Consolidated Transaction Processing LLC v. Shoe Carnival Inc

I. Executive Summary and Procedural Information

• Parties & Counsel:
  • Plaintiff: Consolidated Transaction Processing LLC (Nevada)
  • Defendant: Shoe Carnival, Inc. (Indiana)
  • Plaintiff’s Counsel: DEVLIN LAW FIRM LLC
• Case Identification: 1:22-cv-06813, N.D. Ill., 12/05/2022
• Venue Allegations: Plaintiff alleges venue is proper in the Northern District of Illinois because Defendant maintains established places of business, specifically retail stores, within the district.
• Core Dispute: Plaintiff alleges that Defendant’s e-commerce system for online sales infringes patents related to methods for aggregating product data from multiple sources and generating targeted product offerings based on customer information.
• Technical Context: The technology at issue addresses systems for e-commerce that move beyond a single-retailer inventory model by creating a centralized platform to dynamically manage product data from various distributors and personalize the shopping experience for users.
• Key Procedural History: The patents-in-suit claim priority back to an application filed in 1999, positioning the inventions in the early era of e-commerce development. The complaint dedicates several paragraphs to arguing that the claimed inventions represent a patent-eligible technological solution and not merely an abstract business idea, suggesting an anticipation of challenges under 35 U.S.C. § 101.

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 Issues
2014-04-29	U.S. Patent No. 8,712,846 Issues
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 describes the limitations of traditional commerce models, including brick-and-mortar retail and catalog sales, which suffered from high inventory costs, limited geographic reach, and an inability to provide personalized, dynamic offerings (ʼ846 Patent, col. 1:24-2:20). Early e-commerce often replicated these issues by operating from a single, warehoused inventory (ʼ846 Patent, col. 3:8-14).
• The Patented Solution: The invention describes a computer-implemented system that functions as a central transaction processor, overcoming prior art limitations by receiving product data from a "plurality of distributors" and customer data (including location derived from an IP address) to generate and send "user-specific product offerings" via automated messages (ʼ846 Patent, Abstract; col. 4:11-25). The system architecture, depicted in Figure 1, includes a central database and a "Catalog Builder/Price Modeler" to create dynamic electronic catalogs (ʼ846 Patent, col. 4:57-66; FIG. 1).
• Technical Importance: The claimed invention represents a technological shift from static, inventory-bound e-commerce to a more flexible, data-driven model capable of aggregating supply from multiple sources and personalizing offerings to customers in real-time (Compl. ¶14).

Key Claims at a Glance

• The complaint asserts independent claim 1 and dependent claims 3 and 4 (Compl. ¶30).
• Independent Claim 1 requires:
  • A computer-implemented method for targeted product offering, comprising:
  • receiving product data for a plurality of products from a plurality of distributors for the products via a communications network;
  • receiving customer data from a plurality of customers, the customer data comprising location information associated with customers, the location information derived from an IP address associated with one or more of the customers;
  • generating, at least in part from the customer data, user-specific product offerings from the plurality of products; and
  • sending, by a computer, automated messages comprising the user-specific product offerings to the one or more 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 ’743 Patent, sharing a nearly identical specification with the ’846 Patent, identifies the same problems of inefficiency, high cost, and lack of personalization in pre-existing retail and e-commerce models (ʼ743 Patent, col. 2:63-3:21).
• The Patented Solution: The patent describes a method and system for offering targeted products by receiving product data from multiple distributors and personal information from customers to generate user-specific offerings (ʼ743 Patent, Abstract). A central feature is the ability to select a distributor to fulfill an order based on dynamic criteria like profit margin or shipping availability, moving beyond the limitation of a single source for each product (ʼ743 Patent, col. 9:23-43; FIG. 5).
• Technical Importance: This technology facilitated a marketplace-style e-commerce hub, allowing a system to present a unified catalog to a customer while sourcing products from a variety of otherwise separate distributors (Compl. ¶17, ¶19).

Key Claims at a Glance

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

III. The Accused Instrumentality

Product Identification

The complaint broadly identifies the "Accused Instrumentalities" as the systems used by Shoe Carnival in connection with its e-commerce business, presumably including its public-facing website and associated backend transaction processing systems (Compl. ¶30, ¶35).

Functionality and Market Context

The complaint does not describe the specific technical operations of Shoe Carnival's systems. Instead, it alleges that Defendant provides "user-specific customization ... during the online shopping experience" and that such features are commercially valuable (Compl. ¶20). The infringement theory is based on the general functionality of a modern e-commerce platform, which Plaintiff alleges practices the patented methods (Compl. ¶12, ¶30, ¶35).

