DCT
6:25-cv-00752
Chep v. Alliance Automation LLC
Key Events
Amended Complaint
I. Executive Summary and Procedural Information
- Parties & Counsel:
- Plaintiff: CHEP Ltd (New York) and CHEP Technology Pty Limited (Australia)
- Defendant: Alliance Automation, LLC (Ohio)
- Plaintiff’s Counsel: Perilla Knox & Hildebrandt LLP
- Case Identification: 6:25-cv-00752, M.D. Fla., 10/14/2025
- Venue Allegations: Plaintiff alleges venue is proper based on a forum selection clause in a "Participation Agreement" between the parties designating Orange County, Florida, and based on Defendant allegedly transacting business and causing injury within the district.
- Core Dispute: Plaintiff alleges that Defendant’s PalletAI automated pallet inspection system infringes patents related to automated pallet inspection and repair technology.
- Technical Context: The technology concerns automated systems that use optical scanning and software to inspect, sort, and manage the repair of shipping pallets, which are foundational components of industrial and commercial supply chains.
- Key Procedural History: The complaint alleges a multi-year business relationship where Defendant was a preferred supplier integrating Plaintiff’s own patented technology. Plaintiff alleges it sent a notice letter to Defendant in December 2022 regarding an earlier, similar product ("iPallet") and one of the patents-in-suit. The complaint further alleges that Defendant’s CEO acknowledged infringement and stated the product would be withdrawn from sale, but that Defendant then launched the currently accused PalletAI system less than a year later. This history is presented to support allegations 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 was formed (approx.) |
| 2010-08-03 | ’668 Patent Issue Date |
| 2014-11-11 | ’360 Patent Issue Date |
| 2014-12-30 | ’976 Patent Issue Date |
| 2019-12-31 | Master Services Agreement executed by parties' affiliates |
| 2022-12-20 | CHEP sends notice letter to Alliance re: '976 Patent and iPallet system |
| 2023-02-20 | Alliance CEO responds to notice letter |
| 2023-12-01 | Alliance announces partnership with IVISYS to commercialize PalletAI |
| 2024-07-25 | CHEP Ltd and Alliance enter into Participation Agreement |
| 2025-10-14 | First Amended Complaint Filing Date |
II. Technology and Patent(s)-in-Suit Analysis
U.S. Patent No. 7,765,668 - “Automated Pallet Inspection and Repair”
The Invention Explained
- Problem Addressed: The patent addresses the disadvantages of traditional manual inspection and repair of wooden pallets, which the background describes as a "labor intensive," time-consuming, costly, and error-prone process with associated safety concerns (’668 Patent, col. 1:30-36; Compl. ¶¶ 21-22).
- The Patented Solution: The invention proposes a robotic work cell where a scanning device creates a three-dimensional data map of a pallet. A processor analyzes this map to detect defects like gaps or protrusions and then generates a "recipe of repair tasks for machine control." A robotic arm then transports the pallet to various automated stations to execute the repairs specified in the recipe (’668 Patent, Abstract; col. 6:4-8).
- Technical Importance: This automated approach was aimed at significantly increasing the throughput, consistency, and safety of pallet refurbishment, a high-volume process critical to supply chain logistics (’668 Patent, col. 1:37-43).
Key Claims at a Glance
- The complaint asserts at least independent claim 3 (Compl. ¶76).
- The essential elements of Claim 3, a method claim, include:
- 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 for the ’668 Patent.
U.S. Patent No. 8,881,360 - “Software and Methods for Automated Pallet Inspection and Repair”
The Invention Explained
- Problem Addressed: The patent identifies the need for a software-based process that can automatically inspect a pallet, determine its specific design type, and then decide if repair is needed by comparing the pallet’s actual structure against the design criteria (’360 Patent, col. 2:17-25).
- The Patented Solution: The patented method uses a laser and camera to generate three-dimensional points representing the pallet's surface. Software then filters this data to isolate the top surface geometry, identifies the type and number of individual elements (e.g., boards, bearers), determines the overall pallet design from this information, and compares each element to a database of specifications for that design to generate a list of required repairs (’360 Patent, Abstract; col. 3:38-5:21).
- Technical Importance: The invention describes a more intelligent analytical process, moving beyond simple defect detection to a system that can identify a pallet's specific type and apply corresponding, design-specific inspection rules (’360 Patent, col. 6:44-54).
Key Claims at a Glance
- The complaint asserts at least independent claim 9 (Compl. ¶117).
