Consolidated Transaction Processing LLC v. Lowe's Companies Inc

I. Executive Summary and Procedural Information

• Parties & Counsel:
  • Plaintiff: Consolidated Transaction Processing LLC (Nevada)
  • Defendant: Lowe's Companies, Inc. (North Carolina)
  • Plaintiff’s Counsel: DEVLIN LAW FIRM LLC
• Case Identification: 1:19-cv-01919, D. Del., 10/09/2019
• Venue Allegations: Venue is based on Defendant Lowe's having a regular and established place of business in the District of Delaware, with the complaint identifying specific store locations within the district.
• Core Dispute: Plaintiff alleges that Defendant’s Lowes.com e-commerce website infringes patents related to systems and methods for generating targeted product offerings based on aggregated distributor and customer data.
• Technical Context: The technology concerns e-commerce platforms that integrate product information from multiple sources and use customer-specific data, such as location, to create personalized marketing and product catalogs.
• Key Procedural History: The patents-in-suit descend from a patent application filed in 1999, indicating a long-standing patent family in the e-commerce technology space. The complaint makes allegations for willfulness based on knowledge of the patents as of the complaint's filing.

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," issued April 29, 2014

The Invention Explained

• Problem Addressed: The patent describes the limitations of early e-commerce models that mirrored traditional retail, which involved maintaining costly physical inventories and using the internet primarily as a static, digital catalog (Compl. ¶12, ¶19; ’846 Patent, col. 2:63-3:14). This approach was described as inflexible, expensive, and lacking in personalization.
• The Patented Solution: The invention proposes a computerized system that aggregates product data from a "plurality of distributors" and combines it with customer data, including personal information like location derived from an IP address. This integrated data is then used to generate and automatically send "user-specific product offerings" to customers, creating a dynamic and personalized shopping experience without the need for the e-commerce operator to hold inventory ('846 Patent, Abstract; col. 3:44-52).
• Technical Importance: The technology aimed to improve e-commerce by enabling dynamic catalog generation, real-time price updates, and customized marketing based on user profiles, representing a move beyond the one-size-fits-all web stores of the era (Compl. ¶15-17).

Key Claims at a Glance

• The complaint asserts independent claims 1, 9, and 16, and various dependent claims (Compl. ¶28).
• Independent Claim 1 recites the core elements of a method including:
  • receiving product data for a plurality of products from a plurality of distributors;
  • receiving customer data, including location information derived from an IP address;
  • generating, based at least in part on the customer data, user-specific product offerings; and
  • sending automated messages containing these offerings to customers.

U.S. Patent No. 8,396,743 - "Sending Targeted Product Offerings Based on Personal Information," issued March 12, 2013

The Invention Explained

• Problem Addressed: Sharing a common specification with the ’846 Patent, this patent addresses the same technical problem: the inefficiency, high cost, and lack of personalization of early e-commerce systems that were functionally equivalent to mail-order catalogs and physical stores (’743 Patent, col. 2:26-3:14).
• The Patented Solution: The patented solution is a system architecture for processing transactions that overcomes prior art limitations. Figure 1 illustrates this system, showing the interaction between customers, an "On-Line Shopping System," an "Order Processing System," various databases (customer, product, fraud), a "Catalog Builder/Pricing Modeler," and external "Distributors/Vendors" ('743 Patent, Fig. 1; col. 3:51-4:48). This architecture is designed to dynamically build product catalogs and prices based on real-time data from multiple sources.
• Technical Importance: The invention provided a technical blueprint for a more automated, responsive, and intelligent e-commerce platform capable of offering tailored experiences to different users, such as students versus business professionals (Compl. ¶16; '743 Patent, col. 5:61-6:16).

Key Claims at a Glance

• The complaint asserts independent claims 1, 8, 15, and 20, along with dependent claims (Compl. ¶39).
• Independent Claim 1 recites a method with elements substantially similar to those in claim 1 of the ’846 Patent, including:
  • receiving product data from a plurality of distributors;
  • receiving customer data, including location information derived from an IP address;
  • generating a user-specific product offering based at least in part on personal information concerning a customer location; and
  • sending automated messages with the offering to customers.

III. The Accused Instrumentality

Product Identification

The Lowes.com website and its associated "Internet business transaction technology" (Compl. ¶28, ¶33, ¶39).

Functionality and Market Context

The complaint alleges that the Lowes.com website functions as an e-commerce platform that implements the patented technology (Compl. ¶28, ¶39). While specific operational details of the website are not provided, the infringement theory posits that it receives product data from Lowe's suppliers, collects data from website users, and uses this information to present targeted offerings (Compl. ¶13). Figure 1 from the patents-in-suit depicts a block diagram of the overall e-commerce system, showing the flow of information between customers, an order processing system, various databases, and distributors/vendors ('846 Patent, Fig. 1). The complaint suggests that such user-specific customization is critical for large retailers like Lowe's to compete in the modern online marketplace (Compl. ¶18).

