Exhibit 1037 at page 34. 6 And so, again, I think PMC is estopped from challenging that analysis 7 and that decision from the 755 proceeding. I believe this is decided and it’s 8 decided that programming is not described in 1981 and so claim 3 and the 9 other claims 4 and 7 are not entitled to 1981 priority date on that basis. 10 I’d like to skip ahead now to slide 10 and I’d like to focus on, and this 11 is one of the new issues that’s presented by the claims in this proceeding, 12 and that is this concept of encrypted digital information transmission 13 unaccompanied by any non-digital information transmission. And so this 14 term appears in 18, 20, 32 and 33 and where I’d like to start with this is to 15 first say, there is not any kind of explicit express mention of anything like 16 this limitation in the 1981 specification. These words, or anything like it, 17 appear nowhere in the 1981 specification. This is something that was sort of 18 manufactured, concocted over the decades of prosecution and is something 19 that found its way into the claims, but you can look far and wide in the 1981 20 specification and find nothing like these words. 21 So what we have here and what the issues that are presented to the 22 Board are that PMC has had to try to rummage through different 23 embodiments to try to say even though this is not expressly there, this is not 24 explicitly called out, try to find this concept of encrypted digital information 25 transmission unaccompanied by any non-digital information transmission,

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1 try to find that somewhere in the disclosure, and we’re going to go through 2 four different embodiments where they try to find different pieces and make 3 different arguments to try to find this. And I think it’s important to keep in 4 mind as we go through this analysis what the law says is what’s required to 5 show written description when you’re looking at a limitation and you’re 6 trying to find it in a priority document. 7 You can see here we’ve called out, and these are some of the cases 8 cited in our briefs, the first one there is the Hyatt v. Boone case which makes 9 the point that it’s -- the fact that you might be able to construct what is now 10 claimed in the claims is not enough. It has to be unambiguously described 11 and all limitations need to be unambiguously described in order to establish 12 that there’s written description. You can look at the Lockwood v. Am. 13 Airlines, Inc., case that’s down at the bottom left of slide 10. The point there 14 is it’s not enough to say well, even though it’s not described, it’s not in this 15 embodiment, it would be obvious to make this change. It would be obvious 16 to implement it this way even though it’s not there. That’s not enough for 17 written description either, to show that you’ve possessed the invention is not 18 enough to say oh, this would be an obvious change or it would be obvious to 19 combine one embodiment with another. That’s not enough. 20 It’s also not enough, and this is the Novozymes A/S v. DuPoint 21 Nutrition Biosciences APS case from the Federal Circuit, to go through and 22 try to pluck -- and these are the words from the Novozyme court -- saying 23 derive written description support from an amalgamum of disclosure 24 plucked selectively from an application. You can’t go and find bits and

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1 pieces in different embodiments and say, okay, with hindsight I’m going to 2 construct this claim limitation or this claim from what’s in the disclosure. 3 So that’s -- I think when we go through this you’re going to see that’s 4 PMC has to do because they don’t have any express disclosure of this 5 limitation, they don’t have a single embodiment that discloses it and so what 6 they’re doing is exactly what these cases say you can’t do, to find written 7 description in the 1981 specification. 8 So moving on now to slide 11, this sets forth what PMC tries to point 9 to point to find support for this encrypted digital information transmission 10 unaccompanied by any non-digital information transmission limitation, and 11 again PMC can’t find explicit disclosure, they can’t even find a specific 12 embodiment to say okay, this is my all digital encrypted transmission 13 embodiment, let’s focus on this particular embodiment, this is where you can 14 find it. What they have in their brief is essentially four different arguments - 15 - okay, if one doesn’t work let’s try the next one -- and so they walk through 16 four different embodiments in the 1981 specification to try to find this 17 support that, quite frankly, simply isn’t there. 18 And at times I’ll point out in their brief it gets confusing because there 19 are times when they’re talking about one of the embodiments but then 20 they’ll mix and match and say okay, well but you can take this thing from 21 the 6D embodiment and put it into 6C, that sort of thing. so you’ve got to 22 read very carefully their brief and I know when I’ve gone through it you 23 have to be very careful and look back and look at their citations to make sure 24 wait, are we still talking about the embodiment that they say they’re talking

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1 about or are they trying to insert something in from another embodiment to 2 try to fill a gap or a hole. 3 What we’re going to do, and we’re going to walk through each of 4 these in sequence, is none of these embodiments you’re going to see are 5 described in the 1981 specification and there’s sort of two main 6 requirements. It’s got to be digital only. It can’t have any analog 7 information as part of the information transmission, and it’s got to contain 8 encrypted digital information and so we’re going to see or go through and 9 see how none of these embodiments meet those two basic requirements. All 10 four of them fail in one or both of those grounds. 11 One thing I’ll also mention is it’s been kind of an iterative process 12 where they try to search for finding this description. In their preliminary 13 response they didn’t even mention, for example, the telephone link. It was 14 more focused on an example they don’t even put forth in their response and 15 in the How to Grow Grass example they’ve sort of continued to add things 16 to say well, let’s try this now and see if we can find it. None of them have it. 17 I’ve now moved on to slide 12 and slide 12 deals with the first 18 argument to find written description and that’s this description of a 19 telephone link, and so with respect to the telephone transmission there’s not 20 a detailed discussion of a particular embodiment using a telephone 21 transmission, but there are mentions of telephone transmissions. But at 22 every point where there’s a mention of telephone transmission, you will 23 never find any disclosure or description of any encrypted information 24 transmission being sent over a telephone transmission.

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1 What you will find is every time they talk about the telephone link 2 embodiment, or this telephone link argument, they always have to then point 3 to a cable TV transmission, a television transmission, to try to find any kind 4 of communication of encrypted information and so this telephone 5 transmission argument fails because it never shows sending an encrypted 6 transmission -- encrypted digital information -- over a telephone link. It fails 7 on that basis. And you can see here we’ve called out a couple of examples. 8 These are things in their brief where they try to find the aspect that’s 9 encrypted in transmission and you can see, for example, in the 490 patent, 10 this is Exhibit 1004 at column 50 and 11 and 19, they’re always pointing to 11 something where it’s talking about television transmission, television 12 programming, not telephone transmission, and so they’re mixing and 13 matching embodiments, that’s improper. The telephone link embodiment 14 doesn’t do it for them. 15 If we turn now to slide 13, and you can see here I’ve got the little 16 bubbles. This argument or this problem with PMC’s arguments actually 17 relates to both their second and third embodiments that they try to point to. 18 Both of those are cable TV transmission embodiments and so the same 19 problem, first problem with those, applies to both and that problem is that 20 you can see here, this is figure 6C and figure 6D side by side from the 490 21 patent, Exhibit 1004, and you can see that the input, the transmission that 22 comes into both of these is a multi-channel cable transmission. And so 23 you’re always going to have, as part of both of these, a multi-channel cable 24 transmission which is always going to have analog channels as part of it at 25 the very least as well as it will be transmitted over an analog transmission

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1 medium, and so for sort of two reasons there’s always going to be analog or 2 non-digital information accompanying anything that might be sent as part of 3 this transmission. So, for that reason, both of these arguments Nos. 2 and 3 - 4 - which relate to figure 6C and figure 6D -- both of them fail. 5 If I can now move ahead to slide 14, you can see here that you don’t 6 have to rely on me for that, we can look at what PMC’s own arguments and 7 what PMC’s expert has said about these transmissions and you can see on 8 the left of slide 14 -- this is paper 17, PMC’s response at 31 to 32 and then 9 35 -- where they’re talking about this multi-channel cable transmission that’s 10 sort of the input for figure 6C and figure 6D and you can see it’s multiple 11 channels of data, at least one of which is a digital data channel. So if it was 12 enough to have one digital data channel, the problem is they’re going to 13 have other channels that are going to be analog channels that will 14 accompany that digital information and so it fails to meet what’s required 15 here by this limitation where there can be no analog or non-digital 16 information as part of it. 17 The second piece of this you can see below, this is that it talks about 18 cable converter box 222 tunes to one channel of several available channels 19 and it’s talking about -- this is, we’re getting ahead of ourselves, but this is 20 the French Chef, the Julia Child embodiment, this is the figure 6D 21 embodiment -- but it talks about how one way that’s described in the 22 specification of doing that is to send an all digital recipe embedded in an 23 analog NTSC transmission, and so even when you’re sending digital 24 information as part of these embodiments it’s going to be sent in the 25 conventional way that television wat transmitted in 1981, in an analog

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1 NTSC transmission. You can see here on the right PMC’s expert admits 2 unequivocally that anything transmitted as an NTSC compliant television 3 transmission, as was done in 1981, would necessarily not satisfy the 635 4 patent claim requirement for digital information transmission 5 unaccompanied by any non-digital information transmission. He agrees 6 with that. 7 Put another way, there was no way to send any kind of conventional 8 NTSC compliant television transmission without containing some kind of 9 analog information with it. There were analog synchronization signals that 10 would always be part of that transmission, thus excluding it from tying up 11 with what’s required by the claim language in claims 18, 20, 32 and 33. 12 JUDGE EASTHOM: I didn’t understand your argument on your slide 13 on the left when you were talking about multiple channels of data, at least 14 one of which is a digital data channel. Is that testimony by the expert or is 15 that in the spec? I don’t see it in the spec. 16 MR. SERNEL: So this is PMC’s response characterizing what’s 17 going on in the figure 6C embodiment and so I flipped back just like 13 -- 18 JUDGE EASTHOM: If one of them is only -- if one of them is digital 19 channel, it seems to be a fair argument that that’s not accompanying another 20 channel of information. 21 MR. SERNEL: Well you can see here that the input to figure 6C is a 22 multi-channel cable transmission. So this is a transmission that contains 23 multiple channels. Even if one of them is digital, it is going to be 24 accompanied by other channels that are analog and so I think on that basis it 25 fails.

