Consolidated Transaction Processing LLC v. Childrens Place Inc

I. Executive Summary and Procedural Information

• Parties & Counsel:
  • Plaintiff: Consolidated Transaction Processing LLC (Nevada)
  • Defendant: The Children's Place, Inc. (Delaware)
  • Plaintiff’s Counsel: Shea | Beaty
• Case Identification: 4:24-cv-00447, E.D. Tex., 05/17/2024
• Venue Allegations: Plaintiff alleges venue is proper because Defendant maintains an established place of business in the district, specifically identifying a retail store location in Frisco, Texas.
• Core Dispute: Plaintiff alleges that Defendant’s e-commerce website and associated back-end systems infringe patents related to generating user-specific product offerings by combining product data from multiple distributors with customer data.
• Technical Context: The technology concerns e-commerce systems that move beyond static online catalogs by dynamically creating personalized shopping experiences based on aggregated product data from various suppliers and individualized customer information.
• Key Procedural History: The patents-in-suit belong to a family of patents claiming priority to a 1999 application. The complaint does not mention any prior litigation involving these patents or any post-grant proceedings before the U.S. Patent and Trademark Office.

Case Timeline

Date	Event
1999-06-30	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
2024-05-17	Complaint Filed

II. Technology and Patent(s)-in-Suit Analysis

U.S. Patent No. 8,712,846

• Patent Identification: U.S. Patent No. 8,712,846, "Sending Targeted Product Offerings Based on Personal Information," issued April 29, 2014. (Compl. ¶30).
• The Invention Explained:
  • Problem Addressed: The patent describes the problems of early e-commerce, where online businesses still operated like traditional retailers by maintaining their own costly inventory and using the internet primarily as an advertising medium with static, catalog-style web pages. (Compl. ¶¶ 13, 23; ’846 Patent, col. 2:63-3:14).
  • The Patented Solution: The invention is a system for processing transactions that receives product data from a “plurality of distributors” and personal data from customers. It then uses this combined information to dynamically generate and send “user-specific product offerings” via automated messages, creating personalized electronic catalogs without necessarily holding inventory. (’846 Patent, Abstract; col. 4:41-57).
  • Technical Importance: This technology represents a move away from one-size-fits-all online stores toward dynamic, data-driven e-commerce platforms capable of aggregating product supply from multiple sources to provide a personalized customer experience. (Compl. ¶¶ 17-18).
• Key Claims at a Glance:
  • The complaint asserts independent claim 1 and dependent claims 3 and 4. (Compl. ¶32).
  • Independent Claim 1 of the ’846 Patent requires:
    • 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 an IP address;
    • 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.

U.S. Patent No. 8,396,743

• Patent Identification: U.S. Patent No. 8,396,743, "Sending Targeted Product Offerings Based on Personal Information," issued March 12, 2013. (Compl. ¶35).
• The Invention Explained:
  • Problem Addressed: As a parent to the ’846 patent with a nearly identical specification, the ’743 patent addresses the same limitations of traditional retail and early e-commerce, such as the high costs of inventory and the inflexible nature of static online catalogs. (’743 Patent, col. 2:22-3:42).
  • The Patented Solution: The invention describes a computer-implemented method that solves these problems by receiving product data from multiple distributors and location-based customer data (derived from an IP address), and then generating personalized product offerings for customers. (’743 Patent, Abstract; col. 12:36-50).
  • Technical Importance: The invention facilitates a more efficient e-commerce model where a wider range of product offerings can be presented to customers by aggregating data from various suppliers and personalizing the shopping experience. (Compl. ¶21).
• Key Claims at a Glance:
  • The complaint asserts independent claim 1 and dependent claim 4. (Compl. ¶37).
  • Independent Claim 1 of the ’743 Patent requires:
    • 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, with the customer data comprising 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; and
    • sending automated messages comprising the user-specific product offering.

III. The Accused Instrumentality

• Product Identification: The "Accused Instrumentalities" are identified as "The Children's Place website (www.childrensplace.com), along with associated hardware and/or software, including but not limited to The Children’s Place’ back-end servers and related computer systems" that operate the website. (Compl. ¶9).
• Functionality and Market Context: The complaint describes the Accused Instrumentalities as providing an online shopping experience. (Compl. ¶22). It alleges that the use of automation and user-specific customization is crucial for merchants selling online. (Compl. ¶22). The complaint does not, however, provide specific factual allegations about the technical operation of the Defendant's back-end systems, such as whether they receive product data from multiple distinct distributors or how they use customer data to generate offerings.