IV. Analysis of Infringement Allegations

The complaint states that detailed infringement allegations for the ’846 and ’743 patents are provided in preliminary claim charts attached as Exhibits 3 and 4, respectively (Compl. ¶30, ¶35). As these exhibits were not provided with the complaint, a claim chart summary cannot be constructed.

The narrative infringement theory presented in the complaint is that Defendant’s e-commerce operations necessarily perform the steps of the patented methods. The complaint describes the patented method as receiving product data from multiple distributors, receiving customer data, using that data to generate user-specific offerings, and conveying those offerings via automated messages (Compl. ¶12). The complaint then asserts that Shoe Carnival’s "Accused Instrumentalities" perform these functions (Compl. ¶30, ¶35).

No probative visual evidence provided in complaint.

Identified Points of Contention

• Scope Questions: The core of the dispute may turn on the scope of the term "plurality of distributors." A key question is whether Shoe Carnival's relationship with its wholesale suppliers constitutes receiving data from a "plurality of distributors" as contemplated by the patents, which describe a system for selecting among different distributors for the same product, or if the claims require a multi-sided marketplace platform where different third-party sellers offer products directly to consumers.
• Technical Questions: The complaint alleges that the accused systems generate offerings based on IP-derived location data. A central factual question for the court will be what evidence demonstrates that Defendant's systems perform this specific function. For example, does the accused system use IP-derived location merely for ancillary functions like logistics or regional advertising, or is it used to "generate... user-specific product offerings" by, for example, altering the catalog or pricing, as the claims require?

V. Key Claim Terms for Construction

1. "plurality of distributors"

• Context and Importance: This term is fundamental to the structure of the claimed invention. The interpretation will determine whether the patents apply only to multi-vendor marketplace platforms or more broadly to any retailer that sources its inventory from more than one supplier. Practitioners may focus on this term because it appears to be the primary point of mismatch between the patent's marketplace-focused disclosure and the accused first-party retail model.
• Intrinsic Evidence for Interpretation:
  • Evidence for a Broader Interpretation: The plain language of the claim does not explicitly limit "distributors" to independent, third-party sellers in a marketplace. An argument could be made that any distinct entities that supply products to the e-commerce system satisfy the "plurality" requirement.
  • Evidence for a Narrower Interpretation: The specification repeatedly emphasizes the advantage of selecting from among multiple distributors for the same product based on criteria like "availability, price, shipping speed, or profit margins" (ʼ846 Patent, col. 4:17-23). Figure 5 depicts a "Distributor Selection Logic" choosing between "Distributor 1," "Distributor 2," etc., which supports an interpretation of competing entities rather than a single retailer's internal supply chain (ʼ846 Patent, FIG. 5).

2. "user-specific product offering"

• Context and Importance: Both asserted independent claims require "generating" a "user-specific product offering" based at least in part on customer data (including IP-derived location). The viability of the infringement claim depends on whether the accused system’s functionality qualifies as generating such an "offering."
• Intrinsic Evidence for Interpretation:
  • Evidence for a Broader Interpretation: The term "offering" is not explicitly defined and could be argued to encompass any product-related communication to a user, such as a targeted advertisement or a promotional email.
  • Evidence for a Narrower Interpretation: The specification describes generating "multiple catalogs from the same system" and displaying "user specific interfaces," for example, showing different pricing and products to a student versus a business person (ʼ846 Patent, col. 5:61-6:16). This context suggests the "offering" is an integral part of the dynamic catalog and pricing engine, not just an ancillary advertisement.

VI. Other Allegations

Willful Infringement

The complaint does not include an explicit count or factual allegation of willful infringement. However, the prayer for relief seeks a declaration that the case is "exceptional under 35 U.S.C. § 285" and an award of attorneys' fees, which is a related but distinct legal standard (Compl. p. 9).

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 describes in the context of a competitive, multi-vendor fulfillment model, be construed to read on a traditional first-party e-commerce retailer that sources its own inventory from multiple wholesale suppliers?
• A second pivotal issue will be evidentiary: what proof can Plaintiff provide that Defendant’s system "generates" a "user-specific product offering" that is functionally dependent on a customer's IP-derived location, as required by the claims, versus using that location data for unrelated purposes such as logistics or generic regional marketing?
• Finally, a foundational question, foreshadowed by the complaint's extensive arguments on the topic, will be patent eligibility: are the claims directed to a specific improvement in computer network and database functionality, or are they directed to the patent-ineligible abstract idea of targeted marketing using conventional computer technology?