- The essential elements of Claim 9, a method claim, include:
- operating at least one laser to direct light toward a pallet;
- operating at least one camera to collect the reflected light and generating three-dimensional points with x, y, and z coordinates; and
- analyzing the reflected light based on a four-part process: (i) filtering the points to obtain a top surface geometry, (ii) identifying a 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 for the ’360 Patent.
U.S. Patent No. 8,918,976 - “Automated Digital Inspection and Associated Methods”
- Technology Synopsis: This patent claims an apparatus for automated pallet inspection. The claimed station includes a physical frame, a transport system (e.g., a conveyor) carried by the frame to move a pallet, and at least one "pallet feature sensing head" positioned adjacent to the transport system to generate a three-dimensional data map of the pallet. The claims also recite a filter for processing this 3D data into a 2D image ('976 Patent, Abstract, Claim 1).
- Asserted Claims: The complaint asserts at least independent claim 1 (Compl. ¶174).
- Accused Features: The complaint accuses the entire PalletAI system, alleging it includes the claimed frame, a conveyor belt transport system, and a pallet feature sensing head comprising cameras and lasers (Compl. ¶¶ 182, 184-185, 188).
III. The Accused Instrumentality
Product Identification
- The PalletAI pallet inspection system (Compl. ¶53).
Functionality and Market Context
- The PalletAI system is described as an automated inspection system that uses a combination of cameras, lasers, and tailored illumination to scan pallets (Compl. ¶57). It is alleged to be capable of inspecting for overall dimensions, component alignment, and various defects such as cracks, missing or broken boards, and protruding nails (Compl. ¶57). The complaint includes a marketing image from Defendant's website specifying that the system uses 16 cameras and performs 15,000 measurements per pallet (Compl. p. 20). The system allegedly includes a graphical user interface (GUI) that displays 2D images of the scanned pallet with defects highlighted and can be paired with sorting equipment to route pallets based on the inspection results (Compl. ¶58).
- The complaint alleges that Defendant Alliance Automation has an exclusive contract to sell and install the PalletAI system in North America for the pallet industry and markets it as a technology that can be integrated into existing sort and repair lines (Compl. ¶¶ 59, 107).
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 detects dimensional accuracy in three dimensions (length, width, and height). | ¶86, ¶88, ¶92 | col. 5:1-9 |
| 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 | The PalletAI system collects 3D data and its GUI depicts one or more 2D images. The complaint alleges this transformation is performed by a filter using a height value corresponding to a reference plane or threshold offset. A screenshot from a video allegedly shows the GUI display screen for the PalletAI system (Compl. p. 25). | ¶100, ¶103 | col. 5:1-9 |
| creating a recipe of repair operations from the three-dimensional data map | The PalletAI system is alleged to be capable of identifying repair requirements and can generate a report listing each failed pallet and its specific defects. | ¶105-¶106 | col. 6:4-8 |
| transporting the pallet to at least one repair station in accordance with the recipe | The PalletAI system is advertised as part of a larger "sort and repair system" that can include conveyors to move damaged pallets to specific repair stations based on identified defects. | ¶109-¶111 | col. 6:8-12 |
- Identified Points of Contention:
- Scope Questions: The analysis may focus on whether the accused system's generation of a "report that lists each failed pallet and the specific defects" (Compl. ¶58) satisfies the claim limitation of "creating a recipe of repair operations." The court may need to determine if a "recipe" requires machine-executable instructions or if a human-readable list of required repairs is sufficient.
- Technical Questions: A key factual question may be whether the complaint provides sufficient evidence that the PalletAI system's transformation from 3D data to a 2D image is accomplished by "using a dynamically created height value, corresponding to a reference plane or set threshold offset," as the complaint makes this allegation on "information and belief" (Compl. ¶103).
