Virgin Atlantic v Premium Aircraft

A successful patentee may ordinarily pursue an inquiry as to damages while a further appeal remains possible, at its own risk as to costs if liability is reversed. A final domestic determination of validity and infringement is res judicata between the parties. Later revocation by the European Patent Office affects future enforcement but does not extinguish the established entitlement to damages.

A permanent injunction remains discretionary. In intellectual property cases it must be effective, proportionate and dissuasive. Once domestic appeals are exhausted, withholding or qualifying an injunction requires a strong case: enforcement must be grossly disproportionate to the right protected. Pending an appeal with a genuine prospect of success, the court instead seeks the arrangement most likely to preserve fairness whatever the outcome.

The Court of Appeal had previously held that Virgin Atlantic’s European patent was valid and infringed. The parties could not agree the consequential order. This further judgment determined permission to appeal, a stay of the damages inquiry and the terms of a permanent injunction.

Premium Aircraft, referred to in the judgment as Contour, sought a stay because an application to the Supreme Court and an appeal before the European Patent Office remained possible. It also sought a temporary exemption from the injunction so that it could complete the supply of 400 aircraft seats under an existing contract.

The central questions were whether either possible appeal justified staying the damages inquiry and whether continued enforcement of an unqualified injunction during the proposed runoff period would be grossly disproportionate.

1. The application for a stay of the damages inquiry was refused. A successful claimant is generally entitled to pursue an inquiry notwithstanding a possible appeal. It proceeds at its own risk as to costs. If the decision on liability is reversed, the defendant may recover the costs of the inquiry, damages paid and interest.

2. The pending European Patent Office appeal provided no ground for a stay. Following Unilin, a final domestic determination of validity and infringement is res judicata between the parties. Subsequent revocation by the European Patent Office affects future enforcement, including the continuation of an injunction, but does not remove the established entitlement to damages. The estoppel was cause of action estoppel, so it was immaterial that a particular validity argument might not previously have been raised.

3. Where an appeal remains pending, the court applies balance-of-convenience principles. A successful patentee is prima facie entitled to an injunction, normally subject to a cross-undertaking protecting the defendant if the appeal succeeds. The court should adopt the arrangement achieving the greatest available fairness whatever the appeal’s outcome.

4. Once there is a final decision with no possibility of domestic appeal, different principles apply. An injunction remains discretionary and, under article 3 of the Enforcement Directive 2004/48/EC, intellectual property remedies must be proportionate. Withholding or qualifying a permanent injunction nevertheless requires a very strong case. The operative test is whether enforcement would be grossly disproportionate to the protected right, rather than a simple balance of convenience.

5. The permanent injunction was granted subject to a temporary carve-out permitting completion of 400 seats until the end of June. The carve-out required payment of £10,000 per seat, a parent-company guarantee for any additional damages, and an undertaking preventing use of the relevant aircraft on the London–JFK route. Even if no appeal remained after 20 April, an immediate unqualified injunction would just cross the threshold of gross disproportionality. The seats would not ordinarily compete with the patentee, their number and the runoff period were limited, and an immediate injunction risked a substantial contractual penalty and some effect on employment.

6. Jacob LJ gave the principal judgment. Patten LJ agreed and emphasised that, once all domestic appeals favouring the patentee were exhausted, an unqualified permanent injunction would be the prima facie remedy. Kitchin J agreed with both judgments. Permission to appeal on claim construction, validity and the Unilin rule was refused.

• Court of Appeal (Civil Division): In this further judgment, the court refused permission to appeal and a stay of the damages inquiry. It granted a permanent injunction subject to a temporary, conditional carve-out.
• Court of Appeal (Civil Division): In its earlier judgment in the same proceedings, the court held that the European patent was valid and infringed.
• Patents Court: The appeal originated from a decision of Lewison J. The citation and precise disposition below are not stated in this judgment.