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 (Virginia)
  • Plaintiff’s Counsel: Beaty Legal PLLC
• Case Identification: 4:23-cv-01074, E.D. Tex., 12/06/2023
• Venue Allegations: Plaintiff alleges venue is proper because Defendant maintains an established place of business in the district, specifically an IKEA store in Frisco, Texas.
• Core Dispute: Plaintiff alleges that Defendant’s e-commerce website, IKEA.com, infringes patents related to systems and methods for generating targeted product offerings by aggregating product data from multiple sources and using customer-specific information.
• Technical Context: The technology concerns e-commerce platforms that move beyond static, single-source catalogs to dynamically create personalized shopping experiences by integrating real-time data from a variety of suppliers.
• Key Procedural History: The patents-in-suit claim priority back to an application filed in 1999. The U.S. Patent and Trademark Office records for U.S. Patent No. 8,712,846 indicate it is subject to a terminal disclaimer, which may limit its enforceable term to that of an earlier patent in the family.

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 April 29, 2014.

The Invention Explained

• Problem Addressed: The patent describes the limitations of prior e-commerce and retail models, which often relied on maintaining costly physical inventories and presenting static, "infomercial type" online catalogs that were expensive to update and offered limited personalization (Compl. ¶23; ’846 Patent, col. 3:5-22).
• The Patented Solution: The invention is 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 an IP address) to dynamically generate and send "user-specific product offerings" via automated messages ('846 Patent, Abstract; col. 11:36-12:2). This allows for a more flexible and personalized e-commerce experience without the need for the central merchant to hold inventory.
• Technical Importance: The technology represents a shift from a single-merchant, static web catalog to a multi-source, dynamic system capable of creating customized user experiences and pricing based on a variety of real-time data inputs (Compl. ¶16-17; ’846 Patent, col. 6:7-16).

Key Claims at a Glance

• The complaint asserts independent claim 1 and dependent claims 3 and 4 (Compl. ¶32).
• Independent Claim 1 requires:
  • A computer-implemented method for targeted product offering.
  • Receiving product data for multiple products from multiple distributors via a 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 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: Similar to its family member, the ’743 Patent addresses the shortcomings of traditional retail, such as the geographic and inventory limitations of brick-and-mortar stores and the inflexibility and expense of printed catalogs (’743 Patent, col. 1:21-2:20).
• The Patented Solution: The invention describes a computer-implemented system that receives product data from multiple distributors and customer location data derived from an IP address. Using this information, the system generates "user-specific product offering[s]" and sends them to customers via automated messages, enabling a dynamic and personalized online retail environment (’743 Patent, Abstract; col. 12:36-51). The system architecture is depicted in Figure 1, showing the flow of data between customers, distributors, and various processing modules.
• Technical Importance: This system architecture enabled e-commerce businesses to present a unified storefront that was sourced by multiple, potentially independent, suppliers, with pricing and product selection that could be tailored to individual users in real-time (Compl. ¶19-21; ’743 Patent, col. 6:7-16).

Key Claims at a Glance

• The complaint asserts independent claim 1 and dependent claim 4 (Compl. ¶37).
• Independent Claim 1 requires:
  • A computer-implemented method for targeted product offering.
  • Receiving product data for a plurality of products from a plurality of distributors.
  • Receiving customer data, including location information derived from a customer's IP address.
  • Generating at least one user-specific product offering from the products, based at least in part on personal information related to a customer location.
  • Sending automated messages containing the offering to one or more customers.
• The complaint does not explicitly reserve the right to assert other claims.

III. The Accused Instrumentality

Product Identification

• The "Accused Instrumentalities" are identified as the website https://www.IKEA.com and the servers and systems that host and operate it (Compl. ¶9).

Functionality and Market Context

• The complaint alleges that the IKEA website functions as an e-commerce platform that offers targeted products to customers over a communications network (Compl. ¶14). It is alleged to operate by receiving product data (from what the complaint characterizes as a plurality of distributors) and customer data, and using that combined data to generate user-specific product offerings that are then conveyed to customers (Compl. ¶14). The complaint frames this functionality as providing significant commercial value by enhancing automation and user-specific customization in the online shopping experience (Compl. ¶22). No probative visual evidence provided in complaint.

