Court orders AvTrak to destroy mx data from former clients

 - November 5, 2007, 10:13 AM

The debate between Littleton, Colo. maintenance-tracking provider AvTrak and Hawker Beechcraft (formerly Raytheon Aircraft) stemming from Raytheon’s sale of its Facts (Factory Aircraft Comprehensive Tracking System) to Ronkonkoma, N.Y.-based Camp Systems has heated up once again as a judge upheld a February injunction regarding ownership of the operators’ maintenance data.

In October 2004, AvTrak entered into a formal relationship with Raytheon Aircraft to provide software and Web-based services to support the manufacturer’s Facts service. Essentially, under the five-year agreement, AvTrak’s system became the foundation of Facts, and many Raytheon Aircraft operators using Facts–while still Raytheon Facts customers–received service from AvTrak. Some Raytheon product support employees continued to work with Facts customers as well, but AvTrak provided the bulk of the service, under contract to Raytheon.

Early this year that relationship ended, well before the contract expired, with AvTrak retaining fewer than 10 percent of its former Raytheon operators and Raytheon Aircraft filing a lawsuit against AvTrak.

Late last year, a little more than two years after the two companies signed the Facts contract, while Raytheon was early in the process of selling its aircraft division to an investor group, Raytheon Aircraft notified AvTrak that it planned to terminate the contract for maintenance-tracking services. The agreement, which specified that Raytheon could terminate “at any time, and without stating any reason therefore,” as long as it provided six months’ notice, was to end on July 9, 2007, six months after Raytheon notified AvTrak.

A few weeks later, on January 30, Raytheon Aircraft announced that it was selling Facts to Camp Systems. At the same time, Raytheon also said that Camp Systems would become the company’s “exclusive factory-endorsed provider of maintenance tracking services for all Hawker and Beechcraft aircraft.”

The news of the sale came as a surprise to AvTrak, said president Joe Hertzler. “Obviously we were disappointed.” But that disappointment was not just because Raytheon chose not to compensate AvTrak for canceling the contract early. AvTrak, Hertzler said, knew that Raytheon was planning to sell the Facts business, and given its successful track record serving Raytheon operators, AvTrak ought to have been a logical candidate to buy it. “We had made an offer,” he said, “and had been led to believe we had been awarded the contract that eventually went to Camp.”

In its Jan. 30, 2007, press release announcing the sale of Facts, Raytheon Aircraft explained that Camp would also deliver maintenance and reliability feedback to Raytheon (now Hawker Beechcraft). Camp is also the factory-recommended or -endorsed maintenance-tracking provider for a number of other aircraft manufacturers.

According to Hertzler, AvTrak is “concerned that the marketplace would get the wrong impression about what happened.” AvTrak also provided maintenance and reliability feedback to Raytheon, so that shouldn’t have been a factor.

Before Raytheon Aircraft announced the deal with Camp Systems, and while Hertzler was still under the impression that AvTrak was first in line to buy Facts, his communications with people at Raytheon ceased. A contract between AvTrak and Raytheon Aircraft had been written and was ready to be signed, but then there was industry speculation that Camp Systems was also making an offer to buy Facts.
Not long afterward, AvTrak got word that Raytheon was in fact considering an offer from Camp Systems. “Since December 2006,” Raytheon’s complaint stated, “[AvTrak] has been aware that [Raytheon Aircraft] intended to contract to sell the Facts operation to Camp.” The company also pointed out that it notified AvTrak on January 9–six months’ notice–that it was terminating the contract with AvTrak.

Hertzler and his team then learned that Raytheon Aircraft expected AvTrak to work with Camp Systems to help transfer the customer maintenance-tracking data
to Camp’s computers. And one morning, AvTrak’s employees saw that the report server, the computer that handles reporting functions for the AvTrak GlobalNet maintenance-tracking system, was highly active. It turned out, according to Hertzler, that Raytheon Aircraft employees had been told to run several reports for each airplane on the Facts system.

On January 24, AvTrak turned off access to the system to Raytheon Aircraft employees, believing that the downloading of Facts customer maintenance-tracking data might compromise proprietary AvTrak data. “That was a mistake,” Hertzler conceded. And the result was Raytheon’s complaint against AvTrak, alleging that AvTrak violated the terms of its agreement with Raytheon when it cut off access on January 24; hired away five Facts employees and risked compromising Raytheon’s trade secrets; did not abide by the agreement in terms of maintaining proprietary information, helping transfer customer data after termination of the agreement and soliciting Raytheon Facts customers to switch back to AvTrak after the sale to Camp Systems; and interfering with Raytheon Aircraft’s relationship with Camp Systems.
It didn’t take long for the U.S. District Court for the District of Kansas to hand down an injunction defining just how AvTrak and Raytheon Aircraft had to work together.

