Consolidated Transaction Processing LLC v. Williams-Sonoma, Inc.

I. Executive Summary and Procedural Information

• Parties & Counsel:
  • Plaintiff: Consolidated Transaction Processing LLC (Nevada)
  • Defendant: Williams-Sonoma, Inc. (California)
  • Plaintiff’s Counsel: Devlin Law Firm LLC
• Case Identification: 1:23-cv-04237, N.D. Ill., 06/30/2023
• Venue Allegations: Plaintiff alleges venue is proper in the Northern District of Illinois because Defendant Williams-Sonoma maintains an established place of business in the district, specifically citing a West Elm retail store in Chicago.
• Core Dispute: Plaintiff alleges that Defendant’s e-commerce transaction processing systems infringe patents related to generating and sending targeted, user-specific product offerings based on aggregated customer and product data.
• Technical Context: The technology at issue involves methods for personalizing online shopping by dynamically creating product catalogs and offers based on data collected from various distributors and individual customers.
• Key Procedural History: The patents-in-suit share a common specification and claim priority back to a 1999 application, positioning them as early inventions in the e-commerce personalization space. The complaint does not mention any prior litigation or post-grant proceedings involving these patents.

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 Issued
2014-04-29	U.S. Patent No. 8,712,846 Issued
2023-06-30	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 April 29, 2014

The Invention Explained

• Problem Addressed: The patent describes the state of e-commerce in the late 1990s as an improvement over traditional retail but still limited. It notes that prior e-commerce businesses often operated like their brick-and-mortar counterparts by maintaining costly physical inventory and using the internet primarily as a replacement for static, one-size-fits-all paper catalogs or infomercials (Compl. ¶11; ’846 Patent, col. 2:63-3:14).
• The Patented Solution: The invention proposes a centralized, computer-implemented system that moves beyond this model by aggregating two distinct streams of data: (1) product data (e.g., price, availability) received from a "plurality of distributors," and (2) customer data (e.g., location information, purchase history) received from a "plurality of customers." The system then processes this combined data to dynamically generate and send "user-specific product offerings" via automated messages (’846 Patent, Abstract; col. 4:26-38). This allows for the creation of personalized electronic catalogs and targeted promotions without the need for the central merchant to hold inventory.
• Technical Importance: The claimed approach sought to improve the efficiency and personalization of internet retail by enabling a merchant to offer a dynamically updated and aggregated catalog of products from multiple sources, with pricing and selection tailored to individual users based on their data (’846 Patent, col. 5:61-6:16; Compl. ¶14).

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 method with the following key elements:
  • 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 customer data includes location information derived from a customer's IP address.
  • Generating, at least in part from the customer data, user-specific product offerings.
  • Sending, by a computer, automated messages containing the user-specific product offerings to the customers.
• The complaint does not explicitly reserve the right to assert other claims.

U.S. Patent No. 8,396,743 - “Sending Targeted Product Offerings Based on Personal Information,” Issued March 12, 2013

The Invention Explained

• Problem Addressed: The ’743 Patent shares a specification with the ’846 Patent and thus addresses the same technical problems: the high costs and inflexibility associated with inventory-based e-commerce and the limitations of static, non-personalized online catalogs (’743 Patent, col. 3:5-23).
• The Patented Solution: The solution is materially the same as that described in the ’846 Patent: a system that integrates product data from multiple distributors with personal data from customers to generate targeted offers (’743 Patent, Abstract). A key figure illustrates the system architecture, showing data flowing from distributors and customers into a central database, which is then used by a "Catalog Builder/Pricing Modeler" to create the offerings (’743 Patent, Fig. 1).
• Technical Importance: The invention provided a technical framework for a more advanced form of e-commerce, where a central entity could act as an intelligent intermediary, dynamically curating products and prices from multiple suppliers for specific customers (’743 Patent, col. 5:22-50; Compl. ¶15).

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 method with the following key elements:
  • 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 the personal information concerning a customer location, at least one user-specific product offering.
  • Sending, by a computer, automated messages comprising the user-specific product offering.
• The complaint does not explicitly reserve the right to assert other claims.

III. The Accused Instrumentality

• Product Identification: The complaint refers generally to the "Accused Instrumentalities" but does not identify by name any specific Williams-Sonoma websites, applications, or backend systems (Compl. ¶30, ¶35).
• Functionality and Market Context: The complaint alleges that Williams-Sonoma makes and uses systems that practice the patented inventions, implying these systems are part of its e-commerce operations (Compl. ¶30). The complaint’s background sections describe a system that provides "user-specific customization" during the online shopping experience by using "product data and customer information together to provide a shopper with a more personalized shopping experience" (Compl. ¶18, ¶20). The complaint alleges that such features are crucial for businesses to distinguish themselves in the modern online marketplace (Compl. ¶20). No probative visual evidence provided in complaint.