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1 Now even if it was a multi-channel, you know, all digital channels 2 cable transmission I would still say that that would fail because that would 3 be -- even though the channels may be digital -- they would be transmitted in 4 an analog form with analog synchronization signals. That’s how it was done 5 in 1981, and so it would fail on that additional basis as well. 6 So there’s always going to be analog information either in the form of 7 other channels or in the form of analog synchronization signals as part of 8 any transmission done in this time frame. You can see here their expert, and 9 this is Exhibit 1051, Weaver transcript at page 22, lines 6 to 13 -- I’m back 10 on slide 14 -- admitting that. 11 So figures 6C and 6D are sort of their second and third embodiments 12 as I’ve grouped them fail on that basis right out of the starting block. Now 13 let’s talk about another basis for which they fail and let’s look specifically at 14 the Wall Street Week example, and that’s the figure 6C example. You can 15 see this one has a problem in addition to losing on the all digital 16 requirement. Even though it’s got that one digital data channel, there’s 17 nothing in the Wall Street Week example that says anything about sending 18 an encrypted transmission over that digital data channel. Not a breath of it, 19 and again you can -- all we need to do is look at what PMC’s expert agreed, 20 this is Exhibit 1051 again at page 44, lines 2 to 10 -- where he agrees 21 nothing in the Wall Street Week example that says anything about sending 22 anything encrypted over that digital data channel that’s mentioned. So that’s 23 another reason why the Wall Street Week example fails. 24 Now let’s look at another reason why the Julia Child or French Chef 25 embodiment fails. You can see here, this is figure 6D, and in figure 6D --

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1 different than figure 6C -- there’s not even a mention of an all digital data 2 channel or, sorry, a digital data channel. In figure 6C, the Wall Street Week, 3 at least at least they’ve got the one digital data channel. That doesn’t even 4 appear in figure 6D and this is an issue that, again, all of this wasn’t 5 addressed by the Board but this issue was addressed, to some extent, in the 6 755 proceeding and you can see at the bottom left of slide 16, this is Exhibit 7 1082 of 755 written decision at page 13, where the Board walked through 8 the French Chef embodiment and concluded these 490 patent passages do 9 not describe the transmissions as all digital and so I think this is an issue 10 that’s already been analyzed, addressed and it’s been concluded that French 11 Chef or Julia Child -- those are sort of synonymous terms -- does not 12 disclose any all digital transmission. It fails for that additional reason. 13 One argument that was made -- I don’t want to spend a lot of time on 14 this, but this is slide 17 -- PMC’s expert made an argument about well, I 15 don’t see things that suggest that, and this is back to the figure 6C -- the 16 cable converter box, there’s nothing specifically disclosed there that 17 suggests that you’re going to take something and have to demodulate it off 18 of a signal and because that’s not there, I then assume that this must be 19 coming in all digital form into the system. I think it just technically doesn’t 20 make any sense, I would just direct the Board’s attention to Exhibit 1053, 21 this is Mr. Wechselberger’s declaration at paragraph 6 that explains how the 22 premise is incorrect, how these systems would work and how it absolutely 23 would be the case that it would be sent over an analog transmission medium 24 and just because there’s not specific boxes there showing that it’s 25 demodulated that would be required and necessary to make this system

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1 work. I’ll just quickly mention that in terms of being an expert in television, 2 Mr. Wechselberger has extensive experience and worked in the industry in 3 the early ‘80’s in this cable television industry. PMC’s expert you can see 4 there on the right, not really an expert -- more of a decryption person -- not 5 really an expert in the television area, maybe explaining why this argument 6 was made. 7 If I could now move on to slide 18. This is the fourth embodiment 8 that PMC tries to find this limitation of encrypted digital information 9 transmission unaccompanied by the non-digital information transmission. 10 This one relates to -- a reference to a conventional laser video disk and 11 essentially what’s going on here is it’s sort of a virtual bookstore type 12 concept and using this conventional laser video disk equipment and then 13 transmitting electronic books from that equipment, and so PMC’s argument 14 on this one is that a person of ordinary skill in the art would look at the 15 reference to conventional laser video disk and immediately conclude oh, that 16 must be an all digital system and then sort of extend that to say okay, 17 because it must be an all digital system that this somehow provides written 18 description support for this limitation. 19 I’ll start by pointing out Exhibit 1051 again. This is on the bottom 20 right of slide 18 PMC’s expert at 66 lines 9 to 12, acknowledging that in 21 1981 conventional laser video disk systems could be an analog storage and 22 transmission systems, you know, straight up admits that. So then the 23 question becomes okay, well would a person of ordinary skill in the art 24 looking at what’s in the 490 patent at column 21, lines 9 to 15, conclude that

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1 this must be an all digital system as is required. We’re going to see the 2 answer to that is an emphatic no. 3 So I’ve moved on to slide 19 and you can see here this is some of the 4 evidence in the record. On the left is Exhibit 1048. This is the Kenney 5 reference at pages 329 and 330 talking about video disk systems from the 6 1981 time frame talking about them being NTSC television standard 7 compliant which was, again, an analog transmission standard. We can see 8 here on the right of slide 19 Exhibit 1047, this is the Marsh reference at page 9 2 talking about optical video disk reflective laser systems. You can see that 10 these were available for prices in the 1981 time frame and talk about how 11 they were based with -- they had an analog FM signal encoded. This was an 12 analog system. 13 So PMC then makes an argument and actually points to this Marsh 14 reference and said well, in that Marsh 1981 reference there’s actually 15 another system mentioned and that is a system called an optical digital disk 16 system and suggests that that is somehow the system that must have been 17 referred to when the 490 patent mentions a conventional laser video disk 18 system well known in the art. But you can see here we asked Dr. Weaver, 19 PMC’s expert, some questions about this and this is from page 77, lines 8 to 20 12, and pages 80 and 81 of the Weaver transcript, Exhibit 1051, where he 21 acknowledged that that Marsh reference describes two different systems, one 22 being this optical digital disk system and a different one that is the 23 consumer video disk system, and then he acknowledges the consumer video 24 disk system is an analog system.

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1 And so, if we move on we can look at -- and this is slide 21 and this is 2 another call out from the Marsh reference. The thing that PMC points to, 3 this optical digital disk technology, you can see the Marsh reference itself 4 and this is at page 14 of Exhibit 1047, acknowledges that no computer 5 manufacturer is known to have integrated that system at that time in 1981 6 and so asking Dr. Weaver, PMC’s expert, this is on the bottom at page 75 of 7 Exhibit 1051, saying wait a second, is something that hasn’t even been 8 integrated or launched or commercially available at the filing date of 1981, 9 would that be conventional technology? I don’t know. But he clearly 10 acknowledges that the analog laser video disk system was available in 11 November 1981. That was conventional technology. 12 So, again, the question is when there’s a reference without mentioning 13 it being digital, audio, or analog or whatever in the 490 specification where 14 it says a conventional laser video disk system well known in the art. We can 15 see the contemporaneous literature when it talks about laser video disk 16 systems, those are analog, and the only thing they can point to that’s digital 17 is something that wasn’t even integrated by any computer manufacturer. 18 There’s no way a person of ordinary skill in the art would conclude okay, 19 that’s the well known conventional system as of 1981. It wasn’t even out 20 really in any commercial way at that point in time. There’s no way they 21 were talking about a digital system when referencing that in the 490 patent. 22 This is clearly referencing the analog system and even if the digital system 23 was available, I would suggest that the failure to call out that it’s a digital 24 system and that’s what we’re talking about, falls short of providing the 25 written description they need to justify this limitation.

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1 And so, when you walk through all four of these requirements, or 2 sorry, all four of these embodiments, you see that all four of them fail on one 3 or more multiple grounds to provide written description support for this 4 limitation. 5 One final point I’ll make here, and this is slide 22, this is an argument 6 that was made in the briefing. I’m not sure if PMC is going to present it 7 here today but there was some suggestion that oh, well, there’s a reference to 8 signal words that may be digital and then the argument -- you can see this is 9 from paper 17, their response at page 38 -- them trying to suggest, oh well, it 10 says contains only digital information including signal words of the text of 11 the book. That’s their brief, not what it says in the disclosure, trying to 12 conflate the concepts of the signal words and the text of the book. We asked 13 Dr. Weaver, PMC’s expert -- and this is at page 82 of Exhibit 1051 -- to try 14 to clear that up, say wait a second, when they’re talking about the signal 15 words that’s not referring to the text of the book or the words of the book 16 and he confirmed that that’s not the case, so those are different concepts and 17 can’t be conflated. 18 So that’s sort of the main I think priority argument that we have here. 19 One additional argument that relates to claims 18 and 33 is this concept in 20 18 of locating code and then in claim 33 of downloadable code, and I think 21 you can see by the way that wording is included in the claims that that’s 22 code like computer code, software code. If it was talking about things like 23 numerical codes, you would say locating a code, downloadable codes, not 24 code in sort of the non-count sense like when you’re talking about software

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1 code or computer code. And so that’s what the claims are talking about, this 2 sort of computer code type thing. 3 What PMC points to for written description support are references to 4 things that are referring to a code, a codes, numerical codes, decryption key 5 type codes, those types of things and so I think there’s a mismatch there 6 between what’s being talked about in claims 18 and 33 in terms of code and 7 the support that they look for which would support -- you see claim 3 uses 8 the different terminology. It says a code. It would support something like 9 claim 3 where it’s clearly saying a code, it’s referring to the numerical type 10 codes. That support doesn’t suffice for claims 18 and 33, so that’s an 11 additional problem on priority for them for those claims. 12 Now moving quickly on to claim construction. In that, the issue is -- 13 these are issues that have already been dealt with, decrypt and encrypt, has 14 already been dealt with in prior proceedings so I plan to skip by that and 15 let’s move on to the prior art. I’m going to move ahead to slide 31. This is 16 Campbell, and you can see Campbell is an addressable cable television 17 control system and if we skip ahead to slide 32, there are four – 18 JUDGE EASTHOM: I still don’t understand. Can you go back to the 19 previous slide, I’m sorry? It seems -- I thought it was on slide 23, I’m sorry, 20 I’m a little behind you. 21 MR. SERNEL: Okay. 22 JUDGE EASTHOM: I guess I don’t understand your argument. In 23 light of their spec, if the code is something in those claims that are being 24 used to decrypt something, it would seem that they are relying on crypt type 25 of a code and not a computer code.

