1:22-cv-01556
Aviation Capital Partners LLC v. SH Advisors LLC
I. Executive Summary and Procedural Information
- Parties & Counsel:
- Plaintiff: Aviation Capital Partners, LLC d/b/a Specialized Tax Recovery (Delaware)
- Defendant: SH Advisors, LLC d/b/a Situs Hawk (Delaware)
- Plaintiff’s Counsel: Potter Anderson & Corroon LLP
- Case Identification: 1:22-cv-01556, D. Del., 11/30/2022
- Venue Allegations: Venue is asserted as proper in the District of Delaware because the defendant is a Delaware corporation and is therefore deemed to reside in the district.
- Core Dispute: Plaintiff alleges that Defendant’s aircraft discovery and tax valuation service infringes a patent related to a system and method for determining the taxability status of vehicular assets by identifying and reconciling gaps in flight data.
- Technical Context: The technology addresses the challenge governments face in assessing taxes on transient assets like private and business aircraft, which can move between tax jurisdictions without leaving a complete official record.
- Key Procedural History: The complaint alleges that the dispute arose in the context of a competitive bid for a contract with the Alabama Department of Revenue (ALDOR). Plaintiff alleges it provided Defendant with both oral and written notice of the patent-in-suit prior to filing the complaint. The complaint also notes that the asserted patent was prosecuted and granted after the Supreme Court's decision in Alice Corp. v. CLS Bank, and asserts that the U.S. Patent and Trademark Office found the claims to be patent-eligible.
Case Timeline
| Date | Event |
|---|---|
| 2017-06-26 | '988 Patent Priority Date |
| 2021-03-23 | '988 Patent Issue Date |
| 2022-06-09 | Alabama Department of Revenue (ALDOR) solicits bids |
| 2022-07-26 | Plaintiff alleges it made Defendant aware of the '988 Patent via phone call |
| 2022-08-08 | Plaintiff alleges it provided written notice of the '988 Patent to Defendant |
| 2022-09-15 | ALDOR issues Notice of Intent to Award contract to Defendant |
| 2022-10-05 | Plaintiff files protest letter with ALDOR |
| 2022-11-04 | ALDOR denies Plaintiff's protest |
| 2022-11-04 | Defendant and the State of Alabama allegedly enter into Master Agreement |
| 2022-11-09 | Plaintiff files appeal of ALDOR's protest denial |
| 2022-11-30 | Complaint Filing Date |
II. Technology and Patent(s)-in-Suit Analysis
U.S. Patent No. 10,956,988 - System and Method for Determining a Taxability Status for a Vehicular Asset
- Patent Identification: U.S. Patent No. 10,956,988, System and Method for Determining a Taxability Status for a Vehicular Asset, issued March 23, 2021.
The Invention Explained
- Problem Addressed: The patent’s background section describes the difficulty governmental entities have in assessing and collecting taxes on transient assets like aircraft ('988 Patent, col. 2:5-11). It notes that official Air Traffic Control (ATC) data can have "gaps," for instance when an aircraft flies under visual flight rules (VFR), making it "very challenging to obtain an accurate record of aircraft activity" for tax purposes ('988 Patent, col. 4:1-11).
- The Patented Solution: The invention addresses this problem by combining official ATC data with data from other sources to identify and fill these gaps. As described in the specification and depicted in Figure 1, the system obtains traffic control data (116) and uses a "remote transponder sensing unit" (122) placed near an airport to detect aircraft transponder signals ('988 Patent, col. 5:21-26). This allows the system to confirm an aircraft's presence at a location even if it was not logged in the official ATC data, thereby creating a more complete location history to determine tax liability ('988 Patent, Abstract; col. 4:19-29).
- Technical Importance: This approach seeks to provide tax jurisdictions with more detailed and accurate information about aircraft activity than is available from official sources alone, thereby enabling them to identify and collect potentially owed taxes ('988 Patent, col. 4:12-18).
