Consolidated Transaction Processing LLC v. Lululemon Athletica Inc

I. Executive Summary and Procedural Information

• Parties & Counsel:
  • Plaintiff: Consolidated Transaction Processing LLC (Nevada)
  • Defendant: Lululemon Athletica Inc. (Delaware)
  • Plaintiff’s Counsel: DEVLIN LAW FIRM LLC
• Case Identification: 1:22-cv-02826, N.D. Ill., 05/27/2022
• Venue Allegations: Venue is based on Defendant Lululemon maintaining established places of business, specifically retail stores, within the Northern District of Illinois.
• Core Dispute: Plaintiff alleges that Defendant’s e-commerce system infringes patents related to methods for aggregating product data from multiple distributors with customer data to generate and send targeted, user-specific product offerings.
• Technical Context: The technology at issue addresses early e-commerce challenges by creating dynamic, personalized online retail experiences, moving beyond static product catalogs to systems that tailor offerings based on integrated data.
• Key Procedural History: The two patents-in-suit share a common specification and claim priority back to a 1999 application. The later-issued '846' patent is subject to a terminal disclaimer over the earlier '743' patent, a fact that may be relevant to future validity analyses regarding obviousness-type double patenting.

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"

• Patent Identification: 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 prior art of e-commerce as being limited, with most online businesses still operating like traditional retailers by maintaining their own costly physical inventory and presenting static, catalog-style advertising to all users. (Compl. ¶11; '846 Patent, col. 3:6-21).
• The Patented Solution: The invention proposes a computer-implemented system that solves this problem by receiving product data from a "plurality of distributors" and combining it with customer data (including location information). ('846 Patent, Abstract). This aggregated data is then used to dynamically generate "user-specific product offerings," such as customized electronic catalogs or promotions, which are then sent to customers via automated messages. (Compl. ¶12; '846 Patent, col. 4:42-54).
• Technical Importance: The technology represents a shift from a single-merchant, inventory-based e-commerce model to a more dynamic, data-driven marketplace capable of providing personalized shopping experiences. (Compl. ¶14).

Key Claims at a Glance

• The complaint asserts independent claim 1 and dependent claims 3 and 4. (Compl. ¶30).
• Independent Claim 1 of the '846 Patent recites a computer-implemented method with the following key steps:
  • 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, with the data comprising location information derived from a customer's 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 by a computer.

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

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

The Invention Explained

• Problem Addressed: As with the '846 Patent, the invention addresses the shortcomings of early e-commerce systems that were tied to physical inventory and offered inflexible, non-personalized "infomercial type advertising." (Compl. ¶21; '743 Patent, col. 2:63-3:5).
• The Patented Solution: The patented method involves a transaction processing system that aggregates product information from multiple, distinct distributors and personal information from customers. (Compl. ¶12; '743 Patent, col. 3:44-52). A key aspect is the use of customer location data, derived from an IP address, to help generate the "user-specific product offering" that is then sent to the customer. ('743 Patent, Abstract).
• Technical Importance: This system was designed to improve the functioning of e-commerce computer systems by enabling the dynamic generation of customized product catalogs from a single, centralized database fed by multiple distributors. (Compl. ¶14; '743 Patent, col. 4:55-67).

Key Claims at a Glance

• The complaint asserts independent claim 1 and dependent claim 4. (Compl. ¶35).
• Independent Claim 1 of the '743 Patent recites a computer-implemented method with the following key steps:
  • receiving product data for a plurality of products from a plurality of distributors via a communications network;
  • receiving customer data, including location information derived from an IP address associated with the customer;
  • generating, based at least in part on the personal information concerning customer location, a user-specific product offering; and
  • sending automated messages containing the offering to one or more customers.

III. The Accused Instrumentality

Product Identification

• The complaint identifies the "Accused Instrumentalities" as Lululemon's e-commerce operations, including its website and the underlying systems for processing transactions and customer data. (Compl. ¶30, ¶35).

Functionality and Market Context

• The complaint alleges that Lululemon's system provides an online shopping experience where user-specific customization is a key competitive differentiator. (Compl. ¶20). The accused functionality involves the alleged use of "product data from a plurality of distributors" and "personal information of customers" to generate and convey "electronic catalogs of user-specific product offerings." (Compl. ¶21). The complaint alleges this is achieved by receiving product data from multiple sources, receiving customer data, and using that combined information to create and deliver targeted offerings to customers. (Compl. ¶12).

IV. Analysis of Infringement Allegations

The complaint references preliminary claim charts in Exhibits 3 and 4 but does not include them in the filing. The infringement theory is therefore summarized based on the narrative allegations in the complaint.