IV. Analysis of Infringement Allegations

The complaint alleges that infringement is detailed in preliminary claim charts attached as Exhibits 3 and 4 (Compl. ¶30, ¶35). As these exhibits were not included with the filed complaint document, a detailed element-by-element analysis is not possible.

The narrative infringement theory, based on the body of the complaint, is that Defendant’s e-commerce platform performs the patented methods. This includes allegations that the platform receives product data and customer data (including personal information), and uses this data to dynamically generate and display "user-specific product offerings" to customers (Compl. ¶12, ¶18). Without the claim charts, the specific features of the Accused Instrumentalities that allegedly meet each claim limitation remain unspecified.

• Identified Points of Contention:
  • Scope Questions: The independent claims of both patents require "receiving product data for a plurality of products from a plurality of distributors" (’846 Patent, col. 12:38-41; ’743 Patent, col. 12:38-41). A central question may be whether Defendant Williams-Sonoma, which operates primarily as a retailer of its own sourced and branded goods, can be said to receive product data from a "plurality of distributors" in the manner contemplated by the patents. The answer may depend on how the term "distributor" is construed and whether Defendant's relationships with its various suppliers or internal business units meet that definition.
  • Technical Questions: Claim 1 of both patents requires generating a "user-specific product offering" based at least in part on customer "location information derived from an IP address." A key factual question will be what evidence Plaintiff can present that Defendant’s systems specifically use IP-address-derived location to generate the substance of a product offering, as opposed to using it for other purposes like logistics or currency display.

V. Key Claim Terms for Construction

• The Term: "a plurality of distributors"
• Context and Importance: This term appears in the first limitation of the asserted independent claims of both patents. Its construction is critical because the infringement case may depend on whether Williams-Sonoma's business model, which involves selling products under its own brands (e.g., Williams Sonoma, Pottery Barn, West Elm), satisfies this element. Practitioners may focus on this term to determine if the claims are directed at marketplace aggregators or can also read on integrated retailers.
• Intrinsic Evidence for Interpretation:
  • Evidence for a Broader Interpretation: The patent does not provide an explicit definition of "distributor." Plaintiff might argue the term should be given its plain and ordinary meaning, which could encompass any third-party supplier, manufacturer, or vendor from which Williams-Sonoma sources products.
  • Evidence for a Narrower Interpretation: The specification repeatedly discusses a system that allows a central merchant to select from among multiple distributors for the same or similar products based on criteria like price and availability, which implies distinct, competing entities (’743 Patent, col. 9:8-44). Figure 5, for example, explicitly shows "DISTRIBUTOR 1," "DISTRIBUTOR 2," etc. as separate sources for overlapping products, which a court could see as limiting the term to independent, third-party sellers rather than a retailer's own internal supply chain.

VI. Other Allegations

• Indirect Infringement: The complaint alleges that Defendant is "causing to be used the Accused Instrumentalities" (Compl. ¶30, ¶35). This language suggests a potential claim for induced infringement. However, the complaint does not plead any specific facts to support the requisite elements of knowledge and intent, such as alleging that Defendant instructed its customers to use the accused systems in an infringing manner.
• Willful Infringement: The complaint does not contain an explicit allegation of willful infringement. However, the Prayer for Relief includes a request for a "declaration that this case is exceptional under 35 U.S.C. § 285" (Compl. p.9, ¶C). Such a request for enhanced damages and attorney's fees is often predicated on a finding of willfulness or other litigation misconduct, but the complaint currently lacks specific factual allegations regarding pre-suit knowledge of the patents or egregious conduct that would support such a finding.

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

1. A core issue will be one of definitional scope: can the term "plurality of distributors," which the patent specification illustrates with examples of distinct, competing suppliers, be construed to read on the supply chain and sourcing structure of a vertically integrated retailer like Williams-Sonoma? The viability of the infringement claim may hinge on the construction of this term.

2. A primary evidentiary question will be one of technical proof: in the absence of the referenced claim charts, what specific evidence can Plaintiff provide to demonstrate that Defendant's e-commerce systems perform the claimed methods? Specifically, how does the accused system allegedly use "product data" from multiple sources and customer "location information derived from an IP address" to generate the substance of "user-specific product offerings," as required by the claims.