Consolidated Transaction Processing LLC v. Vans Inc

I. Executive Summary and Procedural Information

• Parties & Counsel:
  • Plaintiff: Consolidated Transaction Processing LLC (Nevada)
  • Defendant: Vans, Inc. (Delaware)
  • Plaintiff’s Counsel: Devlin Law Firm LLC
• Case Identification: 1:22-cv-06817, N.D. Ill., 12/05/2022
• Venue Allegations: Plaintiff alleges venue is proper in the Northern District of Illinois because Defendant Vans maintains established retail stores in Chicago, constituting a regular and established place of business within the district.
• Core Dispute: Plaintiff alleges that Defendant’s e-commerce website and back-end systems infringe patents related to dynamically generating personalized product offerings by aggregating product data from multiple sources and using customer-specific data.
• Technical Context: The patents address e-commerce systems designed to move beyond static, single-source retail models toward dynamic, data-driven marketplaces that personalize the shopping experience for individual users.
• Key Procedural History: The asserted patents 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, potentially linking their expiration dates. The complaint includes a multi-paragraph section arguing that the claims are patent-eligible under 35 U.S.C. § 101, anticipating a likely defense.

Case Timeline

Date	Event
1999-06-30	Priority Date for '743 and '846 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 describes prior art e-commerce as being limited by its reliance on business models inherited from brick-and-mortar retail (Compl. ¶11). These models required merchants to maintain their own costly inventory and presented customers with static, one-size-fits-all online catalogs, using the internet merely as a replacement for print advertising ('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 customer data, including location information derived from a user's IP address. This combined data is used to dynamically generate "user-specific product offerings" that are then sent to customers as automated messages ('846 Patent, Abstract; col. 4:51-67).
• Technical Importance: The technology aimed to improve the efficiency and personalization of e-commerce by enabling a business to act as a dynamic marketplace hub rather than a traditional retailer with a fixed inventory (Compl. ¶14).

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 include:
  • Receiving product data from a plurality of distributors via a communications network.
  • Receiving customer data, including location information derived from a customer's IP address.
  • Generating user-specific product offerings based at least in part on the customer data.
  • Sending automated messages containing the user-specific offerings to 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: Sharing a specification with the '846 Patent, the '743 Patent addresses the same technical problems: the high costs, limited product selection, and inflexibility of early e-commerce systems that maintained their own inventory and could not easily personalize the shopping experience ('743 Patent, col. 2:63-3:21).
• The Patented Solution: The invention describes a system architecture, illustrated in Figure 1, featuring an "Order Processing System" that interacts with databases of customer and product information ('743 Patent, Fig. 1). A key component is the "Catalog Builder/Price Modeler," which uses an "intelligent rule-based algorithm" to dynamically generate competitive pricing and user-specific catalogs, for instance, showing academic pricing to a student and corporate discounts to a business user ('743 Patent, col. 6:6-29).
• Technical Importance: This system represented a technological solution for creating a more responsive and customized e-commerce platform that could select from various distributors and tailor offerings to individual users or user groups (Compl. ¶17, ¶19).

Key Claims at a Glance

• The complaint asserts independent claim 1 and dependent claim 4 (Compl. ¶35).
• The essential elements of independent claim 1 include:
  • 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, based at least in part on the personal information concerning customer location, a user-specific product offering.
  • Sending automated messages containing the offering to the customer.

III. The Accused Instrumentality

Product Identification

The complaint identifies the "Accused Instrumentalities" as the e-commerce operations of Defendant Vans, including its website (Vans.com) and the associated back-end systems, software, and databases used to process online transactions (Compl. ¶30, ¶35).

Functionality and Market Context

The complaint alleges that Vans' system provides "user-specific customization" by utilizing customer data and product data sourced from multiple distributors to automate and personalize the online shopping experience (Compl. ¶20). The functionality is alleged to include receiving product data, receiving customer data, and using that data to generate and convey user-specific product offerings (Compl. ¶12). The complaint asserts that these features are crucial for businesses like Vans to distinguish themselves in a crowded online retail market (Compl. ¶20).

IV. Analysis of Infringement Allegations

The complaint references preliminary claim charts in Exhibits 3 and 4, which were not filed with the complaint itself. The narrative infringement theory is summarized below.

No probative visual evidence provided in complaint.

