Consolidated Transaction Processing LLC v. IKEA North America Services LLC

I. Executive Summary and Procedural Information

• Parties & Counsel:
  • Plaintiff: Consolidated Transaction Processing LLC (Nevada)
  • Defendant: IKEA North America Services, LLC (Pennsylvania)
  • Plaintiff’s Counsel: DEVLIN LAW FIRM LLC
• Case Identification: 1:23-cv-04181, N.D. Ill., 06/28/2023
• Venue Allegations: Venue is alleged to be proper as Defendant IKEA maintains an established place of business within the judicial district, specifically a retail store in Bolingbrook, Illinois.
• Core Dispute: Plaintiff alleges that Defendant’s e-commerce systems, including its website, infringe two patents related to methods for aggregating product data from multiple sources and using customer information to generate targeted product offerings.
• Technical Context: The technology at issue addresses e-commerce systems that create personalized shopping experiences by dynamically generating catalogs based on data from various suppliers and specific information about the customer.
• Key Procedural History: The two patents-in-suit share a specification and claim priority to the same 1999 application. Both patents were filed with terminal disclaimers, which may indicate that the patent office considered their claims to be patentably indistinct from claims in a parent patent. The complaint includes preemptive arguments that the claims are patent-eligible and not directed to an abstract idea.

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 describes the state of e-commerce in the late 1990s, noting that most online businesses operated like traditional retailers by maintaining costly physical inventories and using the internet as a static advertising medium, akin to a printed catalog, which offered a one-size-fits-all customer experience (’846 Patent, col. 2:63-3:14).
• The Patented Solution: The invention proposes a computerized system that acts as an intermediary, rather than a direct seller holding inventory. The system receives product data (e.g., price, availability) from a "plurality of distributors" and also receives data about customers, including location information derived from their IP address. This combined data is then used to generate and send "user-specific product offerings," enabling the creation of dynamic, personalized electronic catalogs tailored to individual users ('846 Patent, Abstract; col. 3:44-52). The system's ability to select from multiple distributors is a key aspect ('846 Patent, col. 9:18-24).
• Technical Importance: This approach sought to improve upon earlier e-commerce models by centralizing product information from multiple sources and leveraging user data to create a more customized and efficient online retail experience, without the high costs of inventory management (Compl. ¶19-20).

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:
  • A computer-implemented method for targeted product offering, the method 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 of 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: Sharing a specification with the '846 patent, the ’743 patent addresses the same technical problems: the high costs and inflexibility associated with inventory-based e-commerce and the static, non-personalized nature of early online "catalog" advertising ('743 Patent, col. 2:65-3:21).
• The Patented Solution: The invention describes the same intermediary e-commerce system that aggregates product information from multiple independent distributors and combines it with customer data to generate customized product offerings. The specification details how different users (e.g., a student versus a business person) could be shown different catalogs with different pricing structures ('743 Patent, col. 6:7-16).
• Technical Importance: The invention provided a technical framework for transforming a static online storefront into a dynamic, personalized marketplace that could aggregate offers from various suppliers to enhance customer choice and reduce merchant overhead (Compl. ¶13-14).

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:
  • A computer-implemented method for targeted product offering, the method 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 identifies the "Accused Instrumentalities" as the e-commerce systems operated by IKEA, including its website(s) and the associated backend infrastructure that provides and manages online sales and targeted advertising (Compl. ¶30, ¶35).

Functionality and Market Context

• The complaint alleges that IKEA's online systems provide a personalized shopping experience by utilizing product data and customer information to generate customized offerings (Compl. ¶15-16). This functionality is alleged to be crucial for distinguishing a business in the competitive online retail market (Compl. ¶20). The complaint does not provide specific technical details on the operation of IKEA's systems, instead referring to claim chart exhibits that were not included with the public filing.

IV. Analysis of Infringement Allegations

The complaint alleges infringement based on claim charts provided as Exhibits 3 and 4, which are not available in the filed document. The following is a summary of the infringement theory based on the complaint's narrative allegations. No probative visual evidence provided in complaint.

