In this document, we will briefly overview the various applications for the IP-Safe system. We will then review the various components of IP-Safe, and describe how they both eliminate unlicensed copies and facilitate the Internet sales of software products.

As mentioned above, software piracy is a huge income loss for companies that develop and distribute software applications. IP-Safe is a robust copy protection system that has been field proven to work extremely well in eliminating software piracy and abuse. IP-Safe fully supports traditional software sales channels and is also uniquely suited for Internet based sales and distribution methods. IP-Safe also contains components and functionality that enable powerful Internet oriented pre-sales and post-sales promotional activities. IP-Safe is easy to integrate into product applications and sales flows, and the IP-Safe Services Group is available to assist in IP-Safe setup and integration. The Services Group can also customize the IP-Safe system for specific customer needs. The IP-Safe system also avoids customer loss of privacy concerns that have surfaced in response to CPU based serial number methods.

IP-Safe is well suited to the protection of software media, such as audio, video and multimedia. Any PC based media player can use IP-Safe to cause media only to be accessible on licensed PC's. If the IP-Safe protected media is copied to any other PC, it will not be accessible.

IP-Safe can be used to require users to register a no-cost "freeware" program for full operation. This registration is required regardless of the source of the installed version of the program, so the freeware can be made widely available on any server, site or CD-ROM demo disc.

Since every PC using the freeware must register, this allows the automatic compilation of a powerful user database that can be used to promote enhancements or complementary products.

To introduce the basic concepts of IP-Safe, we will first present a simple example of the purchase and usage process of an IP-Safe licensed product. In later sections, we will examine each IP-Safe component in more detail. For this example we will describe an Internet based purchase, but keep in mind that the flow with the traditional hard media purchase case is very similar.

• Customer downloads and evaluates demo from vendor's website, decides to purchase.
• Customer uses IP-Safe Ordering Tool to submit secure order to IP-Safe Registration Server (note the ordering tool was automatically downloaded with the demo version of the product).

• When payment is verified, the IP-Safe Ordering Tool communicates with the IP-Safe Registration Server to automatically send the customer a password that will only allow the purchased software package to run on the customer's PC.

• Order request is received by IP-Safe Registration Server and is checked for valid payment.
• If payment is valid, IP-Safe Registration Server uses central database to store customer contact and product purchase information.

• Registration Server then selects an appropriate Product ID number for this purchase, and instructs the Ordering Tool to calculate a Machine ID for the PC based on its CPU and motherboard characteristics.

• Ordering Tool sends the Machine ID to the Server, which stores it with the other customer information.

• Registration Server calculates the unique Password for this Machine ID, and sends it along with the Product ID back to the Ordering tool, where they are both stored on the machine and displayed to the user to save for any needed future re-installations of the software.

A fundamental component of the IP-Safe system is the concept of a "Machine ID". The Machine ID is a number that identifies a particular PC that is to be licensed to operate a software product that uses the IP-Safe protection system. Since the supplied password for a specific software product is dependent on the Machine ID number, that password will not allow operation of the software on a different PC, as that other PC will have a different Machine ID number.

IP-Safe uses proprietary technology that examines properties of the CPU and motherboard to generate a Machine ID for a specific PC. To alleviate concerns of privacy invasion, IP-Safe generates a Machine ID that is sufficiently unique to implement a strong copy protection mechanism while not being so unique as to pinpoint an individual user with 100% accuracy based on the Machine ID alone. In other words, it is very unlikely that the password given to a specific user will allow operation of an IP-Safe protected software program another PC in their workplace (typically a less than 1 in 10,000 chance). However, the Machine ID is not absolutely unique for every PC, and thus a particular user can not be fully identified based only on the Machine ID for their PC.

An important property of the Machine ID is the fact that it is not affected by replacement or reformatting of the hard discs of the PC. It is also unaffected by operating system reinstalls or upgrades. It is also unaffected by the installation of additional hardware in the PC.

The Product ID's primary function is to allow customers who have purchased the product to identify themselves as legitimate owners of the software when they need to either purchase an upgrade of a software product or re-install their software on a new or different PC.

The Product ID will typically contain some identifying components that allow identification of the particular product and optional additional features for the product associated with the Product ID.

In addition, the Product ID includes a large pseudo-random numerical component. This pseudo-random component makes it very unlikely that someone could correctly guess a Product ID that had been issued to a customer.

During an online purchase (as described above), the Product ID number is automatically generated during the transaction by the Registration Server.

For purchases using a traditional software retailer, the Product ID is typically included on a small label either inside the "break the seal" license agreement for the software or inside the CD sleeve for the software.

As will be described in more detail below, the Registration Server fully supports the use of the Product ID in manner that allows software to be pre-manufactured, packaged and shipped to a distributor or retailer in grouped batches that are not yet functional. When that distributor or retailer needs to make a particular batch number functional for sale, they place an order with the software vendor, who uses the Registration Server to set the Product ID's for that batch to the purchased mode, allowing registration and use of the software by the customer.