IV. Analysis of Infringement Allegations

The complaint references preliminary claim charts in Exhibits C and D, which were not available for this analysis. The infringement theory is therefore summarized from the narrative allegations in the complaint.

'846 Patent Infringement Allegations

The complaint alleges that the Lowes.com website directly infringes the ’846 Patent by performing the steps of the asserted method claims (Compl. ¶28). The narrative suggests Lowe's website receives product data from its various third-party vendors (the alleged "plurality of distributors") and customer data from its users, including location information inferred from their IP addresses. The website allegedly uses this data to "generate at least one user-specific product offering" (e.g., targeted advertisements, regional promotions) and conveys these offerings to users via "automated messages" on the site or through other electronic means (Compl. ¶13, ¶28).

'743 Patent Infringement Allegations

The infringement theory for the ’743 Patent is substantively identical to the one for the ’846 Patent. The complaint alleges that the Lowes.com website practices the patented method by receiving and processing product and customer data to generate and send targeted offerings based on customer location (Compl. ¶39). The allegations cover the entire transaction process, from data aggregation to the presentation of a customized offer to the end-user (Compl. ¶13).

Identified Points of Contention

• Scope Questions: A central dispute may arise over whether a single retailer's e-commerce operation, which sources products from multiple suppliers for its own inventory or for drop-shipping, constitutes a system that receives data from a "plurality of distributors" as that term is used in the patent. The interpretation of "distributor" will be critical.
• Technical Questions: The case may turn on what evidence Plaintiff can produce to show that the Lowes.com website performs the specific function of "generating" a "user-specific product offering" that is causally and directly based on "location information derived from an IP address," as required by the claims, rather than engaging in more generalized geo-targeting or personalization.

V. Key Claim Terms for Construction

"plurality of distributors"

• Context and Importance: This term appears in the independent claims of both patents and is fundamental to the infringement theory. Practitioners may focus on this term because its construction could determine whether a single, vertically integrated retailer like Lowe's, working with its suppliers, falls within the scope of the claims, which appear to describe a more distributed, multi-source aggregator model.
• Intrinsic Evidence for a Broader Interpretation: The specification discusses receiving information from "multiple distributors" and also refers to "other suppliers of products" and "individual vendors," which could support a construction that includes a retailer and its network of upstream suppliers ('846 Patent, col. 5:26-27, 5:51-59).
• Intrinsic Evidence for a Narrower Interpretation: Figure 5 depicts distinct entities labeled "DISTRIBUTOR 1," "DISTRIBUTOR 2," through "DISTRIBUTOR n," suggesting independent commercial entities competing or collaborating on a platform, not a single retailer's supply chain ('846 Patent, Fig. 5). The background's focus on solving problems for retailers who previously had to hold inventory could also suggest the "distributors" are external parties who hold the inventory instead.

"user-specific product offering"

• Context and Importance: The definition of this term is critical for determining whether the output of the Lowes.com website meets the level of personalization required by the claims. The dispute will likely center on how "specific" the offering must be to the individual user.
• Intrinsic Evidence for a Broader Interpretation: The patent lists examples such as "targeted advertising, purchase incentives such as electronic coupons and rebates, specialized promotions and competitive pricing," which could be interpreted to cover a wide range of common e-commerce marketing techniques ('846 Patent, col. 5:17-20).
• Intrinsic Evidence for a Narrower Interpretation: The specification also describes a more sophisticated level of personalization, such as generating "customized portfolios based on purchase patterns" and dynamically creating different catalogs for different user types (e.g., student vs. business). This language may support a narrower construction requiring a higher degree of tailoring than simply displaying a localized advertisement ('846 Patent, col. 5:16-17, 6:5-16).

VI. Other Allegations

Indirect Infringement

The complaint alleges both induced and contributory infringement for both patents. Inducement is alleged based on Lowe's providing the Lowes.com website to its partners and customers with alleged specific intent to cause infringement (Compl. ¶31-32, ¶42-43). Contributory infringement is alleged on the basis that the website's "transaction technology" is a material component specially adapted for infringement and not a staple article of commerce (Compl. ¶33, ¶44).

Willful Infringement

The complaint alleges that infringement has been and continues to be willful, but bases this allegation on knowledge obtained "at least as early as the filing of this Complaint" (Compl. ¶30, ¶34, ¶41, ¶45). This frames the willfulness claim as being based on post-suit conduct.

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

• A core issue will be one of definitional scope: can the patent term "plurality of distributors," which appears to describe a system aggregating data from multiple independent sellers, be construed to read on a single retailer's e-commerce site that sources products from its own network of suppliers?
• A key evidentiary question will be one of technical causality: what evidence will be required to demonstrate that the accused Lowes.com website generates a "user-specific product offering" that is directly and functionally linked to a customer's "location information derived from an IP address," as opposed to using more generic personalization or localization techniques?