Consolidated Transaction Processing LLC v. Saks Fifth Avenue LLC

I. Executive Summary and Procedural Information

• Parties & Counsel:
  • Plaintiff: Consolidated Transaction Processing LLC (Nevada)
  • Defendant: Saks Fifth Avenue LLC (Massachusetts)
  • Plaintiff’s Counsel: Devlin Law Firm LLC
• Case Identification: 1:22-cv-06811, N.D. Ill., 12/05/2022
• Venue Allegations: Venue is asserted based on Defendant allegedly maintaining an established place of business in the district, specifically a retail store in Chicago, Illinois.
• Core Dispute: Plaintiff alleges that Defendant’s e-commerce platform and associated systems infringe two patents related to aggregating product and customer data to generate and send user-specific product offerings.
• Technical Context: The technology concerns e-commerce systems that create dynamic, personalized shopping experiences by integrating product data from multiple third-party distributors with customer data, including location information.
• Key Procedural History: The patents-in-suit descend from a patent application filed in 1999, indicating a long prosecution history. The complaint anticipates and attempts to rebut potential challenges to patent eligibility under 35 U.S.C. § 101 by arguing the claims are rooted in technology and solve specific technical problems, rather than merely automating a conventional business practice.

Case Timeline

Date	Event
1999-06-30	Earliest Priority Date for '846 & '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 Apr. 29, 2014)

The Invention Explained

• Problem Addressed: The patent’s background section identifies significant disadvantages with traditional retail models (both store-based and catalog), including high inventory costs, limited geographic reach, and an inflexible, non-personalized customer experience (Compl. ¶11; ’846 Patent, col. 1:26-2:2). It notes that early e-commerce businesses often replicated these flaws by maintaining their own warehouses and using the internet primarily as an advertising medium ('846 Patent, col. 2:63-3:14).
• The Patented Solution: The invention describes a computer-implemented method where a central system receives product data from a plurality of different distributors and customer data from a plurality of customers. A key aspect is using customer location information, derived from an IP address, to help generate "user-specific product offerings." These personalized offerings are then sent to customers via automated messages ('846 Patent, Abstract; col. 12:36-53). This allows for dynamic catalog generation and pricing without the need for the central merchant to hold inventory ('846 Patent, col. 5:26-40).
• Technical Importance: The claimed system architecture enabled a more scalable and capital-efficient e-commerce model by aggregating a wide range of products from multiple suppliers and creating a personalized, dynamic interface for each user (Compl. ¶14, 19).

Key Claims at a Glance

• The complaint asserts independent claim 1 and dependent claims 3 and 4 (Compl. ¶30).
• The essential elements of independent claim 1 are:
  • A computer-implemented method for targeted product offering, comprising:
  • 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 a customer's IP address;
  • generating, at least in part from the customer data, user-specific product offerings; and
  • sending, by a computer, automated messages containing the user-specific product offerings to the customers.

U.S. Patent No. 8,396,743 - "Sending Targeted Product Offerings Based on Personal Information" (Issued Mar. 12, 2013)

The Invention Explained

• Problem Addressed: The patent addresses the same technical problems as its continuation, the '846 Patent: the high costs and operational inefficiencies of traditional retail and early, inventory-holding e-commerce models (Compl. ¶11; ’743 Patent, col. 2:65-3:14).
• The Patented Solution: The invention details a transaction processing system that integrates product data from multiple distributors and personal information from customers to improve the online shopping experience ('743 Patent, col. 4:50-5:6). It specifically describes generating different catalogs for different user types (e.g., student vs. corporate discounts) and using a rule-based algorithm to dynamically generate prices based on distributor cost and desired profit margins ('743 Patent, col. 5:61-6:29). Similar to the '846 Patent, it claims the use of customer location data from an IP address to generate offerings.
• Technical Importance: This technology provided a framework for moving beyond static online product listings to a dynamic marketplace where offerings, catalogs, and even pricing could be tailored to individual users in real-time (Compl. ¶15-16).

Key Claims at a Glance

• The complaint asserts independent claim 1 and dependent claim 4 (Compl. ¶35).
• The essential elements of independent claim 1 are:
  • A computer-implemented method for targeted product offering, comprising:
  • receiving product data for a plurality of products from a plurality of distributors;
  • receiving customer data, including location information derived from the customer's IP address;
  • generating, at least in part from the personal information concerning a customer location, at least one user-specific product offering; and
  • sending, by a computer, automated messages containing the at least one user-specific product offering to one or more customers.

III. The Accused Instrumentality

Product Identification

The "Accused Instrumentalities" are Defendant's e-commerce operations, including the Saks Fifth Avenue website (saks.com), mobile applications, and related back-end systems for processing transactions and managing product and customer data (Compl. ¶30, 35).