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1 MR. SERNEL: So, yeah. I think our point is that if they’re pointing 2 to something that’s a numerical type code, and again you’d have to make it 3 match up with all the other limitations so it gets more complicated. But you 4 can’t point to something that’s just a numerical type code, a code codes, to 5 provide written description for support for 18 and 33. 6 JUDGE EASTHOM: Because you’re saying that code, it embraces 7 more than just that and so it’s too broad a term? 8 MR. SERNEL: Right. You need something more than just a straight 9 number to, you know, as opposed to an a code or codes where that’s a little 10 bit looser. That’s the argument. 11 JUDGE EASTHOM: I guess I don’t -- I mean are you saying that the 12 term is just too -- it encompasses more than what’s disclosed by the spec? In 13 other words, the single embodiment of a code, a numerical code, would 14 support maybe the -- 15 MR. SERNEL: It would support claim 3 and the way that’s used. 16 Again, subject to all the other limitations and it matching up. That wouldn’t 17 necessarily support claims 18 and 33, that’s the point. Downloadable code, 18 you need to -- 19 JUDGE EASTHOM: Are you saying it’s broader than just a 20 numerical code and includes a numerical code (indiscernible) -- 21 MR. SERNEL: No. I’m saying it’s narrow -- I’m saying it’s 22 potentially narrower. 23 JUDGE EASTHOM: But it only includes computer code?

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1 MR. SERNEL: Correct, correct, correct. I think it’s -- again, where 2 that line would be drawn I think is questionable but it’s something narrower 3 than a code. 4 JUDGE EASTHOM: Thank you. 5 MR. SERNEL: Thank you. If I could skip now ahead to 32, and I 6 guess let me look at -- this is the Campbell reference and here is the four -- 7 slide 32 has got the four arguments. I’m going to skip ahead to I guess -- 8 let’s talk about the second argument. 9 This is slide 34. One of their arguments is well, there’s no code or 10 datum identifying a unit of programming, but you can see here we point to 11 something that’s called the program identification code 204. That’s exactly 12 what it’s doing. They suggest well, it can also identify other aspects about 13 the program such as whether it’s special event, but I think this one clearly 14 matches up. 15 If we look at slide 35, we point to the functionality in Campbell that’s 16 pay-per-view functionality and it’s to meet this limitation of receiving a 17 control signal which operates at the remote transmitter station to control the 18 communication of a unit of digital programming in one or more first instruct 19 signals, and so what we point to is pay-per-view functionality where there’s 20 a request for a particular program and then there’s going to be the program 21 being sent back to the subscriber along with some kind of key that’s going to 22 unlock the program for that person who’s actually paid for it, and you can 23 see here the way Campbell describes the pay-per-view programming is that 24 it’s similar to something that’s also -- that’s earlier described in the 25 Campbell specification which is a special event limited access feature,

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1 except that in the special event functionality it’s a one way system and so 2 it’s going to be pre-authorized in terms of how it’s done and you can see 3 here that PMC’s expert acknowledges that’s really the only difference 4 between the two. Pay-per-view is two way where there’s got to be a request 5 for the -- a request made -- and then you send the program versus the one 6 way system of the special event limited access. That’s the way it’s called 7 out in the specification. This is Campbell at column 17, lines 42 and 53, and 8 PMC’s expert acknowledges that that’s really the only difference that’s 9 called out. 10 JUDGE EASTHOM: Counsel, you’re into your rebuttal time. 11 MR. SERNEL: And if I could spend just a couple of minutes of that, 12 I appreciate it. If you can see here, this is Campbell and so this talks about 13 how they enable these programs that are requested. They send what’s called 14 an event enable word, and so in the pay-per-view functionality it’s got to be 15 requested and then they’ll send the event enable word but that’s how they do 16 it. That’s how it would be implemented in this pay-per-view functionality as 17 well and PMC’s arguments otherwise don’t suggest how else it would be 18 done other than how it’s described right here. 19 One final point with respect to Campbell is a slight modification of 20 Campbell to meet one of the requirements of the claims, and that is it would 21 be obvious to generate the channel control word at the remote computer and 22 transmit it to the central data control system which is at the head end stations 23 as opposed to doing it at box 12, and I’m on slide 37 at this point in time. 24 Figure 1, if you look at it, is really a single head end embodiment. 25 But the patent specifically talks about, and this is Exhibit 1044 of Campbell

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1 and I’ve actually got an improper -- and I want to clarify it -- we’ve got an 2 error on the slide. That’s a call out at the top left on slide 37. The top call 3 out is column 4, lines 30 to 33. You can see it specifically says that you 4 have a remote computer which may be used for central control and so it’s 5 suggesting that especially if you have multiple head ends, you can move 6 some of the central control functionality to the remote computer and that is 7 our slight obviousness modification, to say you could take something -- and 8 moving on to slide 38 -- take something that’s common across all of the 9 head ends, and that’s the channel control word, and move it to the remote 10 computer and you can see PMC’s expert acknowledges that this is 11 something that is common across all of the head ends if you’re going to have 12 multiple of them and so you then take that -- move that central to central 13 control at the remote computer and Mr. Wechselberger at paragraph 15 of 14 Exhibit 1053 suggests that that’s an obvious modification to make with 15 many reasons to do it, more efficient, simplifies the process, et cetera. 16 You know, I’m going to jump ahead. I’m going to skip Chandra and 17 if Mr. Kline discusses it I’ll respond in rebuttal. A couple of comments 18 about the motion to amend. You can see here, as we’ve laid out in our 19 briefing, we believe we’ve met what would now be our burden under Apple 20 (phonetic) products to show that the proposed substitute claims are 21 unpatentable on many different grounds. We’ve talked about Section 101. 22 We still have to talk about Section 112 and we’ve also provided bases for all 23 of the claims and sometimes multiple bases under Section 103. I’ll note that 24 PMC does not even provide any expert evidence at all with respect to the 25 103 arguments, so Apple’s expert is unrebutted with respect to the 103

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1 arguments, and with respect to 112, they put in a declaration but it’s from an 2 in-house PMC person that just sort of walked through and tried to map and 3 find description. 4 But what I guess I’ll end with is with respect to the 112 arguments, 5 you can see here this is slide 53, and I apologize I’m jumping around 6 quickly, slide 53, paper 30, this is PMC’s reply at page 3. What they argue 7 they have done to find support for the substitute claims is look through 8 multiple embodiments, and there’s more embodiments than the 1987, and 9 say well, it’s an obvious choice to mix and match these embodiments to fill 10 in the gaps. It’s obvious to fill in the gaps. We’ve already looked at the case 11 law. I’ve put Lockwood up again here. That’s not enough, not enough to 12 say it’s obvious to fill in gaps, not enough to mix and match embodiments 13 and find things. With that, I’ll save the rest for my rebuttal. Thank you. 14 JUDGE EASTHOM: Thank you, Mr. Sernel. Mr. Kline. Mr. Sernel, 15 you have about five minutes left for rebuttal. 16 MR. KLINE: Thank you, Your Honor. We too have hard copies of 17 the slides that we can hand over. 18 JUDGE EASTHOM: Thank you. 19 MR. KLINE: And, Your Honor, can you tell me the order in which 20 these lights -- when we will turn yellow? Can I ask for time or do you just 21 tell me the time? I just need to know when you’re going to set it. 22 JUDGE EASTHOM: Okay. I’m not sure, I think it turns yellow 23 when there’s a couple of minutes into your -- with your time left. 24 MR. KLINE: Okay. Well, it’s easy. It’s quarter of so I just -- easy 25 for me to keep an eye on my watch.

