Consolidated Transaction Processing LLC v. Abercrombie & Fitch Stores

I. Executive Summary and Procedural Information

• Parties & Counsel:
  • Plaintiff: Consolidated Transaction Processing LLC (Nevada)
  • Defendant: Abercrombie & Fitch Stores, Inc., d/b/a Hollister Co. (Ohio)
  • Plaintiff’s Counsel: Devlin Law Firm LLC
• Case Identification: 1:23-cv-04180, N.D. Ill., 06/28/2023
• Venue Allegations: Plaintiff alleges venue is proper in the Northern District of Illinois because Defendant maintains an established place of business in the district, specifically a Hollister retail store in Chicago.
• Core Dispute: Plaintiff alleges that Defendant’s e-commerce system for its Hollister brand infringes patents related to methods for aggregating product data from multiple distributors and generating targeted product offerings for customers based on their personal information.
• Technical Context: The technology concerns early e-commerce systems designed to move beyond static online catalogs by dynamically creating personalized product offerings from a centralized database populated with data from various suppliers.
• Key Procedural History: The patents-in-suit belong to a family with a priority date of June 30, 1999, indicating the technology was conceived in the early stages of commercial internet development. The patents claim to be a continuation of a series of prior applications, and the ’846 patent is subject to a terminal disclaimer.

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 Apr. 29, 2014)

The Invention Explained

• Problem Addressed: The patent’s background section describes the significant disadvantages of traditional retail models in the late 1990s, including the high costs and inflexibility of maintaining physical inventory and the static nature of print catalogs, which limited personalization and rapid updates to product offerings or pricing (’846 Patent, col. 1:26-2:2). Early e-commerce systems often replicated these limitations by acting as simple digital catalogs for a single merchant's inventory (Compl. ¶11).
• The Patented Solution: The invention proposes a centralized, computer-implemented e-commerce system that overcomes these issues. The system receives and aggregates product data (e.g., description, price, availability) from a "plurality of distributors" and also receives customer data (e.g., personal information, IP address) from a "plurality of customers" (’846 Patent, Abstract). Using this combined information, the system dynamically generates "user-specific product offerings" and sends them to customers via automated messages, enabling a more personalized and responsive shopping experience than prior static systems (Compl. ¶12; ’846 Patent, col. 4:51-58).
• Technical Importance: The described approach represented a shift from e-commerce as a simple advertising or direct sales channel to a more sophisticated model of a marketplace aggregator, capable of dynamically creating customized catalogs and pricing without bearing the full risk of holding inventory (Compl. ¶14, ¶18).

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 computer-implemented method comprising the steps of:
  • 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 data includes location information derived from a customer's IP address;
  • generating, based at least in part on 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.

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

The Invention Explained

• Problem Addressed: As a parent to the ’846 patent with a shared specification, the ’743 patent addresses the same technical problems: the limitations of traditional retail and early e-commerce systems tied to physical inventory and static, non-personalized product catalogs (’743 Patent, col. 2:62-3:14).
• The Patented Solution: The invention describes a transaction processing system that integrates data from multiple sources to create customized commercial offerings. A core component is the "Distributor Selection sub-system," which can poll multiple distributors in real-time or near real-time to determine product availability and select a distributor to fulfill an order based on criteria like profit margin or shipping speed (’743 Patent, col. 9:8-44). This allows the central e-commerce platform to offer a wider array of products than it holds in its own inventory.
• Technical Importance: This system architecture aimed to improve the efficiency of online retail by creating a dynamic link between customer demand and a distributed network of suppliers, thereby increasing product selection and enabling competitive, rule-based pricing (Compl. ¶19).

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 computer-implemented method comprising the steps of:
  • 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, including location information derived from an IP address;
  • generating, at least in part from personal information concerning a customer location, at least one user-specific product offering; and
  • sending automated messages containing the offering to customers.

III. The Accused Instrumentality

Product Identification

The complaint identifies the "Accused Instrumentalities" as the e-commerce operations of Defendant Hollister (Compl. ¶30, ¶35). This presumably includes the website "hollisterco.com" and its associated backend systems.