Functionality and Market Context

The complaint alleges that Saks operates an e-commerce platform that aggregates product information from a "plurality of distributors" or vendors (Compl. ¶12, 14). This platform allegedly receives customer data, including personal and location information, and uses it to "dynamically display user-specific interfaces" and generate "customized portfolios" for targeted advertising and promotions (Compl. ¶15-16). The complaint positions these features as crucial for competing in the modern online retail market (Compl. ¶20).

IV. Analysis of Infringement Allegations

The complaint references preliminary claim charts in Exhibits 3 and 4, which were not provided with the filed document. The infringement theory is therefore summarized from the complaint's narrative allegations.

'846 Patent and '743 Patent Infringement Allegations

The core infringement theory is parallel for both patents. The complaint alleges that the Accused Instrumentalities directly infringe at least claim 1 of each patent by performing each claimed step. Specifically, it alleges that Saks’s system (1) receives product data from multiple third-party suppliers, which it characterizes as a "plurality of distributors" (Compl. ¶12, 14); (2) receives customer data, including personal information such as location data that can be derived from a user's IP address (Compl. ¶12, 16); (3) uses this combined data to "dynamically generate" and "generate electronic catalogs of user-specific product offerings" (Compl. ¶15, 21); and (4) sends these offerings to customers via "automated messages," which may be interpreted as the customized web pages displayed to users or targeted marketing communications (Compl. ¶12).

Identified Points of Contention

• Scope Questions: A central dispute may arise over the meaning of "distributors." The patents describe a system that can actively select a distributor from multiple options to fill an order, potentially for an identical product ('743 Patent, col. 9:8-44). The question is whether Saks's relationship with its brand partners or marketplace vendors, who may be the exclusive source for their products on the site, aligns with the patent's description of "distributors."
• Technical Questions: The claims require generating an offering based, at least in part, on "location information derived from an IP address." A key factual question will be what evidence demonstrates that Saks's system specifically uses this data point to generate a "user-specific product offering," as opposed to relying on other data like purchase history, browsing activity, or user-provided preferences. The link between this specific input and the resulting "offering" will be a focus.

No probative visual evidence provided in complaint.

V. Key Claim Terms for Construction

• The Term: "distributors"

  • Context and Importance: The applicability of the claims to Saks’s business model hinges on this term. Practitioners may focus on this term because if Saks’s third-party suppliers are not "distributors" within the construed meaning of the claim, a core element of the infringement allegation may fail.
  • Intrinsic Evidence for a Broader Interpretation: The patent specification uses the term "Distributors/Vendors" in Figure 1 and discusses "small distributors or individual vendors," which could support a broad definition encompassing any third-party supplier of goods ('743 Patent, Fig. 1; col. 5:53-54).
  • Intrinsic Evidence for a Narrower Interpretation: The detailed description explains a "Distributor Selection sub-system" that polls multiple distributors for availability and price to determine which one will "fill the order" ('743 Patent, col. 9:8-25). This could support a narrower definition requiring a system that facilitates direct competition among suppliers for the same order, which may differ from Saks's operating model.

• The Term: "user-specific product offering"

  • Context and Importance: The definition of what constitutes an "offering" is critical. If it is construed narrowly, many of Saks's website personalization features may fall outside the claim scope.
  • Intrinsic Evidence for a Broader Interpretation: The specification describes generating "customized portfolios based on purchase patterns" and displaying catalogs with "products appropriate for students with academic pricing," suggesting that any form of personalized product presentation could be considered an "offering" ('743 Patent, col. 5:16-20, 5:61-6:16).
  • Intrinsic Evidence for a Narrower Interpretation: The claim language requires "sending... automated messages comprising the at least one user-specific product offering," which could be argued to require a discrete, transmitted communication (like a targeted email) rather than simply a dynamically rendered webpage ('743 Patent, col. 12:47-52). The abstract also presents generating the offering and sending the message as distinct steps, potentially supporting a narrower view.

VI. Other Allegations

Willful Infringement

The complaint does not contain an explicit allegation of willful infringement. It does not allege that Defendant had pre- or post-suit knowledge of the patents-in-suit. However, the prayer for relief requests a "declaration that this case is exceptional under 35 U.S.C. § 285" and an award of attorney's fees (Compl. p. 9, ¶C).

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

• A core issue will be one of definitional scope: Do Saks’s third-party brand partners and marketplace vendors, who provide product data and often ship directly to consumers, meet the definition of "distributors" as contemplated by the patents, particularly where the specification describes a system that actively selects from multiple distributors to fill a single order?
• A key evidentiary question will be one of causal linkage: What evidence will Plaintiff present to demonstrate that Saks's platform specifically uses "location information derived from an IP address" to "generate" a "user-specific product offering," and that this specific offering is then "sent" to the user in an "automated message," as required by the sequential logic of the asserted claims?
• A foundational challenge will likely concern patentability: Given the 1999 priority date, the court will have to consider whether the claimed combination of aggregating products from multiple suppliers, personalizing content based on user data like IP addresses, and creating dynamic e-commerce catalogs was a non-obvious technical solution to a technical problem, or an unpatentable abstract idea of applying known business practices to the internet.