IV. Analysis of Infringement Allegations

The complaint references preliminary claim charts in Exhibits 3 and 4, which were not attached to the publicly filed document. The analysis below is based on the narrative infringement theory presented in the body of the complaint.

’846 Patent Infringement Allegations

• Identified Points of Contention:
  • Scope Question: A primary issue may be whether IKEA's internal supply chain, consisting of its own warehouses and distribution centers, qualifies as a "plurality of distributors" as contemplated by the patent, which describes selecting a distributor based on criteria like profit margin and shipping speed (’846 Patent, col. 9:8-44).
  • Technical Question: The complaint provides no specific facts showing that IKEA.com generates offerings based on "location information derived from an IP address." The case may turn on whether evidence demonstrates that the accused system uses IP-based location data for this specific purpose, as opposed to other purposes like logistics or fraud prevention.

’743 Patent Infringement Allegations

• Identified Points of Contention:
  • Scope Question: As with the ’846 Patent, the definition of "plurality of distributors" will be a central point of dispute.
  • Technical Question: The infringement allegation hinges on whether the accused system "generat[es]" offerings based "at least in part from the personal information concerning a customer location." The dispute will likely focus on the causal link between any location data collected and the specific products shown to a user.

V. Key Claim Terms for Construction

• The Term: "plurality of distributors"

• Context and Importance: This term is critical because infringement requires receiving product data from multiple distinct distributors. If IKEA's system sources products from its own network of warehouses under a single corporate umbrella, a court may need to decide if this meets the claim's requirement. Practitioners may focus on this term because its construction could be dispositive of the infringement question.

• Intrinsic Evidence for Interpretation:

  • Evidence for a Broader Interpretation: The claims themselves do not explicitly require the distributors to be separate legal or corporate entities. A party could argue that functionally distinct sources of product data (e.g., different regional warehouses with different stock and pricing data) constitute a "plurality of distributors."
  • Evidence for a Narrower Interpretation: The specification describes a "Distributor Selection" subsystem that chooses a distributor based on competitive factors like "price," "shipping speed," or "profit margins" (’743 Patent, col. 5:8-9; col. 9:23-44). This suggests the patent contemplates commercially distinct entities competing to fill an order, not a single entity's internal logistics network.

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

• Context and Importance: The infringement theory depends on the accused system creating "user-specific" offerings, not merely generic or regional ones. The construction of this term will determine what level of personalization is required to infringe.

• Intrinsic Evidence for Interpretation:

  • Evidence for a Broader Interpretation: The term could be construed to cover any product display that is not identical for all users, such as showing products available at a user's nearest store. The claim only requires the offering to be generated "at least in part" from the customer data (’846 Patent, col. 12:1-2).
  • Evidence for a Narrower Interpretation: The specification provides examples of highly specific personalization, such as showing "a catalog of products appropriate for students with academic pricing" versus one for a "business person... with available corporate discounts" (’846 Patent, col. 6:7-13). This language may support a construction requiring a deeper level of customization than simple geographic filtering.

VI. Other Allegations

• Indirect Infringement: The complaint does not contain specific factual allegations to support claims of induced or contributory infringement.
• Willful Infringement: The complaint makes no allegations of pre-suit or post-suit knowledge of the patents that would typically support a claim for willful infringement. However, the prayer for relief seeks a declaration that the case is exceptional under 35 U.S.C. § 285, which is a request for attorney's fees often associated with findings of willfulness or other litigation misconduct (Compl. p. 9, ¶C).

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

This dispute appears to center on fundamental questions of claim scope and evidentiary proof. The key questions for the court will likely be:

1. A core issue will be one of definitional scope: can the term "plurality of distributors," which in the patent's specification appears to describe a system of competing third-party vendors, be construed to read on a single, vertically integrated company's internal supply chain?
2. A key evidentiary question will be one of causation and specificity: can the Plaintiff provide evidence that IKEA's e-commerce platform performs the specific function of "generating... user-specific product offerings" using "location information derived from an IP address," as required by the claims, or will the evidence show a more generic use of location data for purposes like logistics or inventory display not tied to generating a targeted offering?