Consolidated Transaction Processing LLC v. Tapestry Inc

I. Executive Summary and Procedural Information

• Parties & Counsel:
  • Plaintiff: Consolidated Transaction Processing LLC (Nevada)
  • Defendant: Tapestry, Inc. (Maryland)
  • Plaintiff’s Counsel: Devlin Law Firm LLC
• Case Identification: 1:22-cv-06806, N.D. Ill., 12/05/2022
• Venue Allegations: Venue is alleged to be proper based on Defendant maintaining established places of business in the district, specifically citing Coach retail stores in Chicago and Skokie, Illinois.
• Core Dispute: Plaintiff alleges that Defendant’s e-commerce systems and methods infringe patents related to dynamically generating and sending targeted, user-specific product offerings by aggregating data from multiple sources.
• Technical Context: The technology concerns e-commerce platforms that personalize customer experiences by collecting product data from various distributors and customer data to create customized electronic catalogs and offers.
• Key Procedural History: The patents-in-suit share a specification and claim priority back to a 1999 application. The complaint does not mention any prior litigation, inter partes review (IPR) proceedings, or licensing history related to these patents.

Case Timeline

Date	Event
1999-06-30	Priority Date for ’846 and ’743 Patents
2013-03-12	U.S. Patent No. 8,396,743 Issued
2014-04-29	U.S. Patent No. 8,712,846 Issued
2022-12-05	Complaint Filed

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 state of commerce in the late 1990s, noting the limitations of traditional retail models like brick-and-mortar stores (limited inventory, geographic constraints) and mail-order catalogs (static, costly to update) (Compl. ¶11; ’846 Patent, col. 1:24-2:2). Early e-commerce systems improved on this but were still limited, often operating like digital catalogs by maintaining their own inventory, which was inefficient for rapidly evolving products like computer hardware (’846 Patent, col. 3:6-23).
• The Patented Solution: The invention proposes a centralized, computer-implemented system that overcomes these issues by aggregating data from two distinct sources: product data from a "plurality of distributors" and customer data, including personal and location information (e.g., derived from an IP address) (’846 Patent, Abstract; col. 4:26-34). The system uses this combined data to dynamically generate "user-specific product offerings"—such as customized catalogs or promotions—and sends them to customers via automated messages (’846 Patent, col. 12:41-52). This allows for a more personalized and flexible e-commerce experience without the need for the merchant to hold all inventory directly.
• Technical Importance: This approach aimed to move e-commerce beyond a static, one-size-fits-all model toward a dynamic, personalized system that could tailor offerings and pricing in near real-time based on both supply-side (distributor data) and demand-side (customer data) information (Compl. ¶¶14-15).

Key Claims at a Glance

• The complaint asserts at least independent claim 1 and dependent claims 3 and 4 (Compl. ¶30).
• Independent Claim 1 requires:
  • A computer-implemented method for targeted product offering.
  • 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, where the data includes location information derived from an IP address.
  • Generating, at least in part from the customer data, user-specific product offerings.
  • Sending, by a computer, automated messages comprising the user-specific product offerings to customers.
• The complaint reserves the right to assert additional claims (Compl. ¶30).

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 a related patent sharing a common specification with the ’846 patent, the ’743 Patent addresses the same technical problems of static, inventory-heavy, and non-personalized e-commerce systems prevalent in the late 1990s (’743 Patent, col. 2:62-3:23).
• The Patented Solution: The ’743 Patent describes the same core system for aggregating distributor and customer data to create personalized offerings (’743 Patent, Abstract). The system architecture, depicted in Figure 1, includes an Online Shopping System, an Order Processing System, a Catalog Builder/Price Modeler, and a central database, all designed to automate the process of creating and delivering targeted e-commerce experiences (’743 Patent, col. 4:11-25; Fig. 1).
• Technical Importance: The invention is presented as a solution to the technical problem of automating targeted advertising and product offerings in an online context, improving upon prior art systems that used the internet merely as a replacement for paper catalogs (Compl. ¶¶21-22).

Key Claims at a Glance

• The complaint asserts at least independent claim 1 and dependent claim 4 (Compl. ¶35).
• Independent Claim 1 requires:
  • A computer-implemented method for targeted product offering.
  • 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, where the data includes location information derived from an IP address.
  • Generating, at least in part from personal information concerning a customer location, a user-specific product offering.
  • Sending, by a computer, automated messages comprising the user-specific product offering to customers.
• The complaint reserves the right to assert additional claims (Compl. ¶35).

III. The Accused Instrumentality

Product Identification

The complaint does not identify a specific product by name. It refers generally to "the Accused Instrumentalities," which appear to be Defendant Tapestry, Inc.'s e-commerce systems, websites, and associated backend processes for its brands, such as Coach (Compl. ¶¶7, 30, 35).

Functionality and Market Context

The complaint alleges that Tapestry's e-commerce operations perform the functions recited in the patent claims, such as offering targeted products over a communications network, receiving product and customer data, and generating user-specific product offerings conveyed through automated messages (Compl. ¶12). However, the complaint provides very little specific detail about how Tapestry's systems technically operate. No probative visual evidence provided in complaint. The complaint notes the commercial importance of user-specific customization for businesses selling products online (Compl. ¶20).

