Consolidated Transaction Processing LLC v. Reinalt Thomas Corp

I. Executive Summary and Procedural Information

• Parties & Counsel:
  • Plaintiff: Consolidated Transaction Processing LLC (Nevada)
  • Defendant: Reinalt-Thomas Corporation d/b/a Discount Tire (Michigan)
  • Plaintiff’s Counsel: Beaty Legal PLLC
• Case Identification: 4:23-cv-01077, E.D. Tex., 12/06/2023
• Venue Allegations: Venue is based on Defendant maintaining established places of business within the Eastern District of Texas, including specific retail store locations in Plano and Longview.
• Core Dispute: Plaintiff alleges that Defendant’s e-commerce website and backend systems infringe patents related to dynamically generating and sending targeted product offerings based on aggregated distributor data and customer-specific information.
• Technical Context: The technology concerns e-commerce platforms that function as marketplaces, aggregating product information from multiple suppliers and using customer data to create personalized shopping experiences and offers.
• Key Procedural History: The asserted patents share a common specification and claim priority to a 1999 application. The complaint does not mention any prior litigation, post-grant proceedings, or licensing history related to the patents-in-suit.

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 background describes prior art retail models, including both brick-and-mortar stores and early e-commerce, as suffering from limitations such as high inventory costs, inflexibility, and a lack of personalization (Compl. ¶13; ’846 Patent, col. 3:6-22). These issues were particularly acute for industries with rapidly evolving products (Compl. ¶13).
• The Patented Solution: The invention describes a centralized system that aggregates product data from a plurality of different distributors and receives data from customers (Compl. ¶14). The system then uses this information, specifically including customer location data, to generate and automatically send targeted, user-specific product offerings over a communications network (’846 Patent, Abstract; col. 4:41-58). This allows a merchant to offer a wide variety of products without holding physical inventory.
• Technical Importance: The described technical approach allows an online retailer to create a dynamic, personalized shopping experience that can be customized for different user segments (e.g., students vs. business customers) and offer competitive pricing based on real-time data from multiple suppliers (Compl. ¶17).

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, comprising:
  • receiving product data for a plurality of products from a plurality of distributors via a communications network;
  • receiving customer data, including location information derived from a customer's IP address;
  • generating, at least in part from the customer data, user-specific product offerings; and
  • sending automated messages containing 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 patent addresses the shortcomings of traditional retail and catalog sales, such as geographic limitations, high costs, and the inability to quickly adapt to market changes (’743 Patent, col. 1:21-2:2). It notes that early e-commerce often just replicated these models online without solving the underlying problem of inventory management (Compl. ¶23).
• The Patented Solution: The invention discloses an e-commerce transaction processing system, illustrated in Figure 1, that serves as an interface between customers and multiple distributors/vendors (’743 Patent, Fig. 1). The system builds a product database from various distributor feeds and collects customer data, then uses a "Catalog Builder/Pricing Modeler" to dynamically create user-specific electronic catalogs and offerings based on factors like customer location (’743 Patent, col. 4:35-40, col. 6:1-16).
• Technical Importance: This system architecture enables a single merchant to present a wider range of product offerings than it could from its own inventory alone, and to dynamically select a distributor to fulfill an order based on criteria like price, availability, or shipping speed (Compl. ¶21; ’743 Patent, col. 9:23-44).

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, comprising:
  • receiving product data for a plurality of products from a plurality of distributors via a communications network;
  • receiving customer data, including location information derived from the customer's IP address;
  • generating, based at least in part on personal information about customer location, a user-specific product offering; and
  • sending automated messages containing the user-specific product offering to one or more customers.

III. The Accused Instrumentality

Product Identification

• The complaint identifies the Accused Instrumentalities as the website https://www.discounttire.com and the associated backend servers and systems controlled by the Defendant (Compl. ¶9).

Functionality and Market Context

• The complaint alleges the Accused Instrumentalities constitute an e-commerce platform for selling tires and other automotive products (Compl. ¶9). The infringement theory is predicated on the allegation that this platform operates by receiving product information from multiple manufacturers or suppliers, gathering data from website users, and using that information to present customized or targeted product offerings. The complaint contends that such automation and user-specific customization are crucial for businesses to distinguish themselves in the competitive online marketplace (Compl. ¶22).

