Sams Club West Inc v. Digital Retail Apps Inc

1. Case Identification

• Case #: IPR2022-00232
• Patent #: 9,262,781
• Filed: December 3, 2021
• Petitioner(s): Sam's Club West, Inc. d/b/a Sam's Club
• Patent Owner(s): Digital Retail Apps, Inc.
• Challenged Claims: 1, 2, 5, 7, 9, 11, 15, 16, and 19

2. Patent Overview

• Title: Systems and Methods for Self-Payment and Verification of Purchase of Retail Goods and Services
• Brief Description: The ’781 patent discloses a computer-implemented method for verifying retail purchases using a consumer's mobile device. The system involves a server receiving product and payment data from the mobile device, processing payment, generating a unique token (e.g., QR code), and using the token to verify the purchase at a retailer's electronic device.

3. Grounds for Unpatentability

Ground 1: Obviousness over Katzin - Claims 1, 2, 5, 7, 9, 11, 15, 16, and 19 are obvious over Katzin.

• Prior Art Relied Upon: Katzin (Application # 2012/0271712).
• Core Argument for this Ground:
  • Prior Art Mapping: Petitioner argued that Katzin discloses all elements of the challenged claims through a combination of its various described embodiments. Katzin teaches a system where a user scans a product barcode with a mobile device, which sends product information to a server. The server processes the purchase, sends a confirmation barcode (a unique token) back to the mobile device, and the user presents this token to a retailer's anti-theft device for verification upon exiting the store. Petitioner asserted that Katzin's server performs all the central processing steps recited in independent claims 1 and 15, and its different figures disclose the features of the dependent claims, such as checking item availability and details of the data record.
  • Motivation to Combine (for §103 grounds): A POSITA would combine Katzin’s different embodiments because Katzin explicitly states that features from any embodiment may be combined with others. Furthermore, the different embodiments were described as predictable variations of the same underlying invention (mobile purchasing and verification), and combining them would improve the system's reliability and security by incorporating vetted payment processing techniques.
  • Expectation of Success (for §103 grounds): A POSITA would have had a high expectation of success as combining the like-embodiments of Katzin involved applying known methods to yield predictable results without requiring a leap of inventiveness.

Ground 2: Obviousness over Katzin and Paradise - Claims 1, 2, 5, 7, 9, 11, 15, 16, and 19 are obvious over Katzin in view of Paradise.

• Prior Art Relied Upon: Katzin (Application # 2012/0271712) and Paradise (Application # 2011/0145092).
• Core Argument for this Ground:
  • Prior Art Mapping: This ground relied on the teachings of Katzin as the primary system and supplemented it with Paradise. Petitioner argued that to the extent the Board construes the term "retailer electronic device" to require an interactive display, Paradise explicitly discloses this feature. Paradise describes a loss prevention device (LPD) at a retail establishment that includes a display for showing a purchase confirmation code, allowing personnel to visually or electronically verify the purchase.
  • Motivation to Combine (for §103 grounds): A POSITA would combine Katzin and Paradise to improve the user experience and verification process of Katzin's system. Both references address the same problem of mobile retail purchasing and theft prevention. Adding Paradise's teaching of displaying transaction information on the retailer's device would be an advantageous and predictable substitution of known prior art elements to provide additional verification information to the user and staff.
  • Expectation of Success (for §103 grounds): The combination was argued to be a predictable integration of complementary features from the same technical field, ensuring a reasonable expectation of success.

Ground 3: Obviousness over Paradise, ISO-8583, and Claudatos - Claims 1, 7, 9, 11, and 15 are obvious over Paradise, ISO-8583, and Claudatos.

• Prior Art Relied Upon: Paradise (Application # 2011/0145092), ISO-8583 (a 2003 financial transaction messaging standard), and Claudatos (Patent 7,239,241).
• Core Argument for this Ground:
  • Prior Art Mapping: Petitioner asserted that Paradise provides the foundational mobile commerce framework, including a Purchase Facilitating Server (PFS), a mobile device, and an LPD. To this framework, ISO-8583 was added to supply the well-known, standardized messaging protocol for handling payment authorization requests and responses between the retailer (acquirer) and the card issuer. Claudatos was added to teach an automated, server-based verification process where an RFID reader at the store exit communicates with a central server to verify a receipt's RFID tag against purchased items, triggering an alarm upon mismatch.
  • Motivation to Combine (for §103 grounds): A POSITA would combine these references to create a comprehensive, secure, and efficient mobile payment and verification system. Paradise would be improved by incorporating the industry-standard ISO-8583 for payment processing, enhancing security and interoperability. Combining Claudatos would improve Paradise’s manual verification process by automating it, reducing human error, and improving data management for loss prevention.
  • Expectation of Success (for §103 grounds): Success was expected because the combination involved integrating a standard payment protocol and a known automated verification technology into an existing mobile commerce system to achieve predictable improvements in security and efficiency.
• Additional Grounds: Petitioner asserted an additional obviousness challenge against claims 5 and 19 based on Paradise, ISO-8583, Claudatos, and Vanska (Application # 2004/0093274). Vanska was added for its teachings on checking item availability and notifying a user if a product is out of stock.

4. Key Claim Construction Positions

• "wirelessly transmitting said unique token": Petitioner contended that the claims are invalid whether this term is construed to include or exclude "photographing or scanning." While Petitioner agreed with a prior court construction that excluded scanning, it argued that the prior art (Katzin and Paradise) discloses both optical transmission (scanning a barcode) and non-optical wireless transmission (e.g., Wi-Fi, Bluetooth), rendering the claims obvious under either interpretation.
• "retailer electronic device": Patent Owner previously argued this term requires an interactive display. Petitioner, agreeing with the Board's prior institution decisions, argued it does not. However, Petitioner asserted that even if a display is required, Katzin's "visual alarm" and Paradise’s explicit disclosure of a display on its LPD would satisfy the limitation.

5. Arguments Regarding Discretionary Denial

• Petitioner argued that discretionary denial under §314(a) based on the parallel district court litigation would be inequitable and inefficient. Petitioner stated its intent to file a broad, Sotera-style stipulation in the district court, promising not to pursue any grounds that were raised or reasonably could have been raised in the IPR if review is instituted. This stipulation, Petitioner argued, mitigates concerns of duplicative efforts and conflicting decisions.
• Petitioner also argued that denial would be unfair, citing Patent Owner’s representation to the Board in a prior, settled IPR that "[n]o litigation... is contemplated in the foreseeable future," only to file the complaint against Petitioner one month after termination.

6. Relief Requested

• Petitioner requests institution of inter partes review and cancellation of claims 1, 2, 5, 7, 9, 11, 15, 16, and 19 of the ’781 patent as unpatentable.