Consolidated Transaction Processing LLC v. Northern Tool & Equipment Co Inc

I. Executive Summary and Procedural Information

• Parties & Counsel:
  • Plaintiff: Consolidated Transaction Processing LLC (Nevada)
  • Defendant: Northern Tool & Equipment Company, Inc. (Minnesota)
  • Plaintiff’s Counsel: SHEA | BEATY PLLC
• Case Identification: 4:25-cv-00024, E.D. Tex., 01/08/2025
• Venue Allegations: Venue is alleged to be proper in the Eastern District of Texas because the Defendant maintains a regular and established place of business within the district, specifically a retail store located in Plano, Texas.
• Core Dispute: Plaintiff alleges that Defendant’s e-commerce website and associated systems infringe patents related to methods for dynamically generating personalized product offerings by aggregating product data from multiple distributors and using customer-specific information.
• Technical Context: The technology at issue addresses backend systems for e-commerce, specifically personalizing a user's online shopping experience by creating customized catalogs and promotions based on data integrated from different suppliers and the user's own data.
• Key Procedural History: The asserted patents claim priority back to a 1999 application and are part of a larger patent family. U.S. Patent No. 8,712,846 is subject to a terminal disclaimer, which may limit its enforceable term. The complaint includes preemptive arguments against potential patent eligibility challenges under 35 U.S.C. § 101.

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 static online catalogs, required merchants to maintain expensive physical inventories, and lacked the ability to provide personalized shopping experiences (Compl. ¶13; ’846 Patent, col. 3:6-23).
• The Patented Solution: The invention discloses a computer-implemented system that addresses these problems by receiving product data from a "plurality of distributors" and customer data, including location information derived from an IP address. The system uses this information to generate "user-specific product offerings," which are then sent to customers via automated messages (’846 Patent, Abstract; col. 3:44-52). This allows for dynamic generation of customized catalogs and pricing based on rules, such as showing academic pricing to a student or corporate discounts to a business user (Compl. ¶17; ’846 Patent, col. 6:6-16).
• Technical Importance: The technology aimed to improve e-commerce by enabling a centralized system to offer a wide variety of products from multiple suppliers without holding inventory, while simultaneously personalizing the product offerings and pricing for each customer (Compl. ¶15-16).

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, comprising:
  • 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 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.

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, the ’743 Patent addresses the same technical problem: the inefficiency and lack of personalization in traditional and early e-commerce retail, which was constrained by physical inventory costs and static, one-size-fits-all customer interfaces (’743 Patent, col. 1:22-42, 2:62-3:4).
• The Patented Solution: The ’743 Patent similarly describes a method and system for aggregating product data from multiple distributors and combining it with customer data to create targeted offerings (’743 Patent, Abstract). The specification details how a central system can build a product database from various sources and use customer information to dynamically generate catalogs, promotions, and pricing, thereby creating a more personalized and efficient shopping experience (Compl. ¶14, ¶17; ’743 Patent, col. 5:6-20).
• Technical Importance: The invention provided a technical framework to move beyond e-commerce as a simple "advertising medium" and toward a fully integrated, data-driven retail platform capable of personalizing the customer journey from product discovery to pricing (Compl. ¶23).

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 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.

III. The Accused Instrumentality

Product Identification

The accused instrumentalities are Defendant’s website, "https://www.northerntool.com", and its associated e-commerce backend systems (Compl. ¶9).

Functionality and Market Context

The complaint alleges that the accused website is an e-commerce platform for selling products directly to consumers (Compl. ¶5, ¶9). The infringement theory is predicated on the allegation that this platform provides "automation and user-specific customization" to enhance the online shopping experience, which the Plaintiff claims is a crucial competitive differentiator in the modern online retail market (Compl. ¶22). The complaint does not, however, provide specific technical details regarding the actual operation of the Defendant's website or supply chain. No probative visual evidence provided in complaint.

IV. Analysis of Infringement Allegations

The complaint references "preliminary and exemplary claim charts" (Exhibits 3 and 4) that were not included with the filed document; therefore, the infringement allegations are summarized below in prose (Compl. ¶32, ¶37).

