DCT
1:25-cv-00516
CHEP Technology Pty Ltd v. Ivisys Ab
I. Executive Summary and Procedural Information
- Parties & Counsel:
- Plaintiff: CHEP Technology Pty Limited (Australia) and CHEP Ltd (New York)
- Defendant: Ivisys Ab (Sweden), IVISYS Sweden AB (Sweden), and Ivisys Inc. (Delaware)
- Plaintiff’s Counsel: Morris, Nichols, Arsht & Tunnell LLP; Perilla Knox & Hildebrandt LLP
- Case Identification: 1:25-cv-00516, D. Del., 04/29/2025
- Venue Allegations: Venue is alleged to be proper as Defendant Ivisys Inc. is a Delaware corporation registered in the district.
- Core Dispute: Plaintiff alleges that Defendant’s PalletAI automated inspection system infringes three patents related to automated pallet inspection, analysis, and repair.
- Technical Context: The technology concerns automated systems for inspecting and processing wooden pallets, a critical component of industrial and commercial supply chains, to improve efficiency and reduce costs compared to manual inspection.
- Key Procedural History: The complaint alleges that in December 2022, Plaintiff sent a notice letter to Alliance Automation LLC, now Defendant’s exclusive North American partner, regarding infringement of the ’976 patent by a predecessor product (the "iPallet"). The complaint further alleges that Alliance's CEO acknowledged that the iPallet system "does seem to infringe upon the subject patent" before IVISYS and Alliance announced their partnership in December 2023. These allegations may be used to support claims of willful infringement.
Case Timeline
| Date | Event |
|---|---|
| 2002-12-10 | ’668 Patent and ’976 Patent Priority Date |
| 2003-12-19 | ’360 Patent Priority Date |
| 2008-01-01 | Alliance Automation LLC formed (approx.) |
| 2010-08-03 | ’668 Patent Issued |
| 2014-11-11 | ’360 Patent Issued |
| 2014-12-30 | ’976 Patent Issued |
| 2022-12-20 | CHEP sends notice letter to Alliance regarding iPallet system |
| 2023-02-20 | Alliance CEO responds to CHEP's notice letter |
| 2023-12-01 | IVISYS and Alliance announce exclusive partnership for PalletAI |
| 2024-03-23 | IVISYS announces large order for PalletAI system |
| 2025-04-29 | Complaint Filed |
II. Technology and Patent(s)-in-Suit Analysis
U.S. Patent No. 7,765,668 - “Automated Pallet Inspection and Repair”
Issued August 3, 2010
The Invention Explained
- Problem Addressed: The patent describes the traditional manual inspection and repair of pallets as a labor-intensive, costly, and error-prone process that also poses safety risks to human operators (Compl. ¶¶ 24-25; ’668 Patent, col. 1:30-38).
- The Patented Solution: The invention is a method for automating this process. It uses a scanning device to create a three-dimensional (3D) data map of a pallet to detect defects. This 3D map is then filtered into a simpler two-dimensional (2D) image of "on/off" values, which is used to generate a "recipe of repair operations." A robotic system then transports the pallet to the appropriate repair stations in accordance with this recipe (’668 Patent, Abstract; col. 5:1-12).
- Technical Importance: This approach sought to replace subjective human judgment with an objective, data-driven process, thereby increasing the consistency, speed, and safety of pallet maintenance in large-scale logistics operations (Compl. ¶¶ 32-33).
Key Claims at a Glance
- The complaint asserts independent method claim 3 (Compl. ¶ 61).
- Essential elements of Claim 3:
- using a scanning device to create a three-dimensional data map of a pallet for detecting gaps and protrusions in the pallet;
- filtering the three-dimensional data map into a two-dimensional image of on/off values by using a dynamically created height value, corresponding to a reference plane or set threshold offset above a board surface of the pallet;
- creating a recipe of repair operations from the three-dimensional data map; and
- transporting the pallet to at least one repair station in accordance with the recipe.
- The complaint does not explicitly reserve the right to assert dependent claims.
U.S. Patent No. 8,881,360 - “Software and Methods For Automated Pallet Inspection and Repair”
Issued November 11, 2014
The Invention Explained
- Problem Addressed: The patent addresses the need for a more granular automated analysis that can identify specific individual elements of a pallet (e.g., boards, bearers) and determine the precise nature of required repairs based on the pallet's design specifications (’360 Patent, col. 1:15-22).
- The Patented Solution: The invention is a method where a laser illuminates a pallet and a camera collects the reflected light to generate a set of 3D points. A computer system analyzes this data by first filtering it to isolate the pallet's top surface, then identifying the type and number of elements (e.g., boards), determining the pallet's overall design, and finally comparing each element against a database of design criteria to generate a specific list of repairs (’360 Patent, Abstract; col. 3:42-56).
- Technical Importance: This method provides a more sophisticated software-based approach to not only detect damage but also to intelligently decide on a course of action by referencing a database of known pallet designs and quality standards (Compl. ¶¶ 27, 33).