Functionality and Market Context

The complaint does not provide specific details on the technical operation of Hollister's e-commerce platform. It alleges in a conclusory manner that the platform performs the steps of the asserted claims, such as receiving product and customer data to generate targeted offerings (Compl. ¶12, ¶30, ¶35). The complaint focuses on the commercial importance of user-specific customization in the modern online retail market to distinguish a business from its competitors (Compl. ¶20).

IV. Analysis of Infringement Allegations

The complaint alleges that the details of infringement are provided in "preliminary and exemplary claim charts" attached as Exhibits 3 and 4 (Compl. ¶30, ¶35). However, these exhibits were not included with the filed complaint document. The narrative portion of the complaint alleges that Hollister's e-commerce system practices the methods of the asserted patents by receiving product data, receiving customer data, and using that data to generate and send user-specific product offerings. The complaint does not, for instance, identify the alleged "plurality of distributors" from which Hollister purportedly receives product data, nor does it describe the mechanism by which "user-specific product offerings" are allegedly generated.

No probative visual evidence provided in complaint.

V. Key Claim Terms for Construction

For both the ’846 and ’743 Patents

• The Term: "a plurality of distributors"

• Context and Importance: This term appears in the first limitation of both asserted independent claims. Its construction is critical because the infringement case may depend on whether the defendant's supply chain constitutes a "plurality of distributors" as contemplated by the patent. Practitioners may focus on this term to determine if it requires receiving product data from multiple, distinct, third-party commercial entities, or if it could be read more broadly to include a single company's internal divisions or logistics partners.

• Intrinsic Evidence for Interpretation:

  • Evidence for a Broader Interpretation: The claims themselves do not explicitly state that the distributors must be separate corporate entities. An argument could be made that any system that aggregates product data from multiple, distinct sources or inventories fits the claim language, even if those sources are part of the same parent company.
  • Evidence for a Narrower Interpretation: The specification repeatedly describes a system that allows a central merchant to offer products from various "distributors" and "individual vendors" without holding the inventory itself, suggesting independent, third-party entities (’743 Patent, col. 5:50-58). Figure 5 explicitly depicts "DISTRIBUTOR 1," "DISTRIBUTOR 2," etc., as separate boxes, which may support an interpretation requiring distinct entities.

• The Term: "user-specific product offering"

• Context and Importance: This term is the ultimate output of the claimed method and is central to the invention's goal of personalization. The dispute will likely involve whether the type of personalization used by the accused website (e.g., recommendations based on browsing history, targeted ads) meets the definition of a "user-specific product offering."

• Intrinsic Evidence for Interpretation:

  • Evidence for a Broader Interpretation: The claim language is general. One could argue that any product offering that is tailored to a user and not shown to all users is "user-specific."
  • Evidence for a Narrower Interpretation: The specification provides specific examples of what this means, such as showing "a catalog of products appropriate for students with academic pricing" to one user and a different catalog with "corporate discounts" to a business person (’743 Patent, col. 6:6-16). This suggests a structured, rule-based customization based on user categories, which may be narrower than general algorithmic recommendations.

VI. Other Allegations

• Willful Infringement: The complaint does not contain an explicit allegation of willful infringement or a request for enhanced damages under 35 U.S.C. § 284. It does, however, include a prayer for relief requesting a "declaration that this case is exceptional under 35 U.S.C. § 285, and an award of CTP's reasonable attorneys' fees" (Compl. p. 9, ¶C). Such a finding often involves conduct tantamount to willfulness, but it is a distinct legal standard.

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

1. A central factual and legal question will be one of structural and definitional scope: Does Defendant’s retail model, which primarily sells its own branded products, involve "receiving product data... from a plurality of distributors" as required by the claims? The case may turn on whether Plaintiff can show that Defendant's supply chain or internal logistics qualify as distinct "distributors" under a plausible construction of that term.
2. A key issue of functional interpretation will be the meaning of "user-specific product offering." The court will need to determine whether the term requires the structured, rule-based catalog generation described in the patent's embodiments (e.g., student vs. corporate pricing) or if it can be construed more broadly to cover modern, algorithm-driven product recommendations and personalized advertising.
3. Given the lack of specific factual allegations in the complaint, a primary evidentiary challenge for the Plaintiff will be to discover and present evidence that Defendant's e-commerce systems actually perform the specific steps of the claimed methods, moving beyond the conclusory allegations made in the initial pleading.