Consolidated Transaction Processing LLC v. Mattress Firm Inc

I. Executive Summary and Procedural Information

• Parties & Counsel:
  • Plaintiff: Consolidated Transaction Processing LLC (Nevada)
  • Defendant: Mattress Firm, Inc. (Delaware)
  • Plaintiff’s Counsel: Shea | Beaty
• Case Identification: 4:24-cv-00449, E.D. Tex., 05/17/2024
• Venue Allegations: Plaintiff alleges venue is proper in the Eastern District of Texas because Defendant maintains an established place of business in the district, specifically identifying a retail store location in Sherman, Texas.
• Core Dispute: Plaintiff alleges that Defendant’s e-commerce website and associated back-end systems infringe two patents related to generating and sending targeted product offerings based on customer and multi-distributor product data.
• Technical Context: The technology at issue pertains to e-commerce systems that aggregate product data from multiple sources and leverage customer information to create dynamic, personalized online shopping experiences.
• Key Procedural History: The complaint does not reference prior litigation, inter partes review proceedings, or licensing history concerning the patents-in-suit. The asserted patents are part of the same patent family and share a common specification.

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

• 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's background describes the limitations of prior e-commerce models, which often functioned like online versions of print catalogs or required retailers to maintain costly physical inventories, making it difficult to adapt to market changes or offer a wide variety of products. (Compl. ¶23; ’846 Patent, col. 2:63-3:23).
  • The Patented Solution: The invention describes a centralized system for e-commerce that aggregates product data directly from a "plurality of distributors" and combines it with customer data, including location information derived from an IP address, to generate and send "user-specific product offerings." (’846 Patent, Abstract; col. 3:40-52). This system allows a merchant to offer a dynamically updated and personalized catalog of products without holding the inventory itself, as illustrated in the overall system architecture of Figure 1. (’846 Patent, Fig. 1).
  • Technical Importance: The described technology represents a shift from static e-commerce websites to dynamic platforms that can personalize offerings and serve as an aggregator for multiple, otherwise independent, product suppliers. (Compl. ¶16).
• 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 recites the following essential elements:
    • A computer-implemented method for targeted product offering;
    • Receiving product data for a plurality of products from a plurality of distributors for the products via a communications network;
    • Receiving customer data from a plurality of customers, the customer data comprising location information associated with customers, the location information derived from an IP address associated with one or more of the customers;
    • 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 to the one or more of the customers.
  • The complaint’s use of "at least claims 1, 3, and 4" suggests a reservation of the right to assert additional claims. (Compl. ¶32).

U.S. Patent No. 8,396,743 - Sending Targeted Product Offerings Based on Personal Information

• 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 sharing the same specification, this patent addresses the same technical problems of costly inventory and static product offerings in traditional and early e-commerce systems. (Compl. ¶13; ’743 Patent, col. 2:65-3:39).
  • The Patented Solution: The patented solution is a method for targeted e-commerce that involves receiving product data from multiple distributors, receiving customer data that includes IP-derived location, and using that combined information to generate personalized product offerings. (’743 Patent, Abstract). The detailed description explains that this allows for the creation of dynamic catalogs and pricing based on real-time data from suppliers and user-specific criteria. (’743 Patent, col. 5:57-6:29).
  • Technical Importance: The invention provided a technical framework for an e-commerce business to act as a flexible intermediary between multiple suppliers and end customers, personalizing the shopping experience. (Compl. ¶¶20-21).
• Key Claims at a Glance:
  • The complaint asserts independent claim 1 and dependent claim 4. (Compl. ¶37).
  • Independent Claim 1 of the '743 Patent recites the following essential elements:
    • A computer-implemented method for targeted product offering;
    • Receiving product data for a plurality of products from a plurality of distributors for the products via a communications network;
    • Receiving customer data from a plurality of customers, the customer data comprising location information associated with customers, the customer location information derived from an IP address associated with the customer;
    • Generating, at least in part from the personal information concerning a customer location, at least one user-specific product offering from the plurality of products; and
    • Sending, by a computer, automated messages comprising the at least one user-specific product offering to the one or more customers.
  • The complaint’s phrasing "at least claims 1 and 4" suggests a reservation of the right to assert additional claims. (Compl. ¶37).

III. The Accused Instrumentality

• Product Identification: The "Accused Instrumentalities" are identified as the "Mattress Firm website (www.mattressfirm.com), along with associated hardware and/or software, including but not limited to Mattress Firm's back-end servers and related computer systems" that operate the website. (Compl. ¶9).
• Functionality and Market Context: The complaint alleges that the Accused Instrumentalities provide for online business transactions and are used to make, use, sell, and offer for sale products to customers in the district and throughout the United States. (Compl. ¶¶5, 9). The complaint asserts that automation and user-specific customization are crucial for distinguishing online businesses and that the patented inventions provide these commercially valuable advantages. (Compl. ¶22). The complaint does not, however, provide specific factual allegations in its main body detailing how the Accused Instrumentalities technically operate to perform the steps of the asserted claims.

