Consolidated Transaction Processing LLC v. OReilly Automotive Inc

I. Executive Summary and Procedural Information

• Parties & Counsel:
  • Plaintiff: Consolidated Transaction Processing LLC (Nevada)
  • Defendant: O'Reilly Automotive, Inc. (Missouri)
  • Plaintiff’s Counsel: Beaty Legal PLLC
• Case Identification: 4:23-cv-01076, E.D. Tex., 12/06/2023
• Venue Allegations: Plaintiff alleges venue is proper in the Eastern District of Texas because Defendant O'Reilly maintains established places of business in the district, including specific retail store locations in Longview and Beaumont, Texas.
• Core Dispute: Plaintiff alleges that Defendant’s e-commerce website and associated systems infringe patents related to generating targeted product offerings by aggregating product data from multiple sources and using customer-specific information.
• Technical Context: The technology at issue addresses early e-commerce challenges by creating a centralized, automated system to present dynamic, personalized online catalogs sourced from various suppliers, rather than relying on a single merchant's static inventory.
• Key Procedural History: The patents-in-suit share a specification and claim priority back to a 1999 application, indicating a long prosecution history. The '846 Patent is a continuation of the application that matured into the '743 Patent, suggesting a close technical relationship and a focused effort to claim different aspects of the same core invention.

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 prior art of e-commerce as being constrained by the models of traditional retail, where businesses maintained costly physical inventories and used the internet primarily as a static advertising medium akin to a paper catalog (Compl. ¶13; ’846 Patent, col. 3:8-14). This approach was described as inflexible, slow to update, and lacking in personalization.
• The Patented Solution: The invention proposes a computer-implemented method where a central system receives product data from a "plurality of distributors" and also receives customer data, including location information derived from the customer's IP address. Using this combined data, the system generates "user-specific product offerings" and sends them to customers via automated messages ('846 Patent, Abstract; col. 4:51-58). This creates a dynamic electronic catalog that can be tailored to individual users without the merchant holding inventory from all sources (Compl. ¶16).
• Technical Importance: The described technology represents a shift from a simple online storefront to a more sophisticated e-commerce hub capable of aggregating data from multiple suppliers to enable dynamic pricing and personalized marketing (Compl. ¶17; ’846 Patent, col. 5:61-6:16).

Key Claims at a Glance

• The complaint asserts independent claim 1 and dependent claims 3 and 4 (Compl. ¶32).
• The essential elements of independent claim 1 include:
  • 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.
  • Sending, by a computer, automated messages that comprise the user-specific product offerings to 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: The '743 Patent, sharing its specification with the '846 Patent, identifies the same core problem: early e-commerce systems were often just online versions of mail-order catalogs, suffering from high inventory costs and an inability to provide customized shopping experiences (Compl. ¶23; ’743 Patent, col. 2:62-3:5).
• The Patented Solution: The invention is a method for targeted product offerings using a "transaction processor" that integrates multiple functions, as illustrated in the system diagram of Figure 1 ('743 Patent, Fig. 1). The system receives product data from various distributors and customer data (including location from an IP address) and uses a "Catalog Builder/Price Modeler" to generate dynamic, user-specific catalogs and pricing ('743 Patent, col. 4:36-40). This allows, for example, for different product mixes and pricing to be shown to a student versus a corporate user ('743 Patent, col. 6:6-13).
• Technical Importance: The invention provided a technical framework for an e-commerce platform to act as a marketplace aggregator, offering a wider selection of products and more competitive, dynamic pricing than a single merchant could alone (Compl. ¶¶19, 21).

Key Claims at a Glance

• The complaint asserts independent claim 1 and dependent claim 4 (Compl. ¶37).
• 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 a customer's IP address.
  • Generating, based at least in part on personal information concerning customer location, at least one user-specific product offering.
  • Sending automated messages containing the user-specific product offering.

III. The Accused Instrumentality

Product Identification

The accused instrumentality is Defendant O'Reilly's website, https://www.oreillyauto.com, and the associated servers, systems, and e-commerce functionalities (Compl. ¶9).

Functionality and Market Context

The complaint alleges that the Accused Instrumentality is used to make, use, sell, and offer for sale products and services to customers in Texas and throughout the United States (Compl. ¶¶5, 9). The complaint does not provide specific technical details about the operation of the O'Reilly website. Instead, it references external exhibits, not provided with the complaint, for detailed infringement allegations (Compl. ¶¶32, 37). The complaint asserts that O'Reilly conducts "substantial business" but does not offer further specifics on its market position (Compl. ¶9).