IV. Analysis of Infringement Allegations

The complaint references "preliminary and exemplary claim charts" in Exhibits 3 and 4, which were not provided with the filed complaint document (Compl. ¶¶30, 35). In the absence of these charts, the infringement theory is based on the narrative allegations in the complaint.

Plaintiff’s infringement theory appears to be that Tapestry’s standard e-commerce operations map directly onto the elements of the asserted claims. The complaint alleges that Tapestry’s systems necessarily receive product data (from its own warehouses or other sources, constituting a "plurality of distributors") and customer data (including personal information and potentially location data derived from users' IP addresses) (Compl. ¶12). It further alleges that this data is used to "generate at least one user-specific product offering" that is then "conveyed to customers using automated messages," such as through personalized web pages or promotional emails (Compl. ¶12).

• Identified Points of Contention:
  • Technical Questions: The complaint's infringement allegations are conclusory and lack specific technical evidence. A primary point of contention will be whether Plaintiff can demonstrate that Tapestry's systems perform the specific functions claimed. For instance, what evidence shows that Tapestry generates offerings "at least in part from the personal information concerning a customer location" that is "derived from an IP address," as required by claim 1 of the ’743 patent, rather than from other data like purchase history or browsing activity?
  • Scope Questions: A central dispute may arise over the scope of the term "plurality of distributors." Does Tapestry's internal supply chain, which may involve multiple warehouses or fulfillment centers, qualify as a "plurality of distributors," or does the term require distinct, third-party corporate entities as contemplated in the patent's 1999 context?

V. Key Claim Terms for Construction

For U.S. Patent 8,712,846 and 8,396,743

• The Term: "plurality of distributors"

• Context and Importance: This term appears in independent claim 1 of both asserted patents and is foundational to the claimed invention, which is premised on aggregating product data from multiple distinct sources. The viability of the infringement claim may depend on whether Tapestry's supply chain infrastructure can be characterized as meeting this limitation.

• Intrinsic Evidence for Interpretation:

  • Evidence for a Broader Interpretation: The specification does not provide a formal definition. It mentions that for suppliers without advanced communication capabilities, "small distributors or individual vendors may operate through a secure web site" to provide their information, suggesting "distributors" could encompass a wide range of suppliers, not just large, automated ones (’846 Patent, col. 5:53-59).
  • Evidence for a Narrower Interpretation: The patent's detailed description consistently discusses selecting a single distributor from multiple options based on competing factors like price, availability, and shipping speed (’846 Patent, col. 9:7-44). This context, along with diagrams like Figure 5 showing "DISTRIBUTOR 1," "DISTRIBUTOR 2," etc. as separate functional blocks, suggests the inventors contemplated distinct, independent entities rather than different warehouses of a single parent company.

• The Term: "user-specific product offering"

• Context and Importance: This term, also in claim 1 of both patents, defines the ultimate output of the claimed method. Its construction will determine what level of personalization is required to infringe. Practitioners may focus on this term because modern e-commerce uses many forms of personalization, and the case could turn on whether the accused functionality is the specific type of personalization claimed.

• Intrinsic Evidence for Interpretation:

  • Evidence for a Broader Interpretation: The specification describes generating "customized portfolios based on purchase patterns," "targeted advertising, purchase incentives," and "specialized promotions" (’846 Patent, col. 5:15-20). This language could be argued to cover a wide array of common personalization features found on e-commerce sites.
  • Evidence for a Narrower Interpretation: The claims explicitly link the generation of the offering to specific inputs, particularly "location information derived from an IP address" (’846 Patent, cl. 1). Further, the specification provides concrete examples of distinct user-specific interfaces, such as showing one catalog with "academic pricing" to a student and another with "corporate discounts" to a business person, suggesting a structured and deliberate segmentation rather than generic personalization (’846 Patent, col. 6:6-16).

VI. Other Allegations

• Indirect Infringement: The complaint states that Tapestry infringed by "making, using, providing, and/or causing to be used the Accused Instrumentalities" (Compl. ¶30). The "causing to be used" language suggests a potential claim for induced infringement. However, the complaint does not plead a separate count for indirect infringement or allege specific facts to support the requisite knowledge and intent.
• Willful Infringement: The complaint does not use the term "willful infringement." However, the prayer for relief requests a "declaration that this case is exceptional under 35 U.S.C. § 285" and an award of attorneys' fees (Compl. p. 9, ¶C). The complaint does not allege any facts that would typically support such a finding, such as pre-suit knowledge of the patents or egregious litigation conduct.

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

1. A core issue will be one of definitional scope: can the term "plurality of distributors", which in the patent’s 1999 context appears to contemplate aggregating data from multiple independent vendors, be construed to read on the integrated supply chain and fulfillment centers of a single, modern retailer like Tapestry?

2. A key evidentiary question will be one of technical proof: given the complaint's lack of specific evidence, can the Plaintiff demonstrate through discovery that Tapestry’s e-commerce platform performs the precise, multi-step method of Claim 1? Specifically, does it generate offerings that are "user-specific" because they are based on "location information derived from an IP address," or is the personalization driven by other, unclaimed factors?

3. The case may also raise a significant question under 35 U.S.C. § 101 regarding patent eligibility: do the claims, which are directed to processing business and customer information to create targeted offers, represent a patent-eligible improvement to computer functionality or merely recite an abstract idea of targeted marketing performed on a generic computer? The complaint preemptively argues the claims are not abstract and recite an inventive concept (Compl. ¶¶22-26).