Key Claims at a Glance
- The complaint asserts independent claims 1 (a method), 13 (a system), and 15 (a computer program product) (Compl. ¶33).
- The essential elements of independent claim 1 include:
- obtaining traffic control system information for an aircraft from a first database, the information indicative of departures and arrivals at a plurality of airports;
- detecting a gap in the traffic control system information, the gap being detected based on a mismatch between a departure location of the aircraft and a previous arrival location of the aircraft;
- receiving transponder data from a transponder on the aircraft via a transceiver positioned in proximity to an airport, the data indicative of altitude or speed;
- determining, based on the transponder data, that the aircraft landed at the airport during the time its location was indeterminate; and
- computing a taxability status of the aircraft based on it being present at the airport during that indeterminate time.
- The complaint notes that claims 13 and 15 are similar to claim 1 (Compl. ¶¶41, 43).
III. The Accused Instrumentality
Product Identification
Defendant Situs Hawk’s "system and method for determining a taxability status for a vehicular asset," specifically the platform for aircraft discovery and valuation offered to the Alabama Department of Revenue (ALDOR) and other tax authorities (Compl. ¶¶33, 40, 45).
Functionality and Market Context
The complaint alleges that Situs Hawk’s method uses a "proprietary network of public and private data sources" to supplement official Federal Aviation Administration (FAA) data (Compl. ¶36). This is allegedly done to "reconcile gaps in the traffic control data that otherwise cannot be identified" through conventional means (Compl. ¶36). The system is alleged to utilize Automatic Dependent Surveillance-Broadcast (ADS-B) data, which measures speed and altitude from an aircraft’s transponder, to perform "aircraft discovery and valuation" (Compl. ¶¶37-38). The complaint includes a screenshot from Situs Hawk's bid documentation showing a map and flight details for a specific aircraft, allegedly demonstrating its ability to monitor departures and arrivals (Compl. ¶35).
IV. Analysis of Infringement Allegations
'988 Patent Infringement Allegations
| Claim Element (from Independent Claim 1) | Alleged Infringing Functionality | Complaint Citation | Patent Citation |
|---|---|---|---|
| A computer-implemented method, comprising: obtaining traffic control system information for an aircraft from a first database, the traffic control system information indicative of departures and arrivals of the aircraft at a plurality of airports; | Situs Hawk's method allegedly obtains traffic control information, such as departure/arrival times, from a first database. A provided screenshot shows flight details including departure and arrival airfields. | ¶35 | col. 4:43-52 |
| detecting a gap in the traffic control system information for the aircraft...wherein the gap is detected based on a mismatch in the traffic control system information between a departure location of the aircraft and a previous arrival location of the aircraft; | Situs Hawk allegedly offers a method to "reconcile gaps in the traffic control data" by monitoring for "deficiencies" in public data sources like FAA flight logs. | ¶36 | col. 7:21-31 |
| receiving transponder data from a transponder that is mounted on board the aircraft by way of a transceiver positioned in proximity to an airport, the transponder data indicative of at least one of an altitude or a speed of the aircraft; | Situs Hawk's system is alleged to use ADS-B data, which measures speed and/or altitude, received from a transponder on an aircraft. | ¶37 | col. 5:27-38 |
| determining, based upon the at least one of the altitude or the speed of the aircraft indicated in the transponder data, that the aircraft landed at the airport during the time for which the location of the aircraft was indeterminate; | Situs Hawk is alleged to offer "aircraft discovery and valuation" services which include determining aircraft location based on transponder data to identify where an aircraft was when its location was otherwise indeterminate. | ¶38 | col. 10:41-48 |
| and computing, by a computer, a taxability status of the aircraft based upon the aircraft being present at the airport during the time for which the location of the aircraft was indeterminate. | Situs Hawk is alleged to perform "large scale reporting of supporting documentation for both aircraft discovery and valuation," which includes determining the taxability status of an aircraft. A provided screenshot shows an "Aircraft Audit Trail" with flight dates and locations. | ¶¶39-40 | col. 6:52-65 |
- Identified Points of Contention:
- Technical Questions: A central question will be whether Situs Hawk’s method for "reconciling gaps" (Compl. ¶36) operates using the specific logic required by the patent: detecting a "mismatch...between a departure location...and a previous arrival location" ('988 Patent, col. 10:28-32). The complaint does not specify the exact logic used by the accused system.
