Target Corp v. Proxicom Wireless LLC

1. Case Identification

• Case #: IPR2020-00979
• Patent #: 9,161,164
• Filed: June 1, 2020
• Petitioner(s): Target Corporation
• Patent Owner(s): Proxicom Wireless, LLC
• Challenged Claims: 1-8

2. Patent Overview

• Title: System and Method for Proximity Based Mobile Electronic Transactions and Social Networking
• Brief Description: The ’164 patent discloses a system for exchanging information between wireless devices using proximity beacons and a central server. The system uses a server-based "disclosure policy" to control the release of a second device's information to a first device based on privacy rules and identifiers associated with each device.

3. Grounds for Unpatentability

Ground 1: Claims 1-8 are obvious over Mgrdechian

• Prior Art Relied Upon: Mgrdechian (Patent 7,545,784).
• Core Argument for this Ground:
  • Prior Art Mapping: Petitioner argued that Mgrdechian, which was not applied during prosecution, discloses all elements of claims 1-7 and renders claim 8 obvious. Mgrdechian teaches a wireless communication system where mobile devices broadcast identifiers via a local protocol (e.g., Bluetooth). An initiating device sends detected identifiers to a server, which uses privacy-related "filter parameters" (the claimed "disclosure policy") to determine what profile information of a target device can be returned. The filter parameters are compared against the initiating device's profile to control disclosure. If permitted, the server sends the target device's information, including its unique identifier, to the initiating device, which can then use this information to detect proximity when the target device is in direct range.
  • Motivation to Combine (for §103 grounds): This ground primarily asserted anticipation for claims 1-7, but argued for obviousness over Mgrdechian alone as an alternative. For claim 8, Petitioner argued it would have been obvious to a person of ordinary skill in the art (POSITA) to include a MAC address in the broadcasted beacon information disclosed by Mgrdechian. Mgrdechian already taught using a "unique ID [assigned] in the manufacturing process," which a POSITA would understand to include a MAC address, as an additional identifier to facilitate robust communication.
  • Expectation of Success (for §103 grounds): A POSITA would have had a high expectation of success as Mgrdechian provided a complete system for proximity-based information exchange governed by privacy rules, and adding a known identifier like a MAC address was a simple, predictable modification.

Ground 2: Claims 1-8 are obvious over Mgrdechian in view of Kaplan

• Prior Art Relied Upon: Mgrdechian (Patent 7,545,784) and Kaplan (Patent 8,295,819).
• Core Argument for this Ground:
  • Prior Art Mapping: This ground supplemented Mgrdechian with Kaplan to the extent Mgrdechian was found not to explicitly teach certain implementation details. Specifically, Kaplan was cited for its express disclosure of a mobile device having two separate radios: a first for cellular network communication (long-range) and a second for Bluetooth communication (short-range). Kaplan also explicitly taught a device processor checking locally stored information (a local cache) associated with a received identifier to determine if a request to a remote server for more information was necessary, thereby saving computing resources.
  • Motivation to Combine (for §103 grounds): A POSITA would combine Kaplan's teachings with Mgrdechian's system to implement a well-known and efficient hardware configuration (separate radios for different protocols) and to incorporate a standard resource-saving technique (checking a local cache before querying a server). Kaplan’s teachings provided a known solution for implementing the functions inherent in Mgrdechian’s system, making the combination a predictable improvement.
  • Expectation of Success (for §103 grounds): The combination involved applying conventional wireless device architecture and data retrieval logic from Kaplan to the analogous system of Mgrdechian, ensuring a predictable and successful outcome.

Ground 3: Claims 3 and 4 are obvious over Mgrdechian in view of Kulakowski

• Prior Art Relied Upon: Mgrdechian (Patent 7,545,784) and Kulakowski (WO 2007/084973).

• Core Argument for this Ground:

  • Prior Art Mapping: This ground addressed the "secure and fraud resistant" limitations of claim 3 and the changing identifier limitation of claim 4. While Mgrdechian taught using "dynamic" or "pseudo-random" identifiers, Petitioner argued Kulakowski provided express implementation details. Kulakowski taught a client-server security system using a "covert identifier" that changes periodically over time. The server verifies the identifier to detect cloned or fraudulent devices; if a received identifier does not match the expected, updated identifier, the server can discontinue service, thus providing a secure and fraud-resistant application.
  • Motivation to Combine (for §103 grounds): A POSITA would be motivated to incorporate Kulakowski's method of periodically changing covert identifiers into Mgrdechian's system to enhance its security. This would directly address the problem of preventing spoofed devices from gaining access to private information by using a stale identifier, a known security concern in such systems. Applying Kulakowski’s technique was a known way to improve the dynamic ID system already disclosed by Mgrdechian.
  • Expectation of Success (for §103 grounds): Combining a known technique for enhancing security (periodically changing identifiers) with a system that already utilized dynamic identifiers would predictably result in a more secure version of Mgrdechian's system.

• Additional Grounds: Petitioner asserted additional obviousness challenges, including combining Mgrdechian with Eagle (Application # 2005/0250552) for its teachings on using a "trust network" based on a friends list to filter information (claim 7), and with Behrens (Application # 2010/0138481) for its teachings on transmitting multiple identifiers like a MAC address and Bluetooth address simultaneously (claim 8).

4. Arguments Regarding Discretionary Denial

• Petitioner argued that discretionary denial under §325(d) would be improper because the primary reference, Mgrdechian, was never applied by the examiner during prosecution of the ’164 patent. While a related application was cited in an IDS, Petitioner contended this bare citation did not constitute substantive consideration.
• Petitioner further argued against discretionary denial under Fintiv, stating that: (1) the district court had a history of granting stays pending IPR; (2) the co-pending litigation was in its early stages, with no substantive rulings made; (3) Petitioner did not delay in filing the IPR petition; and (4) the strong merits of the petition, relying on art not considered by the USPTO, favored institution in the public interest.

5. Relief Requested

• Petitioner requested institution of an inter partes review and cancellation of claims 1-8 of the ’164 patent as unpatentable under 35 U.S.C. §§ 102 and 103.