Consolidated Transaction Processing LLC v. Home Depot Inc

I. Executive Summary and Procedural Information

• Parties & Counsel:
  • Plaintiff: Consolidated Transaction Processing LLC (Nevada)
  • Defendant: The Home Depot, Inc. (Delaware)
  • Plaintiff’s Counsel: Devlin Law Firm LLC
• Case Identification: 1:19-cv-01917, D. Del., 10/09/2019
• Venue Allegations: Plaintiff alleges venue is proper in the District of Delaware because Defendant is a Delaware corporation.
• Core Dispute: Plaintiff alleges that Defendant’s e-commerce website, HomeDepot.com, infringes two patents related to methods for generating and sending targeted product offerings based on user information and data from multiple product distributors.
• Technical Context: The patents address early e-commerce systems designed to overcome the limitations of traditional retail and static online catalogs by creating a dynamic, personalized shopping experience.
• Key Procedural History: The asserted U.S. Patent No. 8,712,846 is a continuation of the application that issued as U.S. Patent No. 8,396,743. Both patents claim priority to the same 1999 application. The '846 patent is subject to a terminal disclaimer, which may limit its enforceable term to that of the '743 patent. The complaint alleges willfulness based on knowledge of the patents as of the complaint's filing date.

Case Timeline

II. Technology and Patent(s)-in-Suit Analysis

U.S. Patent No. 8,712,846 - Sending Targeted Product Offerings Based on Personal Information

The Invention Explained

• Problem Addressed: The patent's background section describes the disadvantages of both traditional "store-based retailers" (e.g., limited shelf space, costly inventory) and early "catalog-based" e-commerce, which were often inflexible, costly to produce, and not personalized ( Compl. ¶11; ’846 Patent, col. 1:26-2:2). Early e-commerce businesses often still maintained their own inventory, inheriting many of the same costs and risks as brick-and-mortar stores (Compl. ¶11; ’846 Patent, col. 3:6-21).
• The Patented Solution: The invention is a system for offering targeted products over a network by receiving product data from multiple distributors and customer data from multiple customers. This aggregated data is then used to generate and send "user-specific product offerings" via automated messages (’846 Patent, Abstract). The system architecture, depicted in Figure 1, centralizes an "Order Processing System" that interfaces with customers, multiple "Distributors/Vendors," and various databases to build customized catalogs and set prices dynamically (’846 Patent, Fig. 1; col. 4:11-26).
• Technical Importance: This approach sought to create a more efficient e-commerce model that could dynamically respond to customer demand and market conditions without the retailer bearing the full cost and risk of physical inventory (Compl. ¶14; ’846 Patent, col. 4:50-57).

Key Claims at a Glance

• The complaint asserts independent claim 1 and dependent claims 3, 4, 9, 11, 12, 16, 18, and 19 (Compl. ¶27).
• Independent Claim 1 (Method):
  • A computer-implemented method for targeted product offering, comprising:
  • receiving product data for a plurality of products from a plurality of distributors via a communications network;
  • receiving customer data from a plurality of customers, comprising location information derived from an IP address;
  • generating, at least in part from the customer data, user-specific product offerings from the plurality of products; and
  • sending, by a computer, automated messages comprising the user-specific product offerings.
• The complaint reserves the right to assert other claims (Compl. ¶27).

U.S. Patent No. 8,396,743 - Sending Targeted Product Offerings Based on Personal Information

The Invention Explained

• Problem Addressed: Sharing a common specification with the '846 patent, the '743 patent addresses the same technical problems of prior art retail models, such as the high costs associated with maintaining inventory and the lack of personalization in early e-commerce systems (Compl. ¶18; ’743 Patent, col. 3:6-21).
• The Patented Solution: The invention describes a method and system for offering targeted products by gathering product data from multiple distributors and customer data, including location information derived from a customer's IP address. Using this information, the system generates "user-specific product offerings" that are then conveyed to customers through automated messages (’743 Patent, Abstract; col. 4:46-53). A core feature is the ability to generate different electronic catalogs for different user types (e.g., students versus business professionals) from a single underlying system (’743 Patent, col. 6:6-16).
• Technical Importance: The invention provided a framework for e-commerce platforms to automate and customize the online shopping experience, a key differentiator in a growing market (Compl. ¶17; ’743 Patent, col. 2:50-54).

Key Claims at a Glance

• The complaint asserts independent claims 1, 8, 15, and 20, as well as dependent claims 4, 11, and 18 (Compl. ¶38).
• Independent Claim 1 (Method):
  • A computer-implemented method for targeted product offering, comprising:
  • receiving product data for a plurality of products from a plurality of distributors via a communications network;
  • receiving customer data from a plurality of customers, comprising location information derived from an IP address;
  • generating, at least in part from the personal information concerning a customer location, at least one user-specific product offering; and
  • sending, by a computer, automated messages comprising the at least one user-specific product offering.
• The complaint reserves the right to assert other claims (Compl. ¶38).

III. The Accused Instrumentality

Product Identification

The HomeDepot.com website and its associated backend systems (the "Accused Instrumentalities") (Compl. ¶27, ¶38).

Functionality and Market Context

The complaint alleges that the Accused Instrumentalities provide "automation and user-specific customization" during the online shopping experience (Compl. ¶17). It asserts that the patented inventions resolve technical problems related to using product data from multiple distributors and customer information to generate user-specific offerings, and that the Accused Instrumentalities practice these inventions (Compl. ¶18-19). The complaint does not provide specific details on the technical operation of the HomeDepot.com website, instead referencing claim chart exhibits that were not filed with the complaint (Compl. ¶27, ¶38).