IV. Analysis of Infringement Allegations

The complaint alleges that the details of infringement are set forth in preliminary claim charts attached as Exhibits 3 and 4, which were not included in the public filing (Compl. ¶¶32, 37). The narrative infringement theory, synthesized from the complaint's background section, is that O'Reilly's website performs the patented methods. This theory suggests the website receives product data (from O'Reilly's own supply chain) and customer data (such as location information potentially derived from a user's IP address for features like a store locator) to generate and display product offerings to online shoppers (Compl. ¶¶14, 16).

No probative visual evidence provided in complaint.

Identified Points of Contention

• Scope Questions: A central question may be whether O'Reilly, operating as a single retail entity, meets the "plurality of distributors" limitation. The case may turn on whether O'Reilly's internal supply chain, or any third-party drop-shippers it might use, can be legally construed as a "plurality of distributors" under the patent's definition.
• Technical Questions: The infringement allegation raises the question of the linkage between data collection and offer generation. What evidence demonstrates that the accused website uses IP-derived location data to "generate" a "user-specific product offering" as claimed? A key issue will be whether using location for a separate feature (e.g., a "find a store" function) constitutes using it to generate the product offering itself, or if the claims require a more integrated process where the offering's content or price is directly modified by the location data.

V. Key Claim Terms for Construction

The Term: "plurality of distributors" ('846 Patent, cl. 1; '743 Patent, cl. 1)

• Context and Importance: The construction of this term appears dispositive. If construed narrowly to require multiple independent, third-party commercial entities, the Plaintiff may face challenges proving infringement against a single integrated retailer like O'Reilly.
• Intrinsic Evidence for a Broader Interpretation: The specification refers to "distributors/vendors" and even "individual vendors," which could be argued to encompass a wide range of suppliers, not just large, formal distributors ('743 Patent, col. 5:53-56).
• Intrinsic Evidence for a Narrower Interpretation: The patent's background consistently contrasts its multi-source system with prior art single-merchant models that hold their own inventory ('743 Patent, col. 3:8-14). The detailed description explains a system that polls different distributors to check for product availability and pricing, which implies distinct, competing entities ('743 Patent, col. 9:16-22).

The Term: "generating... user-specific product offering" ('846 Patent, cl. 1; '743 Patent, cl. 1)

• Context and Importance: Practitioners may focus on this term because its definition will determine what level of website personalization constitutes infringement. The dispute will likely center on whether simply displaying a standard product page with a price and shipping options tailored by location is sufficient, or if the "generating" step requires a more fundamental customization of the product selection or price itself.
• Intrinsic Evidence for a Broader Interpretation: The claim language is general and does not specify the degree of customization required for an "offering" to be "user-specific." An offering that includes location-based shipping costs or local store availability could arguably be deemed "user-specific."
• Intrinsic Evidence for a Narrower Interpretation: The specification provides examples of generating substantively different catalogs, such as one with academic pricing for students versus another with corporate discounts for business people ('743 Patent, col. 6:6-16). This suggests "generating" involves creating a distinct and customized commercial offer, not merely appending logistical information to a standard one.

VI. Other Allegations

Indirect Infringement

The complaint includes language alleging O'Reilly is liable for "causing to be used the Accused Instrumentalities," which suggests a claim for induced infringement (Compl. ¶¶32, 37). However, the complaint does not plead specific facts to support the requisite elements of knowledge and intent, such as alleging that O'Reilly provided instructions encouraging its customers to perform the claimed methods in an infringing manner.

Willful Infringement

The complaint does not explicitly plead willfulness. It does, however, ask for a declaration that the case is "exceptional under 35 U.S.C. § 285," a remedy for which willful infringement can be a basis (Compl. p. 9). The complaint does not allege any pre-suit knowledge by O'Reilly of the patents, so any potential argument for enhanced damages would likely rely on conduct occurring after the filing of the lawsuit.

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

• A core issue will be one of definitional scope: can the claim term "plurality of distributors," which the patent specification contrasts with single-merchant systems, be construed to read on the integrated supply chain and e-commerce operations of a single retailer like O'Reilly?
• A key evidentiary question will be one of functional linkage: does the accused website perform the claimed step of "generating" a "user-specific product offering" using IP-derived location data, or is location data used for distinct functionalities (like a store locator) that are separate from the core process of creating and presenting the commercial offer to the user? The plaintiff will need to establish a direct, functional connection between these elements as recited in the claims.