'846 Patent and '743 Patent Infringement Allegations

The infringement theory for both patents is substantially the same due to the similarity of the asserted claims. The complaint alleges that Vans' e-commerce platform directly infringes by performing each step of the asserted method claims (Compl. ¶30, ¶35). The theory posits that Vans' system:

1. Receives product data from a "plurality of distributors" by sourcing its products from various suppliers and manufacturers (Compl. ¶14).
2. Receives customer data, including personal and location information derived from a user's IP address during website interactions (Compl. ¶12).
3. Generates user-specific product offerings by using the collected data to create targeted advertising and customized product portfolios (Compl. ¶16).
4. Sends automated messages containing these offerings, for example, by dynamically generating a customized webpage for the user or sending marketing communications (Compl. ¶12, ¶23).

Identified Points of Contention

• Scope Questions: A central dispute may arise over the meaning of "plurality of distributors." The patent specification describes a system that selects among different distributors offering similar products, akin to a marketplace aggregator ('743 Patent, Fig. 5; col. 9:23-44). The question is whether this claim language reads on a traditional retailer like Vans, which sources its own inventory from multiple independent suppliers, or if it requires the more complex, real-time distributor selection model described in the patent.
• Technical Questions: The complaint alleges that Vans generates offerings based on "location information derived from an IP address" ('846 Patent, cl. 1). A key evidentiary question will be whether Plaintiff can demonstrate that IP-based location is a specific input into an algorithm that generates offerings, as opposed to being collateral data used for analytics, logistics, or regional website versions.

V. Key Claim Terms for Construction

• The Term: "plurality of distributors"

  • Context and Importance: This term is foundational to the infringement allegation. The viability of the plaintiff's case may depend on whether a conventional retailer's supply chain, involving multiple manufacturers and suppliers, qualifies as a "plurality of distributors."
  • Intrinsic Evidence for a Broader Interpretation: The specification is not always limiting, at one point referring to "small distributors or individual vendors," which could be argued to encompass any third-party product source ('743 Patent, col. 5:55-56).
  • Intrinsic Evidence for a Narrower Interpretation: The detailed description and figures suggest a specific technical implementation where the system actively "select[s] from a distributor based on various criteria, such as availability, price, shipping speed, or profit margins" from a pool of entities offering overlapping products ('846 Patent, col. 9:47-58; '743 Patent, Fig. 5). This could support a narrower construction requiring a system that functions as a multi-vendor marketplace, not just a single retailer with a diverse supply chain.

• The Term: "generating... user-specific product offering"

  • Context and Importance: This term defines the core output of the claimed invention. The dispute will likely focus on the required level of sophistication and personalization. Practitioners may focus on this term because its construction will determine whether generic personalization features common on e-commerce sites meet the claim limitation.
  • Intrinsic Evidence for a Broader Interpretation: The claim language requires generation "at least in part from the customer data," which could be argued to cover any form of targeting that uses any piece of customer information as an input ('846 Patent, cl. 1).
  • Intrinsic Evidence for a Narrower Interpretation: The specification describes a specific "intelligent rule-based algorithm" and a "Catalog Builder/Price Modeler" for dynamic generation ('743 Patent, col. 6:17-29). This language may be used to argue that the claims require more than simple product recommendations and instead demand a more complex, rule-based system for creating the offerings.

VI. Other Allegations

The complaint does not explicitly plead counts for indirect or willful infringement. It does, however, request that the court declare the case "exceptional" under 35 U.S.C. § 285, which provides a basis for seeking attorney's fees (Compl., p. 9, ¶C).

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

The resolution of this case may turn on the following central questions:

1. A core issue will be one of definitional scope: Can the term "distributor," as used in a patent describing a multi-vendor selection and aggregation model, be construed to cover the independent manufacturers and suppliers in a traditional retail supply chain?

2. A key evidentiary question will be one of causation and proof: What evidence can the plaintiff provide to establish that Vans’ system specifically uses a customer's IP-derived location information to generate a "user-specific product offering," as required by the claims, rather than for other ancillary purposes?

3. A threshold legal question will be one of patent eligibility: As anticipated by the plaintiff's own complaint (Compl. ¶¶ 21-26), the court will likely need to determine whether the claims are directed to a patent-eligible improvement in computer functionality or to the patent-ineligible abstract idea of targeted marketing performed using generic computer components.