'846 Patent and '743 Patent Infringement Allegations

• The core infringement theory is consistent for both patents. The plaintiff alleges that Lululemon’s e-commerce system directly infringes at least claim 1 of each patent. (Compl. ¶30, ¶35). The theory posits that Lululemon’s system performs the claimed methods by: (1) receiving product data from what the plaintiff characterizes as a "plurality of distributors"; (2) receiving data from its customers, including location information that can be derived from their IP addresses; (3) using this combined data to dynamically generate user-specific product offerings, such as personalized web pages or promotions; and (4) sending these offerings to customers through automated electronic messages. (Compl. ¶12, ¶23). The complaint argues that these actions meet all the limitations of the asserted independent claims. (Compl. ¶30, ¶35). No probative visual evidence provided in complaint.

Identified Points of Contention

• Scope Question: A central dispute may arise over the claim term "plurality of distributors." The infringement case appears to depend on whether Lululemon's business model—primarily selling its own branded apparel that is sourced from various manufacturers—can be properly characterized as operating with a "plurality of distributors" in the manner contemplated by the patents, which describe selecting among different distributors to fill a customer order. ('743 Patent, col. 9:23-43).
• Technical Question: The complaint alleges that the accused system generates "user-specific product offerings" based on customer data. (Compl. ¶12). A key factual question will be what evidence demonstrates that Lululemon's system specifically uses location information derived from an IP address to generate a distinct product offering, as required by the claims, rather than for other purposes like logistics, analytics, or general content localization.

V. Key Claim Terms for Construction

The Term: "plurality of distributors"

• Context and Importance: This term is foundational to the patents' asserted novelty over prior art single-merchant systems. The case's outcome may depend on whether Lululemon, a vertically integrated retailer, is found to use a "plurality of distributors" in the claimed sense. Practitioners may focus on this term because its construction will likely determine whether the accused system's architecture is within the scope of the claims.
• Intrinsic Evidence for a Broader Interpretation: The specification at times uses broader, related terms like "suppliers of products" and "individual vendors," which a plaintiff might argue supports a construction that includes a retailer's various manufacturing sources. ('743 Patent, col. 5:48-56).
• Intrinsic Evidence for a Narrower Interpretation: The patent's detailed description and Figure 5 depict a system where multiple distributors offer similar or overlapping products, and the system performs a "Distribution Selection" to choose one to fill an order based on criteria like profit margin or shipping speed. ('743 Patent, col. 9:8-43; Fig. 5). This suggests distinct commercial entities competing for a sale, a narrower concept than a single retailer's internal supply chain.

The Term: "user-specific product offering"

• Context and Importance: The definition of what constitutes an "offering" is critical to determining infringement. The question is whether any personalized product display meets this limitation or if a more specific, transactional offer is required.
• Intrinsic Evidence for a Broader Interpretation: The specification describes generating "customized portfolios" and "catalogs with different visual presentations," which could support a view that any dynamic tailoring of the user interface is an "offering." ('743 Patent, col. 5:16-17, col. 5:67-6:3).
• Intrinsic Evidence for a Narrower Interpretation: Dependent claims in both patents explicitly define the offering as including items like "a coupon, an electronic coupon, a promotional offer, an exclusive sale, an incentive, a rebate, and competitive pricing." ('846 Patent, col. 12:51-55). A defendant could argue these examples limit the scope of the independent claim's more general term to concrete, transactional proposals.

VI. Other Allegations

Indirect Infringement

• The complaint does not plead separate counts for indirect infringement. The allegations state Lululemon directly infringed by, among other things, "causing to be used the Accused Instrumentalities," language that can suggest induced infringement. (Compl. ¶30, ¶35). However, the complaint does not allege specific facts required to support a claim for indirect infringement, such as knowledge of the patents and intent to encourage infringement by others.

Willful Infringement

• The complaint does not contain an explicit allegation of willful infringement. It does, however, include a prayer for a declaration that the case is "exceptional under 35 U.S.C. § 285" and an award of attorneys' fees, which is the remedy for such a finding. (Compl., p. 9, ¶C). The complaint lacks specific factual allegations typically used to support willfulness, such as pre-suit knowledge of the patents.

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

• A core issue will be one of definitional scope: can the term "plurality of distributors," which the patent specification links to a multi-vendor selection process, be construed to read on the business model of a vertically integrated retailer like Lululemon that sells its own branded products sourced from multiple manufacturers? The resolution of this claim construction dispute may be dispositive.
• A key evidentiary question will be one of technical causation: what proof can the plaintiff provide to demonstrate that Lululemon’s e-commerce platform performs the specific step of "generat[ing]" a "user-specific product offering" as a direct result of using "location information derived from an IP address," as opposed to other forms of customer data or for other purposes permitted by the prior art?