Panic builds over bankrupt Spirit’s looming data sale

What happened

Doug Kreuzkamp was shocked when news outlets reported that Google won an auction to buy a huge amount of operational data as part of Spirit Airlines’ bankruptcy proceedings.

Top concerns are that proprietary data could be transferred to Google without consent, giving firms no chance to guard against Google—or a third party later gaining access to the data—infringing ownership rights and exposing trade secrets. Both vendors said they risked irreparable harm through the sale to Google and then again through possible resales to future third parties.

For Springshot, it also seems possible that Google could use its valuable IP to create a rival product. In August, just a week before the controversial Spirit auction, Europe’s largest airline, Ryanair, announced a five-year partnership with Google. Under the deal, Ryanair will share operational data to improve Gemini Enterprise tools.

” As Springshot argued: Adam Schwartz, a privacy litigation director for a digital rights nonprofit called the Electronic Frontier Foundation, told Ars that allowing Google to buy this dataset via bankruptcy proceedings is unusual. “This is the first time I am aware of so public a bankruptcy proceeding regarding whether a bankrupt company may sell off the personal data it has amassed as an asset in bankruptcy,” Schwartz said.

Why it matters

Kreuzkamp founded a startup called Springshot in 2011, which created a widely used proprietary platform that helps humans and AI systems improve airline efficiency and quickly solve logistics problems so flights can stay on time and airlines can operate as smoothly as possible. Hundreds of airports use it globally. Springshot powered Spirit’s technology stack for the last three years, right up to the “very last flight,” Kreuzkamp told Ars.

Yet his company got no notice when Spirit prepared to auction off a massive dataset that he thinks likely improperly includes a substantial amount of data and intellectual property (IP) that Springshot owns—not Spirit. In a limited objection filed last month, Springshot argued that Spirit’s sale agreement does not make it clear what data is being sold.

” “This expansive definition does nothing to differentiate between Springshot’s intellectual property that exists within Spirit’s data repositories and systems, but Spirit does not own, and Spirit data that it actually owns and has the capacity to sell,” Springshot argued. Springshot urged the court to pause Spirit’s data sale until a transparent forensic process establishes that none of the data Google is grabbing is actually owned by third parties.

If the bankruptcy court does not “pump the brakes,” it risks sanctioning an “unauthorized acquisition and use of trade secrets” that could doom startups, Springshot alleged. ” “Bankruptcy cannot become the new land grab for AI,” Kreuzkamp told Ars. ” Asked for comment, Google’s spokesperson declined to discuss mounting objections and repeated a prior statement provided to Ars that did not address any of the concerns raised.

“We acquired part of an enterprise dataset from Spirit Airlines, which can be helpful in improving our products and AI models,” Google’s spokesperson said. ” It seems likely that a wide range of Spirit vendors could be in the same spot as Springshot, Kreuzkamp suspects, and his firm is not the only one complaining.

Citing Springshot’s concerns in a separate objection, the International Aero Engines LLC and the IAE International Aero Engines AG alleged that the dataset might also include its proprietary commercial information, technical data, and financial data. Both vendors cited confidentiality provisions in Spirit agreements that appear to have been completely ignored in the push to get the data sale approved.

What to watch

” Kreuzkamp is worried that because bankruptcy courts have not deeply considered this issue before, the system is just not set up to protect vendors like his company. In the past it has been straightforward to determine who owns an asset. Consider how Spirit is selling airplanes, which bills of sale clearly demonstrate that it owns, he said.

His experience suggests that when it comes to digital assets, courts don’t have the proper notice provisions that are necessary to ensure vendors can advocate for IP to be segregated from sales, should purchases like Google’s become the norm. “Our main concern with everything is if you want startups to continue building, you need to protect what they built,” Kreuzkamp told Ars.