- Scope Questions: The claim requires "receiving transponder data...by way of a transceiver positioned in proximity to an airport." The complaint alleges use of ADS-B data but does not allege that Situs Hawk itself operates or controls such transceivers. The case may raise the question of whether using data that originated from such a transceiver, but was obtained through a third-party data feed, meets this claim limitation for direct infringement.
V. Key Claim Terms for Construction
The Term: "detecting a gap...based on a mismatch...between a departure location of the aircraft and a previous arrival location of the aircraft"
Context and Importance: This term appears to capture the core logic of the patented invention for identifying unrecorded flights. The infringement analysis will likely depend heavily on whether the accused system’s method for identifying "deficiencies" or "gaps" (Compl. ¶36) uses this precise "mismatch" logic.
Intrinsic Evidence for Interpretation:
- Evidence for a Broader Interpretation: A party could argue that "mismatch" is a general term and that any detected inconsistency between expected and actual flight records should fall within its scope.
- Evidence for a Narrower Interpretation: The patent specification provides a specific definition: "a gap occurs when there is a mismatch between the departing location of a flight and the previous arrival of that flight" ('988 Patent, col. 7:28-31). This language may support a construction limited to this exact scenario.
The Term: "a transceiver positioned in proximity to an airport"
Context and Importance: Practitioners may focus on this term because it defines a specific hardware component of the claimed system. The infringement analysis may turn on whether Situs Hawk's system, as a whole, includes this element or its equivalent. If Situs Hawk merely subscribes to a data service that collects ADS-B data, it may argue it does not "use" a "transceiver" as required by the method claim.
Intrinsic Evidence for Interpretation:
- Evidence for a Broader Interpretation: A party may argue that using a system that necessarily relies on data collected by such transceivers is sufficient, regardless of who owns or operates the physical hardware.
- Evidence for a Narrower Interpretation: The patent depicts this element as a discrete "remote transponder sensing unit" (122) that is part of the overall system (Fig. 1) and is "installed in proximity to an airport" ('988 Patent, col. 5:23-26). This could support a narrower construction requiring the accused infringer to control or operate the physical transceiver.
VI. Other Allegations
- Indirect Infringement: The complaint's prayer for relief requests a judgment of indirect infringement, but the factual allegations in the body of the complaint do not articulate a specific theory of inducement or contributory infringement (Compl., Prayer for Relief ¶B). The allegations focus on direct infringement by Situs Hawk through its sale and use of the accused platform (Compl. ¶45).
- Willful Infringement: Willfulness is alleged based on pre-suit knowledge of the '988 Patent. The complaint states that Plaintiff made Defendant aware of the patent during a phone call on July 26, 2022, and provided "official written notice" on August 8, 2022, both dates preceding the filing of the lawsuit (Compl. ¶¶19, 47).
VII. Analyst’s Conclusion: Key Questions for the Case
This case appears to present two primary questions for the court's determination:
A key evidentiary question will be one of technical implementation: Does the accused Situs Hawk system "reconcile gaps" in flight data by employing the specific logic recited in the patent—namely, by identifying a "mismatch" between a flight's departure airport and the previous flight's arrival airport—or does it use a different, non-infringing algorithm to identify data inconsistencies?
A central issue of claim scope will also arise: Can the claim limitation requiring the use of a "transceiver positioned in proximity to an airport" be met by a system that allegedly uses ADS-B data, without evidence that the accused infringer itself operates or controls the physical transceivers that collect that data? The resolution of this question may be dispositive for the direct infringement analysis.