Key Claims at a Glance
- The complaint asserts independent method claim 9 (Compl. ¶ 101).
- Essential elements of Claim 9:
- operating at least one laser to direct light toward a pallet;
- operating at least one camera to collect the light reflected from the pallet, and generating three-dimensional points based on the reflected light, with each point having an x-, a y-, and a z-coordinate; and
- analyzing the reflected light by (i) filtering the 3D points to obtain a top surface geometry, (ii) identifying the type and number of each element, (iii) determining a pallet design, and (iv) comparing each element to a database to generate a list of repairs.
- The complaint does not explicitly reserve the right to assert dependent claims.
U.S. Patent No. 8,918,976 - “Automated Digital Inspection and Associated Methods”
Issued December 30, 2014
Technology Synopsis
This patent claims an automated pallet inspection station (an apparatus) rather than a method. The station comprises a frame, a transport system (e.g., a conveyor) to move a pallet, and at least one sensing head that generates a 3D data map of the pallet. A key feature is a filter that processes the 3D map into a 2D image based on a height threshold above a board surface (’976 Patent, Abstract; col. 6:22-38).
Asserted Claims
The complaint asserts independent apparatus claim 1 (Compl. ¶ 157).
Accused Features
The complaint alleges that the PalletAI system, with its physical frame, conveyor belts/rollers, and camera/laser sensing head, constitutes an infringing inspection station (Compl. ¶¶ 165, 167-168, 171).
III. The Accused Instrumentality
Product Identification
The accused instrumentality is the IVISYS PalletAI pallet inspection system (Compl. ¶ 49).
Functionality and Market Context
- The complaint alleges the PalletAI system is an automated solution that uses a combination of cameras, lasers, and tailored illumination to scan pallets (Compl. ¶ 51). The system is advertised as being capable of detecting overall dimensions, cracks, missing or broken boards, protruding nails, and other defects (Compl. ¶ 51). The PalletAI system includes an inspection control kiosk with a graphical user interface (GUI) that displays images of the inspected pallet and identified defects (Compl. ¶ 52). A marketing specification sheet for the PalletAI system notes it uses 16 cameras and takes 15,000 measurements per pallet (Compl. ¶ 71).
- The system can be integrated with automated sorting and repair lines, and the complaint alleges it is marketed and sold for this purpose (Compl. ¶¶ 52, 64-65). Defendants have partnered with Alliance Automation as the exclusive integrator for the PalletAI system in North America (Compl. ¶ 53).
IV. Analysis of Infringement Allegations
’668 Patent Infringement Allegations
| Claim Element (from Independent Claim 3) | Alleged Infringing Functionality | Complaint Citation | Patent Citation |
|---|---|---|---|
| using a scanning device to create a three-dimensional data map of a pallet for detecting gaps and protrusions in the pallet | The PalletAI system uses a machine vision system with cameras and lasers to collect 3D data and create a 3D data map to detect defects, including protrusions. The complaint includes a 3D rendering of a pallet allegedly generated by the system. | ¶¶ 70-71, 73, 80 | col. 4:60-67 |
| filtering the three-dimensional data map into a two-dimensional image of on/off values by using a dynamically created height value... | The PalletAI system transforms the collected 3D data map into a 2D image that is displayed on a GUI. The complaint alleges this transformation is done via a filter corresponding to a reference plane. A video screenshot shows the system's GUI displaying a 2D image. | ¶¶ 82, 85, 86, 88 | col. 5:1-6 |
| creating a recipe of repair operations from the three-dimensional data map | The PalletAI system is alleged to be capable of identifying specific repair requirements and can be integrated into existing sort and repair lines. | ¶¶ 90-92 | col. 6:5-9 |
| and transporting the pallet to at least one repair station in accordance with the recipe. | The PalletAI system is advertised as part of an automated sort and repair system and is shown with conveyors that can allegedly move damaged pallets to specific repair stations. | ¶¶ 94-96 | col. 6:15-19 |
’360 Patent Infringement Allegations
| Claim Element (from Independent Claim 9) | Alleged Infringing Functionality | Complaint Citation | Patent Citation |
|---|---|---|---|
| operating at least one laser to direct light toward a pallet... | The PalletAI system is advertised as using a combination of cameras, lasers, and tailored illumination to inspect pallets. | ¶¶ 110-111 | col. 3:42-50 |
| operating at least one camera to collect the light reflected from the pallet, and generating three-dimensional points based on... x-, a y-, and a z-coordinate. | The PalletAI system uses a machine vision system with multiple cameras to collect 3D data, which the complaint alleges generates 3D points with x, y, and z coordinates. A looping video on the IVISYS website allegedly shows this 3D data generation. | ¶¶ 113-114, 122-123 | col. 3:42-56 |
| analyzing the reflected light based on... (i) filtering... to obtain a top surface geometry... by discarding points having a z-coordinate below a threshold... | The PalletAI system is alleged to analyze the top surface of pallets and transform the 3D data map by discarding points below a z-coordinate threshold. | ¶¶ 132, 139 | col. 4:32-37 |
| (ii) "identifying a type and number of each element..." | The system allegedly analyzes the top surface to identify individual boards and other elements. | ¶¶ 141, 143 | col. 4:55-59 |
| (iii) "determining a pallet design from the type and number of each element..." | The system allegedly detects the type of pallet in real time and displays it on the GUI. | ¶¶ 145, 147 | col. 4:55-59 |
| (iv) "comparing each element of the pallet to a database to generate a list of repairs." | The system allegedly compares inspected elements to a set of parameters or thresholds to determine if repair is needed and can generate a report listing defects. | ¶¶ 149, 151 | col. 5:6-10 |
Identified Points of Contention
- Scope Questions: A central question for the ’668 patent will be the scope of "recipe of repair operations." The court will need to determine if a generated list of defects or sorting instructions, as alleged, meets this limitation, which the patent links to "machine control" (’668 Patent, col. 6:7-8). Similarly, for the ’360 patent, a dispute may arise over whether the accused system's use of a "set of parameters or thresholds" (Compl. ¶ 151) is equivalent to "comparing each element... to a database" as required by the claim.
