Data protection and controlled distribution

A system that employs a licensing scheme for distributed digital content. The licensing scheme requires the authentication of a physical key device 1 (e.g. a smart card) and an application extension 9 and may provide content 4 and licenses 5 which are encrypted in a fashion that is unique to the physical key device. The licensing scheme and authentication mechanisms used minimise the possibility of commercial copying. The licensing scheme and authentication mechanisms also allow the consumption of content without the physical key device being present, but still under the conditions defined by the licence. Independent claims relate to various aspects including: (i) Claim 1 characterised by a physical key device and licensing system using their own cipher scheme. (ii) Claims 2-9 characterised by making content available to users only if certain (licensing) conditions are met such as the encoding of the content or the classification of an associated application extension. (iii) Claims 10-11 characterised by determining the authenticity of an application extension using algorithms resident in a physical key device. (iv) Claims 12-13 characterised by determining the authenticity of a physical key device by using algorithms resident in a licensing system. (v) Claim 14 characterised by using a constantly changing data structure in a physical key device to deter duplication of the device. (vi) Claim 15 characterised by issuing encrypted content in a format specified by a user to physical media specified by the user.