IV. Analysis of Infringement Allegations

The complaint alleges direct, induced, and contributory infringement of the '846 and '743 patents but does not include the referenced claim chart exhibits (Exhibits C and D) that would detail the specific infringement theory (Compl. ¶27, ¶38). The narrative infringement theory is that the HomeDepot.com website performs the patented methods for targeted e-commerce (Compl. ¶19-21). This includes dynamically generating electronic catalogs from a plurality of products based on a user's personal information and using that information to authorize distributors to ship products directly to users (Compl. ¶19, ¶20).

No probative visual evidence provided in complaint.

Identified Points of Contention

• Technical Questions: The complaint alleges that the Accused Instrumentalities receive product data from a "plurality of distributors" and use "a user's personal information to dynamically generate user-specific product offerings" (Compl. ¶20). A central factual question will be what evidence demonstrates that the HomeDepot.com website technically performs these functions as required by the claims. For example, does the website use location information derived from a user's IP address to generate a product offering, or does it use more general geo-location for store proximity and inventory checks?
• Scope Questions: A likely point of dispute is whether Defendant’s suppliers and fulfillment partners meet the claim definition of a "plurality of distributors." The patent describes a system that actively polls multiple distributors to determine availability and select one to fill an order (’743 Patent, col. 9:12-26). The infringement case may depend on whether Home Depot’s e-commerce supply chain, which could involve its own warehoused inventory, third-party logistics providers, and drop-shipping vendors, operates in the manner described and claimed in the patents.

V. Key Claim Terms for Construction

For the '846 Patent

• The Term: "user-specific product offerings" (Claim 1)
• Context and Importance: This term is central to the invention's purported novelty. The degree of specificity required will be a critical issue. Infringement will depend on whether the personalization on HomeDepot.com rises to the level of a "user-specific" offering as defined by the patent.
• Intrinsic Evidence for Interpretation:
  • Evidence for a Broader Interpretation: The patent suggests that offerings can be tailored to broad categories of users, not just individuals. For example, it describes generating "a catalog of mixed products appropriate for students with academic pricing" versus a different catalog for a "business person" with "corporate discounts" (’846 Patent, col. 6:8-14). This may support a construction covering segment-based personalization.
  • Evidence for a Narrower Interpretation: The specification also ties offerings to more granular data, such as generating "customized portfolios based on purchase patterns of individuals" (’846 Patent, col. 5:16-18) and using a customer's IP address and location to generate the offering (’846 Patent, Claim 1). This could support a narrower construction requiring personalization based on an individual's specific data or behavior.

For the '743 Patent

• The Term: "receiving product data for a plurality of products from a plurality of distributors" (Claim 1)
• Context and Importance: This limitation defines the source of the product information and is a foundational step in the claimed method. Practitioners may focus on this term because Defendant may argue its supply chain model (e.g., selling its own inventory, sourcing from manufacturers) does not involve receiving data from a "plurality of distributors" in the manner contemplated by the patent.
• Intrinsic Evidence for Interpretation:
  • Evidence for a Broader Interpretation: The patent uses the term "Distributors/Vendors" in its main system diagram (Fig. 1), and elsewhere refers to "suppliers of products" and "individual vendors" (’743 Patent, Fig. 1; col. 5:51-56), suggesting the term could encompass a wide range of third-party product sources.
  • Evidence for a Narrower Interpretation: The detailed description explains a process where the system sends a product SKU to multiple distributors, who are then "polled for availability, quantity available... and the current price," after which a selection logic determines which one will "fill the order" (’743 Patent, col. 9:12-26). This could support a narrower construction limited to a real-time, multi-source fulfillment marketplace, which may not describe a traditional e-commerce retailer's operations.

VI. Other Allegations

• Indirect Infringement: The complaint alleges inducement by asserting that Defendant provides the HomeDepot.com website and related materials to "partners and customers," thereby encouraging their infringing use (Compl. ¶30-31, ¶41-42). Contributory infringement is alleged on the basis that the Accused Instrumentalities are "especially made or adapted for use in an infringement" and are not a "staple article of commerce suitable for substantial non-infringing use" (Compl. ¶32, ¶43).
• Willful Infringement: Willfulness is alleged based on Defendant’s awareness of the patents and its alleged infringement "at least as early as the filing of this Complaint" (Compl. ¶29, ¶33, ¶40, ¶44). This indicates a theory of post-suit willfulness.

VII. Analyst’s Conclusion: Key Questions for the Case

• A core issue will be one of definitional scope: Can the term "distributor," as used in the patents in the context of a multi-source, real-time polling system, be construed to read on the varied supply-chain relationships of a modern, large-scale e-commerce retailer like The Home Depot?
• A key evidentiary question will be one of technical implementation: What factual evidence will Plaintiff be able to produce to demonstrate that the HomeDepot.com website generates "user-specific product offerings" by using "location information derived from an IP address," as strictly required by the claims, rather than using more generalized personalization or localization techniques?
• A third question relates to patent eligibility: Given the 1999 priority date, the claims are directed to processing business information on the Internet. The court will likely have to analyze whether the claims, which recite using customer and product data to create targeted offers, are directed to a patent-ineligible abstract idea and, if so, whether they contain a sufficient "inventive concept" under 35 U.S.C. § 101, an issue the complaint attempts to preemptively address (Compl. ¶19-23).