Penny Wise Pound Foolish

I just read a court decision that reminded me of a favorite expression when commenting on someone's mistake or blunder, in French, a faux pas. The case was filed in the U.S. District Court in Savannah, GA.

Gulfstream Aerospace vs. Camp Systems International, cv01646, MDGA

The case, as reported, stated that Gulfstream Corp. (G series jets) sued a smaller company named Camp Systems. Camp specializes in providing maintenance management systems for operators of Gulfstream and other aircraft. Most technicians are aware of the company and many use the Camp Systems materials. Camp refers to the owners' Gulfstream manuals in order to prepare a maintenance tracking system. Apparently, it did not acquire any manuals directly from Gulfstream.

Gulfstream offers a similar maintenance management system to its customers and wanted to stop Camp from competing with it for this business. So, it filed a lawsuit and asked the court to order Camp, among other things, to cease its use of Gulfstream manuals in its business. It claimed Camp was illegally using the Gulfstream materials and was violating copyright law. Needless to say, Gulfstream copyrights all of its manuals and other written material that it produces for its customers.

Gulfstream wanted the court to order Camp to stop using its manuals in the preparation of maintenance management systems. It said that copyright laws prevent Camp from using its manuals. The court however found in favor of Camp Systems, allowing its continued use of the Gulfstream manuals as supplied by the owners of the aircraft.

Copyright Law 101

Disputes over using an author's written materials are controlled by U.S. copyright law. This law is arcane and tedious for most people. Nonetheless, it is important to protect the work of writers and, like trademarks and patent law, is very important for the people who create things.

Unlike patents and trademarks, copyrights protect writings against copying. Many forms of writings are included such as music and artistic works and of course things such as engineering manuals. Copyright extends further in some cases to recordings, performance rights, and photographs. However, there exists a whole body of law supporting copyright exemptions in the case of what's called "fair use"… That is, using the material other than in a way that copies the complete text of the manual or other writing. The fair use doctrine opens up many doors that sometimes make it difficult to enforce a copyright position.

After hearing all the evidence the court found that the copyright "fair use" exception applied and that Camp had a right to fair use of the materials contained in Gulfstream's manuals.

Gulfstream argument

Gulfstream also argued that safety was involved because a decision in favor of Camp would have the effect of forcing it to create a bare bones manual that would simply meet but not exceed the requirements of FAA mandates. Safety, motherhood, and apple pie … in the sky … How lawyers can reach for issues. This argument is of course somewhat dubious and the court simply acknowledged that any benefit the manuals provided to Camp is just part of the burden placed on a manufacturer of airplanes.

The court said that Gulfstream, in refusing to sell manuals to Camp, was attempting to hinder Camp's effort to compete with Gulfstream's maintenance monitor system. This was seen as an attempt to expand copyright law to include one's ability to interfere with legitimate competition. The court seems to have felt that this was an abuse of the copyright privilege, and the manuals are nothing more than reference materials for the preparation of Camp's maintenance control systems.

The court stated further … "… it is penny wise and pound foolish to hamper a competing servicer's efforts in quest of a competitive advantage."

Amen to that! You would think that Gulfstream would work with Camp and others in a spirit of cooperation so that the overall safety issue would be enhanced. Not so here. Money is the bottom line. The big company apparently feels that the profit from its system and the control it wields over maintenance efforts are more important points. Most, including the court, would think differently. Indeed, many of its customers might feel the smaller company's programs are better? Perhaps this and costs explain the dispute.

Bottom line

As usual, the only people making any money from this fiasco are the lawyers. This decision will probably be appealed further in an attempt to change the result. But who knows … maybe sanity will prevail and a settlement will be struck.

Camp Systems lawyers, very wisely, cross- complained against Gulfstream for alleged anti-trust violations, copyright misuse, and interference with Camp's business. A decision on these claims remains open. The parties are in a good position to settle this. Many believe Gulfstream used poor judgment in pursuing the matter the way it did.

Similar dispute — FAR Part 13 complaint to FAA

The Gulfstream dispute is not the only variety of dispute between manufacturers and other competitors. FAR Part 13 allows formal complaints to be filed with the FAA in order to attempt to settle disputes within the industry between various competing interests. They are not lawsuits and are more like administrative matters.

For example, the ability to repair components of various aircraft is closely guarded by OEMs because of the profits involved. If they can keep some of this work in house they can continue their profit even where competition grows on the repair side.

Manufacturers create revenue streams through parts sales. Like Mr. Ford said many years ago …"I'll give you the car at cost if you will agree to buy all your replacement parts from me …" New parts sales and component repairs are a critical part of the bottom line at all aircraft manufacturers. It is in their interest to keep the repair and replacement parts business in their control. (If you have priced Ford parts at the Ford store and compared them with aftermarket providers, you know the difference.)

Many manufacturers use various techniques in order to prevent repair facilities from obtaining certain component repair procedures (repair manuals) among them, claiming that they are deemed to be proprietary and owned by the OEM. All repairs concerning these items must be done at the OEM or their designated repair facility. All you can do is remove and replace the item and then send it to them for repair.

A dispute now brewing between some OEM manufacturers (Allison/Rolls-Royce and Airbus) and some repair stations involves the repair facility's ability to acquire manuals and repair instructions for various engine and airframe components. The repair facilities claim that they cannot repair certain parts because they are not provided instructions to do so. They therefore must be sent to the manufacturer or its designated agent.

In a complaint to the FAA, repair facilities argue that the procedures are a form of Instructions For Continued Airworthiness (ICA's) that are mandated by FAA to be supplied by the manufacturers. The OEM people maintain that these repair procedures are proprietary data and therefore will not be released to the repair facilities. Further, Airbus states that off aircraft component maintenance is not essential to continued airworthiness, therefore they do not supply instructions for continued airworthiness for these components. FAA has not yet ruled on this case.

Again, here the OEMs appear to be attempting to protect their profits made on repair of certain components, fearing that competition would hurt their bottom line. Time will tell whether changes will be made. Perhaps these disputes on the part of the OEMs could also be described as …penny wise and pound foolish … Send any comments to aerolaw@att.net .

Stephen P. Prentice is an attorney whose practice involves FAA-NTSB issues. He has an A&P certificate and is an ATP rated pilot. E-mail: aerolaw@att.net.

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