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1 JUDGE EASTHOM: Right, yes. We’ll start it at 1:45. It’s started 2 but you have until 2:30. 3 MR. KLINE: Right. Thank you very much, Your Honor. Maybe 4 first things first, Your Honor, just because I don’t want this to come up. I 5 don’t -- PMC intends to rest on its papers with respect to the motions to 6 amend so we don’t plan to at any time during this presentation on the motion 7 to amend. 8 JUDGE EASTHOM: Thank you. 9 MR. KLINE: Thank you. So there are four areas that I would like to 10 address. I certainly am eager to address all of the questions that the Board 11 may have so please feel free, as I know you will, to interrupt me. To the 12 extent I’m able to get through the entire presentation, I’d like to focus on the 13 fact that the cited references are not prior art to the challenged claims, to 14 spend some time describing why the cited references fail to disclose the 15 elements of the claims, talk about why the references do not combine the 16 way that Apple has argued that they ought to be combined and in fact, the 17 references conflict with one another in some very important ways, and then 18 just a little bit on some of the preliminary constructions that the Board 19 reached in its institution decision in the decrypt term. In particular, I think 20 we may end up jumping around a little bit because so many of the topics are 21 so interrelated. 22 I know, Judge Turner, you had a question of counsel for the 23 Petitioner. You made a reference to priority in the 754. I think priority 24 came up in 755 actually. I don’t think priority has ever been an issue before 25 this with respect to the 635 patent. There was a question we spent a

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1 significant amount of time at the oral hearing in the 755 IPR on priority, but 2 that concerned the 091 patent and we certainly disagree with the Petitioner 3 to the extent that Petitioner asserts that PMC is somehow estopped from 4 arguing about claims like programming, for example, which I would like to 5 spend some time addressing or somehow estopped from trying to correct 6 mistakes that have been made with respect to the construction of decrypt. 7 We certainly do plan to address that. Nothing that we say conflicts with 8 things that we’ve said before. It certainly may turn out that there are some 9 things that respond to some issues that have arisen in the Institution decision, 10 for example. 11 So turning to, and I wondered last night whether we could grey out 12 slides -- whether we could grey out some claims 4, 7 and 13 on this slide 13 consistent with the way Petitioner did, but I was reminded by the team that 14 we’d exchanged them and provided them, so we didn’t. But similarly to 15 what Petitioner has done, don’t intend to spend much time on any arguments 16 that focus solely on claims 4, 7 and . . 13. Instead we’ve got challenged 17 claims 3, 18, 20 and 32, and they generally all relate to decryption key 18 management techniques, and a principal question because the entire Inter 19 Partes Review stands or falls on the question of priority with respect to 20 Institution being denied, that Institution was denied on a finding that claims 21 21 and 28 through 30 are in fact entitled to the earliest effective filing date of 22 the 635 patent, which is November 3rd, 1981 which removes all of the cited 23 references as prior art against those claims. 24 As we know and as evidenced certainly represented by the Institution 25 decision, each of the claims needs to be reviewed individually and the patent

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1 is entitled to the benefit of the earlier filing date if the disclosure of the 2 earlier application provides support for the claims of the later application. I 3 don’t think there’s any reasonable dispute about the framework among the 4 participants in this hearing. Generally, what we do is we construe the claims 5 in the context of the 635 patent as it issued and then we make a judgment 6 whether these claims are supported by the 1981 specification which 7 throughout all of the papers is generally as a shorthand, that’s the 490 patent, 8 the 1981 specification issued as the 490 patent. 9 Now, first of all, Apple’s priority analysis is improper from the start. 10 Mr. Wechselberger failed to conduct a proper priority analysis. First of all, 11 he failed to construe the claims at all. It’s cited in the brief, and I’m looking 12 at slide 5 now. He just took the constructions that Apple had told him to use 13 for certain claim terms, then went in to see whether they were supported to 14 his opinion as he was willing to express it in the 1981 case. 15 In many instances, executable instructions, for example -- which is a 16 term we’ll talk about in a moment -- as a result Mr. Wechselberger failed to 17 apply the constructions that Apple proposed which the Board essentially 18 adopted. With respect to executable instructions, it sort of comes up by 19 implication but it’s clear, that’s the constructions -- seems clear to us 20 anyway -- that’s the construction that the Board was adopting and 21 considering the petition in whether to institute these proceedings. 22 Turning to slide 6, in addition Mr. Wechselberger stated right in his 23 declaration that he conducted the analysis as of September 11, 1987, 24 specifically was asked for purposes of assessing the priority date of the 25 challenged claims of the 635 patent. “You considered the perspective of a

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1 person of ordinary in the art in 1987; isn’t that correct?” And he answered, 2 “Reading the 635 patent, yes it is in 1987.” So Mr. Wechselberger never 3 even stepped back to 1981, tried to put himself in the shoes of a person of 4 ordinary skill in the art, read the entire 490 specification and made a 5 determination whether he thought a person at that time -- the right time, the 6 1981 time frame -- would have concluded that PMC had in fact made the 7 invention described in the claims. 8 JUDGE EASTHOM: Which way (indiscernible) doesn’t that cut 9 (phonetic) for you if he’s viewing it with a little bit more skill in 1981 10 through the eyes of a 1987 artisan? I realize that’s not the right standard --- 11 MR. KLINE: Right. 12 JUDGE EASTHOM: -- but (indiscernible.) 13 MR. KLINE: Since it’s not the right standard, Your Honor, I didn’t 14 give too much thought to whether it worked to my benefit or not, my client’s 15 benefit or not. What I would say is it’s a flawed analysis and for that reason 16 almost alone his opinion on the matter can be rejected. 17 With respect to priority, there are basically three terms that come up. 18 There’s the question whether encrypted digital information transmission 19 unaccompanied by any non-digital information transmission, as the term is 20 used, in claims 18, 20, 32 and 33, comes up. Also the question of 21 programming. There’s a question whether programming, as the Board has 22 preliminarily construed it, is supported by the 1981 specification, and finally 23 there’s a question whether executable instructions as the phrase ought to be 24 construed properly is supported by the 1981 specification.

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1 Looking at slide 7, this is a good example which responds -- as it turns 2 out, maybe not surprisingly -- to many of the comments that Petitioner’s 3 counsel made which are mistaken and I think that they misconstrue what is 4 described in the -- depicted in figures 6C and 6D of the 490 patent, and what 5 is described as going on there. I’ll just turn ahead in my own binder. 6 This will go to a question, Your Honor Judge Easthom that you asked 7 a moment ago. So the cable converter box 222, that’s shown in the upper 8 left hand corner. I certainly have no confidence that my laser is visible on 9 the remote but if we turn to the upper left hand corner of figure 6C, you’ll 10 see there’s a cable converter box 222. 11 JUDGE BRADEN: And could you make sure that you note the 12 numbers of the boxes because we can’t see the pointer. 13 MR. KLINE: Thank you very much. So I’m on slide 7 of Patent 14 Owner’s presentation and we have excerpted here from the 490 patent figure 15 6C on the left and figure 6D on the right. In the upper left hand corner of 16 figure 6C we have a cable converter box 222. Plainly, the figure shows that 17 it receives one digital data channel that is reported immediately, expressly, 18 in the figure. What we have in figure 6D in the upper left hand corner is the 19 same cable converter box 222 that receives a signal, it’s not expressly 20 labeled again as the one digital data channel but it plainly is. It’s passed to a 21 decrypter 224 so it’s clear from these two figures almost alone that the one 22 digital data channel that is not described as including any, or as being 23 accompanied by, any analog information. It is fed to a decrypter, so it is 24 decrypted.

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1 Now, the question arose about -- and the argument Petitioner has 2 made -- is that well, that one digital data channel is being transmitted 3 together in a multi-channel cable transmission. This is why it’s important 4 always to orient ourselves in the claim language. The claim language says 5 “received.” The claim language doesn’t say “transmitted.” The claim 6 language says “receiving at least one,” this is claim 18, “receiving at least 7 one encrypted digital information transmission wherein the at least one 8 encrypted digital information transmission is accompanied by any non- 9 digital information transmission.” So that it’s a multi-channel system in 10 which some of the channels are only digital and other of the channels may -- 11 that it’s being transmitted with -- may include some analog information. 12 That does not change the fact that what is depicted in figure 6C is that the 13 cable converter box 222 is only receiving one digital data channel. My car 14 has a radio and the radio only receives the stations to which it is tuned. We 15 know that these are called channels because the communication takes place 16 over a range of frequencies that include a variety of information and we 17 know from figure 6C that this channel is one digital data channel. So it 18 certainly isn’t relevant to the claim language which refers only to receiving 19 at least one encrypted digital information transmission unaccompanied by 20 any non-digital information transmission. It doesn’t matter that other 21 channels in the transmission may include some digital information. 22 JUDGE TURNER: Counsel, let me ask about that -- 23 MR. KLINE: Please, sure. 24 JUDGE TURNER: -- because I understand why you’re focusing on 25 receive, but the claim talks about transmissions. So you have a transmission

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1 and it’s unaccompanied by any non-digital information transmission, so 2 you’re saying okay, this digital channel comes in, it seems with non-digital 3 information, I think you’re losing me perhaps. 4 MR. KLINE: It’s not received until it’s tuned to, and this channel is 5 the only one that is being received at the time. The claim says received. 6 “Receiving at least one encrypted digital information transmission.” The 7 cable converter box does not receive a channel until it’s tuned to that 8 channel. When it tunes to that channel, that is the only transmission that it is 9 actually receiving. That is why in fact it’s called a receiver. It needs to be 10 tuned to receive a signal within specified range. Since these are channels, 11 it’s a range of frequencies. That channel -- 12 JUDGE TURNER: (Indiscernible.) 13 MR. KLINE: Pardon me. 14 JUDGE TURNER: No, I understand that and I -- let me, I’m sorry for 15 interrupting you, I’m just trying to understand this. But the multi-channel 16 cable transmission certainly includes analog information, doesn’t it? 17 MR. KLINE: There are other channels in the transmission, some of 18 which may include analog information and in fact the Julia Child, the French 19 Chef example that we hard about a moment ago which illustrates some other 20 important points that we’ll talk about given the chance, is depicted in figure 21 6D I believe and talks about transmitting the digital recipe within the same 22 programming channel as the Julia Child channel which I think fairly, in that 23 instance, does include some analog information. It’s an NTSC signal. 24 JUDGE TURNER: Right. I understand that you’re only saying it 25 unless it’s tuned to that channel, but the way that it receives it is on an

