Consolidated Transaction Processing LLC v. Container Store Group Inc

I. Executive Summary and Procedural Information

• Parties & Counsel:
  • Plaintiff: Consolidated Transaction Processing LLC (Nevada)
  • Defendant: The Container Store Group, Inc. (Maryland)
  • Plaintiff’s Counsel: DEVLIN LAW FIRM LLC
• Case Identification: 1:22-cv-06807, N.D. Ill., 12/05/2022
• Venue Allegations: Venue is alleged to be proper based on the Defendant operating established places of business, specifically retail stores, within the Northern District of Illinois.
• Core Dispute: Plaintiff alleges that Defendant’s e-commerce platform infringes patents related to methods for processing online transactions by receiving product data from multiple distributors and using customer-specific information to generate targeted product offerings.
• Technical Context: The technology at issue concerns dynamic e-commerce systems that aggregate product information from various sources to create a personalized shopping experience, a foundational aspect of modern online retail.
• Key Procedural History: The patents-in-suit claim priority to an application filed in 1999, indicating a long prosecution history. The complaint does not mention any prior litigation or post-grant proceedings involving these patents.

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 (’846 Patent)

The Invention Explained

• Problem Addressed: The patent’s background section identifies significant disadvantages with traditional commerce models. Store-based retail is constrained by physical shelf space and costly inventory, while catalog-based sales are inflexible and expensive to produce and distribute (’846 Patent, col. 1:29-67). Early e-commerce often replicated these issues by maintaining its own warehouses and using the internet simply as a new form of static catalog (’846 Patent, col. 3:1-14).
• The Patented Solution: The invention describes a computer-implemented system that moves beyond these limitations. It proposes receiving product data directly from a "plurality of distributors" and customer data from a "plurality of customers" over a network (’846 Patent, Abstract). The system then uses this combined data, including personal information like a customer's location derived from their IP address, to generate and send "user-specific product offerings" via automated messages (’846 Patent, col. 12:41-53). This approach aims to replace a static, one-size-fits-all catalog with a dynamic, personalized, and inventory-less e-commerce engine.
• Technical Importance: This technology represents a shift from a simple online storefront to a more sophisticated, data-driven platform capable of aggregating supply-side information and tailoring demand-side offerings in real-time.

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 method with the following key steps:
  • Receiving product data for multiple products from multiple distributors over a communications network.
  • Receiving customer data from multiple customers, where the data includes location information derived from a customer's IP address.
  • Generating, based at least in part on the customer data, a "user-specific product offering."
  • Sending automated messages containing the user-specific product offering to the 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 (’743 Patent)

The Invention Explained

• Problem Addressed: The ’743 Patent, from the same family as the ’846 Patent, addresses the identical technical problem: the inefficiencies of traditional retail and early e-commerce models that relied on self-maintained inventory and static product presentations (’743 Patent, col. 1:24-3:42).
• The Patented Solution: The solution is a centralized transaction processing system that integrates product data from multiple third-party distributors with personal information gathered from customers (’743 Patent, Abstract). A key feature is the use of customer location data, derived from an IP address, to help generate "user-specific product offerings," which are then sent to customers via automated messages (’743 Patent, col. 12:36-52). The system is designed to enable dynamic pricing and catalog generation, for instance, by creating different product catalogs for different user types, such as students versus business professionals (’743 Patent, col. 6:6-16).
• Technical Importance: The invention provides a framework for an e-commerce platform that can adapt its offerings and pricing based on both real-time supplier data and specific customer attributes.

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 method with the following key steps:
  • Receiving product data for a plurality of products from a plurality of distributors.
  • Receiving customer data, including location information derived from a customer's IP address.
  • Generating, based at least in part on personal information related to customer location, a "user-specific product offering."
  • Sending automated messages containing the offering to one or more customers.
• The complaint reserves the right to assert additional claims (Compl. ¶35).

III. The Accused Instrumentality

Product Identification

• The complaint identifies the accused instrumentalities as the e-commerce operations of Defendant The Container Store, including its website and related backend systems used for online business transactions (Compl. ¶¶19-20, 30, 35).

Functionality and Market Context

• The complaint alleges that Defendant operates an e-commerce business that provides a wide range of product offerings to customers over the internet (Compl. ¶19). The plaintiff's theory suggests this system functions by aggregating product information from multiple sources and using customer information to facilitate online sales (Compl. ¶¶12, 14). The complaint frames this online customization as a crucial competitive differentiator in the modern retail market (Compl. ¶20). No probative visual evidence provided in complaint.

IV. Analysis of Infringement Allegations

The complaint references preliminary and exemplary claim charts in Exhibits 3 and 4, which were not attached to the publicly filed complaint. Therefore, a detailed element-by-element analysis based on the plaintiff's explicit infringement contentions is not possible. The infringement theory must be inferred from the narrative allegations in the complaint.