On February 23, Avtrak and Raytheon Aircraft (now Hawker Beechcraft) agreed to the terms of the injunction:
• AvTrak won’t interfere with Raytheon Aircraft’s access to GlobalNet and will provide access until Jan. 1, 2008.
• AvTrak will assist with transferring data to Camp Systems, but in a way that protects AvTrak’s proprietary information.
• AvTrak could solicit Raytheon Aircraft operators that were not current Facts subscribers (as of the date of the injunction).
• The court ordered AvTrak not to solicit its services to other Raytheon Aircraft operators (i.e., current Facts subscribers) until Aug. 1, 2007.
• Raytheon Aircraft operators who indicated that they wanted to stay with AvTrak’s GlobalNet could do so, if they wrote an e-mail or letter to Raytheon Aircraft.
• AvTrak proprietary information delivered to Raytheon Aircraft must be returned to AvTrak or destroyed. The same goes for Raytheon Aircraft information delivered to AvTrak.
• Both parties release each other from claims or causes of action through the date of the injunction.

Until Raytheon Aircraft canceled the Facts contract, AvTrak had between 1,200 and 1,300 Raytheon aircraft on GlobalNet. During the injunction period, operators of 90 aircraft switched back to AvTrak after going through the required process. The loss of the bulk of the Raytheon business, however, “was a fairly big chunk of aircraft coming out of the system,” Hertzler said. “It really didn’t have a significant impact on us financially, but it certainly hurt.” Currently, AvTrak has more than 4,200 aircraft subscribed to GlobalNet. AvTrak is also the service provider behind Gulfstream Aerospace’s maintenance-tracking system. AvTrak will maintain its relationship with Hawker Beechcraft and keep providing maintainability and reliability data.

More than 900 airplanes moved onto the Camp Systems program after the deal with Raytheon, Camp president Ken Gray told AIN. The transitioning Facts customers get to pay 2006 Facts pricing as long as they own their aircraft, and new Hawker Beechcraft customers get one year of free service. AvTrak is also offering the first year free to buyers of new Hawker Beechcraft models who chose to use GlobalNet. Using AvTrak does not affect the Hawker Beechcraft warranty.

Gray said that Camp did not have any trouble transferring the customer data, but he also pointed out that the data belonged to Raytheon Aircraft, not to AvTrak.
Facts customers like the service provided by Camp Systems; a recent survey showed that 95 percent of subscribers who operated Hawker Beechcraft aircraft “would recommend Camp to another maintenance professional,” according to Gray.

AvTrak’s Facts customers were also happy with their service, according to Hertzler, who still doesn’t understand why Raytheon Aircraft executives decided to sell Facts to Camp. “In the end,” he said, “we think the customers were given the raw deal. We were wronged as well. We can tough through that OK. The customers were forced into things they might not have chosen to do if they were given a choice. I think that many customers would like to have continued using the GlobalNet system that powered Facts rather than switch to Camp, and we want them to know that continues to be an option.”

For a short period of time earlier this year it seemed that AvTrak and Hawker Beechcraft had put the matter behind them, but then another wrinkle in the dispute developed, as there was debate about the terms of the injunction. Hawker Beechcraft filed a motion to force AvTrak to delete from its database all owner-operator compliance data having to do with airplanes in the former Raytheon Facts system, as per the original injunction.

At an August 21 hearing, Hertzler said, “We told the judge that we believe compliance data is the owner-operator’s and not Hawker Beechcraft’s to destroy. We believe it is critical that we keep a copy in case the owner-operator should ever need it for any reason. We also have told the court we will gladly delete the owner-
operator’s aircraft compliance data, if so requested by the customer.”

Hawker Beechcraft, in its motion, said “Defendant [AvTrak] has been unwilling to return or destroy the maintenance records of aircraft which were maintained on the plaintiff’s Facts system.” Hawker Beechcraft is concerned that “if defendant is permitted to solicit customers while still in possession of plaintiff’s proprietary information, defendant will have an unfair and unintended advantage.”

On September 12, judge Wesley Brown granted Hawker Beechcraft’s motion to enforce, ruling that AvTrak was obligated either to return the data to Hawker Beechcraft or destroy it, as required by the court’s injunction. “The aircraft data in question is [Hawker Beechcraft’s] ‘proprietary information’ insofar as defendant AvTrak is concerned,” the judge noted.

Finally, the court rejected Hawker Beechcraft’s claim that AvTrak “engaged in bad faith or vexatious conduct by declining to return or destroy the customer maintenance data that is the subject of this motio