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1 analog basis so it has to receive analog information along with digital 2 information or am I -- point out what I’m missing. 3 MR. KLINE: Well of course to receive it on an analog basis, that’s 4 not the information. It was referenced during Petitioner’s presentation about 5 analog media, analog transmission methods that might be used for 6 communicating digital information. The claim talks about receiving at least 7 one encrypted digital information transmission wherein the at least one 8 encrypted digital information transmission is unaccompanied by any non- 9 digital information transmission. It’s the information that must be digital 10 unaccompanied by any non-digital information. The carrier waves, maybe it 11 came in on any number of analog systems or analog modulations, that 12 doesn’t mean that that’s not information, that’s the mailman who brings the 13 letter to your house. It’s the contents of the letter that need to be digital. 14 JUDGE EASTHOM: So you’re saying at the top of the box on the 15 left hand side in figure 6C -- 16 MR. KLINE: That’s right, Your Honor. 17 JUDGE EASTHOM: -- going into the cable converter box has an 18 analog system of digital data embedded in it? 19 MR. KLINE: I don’t believe that it says it’s an analog signal. What 20 I’m saying is it wouldn’t matter if it was. It’s one digital data channel. It’s 21 described only as one digital data channel. There’s no -- 22 JUDGE EASTHOM: That’s where I guess I’m having trouble. I 23 don’t understand what exactly is going on with that figure. Is there any 24 description of that or --

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1 MR. KLINE: Sure. There’s plenty of description, Your Honor, and I 2 think if we -- well, here we go and this becomes pretty relevant. So -- and it 3 goes to the question of negative limitations, and we’ve talked about some 4 case law, and the case law is clear. The Inphi Corporation v. Netlist, Inc., 5 and I’m on slide 8 now, the Inphi Corporation v. Netlist, Inc. and the 6 Santarus, Inc. v. Par Pharmaceutical, Inc., that are referred to on slide 8 of 7 Patent Owner’s presentation, there are two embodiments described and this 8 is an example where I think Petitioner made some arguments that have some 9 mistakes in them. 10 There are two embodiments described and much of this comes from 11 the 490 patent, column 20 at lines -- the first primary embodiment – lines 31 12 to 37. “The signal instructs buffer comparator 8,” and I want to take a look 13 at my patent while I go through this. Right. So I’m at column 18 of the 14 patent -- I’m sorry, column 20 of the patent, that’s what I expected -- so at 15 around lines 31 to 37, 16 “The signal instructs buffer comparator 8 that a 567 has been received 17 from the signal generator 225. The signal processor 200 should in a 18 predetermined fashion instruct the tuner 223,” so if I come back we can see 19 the tuner 223 in the upper left hand corner of figure 6C of slide 7, “to tune 20 cable converter box 222,” again upper left hand corner, figure 6C, “to the 21 appropriate channel to receive the recipe in encoded digital form,” and 22 actually this section of the 490 specification at column 20 actually is a 23 description to figure 6D.

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1 JUDGE EASTHOM: Is this whole Julia Child, the French Chef 2 program is talking about a television program that’s being sent. It seems as 3 if that’s a typical analog television program. 4 MR. KLINE: I think that’s fair, Your Honor. The television program 5 itself, let’s assume it’s being sent in analog fashion. What the patent 6 describes is that you can include a signal in that television -- let’s say it’s an 7 analog presentation --you can include a signal that tells the signal processor 8 shown in figure 6D to tune the cable converter box 222 via tuner 223 to a 9 different channel. Tune it to the one digital data channel and from it receive 10 the recipe in encoded digital form. So what we have here is a multi-channel 11 presentation. The television program is coming in on one channel being 12 received by cable converter box 201 as shown in figure 6D. That 13 transmission includes a signal that tells the signal processor 200 to direct 14 cable converter box 222 to tune to a different channel. That channel is one 15 digital data channel and at that channel the user is able to receive the recipe 16 in an encoded digital form. That is, as claim 18 describes, an encrypted 17 digital information transmission. That transmission that is coming in on the 18 digital data channel is in fact unaccompanied by any non-digital information. 19 Now, there’s an alternate embodiment described toward the end of 20 column 20 of the 490 patent – 21 JUDGE EASTHOM: That’s the one where it’s coming in on the same 22 -- 23 MR. KLINE: That’s correct, Your Honor. Right. And we see toward 24 the end, it’s about line 60 of column 20, an alternate method for transmitting 25 the recipe to printer 221 would be for the recipe itself to be located in

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1 encoded digital form in the programming transmission received by TV set 2 202. So we have here the classic embodiment, example I should say, the 3 classic example of two embodiments are described -- 4 JUDGE EASTHOM: Can I ask you another question? 5 MR. KLINE: Please do. 6 JUDGE EASTHOM: The column that you’re referencing is referring 7 to figure 6D, not figure 6C. 8 MR. KLINE: That’s correct, Your Honor. And you can see on the 9 right we have figure 6D. 10 JUDGE EASTHOM: So are you -- you’re reading the Julia Child 11 example which is in column -- 12 MR. KLINE: Twenty. 13 JUDGE EASTHOM: -- 20 referring to figure 6D, but now you’re 14 telling me to read that in light of figure 6C. 15 MR. KLINE: Well they certainly go together, Your Honor. If you 16 read the specification as a whole and as well as you can see the cable 17 converter box 222 is the same. The signal processor 200 -- 18 JUDGE EASTHOM: Oh, I see. 19 MR. KLINE: -- is the same. 20 JUDGE EASTHOM: You’re saying they’re the same. Okay. 21 MR. KLINE: Yeah. The cable converter box 201 is the same. 22 JUDGE EASTHOM: Why do you have two different -- what are the 23 differences? Are there just -- 24 MR. KLINE: There are some differences, Your Honor. I think in 25 figure 6D we’re taking some instructions by telephone that are shown. Also

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1 in figure 6C there is a video recorder and player. So there is some hardware 2 that appears in one of them but not other, but if you look across the top -- 3 JUDGE EASTHOM: Can I ask you another question? 4 MR. KLINE: Sure. 5 JUDGE EASTHOM: Assuming you’re correct that those are the 6 same, they’re friends on the other side are contending that in that time frame 7 1981 there was no pure digital television channel. 8 MR. KLINE: I don’t understand that to be true, Your Honor. That’s 9 not -- I don’t know if digital television -- I mean there’s certainly a digital 10 data channel, it’s described. 11 JUDGE EASTHOM: Is this just one -- is there a modulation going on 12 in this channel or how do we interpret this? How is this digital information 13 being transmitted in 1981? 14 MR. KLINE: In 1981, I mean inevitably there’s likely some form of a 15 modulation required. I mean that’s the means of communication, but again 16 that’s not the information and there’s nothing about claim 18 -- 17 JUDGE EASTHOM: I don’t understand your argument because 18 you’re saying we’re only talking about digital information and it looks like 19 you do have digital information maybe coming out of that box. I’m trying to 20 figure out what’s going in that box. Is it all digital information or is it 21 analog mixed with digital? 22 MR. KLINE: This is in figure 6C, the one digital data channel? 23 JUDGE EASTHOM: Yes. 24 MR. KLINE: Well I certainly think as of 1981, and reading the 25 specification as a whole, that a person of ordinary skill in the art could look

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1 at that and understand how to get one digital data channel from multi- 2 channel cable transmission. I mean the argument’s never been raised. 3 JUDGE EASTHOM: Is that a pure digital channel? In other words, 4 we have digital television nowadays. Is that what you’re saying was going 5 on in 1981? I’m -- 6 MR. KLINE: What I’d say, Your Honor, is what I know is when I 7 read the specification what is described here is that is one digital data 8 channel. The specification -- 9 JUDGE EASTHOM: I don’t think we’re getting anywhere. You’re 10 repeating what that says. It says one digital data channel -- 11 MR. KLINE: Okay. So what would you like me to try to answer 12 more clearly? 13 JUDGE EASTHOM: Can you explain to me how that digital data is 14 getting to that box? How is the digital data getting to the box 222? What 15 form is it arriving in? 16 MR. KLINE: Well, I would say it arrives in digital form. 17 JUDGE EASTHOM: Okay. 18 MR. KLINE: I mean, there were conventional methods for delivering 19 cable signals. Multi-channel cable -- 20 JUDGE EASTHOM: This is a conventional method. 21 MR. KLINE: As of 1981, the transmission means themselves were 22 conventionally known. The way that information could be transmitted, the 23 transmission techniques, there certainly were conventional transmission 24 techniques known at the time.