’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 comprising a number of elements to be inspected | The PalletAI system is advertised as using a combination of cameras, lasers, and tailored illumination to inspect pallet elements. | ¶126-¶127 | col. 2:48-52 |
| 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 | The system allegedly uses a machine vision system with multiple cameras to collect 3D data and detects "dimensional accuracy" by generating three-dimensional points with x, y, and z coordinates. The complaint includes images from the IVISYS website that appear to show a 3D point cloud rendering of a pallet (Compl. p. 36). | ¶129-¶130, ¶136 | col. 3:41-43 |
| analyzing the reflected light based on... (i) filtering the three-dimensional points to obtain a top surface geometry and topography by discarding points having a z-coordinate below a threshold | The complaint alleges, on information and belief, that the system analyzes the top surface of pallets by transforming a 3D data map and discarding points having a z-coordinate below a threshold. | ¶148, ¶155 | col. 3:32-38 |
| analyzing the reflected light based on... (ii) identifying a type and number of each element based on the top surface geometry and topography | The system is alleged to analyze the top surface of pallets, including the analysis of individual boards. | ¶157, ¶159 | col. 5:10-21 |
| analyzing the reflected light based on... (iii) determining a pallet design from the type and number of each element | The system can allegedly identify "pallet size, color, condition" and "detects the type of pallet." | ¶161-¶163 | col. 5:4-5 |
| analyzing the reflected light based on... (iv) comparing each element of the pallet to a database to generate a list of repairs | The system allegedly compares inspected pallet elements to "a set of parameters or thresholds" to determine repair needs and can generate a report listing defects. | ¶165-¶167 | col. 5:44-51 |
- Identified Points of Contention:
- Scope Questions: A central dispute may arise over the meaning of "database." The infringement theory will require establishing that the accused system's comparison of pallet elements to a "set of parameters or thresholds" (Compl. ¶167) meets the claim requirement of comparing elements to a "database."
- Technical Questions: The complaint's allegations regarding specific software operations, such as "discarding points having a z-coordinate below a threshold" (Compl. ¶148), are made on "information and belief." The factual accuracy of these characterizations of the PalletAI system's internal workings will likely be a point of contention.
V. Key Claim Terms for Construction
Term from the ’668 Patent: "recipe of repair operations"
- Context and Importance: This term is critical because the accused PalletAI system is alleged to generate a "report" of defects. Whether this report constitutes a "recipe of repair operations" will be a central question for infringement of claim 3.
- Intrinsic Evidence for Interpretation:
- Evidence for a Broader Interpretation: Practitioners may argue that the ordinary meaning of "recipe" includes any set of instructions for achieving a result. The specification does not provide an explicit definition that would narrow this meaning.
- Evidence for a Narrower Interpretation: The specification states that "the system generates a recipe of repair tasks for machine control" (’668 Patent, col. 6:5-7). A defendant could argue this language limits the term "recipe" to a set of instructions formatted for direct execution by automated machinery, not a human-readable report.
Term from the ’360 Patent: "database"
- Context and Importance: The final analytical step of asserted claim 9 requires "comparing each element of the pallet to a database." The complaint alleges the accused system compares elements to a "set of parameters or thresholds" (Compl. ¶167). The construction of "database" will determine if this alleged functionality meets the claim limitation.
- Intrinsic Evidence for Interpretation:
- Evidence for a Broader Interpretation: The patent uses the term in the context of storing and retrieving information, such as "pallet quality criteria are loaded from the database" (’360 Patent, col. 5:6-7) and "all results are stored in the database" (col. 6:9). This could support a broad interpretation where any organized collection of data, including a set of parameters, qualifies.
- Evidence for a Narrower Interpretation: A party might argue that in the context of the art, "database" implies a more structured data-management system than a simple set of pre-defined thresholds. However, the specification does not contain language explicitly limiting the term's scope in this manner.
VI. Other Allegations
Indirect Infringement
- The complaint does not plead separate counts for indirect infringement. The allegations focus on Defendant's direct infringement through its own actions of making, using, selling, and offering to sell the accused system (Compl. ¶¶ 75, 116, 173).
Willful Infringement
- The complaint alleges that Defendant's infringement has been "deliberate and willful" for all three asserted patents (Compl. ¶¶ 114, 171, 210). The factual basis for this allegation includes the parties' long-standing business relationship, during which Defendant allegedly worked with Plaintiff's patented technology, and Defendant's alleged receipt of a notice letter regarding a prior infringing product, to which its CEO purportedly acknowledged infringement before launching the currently accused product (Compl. ¶¶ 41, 50-53).
VII. Analyst’s Conclusion: Key Questions for the Case
- A central issue will be one of definitional scope: can the term "recipe of repair operations" in the ’668 Patent be construed to cover the defect "report" allegedly generated by the accused system? Similarly, does the accused system's use of a "set of parameters or thresholds" satisfy the ’360 Patent's requirement of comparing elements to a "database"?
- A key evidentiary question will be one of operational proof: can Plaintiff substantiate its "information and belief" allegations regarding the specific internal software methods of the PalletAI system, such as how it filters 3D data by "discarding points having a z-coordinate below a threshold" as required by the asserted claims?
- Given the detailed allegations of a prior business relationship and correspondence in which Defendant’s CEO purportedly acknowledged infringement of related technology, a significant focus will be on the question of willfulness: do the facts alleged suggest Defendant acted with egregious conduct sufficient to warrant an award of enhanced damages?