IV. Analysis of Infringement Allegations

The complaint alleges direct infringement of both the ’846 and ’743 patents but relies on "preliminary and exemplary claim charts" provided as Exhibits 3 and 4 to detail its infringement theory. (Compl. ¶¶ 32, 37). As these exhibits were not filed with the public complaint, a detailed element-by-element analysis is not possible from the complaint itself. The narrative portions of the complaint do not provide sufficient detail for analysis of the infringement allegations.

No probative visual evidence provided in complaint.

• Identified Points of Contention:
  • Technical Questions: A central question will be whether the accused e-commerce platform functions as a marketplace aggregating products from a "plurality of distributors," or whether it operates as a conventional single-merchant retailer selling its own inventory. The complaint does not provide facts to resolve this question.
  • Scope Questions: The dispute may turn on whether the accused system's use of customer data to personalize a user's experience constitutes the "generat[ion]" of a "user-specific product offering" as those terms are used in the patents. It also raises the question of whether the Defendant's system uses "location information derived from an IP address" in the manner required by the claims.

V. Key Claim Terms for Construction

• The Term: "plurality of distributors"

• Context and Importance: This term appears in independent claim 1 of both asserted patents and is foundational to the patent's description of the invention. Practitioners may focus on this term because its construction could determine whether the patents apply only to multi-vendor marketplaces or also to single-brand retailers that have multiple internal distribution points or suppliers. The complaint does not allege any facts suggesting Defendant uses multiple third-party distributors.

• Intrinsic Evidence for Interpretation:

  • Evidence for a Broader Interpretation: Parties seeking a broader definition might argue that the term is not explicitly defined and could encompass separate warehouses or supply chains within a single corporate entity.
  • Evidence for a Narrower Interpretation: The specification repeatedly contrasts the invention with traditional retailers that maintain their own inventory. (’846 Patent, col. 3:6-14). Furthermore, Figure 5 and the accompanying text describe a "Distributor Selection Logic" for choosing among "DISTRIBUTOR 1," "DISTRIBUTOR 2," etc., who may offer overlapping products, which suggests they are distinct commercial entities. (’846 Patent, Fig. 5; col. 9:7-43).

• The Term: "user-specific product offering"

• Context and Importance: This term is the output of the claimed method. Its definition is critical for determining what level of personalization is required to infringe. The dispute will question whether standard e-commerce features like displaying recently viewed items or basic recommendations meet this limitation.

• Intrinsic Evidence for Interpretation:

  • Evidence for a Broader Interpretation: A party could argue that any presentation of products tailored to a user, however simple, is "user-specific."
  • Evidence for a Narrower Interpretation: The patent describes a "Catalog Builder/Price Modeler" that uses an "intelligent rule-based algorithm" to generate offerings based on distributor prices, profit margins, and customer-specific data like academic or corporate status, suggesting a more complex and structured generation process than simple personalization. (’846 Patent, col. 5:61-6:29).

VI. Other Allegations

• Willful Infringement: The complaint does not explicitly allege willful infringement or provide facts to support pre-suit knowledge of the patents. However, the prayer for relief requests a declaration that the case is "exceptional under 35 U.S.C. § 285," which could lay the groundwork for a later motion for enhanced damages or attorney's fees. (Compl. p. 9).

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

• A core issue will be one of definitional scope: can the term "plurality of distributors", which the patents describe in the context of selecting between different suppliers, be construed to read on the internal supply chain or distribution centers of a single, vertically integrated retailer? The viability of the infringement case may depend heavily on this construction.
• A key evidentiary question will be one of factual correspondence: as the complaint relies entirely on unattached exhibits, the case will turn on whether Plaintiff can produce evidence showing that Defendant's e-commerce platform actually performs the specific technical steps of the claims, particularly the aggregation of product data from multiple distinct sources and the specific use of IP-address-derived location data to generate personalized offerings.