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1 JUDGE EASTHOM: Can you describe the ones that you’re referring 2 to with respect to figure 6C, a conventional one just for my benefit because I 3 don’t know which ones you’re talking about? 4 MR. KLINE: Well I cannot, Your Honor. 5 JUDGE EASTHOM: Okay. 6 MR. KLINE: I don’t want to spend more time than is necessary on 7 this, but I think that it’s clear -- 8 JUDGE EASTHOM: Well it’s a pretty critical issue. 9 MR. KLINE: It’s a very critical issue, Your Honor. The fact -- 10 JUDGE EASTHOM: (Indiscernible) can spend -- we can give you 11 extra time. 12 MR. KLINE: Well I understand that, Your Honor, and I think that 13 there’s been a mistake made. I think we’ve conflated things like information 14 and transmission media. I think we’ve done that in other areas as well which 15 I hope to be able to get to. Here, again, it’s important to root ourselves in 16 the claim language and we have to -- 17 JUDGE TURNER: And counsel, let me try and bring us back 18 because I understand the argument, but I think it’s the claims that receiving 19 at least one encrypted digital information and stop there, I think I would 20 agree with you because, you know, it’s receiving that information and that 21 information is perhaps, you know, unaccompanied by non-digital 22 information, but the claim says transmission. So it’s not -- you have to take 23 what it’s receiving from that transmission, you know, not just what it derives 24 from the transmission, but the transmission is unaccompanied by another

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1 transmission. So you have to actually deal with that medium I think that it’s 2 coming in in. 3 MR. KLINE: So we have a transmission. What kind of transmission 4 is it? It’s an encrypted digital information transmission. Then the claim 5 goes on to say it’s unaccompanied by a certain kind of other transmission. 6 What is it unaccompanied by? It’s unaccompanied by any non-digital 7 information transmission. It doesn’t say it’s unaccompanied by any analog 8 wave over which the non-digital information may be being delivered. The 9 claim does not require that. The claim says affirmatively that there is 10 something that must be absent in order to infringe the claim, or in order to -- 11 sure, infringe the claim. What must be absent? Transmissions that are of 12 the non-digital information type. 13 JUDGE EASTHOM: Okay. I think I understand. So maybe I can 14 ask it this way? Are you saying the claim covers conventional signals that 15 have therein embedded digital information -- analog television transmissions 16 with embedded digital information? 17 MR. KLINE: No. It does not cover that, and in fact that is the 18 alternate embodiment that is described at the bottom of column 20. That is 19 the encoded digital recipe is being delivered together with the conventional 20 television signal. That is described as an alternative to the earlier described 21 embodiment in which the encrypted digital recipe is being received on a 22 channel that is different from the channel that includes the television 23 program. In the primary embodiment disclosed earlier, that channel -- that 24 one digital data channel -- is not described as including any non-digital 25 information, which is what the claim requires.

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1 JUDGE EASTHOM: Okay. Thank you. 2 MR. KLINE: So I think that’s -- there’s briefing about the telephone 3 transmission. I don’t want to dwell because I do want a chance to talk about 4 some other very important issues and I feel like the telephone, the encrypted 5 digital information that’s being passed by telephone, the encrypted digital 6 information that’s being passed by laser video disk information all go to the 7 same issue and frankly, in my view, the best example that we can point to 8 for written description in the 490 patent is that Julia Child example because 9 alternate embodiments are disclosed, as we just described. In one instance 10 there is the digital recipe and the analog television program together. In 11 another there is the digital recipe on a separate non-digital channel. So I’d 12 like to just pass through those things. 13 I’d like to spend some time on the question of programming. The 14 panel may recall, I certainly do, we spent quite a bit of time on this at the, I 15 think it was the 755 hearing, final hearing. I would like to address in 16 particular here really one issue that really ripens in the Institution decision. 17 Again, we understand what we’re to do, construe the claim using a later 18 spec, determine whether the earlier spec supports the claim. We’ve talked 19 about the case law. The Board construed programming as defined in the 635 20 patent. This is from the Institution decision. “The term programming refers 21 to everything that is transmitted electronically to entertain, instruct or 22 inform.” It then goes on to describe examples, and they include television, 23 radio, broadcast, print and computer programming as well as combined 24 medium programming.

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1 There is a reference in the Institution decision suggesting that the 2 Board might be taking the preliminary view that the 490 patent discloses 3 only single channel single medium forms of programming, and that’s a 4 mistake. We have talked quite a bit, for example, what I want to do is -- if 5 we think first about the Julia Child example that we just talked about, and 6 we think about that in terms of programming. The primary embodiment that 7 was described with respect to the Julia Child example where the television 8 program comes in on one channel and the recipe comes in on another, 9 obviously that’s a multi-channel form of programming that’s described in 10 the 490 patent. 11 Within the same example, the alternate Julia Child example where the 12 digital recipe is coming in together with the analog programing, that plainly 13 is a single channel mufti-media presentation. So it is not correct to conclude 14 -- it would not be correct to conclude -- that the 490 patent enables or 15 provides a written description of only single channel or only single medium 16 presentations. In fact, this is a sentence that the Institution decision refers to, 17 it comes from column 3 of the 490 patent where the patent first describes 18 that the method provides techniques whereby automatically single channel 19 single medium presentations, be they television, radio or other electronic 20 transmissions, may be recorded coordinated in time with other programming 21 previously transmitted and recorded, or processed in other fashions. 22 Immediately afterwards, the patent goes on to say multi-media presentations 23 may be coordinated in time. So again, there’s plain disclosure of multi- 24 media presentations.

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1 Other examples, the 490 patent column 10. There are references to 2 cable systems cable casting many channels. They can be used in facility 3 transmitting television programming, radio programming, and making other 4 electronic transmissions. Earlier in the patent column 3, lines 36 through 41, 5 again we have multiple channels of programming described. Column 10, 6 lines 24 to 39, ”Cable casts several channels of television programming.” 7 Toward the end of that same excerpt, I’m at slide 16, “Other electronic 8 programming input means can receive programming transmissions” and in 9 the same section we’ve got reference to other ways the programming can be 10 transmitted. The means for, and the method of, transmission of 11 programming described here is well known in the art. The facility receives 12 programming from many sources. Transmissions may be received from 13 satellites by satellite antennae, low noise amplifiers and TV receivers. 14 Microwave transmissions can be received by microwave antennae and 15 television, video and audio receivers. Conventional TV broadcast 16 transmissions can be received by antennae. 17 So there is certainly a wide variety of programming described in the 18 490 specification. Certainly every kind of programming which is the 19 content that is described in the Board’s preliminary finding regarding how 20 the term programing would be construed in the context of the 635 patent, 21 and we’ve talked quite a bit about this, Your Honors, where the Julia Child 22 example itself explains that multi-media presentations, multi-channel 23 presentations, are described. So, again, it would be incorrect to conclude 24 from reading of the 490 patent that a person of ordinary skill would interpret 25 it only to disclose single media or single channel communication’s.

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1 If I could move on to executable instructions. I don’t think this 2 requires a lot of time. The Board has, in the 754 I have to say it’s our 3 reading -- I don’t believe the Board made an express ruling on the 4 construction of executable instructions in this Institution decision, but it did 5 make an express ruling in the final written decision in the 754 and it 6 construed executable instructions as instructions capable of being executed. 7 It also seems implicit throughout a reading of the Institution decision that 8 that is the construction that this Board has taken in this current matter and 9 it’s plainly disclosed in the 490 patent. 10 At slide 18, we’ve got from the 490 patent, column 15 beginning lines 11 119, “Signal processor can identify process and transfer needed signal or 12 signals, decrypter interrupter can decrypt or transfer the incoming 13 transmission from the box.” Later, there’s a reference in the same excerpt, 14 figure 4E, “The signal or signals needed to operate the decrypter 115 15 correctly may be on a separate channel of programming that is itself 16 encrypted in transmission.” So plainly executable instructions that are 17 encrypted are disclosed as being transmitted in the 490 specification. 18 So with that, we can talk about even if these cited references were in 19 fact prior art against these claims, which they are not, nevertheless for sake 20 of argument considering them as references against the claims, the challenge 21 claims are still patentable over the cited references. What I’d like to talk 22 principally about at this point are the Campbell reference and the Chandra 23 reference, and in the time available to me what I’d like to do is I’d like to 24 talk about Campbell and Chandra.

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1 First of all, decryption. I want to try to do this very quickly with 2 respect to decryption. Decrypt has been considered many, many times, as 3 we all know. If we could see -- the Board in its Institution decision asked 4 for references to a disclaimer. I think if I frame this, we’ve spent quite a bit 5 of time with respect to decryption on -- I’m at slide 33 -- we spent quite a bit 6 of time. Many lawyers and tribunals have spent quite a bit of time on the 7 question whether decryption, encryption as used in this patent, can cover 8 analog processes such as scrambling. Spent a lot of time looking at -- in the 9 635 patent, this excerpt which is at column 144, 9 through 19 -- and I think 10 the only conclusion that can be drawn from that, because even Boards of the 11 Patent Office have found differently from the preliminary ruling that the 12 Board has made in this case that reasonable minds might be able to disagree 13 about what the proper interpretation of this one sentence is. 14 What becomes important therefore is to read the specification as a 15 whole and consider the prosecution history and in the Institution decision 16 here, the Board asked the question well, has there been a disclaimer in this 17 case and the answer is yes, and both Petitioner and Patent Owner refer to 18 that disclaimer. During prosecution of the 635 patent, the file history of 19 which -- and I’m at slide 34 -- is that Exhibit 2012 at 1330, and can we 20 maybe just bring the document itself up? Can we make it bigger? So this is 21 during prosecution of the application that led to the 635 patent, the 22 Applicants pointed out that they have consistently asserted in their previous 23 responses that the Board of Patent Appeals and Interference decided in 24 another proceeding that encryption and decryption require a digital signal. 25 The PMC reminded, went on to say the Board considered the very same

