Consolidated Transaction Processing LLC v. Patagonia Inc

I. Executive Summary and Procedural Information

• Parties & Counsel:
  • Plaintiff: Consolidated Transaction Processing LLC (Nevada)
  • Defendant: Patagonia, Inc. (California)
  • Plaintiff’s Counsel: DEVLIN LAW FIRM LLC
• Case Identification: 1:22-cv-06810, N.D. Ill., 12/05/2022
• Venue Allegations: Venue is asserted based on Defendant Patagonia, Inc. maintaining established places of business, specifically retail stores, within the Northern District of Illinois.
• Core Dispute: Plaintiff alleges that Defendant's e-commerce website and underlying transaction processing systems infringe patents related to generating user-specific product offerings by aggregating product data from multiple sources and using customer data.
• Technical Context: The technology concerns e-commerce systems that move beyond static, single-source retail models by dynamically creating personalized online shopping experiences based on aggregated product information and individual customer data.
• Key Procedural History: The patents-in-suit descend from a common application filed in 1999. U.S. Patent No. 8,712,846 was issued with a terminal disclaimer over its parent, U.S. Patent No. 8,396,743, meaning the two patents will expire on the same date. The complaint requests a declaration that the case is exceptional, but does not explicitly plead willfulness.

Case Timeline

Date	Event
1999-06-30	Earliest 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 limitations of both traditional retail and early e-commerce, which often operated by maintaining a proprietary inventory, leading to high costs, limited product selection, and static, one-size-fits-all customer experiences (Compl. ¶11; ’846 Patent, col. 2:63-3:14).
• The Patented Solution: The invention proposes a centralized transaction processing system that aggregates product data from a "plurality of distributors" and combines it with personal data received from customers (including location information derived from an IP address) to generate and send "user-specific product offerings" via automated messages (’846 Patent, Abstract; col. 4:10-52). This allows for dynamic catalog generation and personalized marketing without the need for a single, central inventory (Compl. ¶12).
• Technical Importance: This approach sought to improve e-commerce by enabling a single system to offer a wider range of products from multiple sources and to customize the shopping experience for individual users, thereby increasing efficiency and personalization (Compl. ¶14, ¶19).

Key Claims at a Glance

• The complaint asserts independent claim 1 and dependent claims 3 and 4 (Compl. ¶30).
• Independent Claim 1 requires:
  • 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 customer data includes location information derived from an IP address.
  • Generating, based at least in part on the customer data, user-specific product offerings.
  • Sending, by a computer, automated messages containing the user-specific product 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: As the parent patent sharing a specification with the ’846 patent, this patent addresses the same problems of costly inventory, limited geographic reach, and inflexible product offerings associated with traditional retail and early e-commerce models (’743 Patent, col. 1:22-2:20).
• The Patented Solution: The invention describes a distributed transaction processing system that integrates an Online Shopping System, an Order Processing System, and a Catalog Builder/Price Modeler (’743 Patent, Fig. 1). This architecture is designed to receive product data from multiple distributors/vendors and customer data to generate targeted offers, thereby improving upon static online catalogs (Compl. ¶12; ’743 Patent, col. 3:10-4:39).
• Technical Importance: The system described provides a framework for creating a more dynamic and responsive e-commerce environment, where product offerings and pricing can be adjusted in real-time based on a variety of data inputs (Compl. ¶15, ¶19).

Key Claims at a Glance

• The complaint asserts independent claim 1 and dependent claim 4 (Compl. ¶35).
• Independent Claim 1 requires:
  • 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 customer data includes location information derived from an IP address.
  • Generating, based at least in part on the personal information concerning a customer location, at least one user-specific product offering.
  • Sending, by a computer, automated messages containing the user-specific product offering to customers.

III. The Accused Instrumentality

• Product Identification: The complaint identifies the "Accused Instrumentalities" as Patagonia’s e-commerce website and the underlying systems used to process transactions and customize the online shopping experience (Compl. ¶30, ¶35).
• Functionality and Market Context: The complaint alleges that Patagonia operates a commercially significant e-commerce business that provides "user-specific customization" (Compl. ¶20). The complaint does not, however, provide specific technical details about the operation of Patagonia’s backend systems. It asserts that Patagonia’s e-commerce activities fall within the scope of the patented methods, but defers a detailed element-by-element breakdown to exhibits not included with the filed complaint (Compl. ¶30, ¶35).