- Technical Questions: A key evidentiary hurdle will be proving that the PalletAI system actually performs all the claimed method steps. For both patents, the allegations rely heavily on marketing materials and statements from a trade show. A factual dispute will likely emerge over whether the system, as delivered and used by customers, performs the complete end-to-end process of generating a repair "recipe" and "transporting the pallet to... a repair station" (’668 Patent) or the full four-part analysis required by the ’360 patent.
V. Key Claim Terms for Construction
Term: "creating a recipe of repair operations" (from ’668 Patent, Claim 3)
- Context and Importance: This term is critical because it links the inspection phase to the repair phase. The infringement case for this claim depends on showing that the PalletAI system does more than just identify defects; it must generate a specific set of instructions for repair.
- Intrinsic Evidence for Interpretation:
- Evidence for a Narrower Interpretation: The specification states, "the system generates a recipe of repair tasks for machine control within the repair cell" (’668 Patent, col. 6:5-8). This language may support an argument that a "recipe" must be a set of machine-executable commands for automated tools, not just a human-readable list.
- Evidence for a Broader Interpretation: The term "recipe" itself is not explicitly defined. A party could argue that in the context of the overall disclosure, any systematically generated list of required repairs, whether for a machine or a human, would meet the ordinary meaning of the term.
Term: "database" (from ’360 Patent, Claim 9)
- Context and Importance: The final step of the analysis in Claim 9 requires comparing pallet elements to a "database" to generate a repair list. Infringement hinges on whether the accused system's architecture includes a "database" as construed. The complaint alleges the system compares elements to a "set of parameters or thresholds" (Compl. ¶ 151).
- Intrinsic Evidence for Interpretation:
- Evidence for a Narrower Interpretation: A defendant might argue that a "database" implies a structured, queryable collection of data (e.g., an SQL database) containing multiple pallet designs and criteria, and that a simple set of user-configurable parameters does not qualify.
- Evidence for a Broader Interpretation: The specification states, "Pallet quality criteria are loaded from the database into the analysis system for the particular pallet type" (’360 Patent, col. 5:6-8). This could support an argument that any organized collection of data used as a reference for quality checks, including a file of parameters, constitutes a "database" in the context of the patent.
VI. Other Allegations
- Indirect Infringement: The complaint's formal counts only allege direct infringement under 35 U.S.C. § 271(a) (Compl. ¶¶ 60, 100, 156).
- Willful Infringement: The complaint does not contain a separate count for willful infringement, but the prayer for relief requests a finding that the case is exceptional under 35 U.S.C. § 285, which is often predicated on willfulness (Compl. p. 51, ¶D). The factual basis is laid by alleging that IVISYS's exclusive partner, Alliance, was on notice of the ’976 patent via a letter from CHEP, and that Alliance's CEO allegedly acknowledged that a predecessor product seemed to infringe, prior to IVISYS and Alliance entering their partnership (Compl. ¶¶ 46-48).
VII. Analyst’s Conclusion: Key Questions for the Case
- A core issue will be one of functionality and proof: Can Plaintiff demonstrate that the accused PalletAI system, in actual operation, performs the complete, multi-step processes claimed in the asserted method claims? The case may turn on evidence moving beyond marketing materials to show that the system generates a "recipe of repair operations" and "transport[s]" pallets accordingly ('668 Patent), and performs the specific four-part analysis including "comparing... to a database" ('360 Patent).
- A second key question will be one of claim construction: The dispute will likely focus on the scope of functional language. Can Plaintiff establish a broad enough definition for terms like "recipe of repair operations" and "database" to encompass the accused system's generation of defect reports and comparison to user-set parameters?
- Finally, a significant question for damages will be willfulness: Can the pre-suit notice provided to Defendant's partner, Alliance Automation, and the alleged admission by Alliance's CEO, be legally imputed to the IVISYS defendants to establish the knowledge and intent required for a finding of willful infringement?