To facilitate IP-Safe usage in a traditional sales mode where software products are stocked on retailer's shelves, IP-Safe includes the ability for the vendor to specify that a product should run for a specified amount of time without needing a password. This allows users to have immediate use of product purchased from a dealer's shelf. During that initial time period, the user simply needs to run the ordering tool to register their Product ID number with the Registration Server to receive a password that allows permanent operation.

The IP-Safe Registration Server performs several important functions:

• Manages a central database of Product ID numbers, customer contact information and customer registration information

• Allows customer to order products, providing them with passwords and storing their contact information

• Supports inquires from the IP-Safe Sales Report Tool, Billing Tool and Customer Support Tool

The IP-Safe Registration Server can either be run on an existing company server, or a server can be set up and maintained by the IP-Safe Services Group.

In the event that the vendor sells packaged software products through distributors, The IP-Safe Registration server also supports the generation of batch Product ID's. These Product ID's are typically printed on small labels and then attached to the package under the "break the seal" license flap, or inside the CD case. Upon purchase, the customer then uses that Product ID to register the product for full operation.

To allow pre-manufacturing of product packaging, Product ID batches can be generated in a "pre-purchase" mode. When a particular batch is shipped to a distributor, that batch is converted to purchased mode, and the distributors billing information is entered.

If desired, the IP-Safe system can be set up so that upon opening and installing the software for the first time, the customer is allowed a limited time of full operation before they are required to register their software.

During the process of supporting the customer sales and registration process, the IP-Safe Registration Server builds a powerful database of customer contact, purchase and registration information. This database is built using standard SQL for compatibility with virtually any customers database system preferences. Proper use of this valuable database can have a strong positive effect on sales volume. For example, an inquiry to the database can be made to provide contact information for all customers who have purchased the product but have not yet purchased the latest upgrade.

An additional lucrative capability of the IP-Safe system is the ability to set up demo versions of software products that require registration for operation of the demo. IP-Safe allows demo versions to be set up that will only function on a particular PC when they have been registered by the customer using the Ordering Tool. The contact information for these demo users is fully available in the vendor's IP-Safe database, and can be used for very targeted product promotions. The vendor can freely choose the amount of information required for registration, from a simple email address up to full address information.

With this system, regardless of how the demo software was distributed, the user must register it to allow operation. This allows demo versions to be made very widely available through multiple sources (CD-ROM's, shareware sites, etc.) while still gathering contact information for each usage.

Power Technology provides a set of tools for generating most of the common IP-Safe Database reports and inquires. Special tools that facilitate a particular customers' sales and distribution process can be quickly developed by the IP-Safe Services group. The standard IP-Safe Database tools are described below.

The IP-Safe Sales and Registration Report can very quickly give full up to date information on the number of sales of any particular product over a chosen time period. Note that since this information can supply the number of customers who have actually registered for use, it can provide a much more accurate and timely sales measure than the traditional count of dealer shipments. These highly accurate reports are invaluable for instant feedback on special promotions or advertisements.

If the vendor is providing a demonstration version of the product, full reports can be generated on the number of demo registrations, again giving highly valuable immediate feedback on product promotional efforts.

If the vendor is selling systems to distributors, the IP-Safe Billing tool can be used to generate reports about those sales. It can also be used to generate reports on the number of end-user sales that have occurred for a particular distributor. This provides immediate feedback on the effectiveness of a particular distributor that is much more accurate and timely than the typical reports on the number of systems shipped by the distributor to dealers.

The IP-Safe Customer Support tool provides powerful capabilities to product support personnel. Based on partial customer information, such as last name, email address or phone number, the tool can retrieve a full report of the product purchases and registrations performed by that customer.

As mentioned earlier, each product installation of a product using IP-Safe is tied to a particular Machine ID number, and that Machine ID number is generated using properties of the PC's CPU and motherboard. The advantage of his method is that the Machine ID will not be affected by disc replacements, reformatting or operating system installations or upgrades. In addition, the Machine ID is not affected by the addition of new hardware to the PC.

In the event that the user changes the motherboard or CPU in their PC, or fully replaces their PC, they will need to re-register their software for full operation. To take care of these cases in a manner that minimizes support calls, IP-Safe uses a system called SmartReg. SmartReg is typically set up to allow additional customer registrations over time, with time periods chosen by the vendor. Appropriate use of the SmartReg system keeps customer support calls to a very low level.

The IP-Safe Services Group was formed to assist vendors in integrating the IP-Safe system into their products and sales and distribution processes. The Services Group typically works closely with the customer to recommend the best configuration of the IP-Safe system for each customer unique combinations of product features, pre-sales activities, sales and distribution process and information infrastructure. The Services Group can fully customize the IP-Safe system to best suit a particular customers' needs.

For more information on the IP-Safe system, please contact:

Power Technology
100 Northill Dr., Bldg. #24
Brisbane, CA 94005
415-467-7886
fax – 415-467-7386