IV. Analysis of Infringement Allegations

The complaint states that detailed infringement allegations for the '846 and '743 patents are provided in attached Exhibits 3 and 4, respectively. (Compl. ¶¶32, 37). As these exhibits were not included with the complaint document, a claim chart analysis is not possible.

No probative visual evidence provided in complaint.

The narrative infringement theory is that the Accused Instrumentalities practice the methods claimed in the patents-in-suit. (Compl. ¶¶32, 37). This theory is based on the general inventive concept of using "product data from a plurality of distributors and personal information of customers in generating electronic catalogs of user-specific product offerings." (Compl. ¶23). The complaint alleges that Defendant’s website and back-end systems constitute the system that performs these infringing methods. (Compl. ¶9).

• Identified Points of Contention:
  • Scope Questions: A central question may be whether the entities from which Mattress Firm sources its products (e.g., various mattress brands) qualify as a "plurality of distributors" as the term is used in the patents. The patent specification describes a model where an e-commerce system selects a distributor to fill an order from multiple options, a process that may or may not map directly onto a retailer's relationship with its brand suppliers. (’846 Patent, col. 9:8-44).
  • Technical Questions: The claims require "generating... user-specific product offerings" based on "location information derived from an IP address." (e.g., ’846 Patent, cl. 1). A key technical question will be what evidence demonstrates that the Accused Instrumentalities use IP-derived location data as an input to generate a product offering, as opposed to using such data for other purposes, such as identifying nearby physical stores, calculating regional sales tax, or estimating shipping costs, which may not satisfy the claim limitation.

V. Key Claim Terms for Construction

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

  • Context and Importance: The infringement analysis depends on whether Defendant’s product suppliers are considered "distributors" under the patents' claims. Practitioners may focus on this term because its construction could determine whether Defendant's business model falls within the scope of the claims.
  • Intrinsic Evidence for Interpretation:
    • Evidence for a Broader Interpretation: The claims do not define the term, which may support an argument for applying its plain and ordinary meaning, potentially encompassing any set of multiple, distinct product suppliers or manufacturers.
    • Evidence for a Narrower Interpretation: The specification describes a "Distributor Selection sub-system" that polls distributors for availability and price to determine which one will fill the order. (’846 Patent, col. 9:8-25). Figure 5 depicts a "Distributor Selection Logic" choosing between "DISTRIBUTOR 1," "DISTRIBUTOR 2," etc. This context could support a narrower construction tied to a model where a central system actively selects from competing third-party fulfillers, rather than a retailer simply sourcing products from multiple brands.

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

  • Context and Importance: This term is at the core of what the invention creates. Its definition is critical for determining whether the output of the Accused Instrumentalities meets this limitation.
  • Intrinsic Evidence for Interpretation:
    • Evidence for a Broader Interpretation: The specification gives an example of showing a student a catalog with academic pricing and a business person a catalog with corporate discounts, suggesting that different pricing or catalog views for different user types could constitute a "user-specific product offering." (’846 Patent, col. 5:61-6:16).
    • Evidence for a Narrower Interpretation: The claims require the offering to be generated "at least in part from the customer data, user-specific product offerings." ('846 Patent, cl. 1). This language could be argued to require that the specific products shown, or their arrangement, are algorithmically selected based on the user's data, as opposed to simply applying a different price skin or showing localized availability information for a universal catalog. The patent also discusses generating "customized portfolios" based on purchase patterns for "targeted advertising." (’846 Patent, col. 5:15-20).

VI. Other Allegations

• Willful Infringement: The complaint does not include an explicit allegation of willful infringement. However, the prayer for relief requests a declaration that the case is "exceptional under 35 U.S.C. § 285" and an award of attorneys' fees, but does not plead specific facts (such as pre-suit knowledge of the patents) to support such a finding. (Compl. p. 9, ¶C).

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

This case appears to present foundational questions of claim scope and evidentiary proof, heightened by a complaint that relies on extrinsic documents for its specific infringement contentions. The key questions for the court will likely include:

1. A core issue will be one of definitional scope: Can the patent term "plurality of distributors," which the specification illustrates with a model of an e-commerce aggregator selecting between competing fulfillers, be construed to read on a conventional retailer’s business of sourcing and selling products from multiple distinct brands?

2. A key evidentiary question will be one of technical causality: What evidence will be required to prove that the accused website performs the claimed step of "generating" a "user-specific product offering" from customer location data, rather than merely using location data for ancillary logistical functions such as local store identification or tax calculation? The resolution will depend on the factual record developed during discovery concerning the actual operation of Defendant's systems.