Infringement Theory Summary

Plaintiff's theory is that IKEA's e-commerce platform directly infringes the asserted claims by performing the patented methods (Compl. ¶30, ¶35). The complaint alleges that IKEA's system necessarily: (1) receives product data from what constitutes a "plurality of distributors" for its vast product catalog; (2) receives customer data, including location information implicitly or explicitly derived from user interactions (e.g., via IP address); (3) uses this combined data to generate "user-specific product offerings" such as targeted advertisements or customized product displays; and (4) sends these offerings to customers' computers for display (Compl. ¶12, ¶21-23).

Identified Points of Contention:

• Scope Questions: The central issue for infringement may be whether IKEA, an integrated retailer, uses a system that receives data from a "plurality of distributors" as the patent contemplates. A court may need to determine if IKEA's internal supply divisions or external manufacturing partners qualify as "distributors" under the claim language, which appears to describe a marketplace of distinct, competing vendors ('743 Patent, Fig. 5; col. 9:8-24).
• Technical Questions: A key factual question is whether IKEA's system actually generates product offerings based on "location information derived from an IP address," as required by the claims. The defense could argue that any personalization on its website is driven by non-locational data, such as a user's purchase history, search queries, or stated preferences, and that there is no causal link between IP-based location and the specific offerings generated.

V. Key Claim Terms for Construction

1. "plurality of distributors"

• Context and Importance: This term is fundamental to the infringement analysis. The case may turn on whether IKEA's supply chain is construed as meeting this limitation. Practitioners may focus on this term because IKEA could argue it operates as a single retailer, not an aggregator of data from multiple, independent distributors as depicted in the patent's specification.
• Intrinsic Evidence for Interpretation:
  • Evidence for a Broader Interpretation: The specification suggests some flexibility by mentioning "suppliers of products" and "individual vendors" ('846 Patent, col. 5:50-58), which could be argued to encompass any distinct entities in a supply chain that provide product data to a central system.
  • Evidence for a Narrower Interpretation: The patent repeatedly describes a system that polls multiple distributors to select one to fill an order based on criteria like price, availability, and shipping speed, which strongly implies they are separate, competing commercial entities ('846 Patent, col. 9:18-30). Figure 5, showing distinct "DISTRIBUTOR 1," "DISTRIBUTOR 2," etc., further supports a narrower construction of independent, third-party entities.

2. "user-specific product offering" generated from "location information"

• Context and Importance: The precise nature of the "offering" and its causal link to the user's location data is critical. The dispute will likely involve whether generic targeted ads or sorted product lists meet this definition, or if a more direct form of location-based customization is required.
• Intrinsic Evidence for Interpretation:
  • Evidence for a Broader Interpretation: The patent provides a wide-ranging list of potential offerings, including "targeted advertising, purchase incentives such as electronic coupons and rebates, specialized promotions and competitive pricing" ('846 Patent, col. 5:16-20), suggesting that many forms of marketing could qualify.
  • Evidence for a Narrower Interpretation: The claims explicitly link the generation of the offering to "location information." Embodiments describe creating entirely different catalogs for different user types, such as a student versus a business person, implying a highly segmented and deliberate customization rather than a simple targeted banner ad ('846 Patent, col. 6:6-16). This could support an argument that the offering must be substantively tailored because of the user's location.

VI. Other Allegations

• Willful Infringement: The complaint does not contain specific factual allegations to support a claim of willful infringement, such as pre-suit knowledge of the patents. 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 (Compl. p. 9, ¶C).

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

The resolution of this case will likely depend on the court's answers to several key questions:

1. A central question will be one of definitional scope: Can the term "plurality of distributors," which the patent specification depicts as independent, competing vendors, be construed to read on the integrated supply chain of a single, large-scale retailer like IKEA?
2. A second core issue will be one of causal linkage: Does Plaintiff's evidence demonstrate that the accused IKEA system generates "user-specific product offerings" specifically because of a customer's location as derived from an IP address, as the claims require, or is the personalization based on other, non-infringing factors like browsing history?
3. Finally, an underlying legal battle will concern patent eligibility: Do the asserted claims, which recite methods for collecting and using commercial data to target customers, represent a patent-eligible improvement to computer functionality under 35 U.S.C. § 101, or do they claim an abstract business practice implemented on a generic computer, a question the complaint preemptively attempts to address (Compl. ¶22-26)?