The complaint's narrative theory of infringement alleges that Defendant's e-commerce platform ("www.northerntool.com") practices the methods claimed in the '846 and '743 patents (Compl. ¶32, ¶37). The core allegation is that the Defendant's systems perform the steps of: (1) receiving product data from what the Plaintiff characterizes as a "plurality of distributors"; (2) receiving customer data, including location information that the patents teach can be derived from an IP address; (3) using this data to generate "user-specific product offerings"; and (4) sending these offerings to customers as "automated messages," for example by displaying personalized content on the website (Compl. ¶14, ¶24). The complaint does not provide specific, public-facing facts to support how the Defendant’s systems technically perform each of these claimed steps.

• Identified Points of Contention:
  • Scope Questions: A central question may be whether the Defendant's supply chain qualifies as receiving data from a "plurality of distributors" as contemplated by the patents. The court may need to determine if this requires real-time data aggregation from independent third-party entities, or if it can read on a more conventional retail model where a company sources products from various suppliers for its own centralized inventory (Compl. ¶19).
  • Technical Questions: A key evidentiary issue will be what technical evidence demonstrates that the accused website "generat[es]... user-specific product offerings" specifically from "location information derived from an IP address," as required by the independent claims of both patents. It raises the question of whether the website uses IP-based geolocation merely for logistics (e.g., shipping estimates, identifying a local store) or if it actively alters the substantive product offerings themselves based on that data.

V. Key Claim Terms for Construction

• The Term: "user-specific product offering"

• Context and Importance: This term defines the output of the claimed method and is central to the infringement analysis. The outcome of the case may depend on whether routine e-commerce personalization features, such as targeted advertisements or promotions, fall within the scope of this term. Practitioners may focus on this term because its construction will determine whether the claims cover a broad range of modern e-commerce practices or are limited to more specific implementations.

• Intrinsic Evidence for Interpretation:

  • Evidence for a Broader Interpretation: The specification provides examples of offerings that include "targeted advertising, purchase incentives such as electronic coupons and rebates, specialized promotions and competitive pricing" (’846 Patent, col. 5:16-20). This language may support a construction that covers a wide variety of individualized commercial inducements.
  • Evidence for a Narrower Interpretation: The specification also provides detailed examples of generating entire, distinct "catalogs" for different user types, such as a student versus a business professional, with different product mixes and pricing structures (’846 Patent, col. 6:6-16). This could support a narrower construction requiring the generation of a comprehensive, customized shopping interface rather than isolated promotional messages.

• The Term: "plurality of distributors"

• Context and Importance: This term is critical for defining the claimed system architecture. The infringement case hinges on whether Defendant’s system aggregates data from sources that meet this definition. Practitioners may focus on this term to distinguish the patented 'aggregator' or 'marketplace' model from a conventional 'retailer' model where a single entity sources products from multiple vendors for its own inventory.

• Intrinsic Evidence for Interpretation:

  • Evidence for a Broader Interpretation: The patent states that product information can be accessed via standard protocols like FTP, which could suggest that any electronic data feed from more than one product supplier meets the definition (’846 Patent, col. 5:30-34).
  • Evidence for a Narrower Interpretation: The specification describes a "Distributor Selection logic" that polls distributors in near real-time to determine availability and price, and then selects one to "fill the order" (’846 Patent, col. 9:10-24; Fig. 5). This may support a narrower construction requiring a system that actively selects from among competing, independent distributors on an order-by-order basis.

VI. Other Allegations

The complaint does not explicitly plead willful infringement. It does, however, request a finding that the case is "exceptional" under 35 U.S.C. § 285 to recover attorneys' fees, but it does not allege a factual basis for this request, such as pre-suit knowledge of the patents (Compl., Prayer for Relief ¶C). No allegations of indirect infringement are made.

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

The resolution of this case will likely depend on the court’s determination of several key questions:

1. A central issue will be one of patent eligibility: do the claims, which recite using customer location data to generate targeted product offerings, constitute a patent-eligible improvement to computer functionality, or do they claim an abstract idea (e.g., targeted marketing) performed using generic computer components? The complaint's defensive arguments on this topic suggest it is an anticipated point of dispute.

2. A second core issue is one of definitional scope: can the term "user-specific product offering", which the patents illustrate with entire dynamically-generated catalogs, be construed to cover the more common personalization features (e.g., targeted on-site ads, geographically-based promotions) that are prevalent in modern e-commerce?

3. Finally, a key evidentiary question will be one of technical equivalence: does the Defendant’s e-commerce platform actually operate as the claimed 'multi-distributor aggregator' by dynamically polling and selecting from multiple suppliers to fill orders, or is there a fundamental mismatch between the claimed technical method and the accused system's actual operation as a more traditional online retailer?