The complaint's narrative alleges that The Container Store’s e-commerce platform performs the steps of the asserted claims. The theory suggests that when a user accesses the defendant's website, the system receives product data from its various suppliers (alleged to be a "plurality of distributors") and receives customer data from the user (including an IP address, from which location can be derived). The system then allegedly uses this information to generate a "user-specific product offering"—the webpage displaying products for sale—which is conveyed to the user's computer. This sequence of operations is alleged to constitute direct infringement of the methods claimed in the ’846 and ’743 Patents (Compl. ¶¶12, 30, 35).

• Identified Points of Contention:
  • Scope Questions: A primary question may be whether the defendant’s supply chain constitutes a "plurality of distributors" as taught in the patents. The patents describe a system capable of dynamically selecting a distributor for a product based on factors like price or availability (’846 Patent, col. 9:8-26; Fig. 5). The dispute may turn on whether the accused system performs such a dynamic selection or simply sources different products from a static list of various suppliers.
  • Technical Questions: A key technical question will likely be how customer location data is used. The claims require generating a "user-specific product offering" based "at least in part" on this location information. A central issue for the court may be whether the accused system uses location data to substantively influence or create the product offering itself, or if that data is merely used for logistical functions (e.g., calculating shipping costs or taxes) after a product has already been selected by the user.

V. Key Claim Terms for Construction

• The Term: "plurality of distributors"

• Context and Importance: This term is foundational to the patent's architecture, which distinguishes itself from single-source or self-inventoried e-commerce. The outcome of the infringement analysis may depend heavily on whether The Container Store's network of suppliers falls within the construed scope of this term.

• Intrinsic Evidence for Interpretation:

  • Evidence for a Broader Interpretation: The specification refers to "individual vendors" and "other suppliers of products that may not have such communication capabilities," which could support a broad definition that includes any third-party source of products (’846 Patent, col. 5:50-57).
  • Evidence for a Narrower Interpretation: The patent's detailed description and Figure 5 illustrate a "Distributor Selection Logic" module that chooses between multiple distributors, potentially for the same product, based on various criteria (’846 Patent, col. 9:8-43; Fig. 5). This could support a narrower construction requiring a system that actively and dynamically selects from among competing distributors, rather than one that simply has various suppliers for its different products.

• The Term: "user-specific product offering"

• Context and Importance: This term defines the output of the claimed method. Practitioners may focus on this term because its construction will determine what level of personalization is required to infringe. The dispute will likely concern whether a standard product webpage qualifies, or if more active tailoring is necessary.

• Intrinsic Evidence for Interpretation:

  • Evidence for a Broader Interpretation: The claim language requires the offering to be generated "at least in part" from customer data, which a party could argue is met by any webpage that is dynamically generated for a specific user session, even if the core product content is generic.
  • Evidence for a Narrower Interpretation: The specification provides examples of significantly more tailored offerings, such as generating "customized portfolios based on purchase patterns" or displaying different catalogs and pricing for different user types (e.g., "students with academic pricing" vs. "business person" with "corporate discounts") (’846 Patent, col. 5:16-20; col. 6:6-16). This could support a narrower definition requiring the product selection, pricing, or presentation to be substantively altered based on the user's specific data.

VI. Other Allegations

• Indirect Infringement: The complaint does not plead specific facts to support claims for induced or contributory infringement. The infringement counts are limited to allegations of direct infringement (Compl. ¶¶ 30, 35).
• Willful Infringement: The complaint does not include an explicit count for willful infringement or allege that Defendant had pre- or post-suit knowledge of the patents. However, the prayer for relief includes a request for a declaration that the case is "exceptional under 35 U.S.C. § 285" and an award of attorneys' fees, which is typically predicated on a finding of willful infringement or other litigation misconduct (Compl. Prayer for Relief C).

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

• A core issue will be one of definitional scope: does The Container Store’s sourcing of products from its various suppliers meet the claimed requirement of receiving data from a "plurality of distributors," particularly as that term is described in the patents’ preferred embodiments which teach dynamic, multi-source selection for products?
• A key evidentiary question will be one of functional causality: does the accused e-commerce platform actually use a customer's location data (derived from an IP address) to "generate" the "user-specific product offering" as required by the claims, or is that location data used only for collateral purposes, such as calculating shipping and taxes, after a generic offering has already been presented?
• Finally, the case may raise a question of patent eligibility: given the 1999 priority date, the defense may challenge the claims as being directed to the abstract idea of targeted marketing, raising the question of whether the claims recite a sufficient inventive concept that is "deeply rooted in computerized transaction processing" as the complaint alleges (Compl. ¶22).