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1 specification that is part of this application in finding that encryption and 2 decryption are limited to digital applications. The Board also held that 3 encryption and decryption are not broad enough to read on scrambling and 4 descrambling. 5 During prosecution of the 635 patent, PMC adopted that construction 6 and used that construction to distinguish the claims over the then cited prior 7 art. PMC went on to say, 8 “Applicants do not dispute that a reissued patent is entitled to a filing 9 date of its parent, however Applicants note that encryption is not disclosed 10 anywhere in the specification of Davidson, which was the reference at the 11 time, only in the claims added via reissue. Davidson describes scrambling 12 video signals scrambling video signals and converting analog audio signals 13 to coded digital audio signals but does not teach or suggest encryption as 14 claimed in the instant application and as understood by the Board.” 15 It’s a very clear statement that PMC was adopting the Board’s 16 construction of decryption at the time which excluded analog descrambling 17 relying on that construction to distinguish the claims over the then cited 18 prior art, the Davidson reference. Even if the only conclusion that could be 19 compelled from reading the sentence in the specification we referred to 20 earlier was that decrypters could be replaced with descramblers, if that were 21 the only conclusion that could be drawn, and Patent Owner certainly says it 22 is not, but this statement during prosecution certainly disclaimed any 23 interpretation of decryption that could cover descrambling. 24 Now, Petitioner made the argument in its briefing and its reply brief, 25 and it tried to characterize something as a new argument that PMC was

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1 making that the implication, to us at least, was they may be suggesting that 2 somehow PMC made the disclaimer but then drew the disclaimer back, and 3 that’s not at all what happened. This was a function of prosecuting cases 4 that had been filed before GATT but were pending when GATT took effect 5 and the RCE process that existed at the time, you had to make clear what 6 were the previously asserted arguments, what are the new arguments that 7 were being made, that’s the only reason this heading is characterized as a 8 new argument. But, in any event, it goes to a different limitation. What 9 PMC is saying that for the reasons described above, the claims are 10 distinguishable over Davidson taking the Board’s construction of encryption 11 to exclude descrambling, the claims are distinguishable. 12 Nevertheless, to try to move prosecution along -- so Davidson 13 includes analog information. Nevertheless, to try to move prosecution 14 along, we will add unaccompanied by any digital information transmission. 15 It’s a different part of the limitation from the question how should 16 decryption be construed. 17 So, if we could go back to the presentation. This issue arises in the 18 context of Campbell which there is no dispute, Campbell concerns 19 scrambling. There is also no dispute -- in the few minutes I have left -- there 20 is also no dispute, I want to say one thing about Campbell and one thing 21 about Chandra. There’s no dispute that Campbell does not disclose all of the 22 elements of claim 3. Mr. Wechselberger says that the aspects of the claim 23 that are not disclosed in Campbell would have been obvious. He cites no 24 reference for that proposition. He simply claims it to be true.

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1 Regarding what those limitations are, it’s the generation of the 2 channel control word. It’s the generation of the channel control word and if 3 I could see figure -- no I don’t want to see it, Anne (phonetic), thank you 4 though. Claim 3 requires receiving a control signal which operates at the 5 remote transmitter station to control the communication of a unit of 6 programming. 7 Campbell does not disclose that. What Campbell describes is 8 generating a control signal. It does not receive the control signal. Mr. 9 Wechselberger argues that you could separate some of the features of 10 Campbell’s PCS system –--not all of them -- some of them and you could 11 move them to a remote computer for the sole reason essentially with the 12 benefit of reading claim 3 of the 491 patent and applying hindsight analysis 13 to consider how could I modify Campbell, without even citing a reference, 14 to make it look more like claim 3. He says you could move part of the 15 functionality of Campbell’s head end out to a remote system for the sole 16 purpose of then being able to receive information there rather than generate 17 information at the remote transmitter itself. He doesn’t cite a reference for 18 that proposition. 19 We’ve explained in the briefing the significant changes that would 20 need to be made to the Campbell system. The Campbell system relies on the 21 HVP system that generates certain of the information required to generate 22 the channel control words. Those are within the head end. There’s a catch 23 22 here. If we afford the priority date of these claims, 1981, as we ought to 24 and Campbell is not even a reference. If we do not give them the priority 25 date and we give them a 1987 priority date, Campbell also was filed in 1981.

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1 So Mr. Wechselberger is making all of these modifications to the Campbell 2 reference to somehow try to arrive at claim 3. He does not cite any 3 references to support the modification that he proposes to make. 4 In the six years intervening between the Campbell filing date, and 5 let’s assume for purposes just of this section of this argument, that the 635 6 patent is only entitled to a 1987 filing date -- 7 JUDGE EASTHOM: (Indiscernible.) 8 MR. KLINE: -- he has no references. Could I say just a few things 9 about Chandra? 10 JUDGE EASTHOM: Sure. Let’s wrap it up. 11 MR. KLINE: Yeah. What I’d like to say about Chandra is, let’s think 12 about what the Chandra system is all about. It’s an IBM patent during a 13 time that people were getting their software -- this is the Chandra reference - 14 - people were getting their software on magnetic media, and the problem that 15 software developers are facing is that people are copying the software and 16 they’re giving it to their friends. 17 So the Chandra invention says we know a way to fight against this 18 piracy. We’re going to take some of the software, just a little piece, it’ll be 19 an important piece but we’re going to take some important aspects of the 20 software, we’re going to encrypt it and then we’re going to run those parts 21 on a separate processor and we’re not going to expose any of how that works 22 to the actual host, and the decryption process that Chandra discloses for how 23 are we going to decrypt the encrypted portions of the software by this 24 coprocessor -- do I have the broader figure? I don’t -- is we’re going to 25 require this cartridge that includes a token.

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1 So there are at least three things I’d like us all to keep in mind. 2 Chandra requires a host and a separate coprocessor. It requires part of the 3 software be encrypted and sent to this separate coprocessor. It requires a 4 physical cartridge that includes a token that can only be read once that is an 5 important aspect of decrypting the encrypted portions of the software that 6 are being run by the coprocessor. That’s what Chandra is about. 7 There is a lot of talk -- Chandra emphasizes the importance that this 8 coprocessor be physically and logically secure because that’s where things 9 are going on that it wants to make sure cannot be copied. In fact, it goes on 10 to say this is where things that are going on that we don’t even want the host 11 to be able to monitor because smart pirates might build these monitoring 12 applications on the host and if they can get a look at what’s going on at this 13 coprocessor, then they’ll be able to copy our software. 14 There are several problems with Petitioner’s arguments with regard to 15 Chandra. First, they argue, again, if we orient ourselves in the claims, claim 16 18 requires a step of passing a decrypted portion of at least one encrypted 17 digital information transmission to a processor or an output device, and the 18 allegation has to be that the processor and the output device are the same. 19 Petitioner is arguing that all of the coprocessor is the decrypter called 20 for by claim 18. It is then arguing that the CPU within the coprocessor is the 21 processor required by claim 18. So the step of passing the decrypted portion 22 of said at least one encrypted digital information transmission to one of said 23 processor and output device cannot be met by the way that Petitioner seeks 24 to interpret, read the claims against Chandra because the processor can’t 25 pass the encrypted digital information transmission, the decrypted portion of

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1 it, to itself. There is a reason why these processes are separated from one 2 another. 3 There is another processor in the system, it’s at the host, but they 4 never pass code back and forth from one another. Again, the patent 5 emphasizes the importance of keeping these things separate from one 6 another. So it’s not logical to say that the coprocessor can be the decrypter, 7 now that decryption must be taking place by the CPU in the coprocessor, 8 then that same CPU can be the processor described by the claims when the 9 claims require that the decrypted portion of the at least one encrypted digital 10 information transmission be passed to the processor. It can’t pass it to itself, 11 and those are important distinctions. 12 With respect to the Nachbar reference, Nachbar talks about updating a 13 UNIX system, the firmware of a UNIX system. Petitioner has argued that 14 you could use the Nachbar system to update the firmware in the non-volatile 15 RAM 150 -- 16 JUDGE BRADEN: I’m sorry. Can we check the time? I believe that 17 we are running over. 18 MR. KLINE: If I could say -- if I could have one minute, Your 19 Honor? 20 JUDGE BRADEN: I believe we’ve already allowed several minutes, 21 but thank you. 22 JUDGE EASTHOM: Petitioner, you had five minutes, I think your 23 friend went over six minutes, but if you could wrap it up? 24 MR. SERNEL: I don’t think I’ll need that much. 25 JUDGE EASTHOM: Okay. Thank you.

