Sams Club West Inc v. Digital Retail Apps Inc

1. Case Identification

• Case #: IPR2022-00233
• Patent #: 9,934,506
• 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, 6, 7, and 13

2. Patent Overview

• Title: Systems and Methods for Self-Payment and Verification of Purchase
• Brief Description: The ’506 patent discloses a system for spot-checking and verifying a consumer’s in-store, self-checkout purchases. The method involves a consumer paying with a mobile device, receiving a unique token (e.g., a QR code) corresponding to the purchase, and a retailer device scanning that token at the exit to verify the transaction with a remote server before the consumer leaves.

3. Grounds for Unpatentability

Ground 1: Obviousness over Core Anti-Theft References - Claims 1 and 13 are obvious over Paradise in view of Claudatos.

• Prior Art Relied Upon: Paradise (Application # 2011/0145092) and Claudatos (Patent 7,239,241).
• Core Argument for this Ground:
  • Prior Art Mapping: Petitioner argued Paradise taught a mobile-based purchase verification method to reduce theft, where a consumer's mobile device receives a receipt with a unique "purchase confirmation code" from a server. The consumer presents this code to a retailer’s "loss prevention device" upon exit. However, Paradise was not explicit that the retailer device sends a verification request to the server. Petitioner asserted that Claudatos supplied this missing element by teaching a centralized inventory control system where a retailer device (an RFID reader) reads a tag on a receipt and communicates with a central server to verify the purchase and detect mismatches.
  • Motivation to Combine: A person of ordinary skill in the art (POSITA) would combine Paradise and Claudatos because both address the same problem of minimizing retail theft. A POSITA would improve Paradise’s system by incorporating Claudatos’s centralized, server-based verification to automate the process, reduce human error, and synchronize purchase data across multiple retailer devices, which was a predictable improvement.
  • Expectation of Success: The combination involved applying a known verification technique (Claudatos's server check) to a similar system (Paradise's mobile token system) to achieve a predictable result.

Ground 2: Obviousness with Explicit User Prompting - Claims 1 and 13 are obvious over Paradise in view of Claudatos and Rothschild.

• Prior Art Relied Upon: Paradise (Application # 2011/0145092), Claudatos (Patent 7,239,241), and Rothschild (Application # 2012/0041845).
• Core Argument for this Ground:
  • Prior Art Mapping: This ground built upon the Paradise and Claudatos combination by adding Rothschild to explicitly teach the limitation of prompting a user for a response after a token is validated. While Petitioner argued this step was implicit or obvious in the primary combination, Rothschild expressly disclosed a system where, after a transaction code is verified, the retailer device instructs personnel to compare the items with the electronic receipt and then prompts them to indicate whether the items matched.
  • Motivation to Combine: A POSITA would incorporate Rothschild's teachings to improve the verification aspect of the Paradise/Claudatos system. Rothschild's systematic, prompt-driven method for guiding personnel would automate and standardize the visual inspection step, improving the efficiency and reliability of data collection for theft prevention, a known goal in the art.
  • Expectation of Success: Adding a guided user interface with prompts, as taught by Rothschild, to an existing verification workflow was a routine design choice with predictable results.

Ground 3: Obviousness of Barcode Implementation - Claims 6 and 7 are obvious over combinations including Nelms and Katzin.

• Prior Art Relied Upon: The combinations from Grounds 1 or 2, further in view of Nelms (Patent 10,121,133) and Katzin (Application # 2012/0271712).
• Core Argument for this Ground:
  • Prior Art Mapping: This ground addressed dependent claims 6 and 7. Claim 6 requires the unique token to be a displayable code that is "captured" by the retailer device, which then "retrieves" the token. Petitioner argued that Nelms taught these exact steps, disclosing a mobile self-checkout system where a barcode displayed on a consumer's phone is scanned by a retailer's barcode reader, which extracts the unique identifier encoded within. Claim 7 requires the code to be a QR code. Petitioner argued Katzin explicitly taught that a confirmation barcode for purchase verification could be a QR code.
  • Motivation to Combine: A POSITA would combine Nelms and Katzin with the base references to further automate the checkout and verification process. Using a scannable barcode or QR code is a well-known, efficient, and reliable method for data entry, making it an obvious and predictable way to implement the token transfer from the consumer's mobile device to the retailer's device in the systems of Paradise or Rothschild.
  • Expectation of Success: Implementing token exchange using common barcodes and QR codes, as taught by Nelms and Katzin, was a well-established practice with a high expectation of success.

4. Key Claim Construction Positions

• "Retailer electronic device": Petitioner argued, consistent with a prior Board decision in a related inter partes review (IPR), that this term should be given its ordinary meaning and does not require an "interactive display." Petitioner contended its invalidity grounds succeed even if the device includes a display, as taught by the prior art.
• "spot checking": Petitioner acknowledged a prior district court construction of this term as "physically or visually inspecting (1) purchased items and (2) either a receipt or token to verify a consumer's purchase." Petitioner argued that the asserted grounds demonstrate the invalidity of the challenged claims even under this limiting construction.

5. Arguments Regarding Discretionary Denial

• Not Cumulative under §325(d): Petitioner argued that denial would be improper because the core prior art reference, Paradise, was only listed in an Information Disclosure Statement (IDS) during prosecution and was never substantively considered or used in a rejection by the Examiner. The other references were not before the Examiner at all.
• Fintiv Factors: Petitioner stated it would file a broad stipulation in the parallel district court proceeding, consistent with the Sotera precedent, agreeing not to pursue any ground raised or reasonably available in the IPR. This stipulation, it argued, mitigates concerns of duplicative efforts and ensures the IPR is a true alternative to district court litigation.
• Fairness: Petitioner argued that Patent Owner engaged in inequitable conduct. In a prior IPR, Patent Owner persuaded the Board to terminate proceedings post-settlement by representing that "no litigation... is contemplated in the foreseeable future," only to file suit against Petitioner one month later, making discretionary denial unfair.

6. Relief Requested

• Petitioner requested institution of an IPR and cancellation of claims 1, 6, 7, and 13 of the ’506 patent as unpatentable.