IV. Analysis of Infringement Allegations

The complaint references preliminary claim charts in Exhibits 3 and 4, which were not provided with the complaint document. Therefore, a detailed element-by-element analysis cannot be performed based on the available information. The general infringement theory alleges that Patagonia's e-commerce platform performs the core steps of the asserted claims by receiving product and customer data and using it to generate and deliver customized product offerings (Compl. ¶23).

No probative visual evidence provided in complaint.

• Identified Points of Contention:
  • Scope Questions: A primary question will be whether Patagonia, as a vertically integrated retailer primarily selling its own branded goods, constitutes a system that "receiv[es] product data... from a plurality of distributors." The defense may argue that Patagonia functions as a single distributor, placing it outside the patent's scope, which was designed to solve the problem of aggregating data from multiple, separate entities.
  • Technical Questions: The complaint does not specify how Patagonia’s system allegedly uses "location information derived from an IP address" to "generat[e]... user-specific product offerings." A key factual dispute will likely be whether Patagonia's system uses IP-derived location data for anything more than ancillary functions (e.g., shipping estimates) and whether such use constitutes "generating" an "offering" as required by the claims.

V. Key Claim Terms for Construction

• The Term: "user-specific product offering"

  • Context and Importance: This term defines the output of the claimed method and is central to the scope of infringement. Its construction will determine whether a wide range of marketing activities (e.g., a single targeted email, a dynamic price) or only a comprehensive, customized catalog or interface falls within the claims.
  • Intrinsic Evidence for a Broader Interpretation: The specification provides a non-exhaustive list of examples, including "targeted advertising, purchase incentives such as electronic coupons and rebates, specialized promotions and competitive pricing" (’846 Patent, col. 5:17-20). This suggests the term could encompass various forms of personalized marketing.
  • Intrinsic Evidence for a Narrower Interpretation: The specification also describes generating "multiple catalogs from the same system" and displaying different "user specific interfaces" for different user types (e.g., a student-priced catalog vs. a corporate-priced one) (’846 Patent, col. 5:61-6:16). This language could support an argument that the term requires the generation of a more substantial, customized browsing experience, not just a single promotional message.

• The Term: "plurality of distributors"

  • Context and Importance: This term is foundational to the patent's purported advance over the prior art of single-merchant systems. Infringement hinges on whether the accused system receives product data from more than one entity that qualifies as a "distributor." Practitioners may focus on this term because it presents a potentially clear-cut non-infringement position for a vertically integrated retailer like Patagonia.
  • Intrinsic Evidence for a Broader Interpretation: The patent's block diagram labels the source of product data as "Distributors/Vendors," and the specification later refers to "suppliers of products" and "individual vendors" (’743 Patent, Fig. 1; col. 5:50-56). Plaintiff may argue this supports a broad definition that could include a company's own distinct warehouses, manufacturing arms, or regional business units.
  • Intrinsic Evidence for a Narrower Interpretation: The background section explicitly contrasts the invention with prior art e-commerce businesses that "operate by maintaining an inventory" in their own warehouses (’846 Patent, col. 3:8-14). This context suggests "distributors" refers to distinct, third-party commercial entities, not internal divisions of a single company.

VI. Other Allegations

• Indirect Infringement: The complaint does not include separate counts for indirect infringement. It alleges Defendant is liable for "causing to be used the Accused Instrumentalities" (Compl. ¶30, ¶35), but does not plead the specific factual basis for knowledge and intent required to sustain a claim for induced infringement.
• Willful Infringement: The complaint does not explicitly allege "willful infringement." It does, however, request a "declaration that this case is exceptional under 35 U.S.C. § 285" (Compl. p. 9, ¶C). While willful infringement can be a basis for an exceptional case finding, the complaint does not allege any facts regarding pre-suit or post-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 is central to the patent's stated purpose of aggregating data from multiple sources, be construed to read on the operations of a vertically integrated retailer like Patagonia that primarily sells its own products?
• A key evidentiary question will be one of technical implementation: what evidence will discovery reveal about whether Patagonia’s e-commerce platform actually uses "location information derived from an IP address" for the specific purpose of "generating... user-specific product offerings," as opposed to ancillary functions like logistics or regional pricing?
• The outcome may also depend on the construction of "user-specific product offering": will the court interpret this term broadly to cover any personalized marketing communication, or will it require the generation of a distinct, customized catalog or user interface as described in the patent's preferred embodiments?