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1 MR. SERNEL: Let me just get my slides and I’ll be ready to go. 2 Okay. I’ve got approximately four points I’d like to make a quick rebuttal 3 on. 4 First point with respect to the argument that -- and this is PMC’s slide 5 6 where they suggest that somehow Mr. Wechselberger did the wrong 6 analysis. We totally disagree with that. He did exactly the right analysis. 7 Obviously there’s different dates matter for different parts of the analysis. 8 The priority analysis was looking at okay, does the 1981 specification 9 provide written description support for the claims, but then once you 10 determine no it doesn’t, then the prior art analysis is done as of 1987 and so 11 the first call out from their slides that he’s just saying that the priority date of 12 1987 was what he used for that part of it. 13 The second part of this Exhibit 2020 where they call out an out of 14 context excerpt from the deposition. This is just horribly misleading. If you 15 go and look at Mr. Wechselberger’s deposition, the next question and 16 answer he clarifies that okay, when we’re talking about the priority analysis 17 I clearly looked at the 1981. It went on for several pages and, again, on 18 pages 18 through 20 of his deposition it is crystal clear he did the right 19 analysis, when looking at priority he looked at 1981, when looking at 1987, 20 this is an attempt at a gotcha but he did the right analysis. This is not -- 21 there’s no flaws as to what Mr. Wechselberger did at all. 22 With respect to slides 7 and 8, Mr. Kline’s argument regarding the 23 multi-channel cable transmission and his suggestion that somehow you can 24 find something that’s all digital and doesn’t have analog information as part 25 of it. First argument Mr. Kline made was well, you have to look at what’s

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1 received and I think he was pointing to the cable converter box. You can see 2 the arrow going into that box is a multi-channel cable transmission. It’s not 3 an all digital channel sent separately from the other channels, it’s a multi- 4 channel cable transmission. 5 The second argument that Mr. Kline made was well, the analog -- 6 how it’s sent doesn’t matter. It matters what the information is, it doesn’t 7 matter what the transmission is. But that is completely inconsistent with the 8 arguments that the position that their expert -- PMC’s expert -- has taken and 9 PMC has itself taken in this proceeding and in prior proceedings, and I’d 10 like to read to you -- these are admissions from Dr. Weaver, PMC’s expert, 11 this is Exhibit 1051 and I’m going to read you the questions and answers 12 from page 20, line 16 through page 21, line 3. 13 “Question: Would you agree with me” -- and so remember the 754 14 proceeding, this was looked at – “would you agree with me then the 754 15 proceeding you” -- and that’s PMC’s expert – “took the position that an 16 NTSC or FCC compliant television transmission that contained analog 17 synchronization signals could not meet the requirement of claim 18 of a 18 digital information transmission unaccompanied by the non-digital 19 information transmission? 20 Answer: Yes, I took that position. 21 Question: And do you recall that this position was actually successful 22 in convincing the PTAB not to institute the 754 IPR proceeding with respect 23 to these claims? 24 Answer: Yes, that’s correct.”

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1 And so to now hear -- to suggest well, if we’re sending digital over 2 those transmission, it matters what the payload is sort of the digital 3 information, not the transmission, is totally inconsistent with the positions 4 PMC’s taken, and I’ll point you to another part of Weaver’s transcript. 5 JUDGE EASTHOM: I think they’ve backed off of that here. They 6 just said that now they’re not -- that’s another embodiment. They’re relying 7 on the embodiment where it’s one digital, it’s only digital channel. 8 MR. SERNEL: Well, again, there is no such embodiment. 9 JUDGE EATSHOM: That’s what I was going to ask you. What does 10 that mean to you, the one digital channel in figure 6 that they’re relying on? 11 Are you conceding that there is a channel that’s all digital and one of those 12 multi-channel (indiscernible)? 13 MR. SERNEL: I would concede that it mentions a one digital data 14 channel. I think that would be transmitted over an analog medium and so 15 that would -- and it would contain analog synchronization signals and that 16 was the whole point of the prior discussion which is you can send digital 17 information either over a digital transmission media or an analog 18 transmission media. If you have analog synchronization signals, which is 19 how in 1981 the only way you could do it, you’re going to have these analog 20 synchronization signals and their own expert admits if you have that, it fails 21 to meet the requirement of the claim. 22 JUDGE EASTHOM: I see. So there is no all digital, that you always 23 have these analog -- 24 MR. SERNEL: Absolutely, absolutely. And I think --

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1 JUDGE EASTHOM: Is there testimony, has expert testimony -- 2 that’s what you just read? 3 MR. SERNEL: And, again, well there’s one other one I’ll point you 4 to and this is page 22, lines 6 to 13, we may have looked at this previously 5 from PMC’s expert. 6 “Question: For an NTSC compliant television transmission sent in 7 1981, you agree with me that the transmission would not satisfy” -- 8 JUDGE EASTHOM: Is that one digital channel an NTSC? 9 MR. SERNEL: Again, you asked Mr. Kline is there any other way to 10 send it? Was there any other way to send these things in 1981? Was there 11 any other kind of television? I mean there was probably things in Japan and 12 Europe, but in the United States the way television was transmitted and then 13 displayed on television screens at that time was to do it according to the 14 standard, the NTSC compliant way of doing it, and Mr. Weaver said you 15 would “agree with me that it would not satisfy this requirement for a digital 16 information transmission unaccompanied by any non-digital information 17 transmission?” 18 “Answer: That is correct for an NTSC transmission.” 19 Done. And so there’s no way that anything transmitted via television, 20 even if it’s a digital data channel is going to meet this, that’s the position 21 they took to fight off the 754 proceeding and now they’re trying to say -- 22 back away from that and suggest something different, that fails. If I could 23 now – 24 MR. KLINE: If you could flip to our slides.

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1 MR. SERNAL: I’d like to talk about Nachbar -- I’m sorry, Chandra 2 briefly. Again, Chandra is a system where it’s a software protection system 3 where you’re sending -- in one of the embodiments it talked about sending 4 over a telephone transmission media encrypted software over that medium. 5 And so one of the arguments that Mr. Kline made -- and I think he was 6 making the argument regarding claim 13, I’m not going to address that -- but 7 for claim 18 you can see here their problem is that there’s a processor that 8 needs to be identified or a controllable device and then a decrypter. Clearly 9 both of those functions are happening here. They have a problem with well, 10 because the box that we identified for the decrypter, because it doesn’t 11 specify where the decryption actually happens, encompasses the CPU that’s 12 the processor, somehow that’s a problem. There’s no place in the claims 13 where that breaks down at all. There’s nothing that needs to happen 14 between these two, and so this was -- the same exact argument was made in 15 the preliminary response. The Board dealt with this -- this is slide 44, left 16 paper 7, the Institution at page 28 -- the Board already looked at this and 17 said there’s no requirement that these things be separate, no new arguments 18 that have been presented as part of the proceeding. 19 Now, the other question that was raised is with respect to the 20 combination with Nachbar. And so Nachbar is sending firmware updates 21 and Nachbar has got this additional requirement that meets the requirement 22 of claim 33 and that is selecting by processing a selection criteria, and so the 23 selection criteria we point to is Nachbar has the system where you look at 24 the modification date and if the update that’s going to be sent out has a 25 modification date or if it’s newer than the last modification of the system

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1 software or firmware that’s on the system, it will then process it and send it 2 and so it determines which of the files will be downloaded and which ones 3 won’t be based on this modification date. 4 The principal argument that PMC had made in the briefing was well, 5 this is not selecting, this isn’t meeting the requirement but you can see slide 6 45 -- this is on the right, PMC’s expert -- admits that Nachbar; 7 “Question: Would you agree that in Nachbar’s system the 8 modification date serves as a selection criteria? 9 Answer: Yes, I think that’s substantially correct.” 10 And that’s at page 119, lines 10 to 15 of the Weaver deposition 11 transcript. And so Nachbar teaches that. That’s the obvious modification. 12 The remainder of the arguments with respect to the Chandra combination 13 with Nachbar is essentially PMC mischaracterizing how Apple’s expert and 14 Apple suggests these would be combined. The combination is simply take 15 the Chandra system and add in the limited additional Nachbar functionality, 16 not sort of shove Nachbar in wholesale into the Chandra system, and you 17 can see here Mr. Wechselberger, Exhibit 1001 -- I’m on slide 46 now, 18 paragraph 148 and 149 – explains how that’s being done. Again, this is 19 another argument that PMC raised in the preliminary response and the 20 Institution decision 40. The Board’s already talked about this. 21 Again, other arguments that PMC makes about this parade of 22 horribles, how it would be so hard to put Nachbar into Chandra. Again, 23 mischaracterizing what would have to be done in terms of updating 24 decryption algorithms. We’re not suggesting they would need to replace old 25 algorithms, it’s simply going to update or add them. Mr. Wechselberger --

Case IPR2016-01520 Patent 8,559,635 B1

1 this is slide 47 at paragraph 155 -- explains that. And then again this whole - 2 - 3 JUDGE EASTHOM: Counsel, we’re going to have to wrap this up. 4 MR. SERNEL: Okay. If I can just quickly, just finish. 5 JUDGE EASTHOM: Okay. 6 MR. SERNEL: The final thing with respect to the security, there’s 7 nothing about the combination where we’re suggesting that we’d allow third 8 parties access or even the host access. Again, Chandra is trying to prevent 9 the host of the software access, the whole point would be having the 10 software vendor, the manufacturer, be able to send out updates. They would 11 have access but we wouldn’t be opening up the access that PMC suggests, 12 and so we think this is a very straightforward obvious combination adding in 13 the little bit of functionality from Nachbar and Chandra. All kinds of 14 reasons to do it, and it would be straightforward to implement. 15 Unless there are questions, I’ll -- 16 JUDGE EASTHOM: Any questions? Thank you, Mr. Sernel. 17 MR. SERNEL: -- wrap up. Thank you. 18 JUDGE EASTHOM: Thank you, Mr. Kline. We appreciate 19 everybody’s input. We’re adjourned. 20 MR. KLINE: Thank you. 21 (Whereupon, 2:43 p.m., these proceedings were concluded.)

Case IPR2016-01520 Patent 8,559,635 B1

PETITIONER:

Marc Sernel Joel Merkin Eugene Goryunov Gregory Arovas Alan Rabinowitz KIRKLAND &ELLIS LLP [email protected] [email protected] [email protected] [email protected] [email protected]

PATENT OWNER:

Douglas Kline Jennifer Albert Sarah Fink Stephen Schreiner GOODWIN PROCTER LLP [email protected] [email protected] [email protected] [email protected]

Thomas Scott [email protected]