IV. Analysis of Infringement Allegations

The complaint references "preliminary and exemplary claim charts" in Exhibits 3 and 4, which were not filed with the public complaint (Compl. ¶¶32, 37). The complaint does not provide sufficient detail for a tabular analysis of the infringement allegations.

The narrative infringement theory for both the ’846 and ’743 patents appears to be that the Defendant's website performs the steps of the asserted method claims. The complaint alleges that the Accused Instrumentalities (1) receive product data from a plurality of sources (e.g., tire manufacturers); (2) receive customer data, including location information that can be derived from a user's IP address; (3) use this data to generate user-specific product offerings, such as showing tires that fit a specific vehicle and are available at a local store; and (4) send automated messages containing these offerings, for example by displaying the tailored results on the website (Compl. ¶¶14, 32, 37). No probative visual evidence provided in complaint.

• Identified Points of Contention:
  • Scope Questions: A potential dispute may arise over the meaning of "plurality of distributors." The infringement allegation appears to treat tire manufacturers as "distributors." The defense may argue that as a retailer, it does not operate the claimed multi-distributor platform. The resolution may depend on how broadly the term "distributor" is construed from the patent's specification, which also uses the terms "vendors" and "suppliers" (’743 Patent, col. 5:50-61).
  • Technical Questions: A key factual question is whether the accused system "generat[es]" offerings based on "location information derived from an IP address," as strictly required by the claims. The complaint does not provide evidence to distinguish this specific mechanism from more common methods, such as a user manually entering a zip code or selecting a store location. The source of the location data used to generate the offering will likely be a point of significant factual dispute.

V. Key Claim Terms for Construction

• The Term: "receiving product data ... from a plurality of distributors" (’846 Patent, cl. 1; ’743 Patent, cl. 1)

  • Context and Importance: This term is foundational to the patent's architecture and the infringement case. Practitioners may focus on this term because its construction will determine whether Defendant’s business model, which may involve sourcing from manufacturers rather than acting as a pure marketplace for third-party distributors, falls within the scope of the claims.
  • Intrinsic Evidence for Interpretation:
    • Evidence for a Broader Interpretation: The specification uses "distributors" interchangeably with "vendors" and discusses sourcing from "suppliers of products," which may support a broad definition that includes manufacturers supplying goods to a retailer (’743 Patent, col. 5:50-51; ’743 Patent, Fig. 1).
    • Evidence for a Narrower Interpretation: The context of the invention solving the problem of a retailer holding inventory could support a narrower definition where "distributors" are distinct third-party entities that ship directly to the customer, a model that may differ from Defendant's operations. The system diagram shows "Distributors/Vendors" as an entity separate from the core "Order Processing System" (’743 Patent, Fig. 1).

• The Term: "location information derived from an IP address" (’846 Patent, cl. 1; ’743 Patent, cl. 1)

  • Context and Importance: This limitation defines a specific technical mechanism for obtaining customer location. Its construction is critical because infringement requires proof that the accused system uses this particular method, not just any method of determining location.
  • Intrinsic Evidence for Interpretation:
    • Evidence for a Broader Interpretation: A party might argue that "derived from" could cover a process where an IP address is used to provide an initial, default location that the user can then confirm or change, thereby still being "derived from" the IP address.
    • Evidence for a Narrower Interpretation: The claim language explicitly ties the "location information" used for generating the offering to a specific source: "an IP address" (’743 Patent, col. 12:43-45). This suggests that if the system generates offerings using only user-entered data (like a zip code) without using IP-based geolocation, it would not meet this element.

VI. Other Allegations

• Willful Infringement: The complaint does not explicitly allege willful infringement. It does, however, include a prayer for a declaration that the case is "exceptional" under 35 U.S.C. § 285, which is the basis for awarding attorneys' fees (Compl., Prayer for Relief ¶C).

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

The resolution of this dispute may turn on the answers to several key questions:

1. A central issue will be one of claim scope and factual application: Can the term "distributors," as used in the patents, be construed to cover the relationship between a retailer like Discount Tire and its product manufacturers, or is it limited to a multi-vendor marketplace model?

2. A key evidentiary question will be one of technical implementation: Does the Plaintiff have evidence to prove that the accused website generates its product offerings using location data specifically "derived from an IP address," as the claims require, or does the system rely exclusively on location data manually provided by the user?

3. A final question will concern the definition of "sending...automated messages." Does the routine, server-side generation and display of a webpage in a user's browser meet this limitation, or does the claim require a more discrete, outbound communication such as an email or notification?