Lufthansa Technik AG v Astronics Advanced Electronic Systems & Anor

Contrary to a simple “all‑profits” approach, where a patented feature is only one of several commercial and technical drivers of a complex product the court will ask not only whether the infringement was a but‑for cause of profits but also whether it is the legal (proximate) cause; if not, an apportionment is appropriate. The Patent’s insertion/timing and remoteness features enabled certification but did not by themselves drive the Defendants’ profits from integrated IFE/PED power systems, so only a proportion of profits is awarded.

This judgment resolves an accounts inquiry following a liability judgment and appeal in which the [2020] EWHC 1968 (Pat) decision and subsequent Court of Appeal ruling had declared the Defendants to have infringed EP(UK) 0,881,145 B1. The trial addressed technical background, certification and market integration of in‑seat power systems (ISPs/ISPSS), whether non‑infringing alternatives were available, factual causation (“but‑for”) and legal causation (proximate cause), and the proper method for quantifying any account of profits. The court found (i) the Patent’s insertion/timing and remoteness features were necessary to obtain regulator/airframer acceptance but were only one element among many safety, engineering and commercial requirements; (ii) no practicable non‑infringing alternative existed that would have been used; (iii) the infringement was a factual cause of profits but not the legal/proximate cause of the Defendants’ full profits; and (iv) apportionment was therefore required. Applying those conclusions to the expert accountancy evidence the court quantified the sums to be disgorged by Astronics, Panasonic and Safran (details below).

1. Disposition. The court orders an account of profits but significantly apportions recoverable sums because the infringement, although a but‑for cause of gains, was not the proximate legal cause of the full profit pools: only a portion is recoverable from each Defendant. The court directs payment of the amounts indicated below (subject to consequential submissions): Astronics: US$4.42m; Panasonic: US$7.384m; Safran: US$81,800 (provisional apportionment basis noted below).
2. Construction and key legal propositions. The Patent principally protects a safety regime combining (A) a plug‑insertion detection (the plug pins must be detected by detectors when inserted to trigger power) and a short timing check (Claims 1–2) and (B) a requirement that the high‑voltage supply device be located/arranged so it is not exposed to passenger access (the remoteness concept). The court construes Claim 1 as requiring the plug pins to contact pin detectors (not merely be sensed on approach) and, sensibly, to operate in a way that minimises casing‑to‑casing exposure; the skilled person would regard approximately any exposure below about 4 mm as consistent with “fully inserted” for implementation purposes. The court therefore rejects a literal ‘zero‑ETP’ (zero exposure) construction as unrealistic and inconsistent with purposive reading of the specification and the regulatory context.
3. Non‑infringing alternatives. The court finds on the evidence that defendants could not, in the Relevant Period, have adopted a practicable non‑infringing product that would have achieved certification and airframer approval. A variant (the 1171M) could have been engineered but would itself have infringed on the correct construction/equivalence analysis; commercially available third‑party alternatives post‑dated the Relevant Period or were not viable. The defendants therefore fail the primary non‑infringing alternative defence.
4. Causation (two stages).
   • (a) Factual causation: the court accepts that but‑for the infringing use the Defendants would not have realised the profits in issue (the Patent was a necessary enabler of the certified, airframer‑approved products actually sold).
   • (b) Legal (proximate) causation: the court then considers whether the infringement was the effective/legal cause of the profits. Applying the approach in Anan Kasei/Neo and related authorities, and looking at the full commercial and regulatory matrix (multiple additional safety tests, airframer technical requirements, product weight, reliability, supply‑chain events and KID’s technical setbacks), the court concludes the infringement was not the proximate legal cause of the entire profit pools. The sale pools resulted from multiple factors beyond the patented features; hence apportionment is required.
5. Accounts arithmetic. The court accepts the experts’ principal measurement framework (identify relevant revenues; deduct direct costs; allocate/deduct attributable overheads and tax; apportion the resulting net profit to the patented contribution). Working through the experts’ agreed and disputed inputs, the court makes factual findings on IR&D, sales‑credit treatment, FAL components and tax, and adopts the parties’ agreed methodology for the remainder. The resulting net profit pools used for apportionment are: Astronics US$34.0m; Panasonic US$56.8m; Safran US$168.5m (before apportionment adjustments noted below).
6. Apportionment method and result.
   • (a) The court finds the 2014 Lufthansa–KID Teaming Agreement a relevant market comparator for the value of the patent contribution and, in the circumstances, an appropriate yardstick to infer an implied apportionment percentage (subject to overhead‑deduction mechanics). This drives an implied royalty‑type allocation. The court also accepts the Court of Appeal reasoning in OOO Abbott, Cipriani and Jack Wills that, in difficult multi‑factor cases, a broad‑brush apportionment (including royalty‑style comparators) is permissible.
   • (b) Applying the chosen comparator and the court’s deductions for incremental overheads and tax (see reasons), the court provisionally adopts an implied apportionment of 13% of net profits (the court notes an alternative 21% figure if all overheads are deducted; the precise choice between these two approaches is left for further consequential submissions because it affects the final arithmetic materially).
   • (c) Applying the 13% basis provisionally, Astronics accounts US$4.42m; Panasonic accounts US$7.384m. For Safran the court adopts the defendant‑favouring labour‑share apportionment and provisionally awards US$81,800 (deducting full overheads); an alternate variable‑overhead outcome (US$567,800) is recorded as the contingency for submissions on costs/consequentials.
7. Agreements between the parties and licence arguments. The court rejects Astronics’ submission that the 2003 Settlement Agreement and KID’s dealings with GD/Astronics discharge or reduce Lufthansa’s entitlement. On interpretation of the 1998 Teaming Agreement under German law the court finds KID was granted a sole exclusive (not an absolute exclusive that excludes the licensor) right limited to the “Advanced System” and to the co‑operation purpose; on that basis KID had no section‑67 exclusive‑licensee cause of action that could have displaced Lufthansa’s right to sue in the UK. Appeal material from the German courts is discussed and treated as persuasive but not binding on English relief calculations; the English court follows the contractual construction and factual matrix described above.
8. Practical conclusion and directions. The court orders the provisional account awards above. The court reserves certain consequential questions for short further argument (deduction of all overheads vs incremental overheads; any double‑recovery risk with foreign proceedings; discrete factual credits) before making final operative orders and costs determinations.

• Court of Appeal: Appeal from the liability decision and later interlocutory matters dismissed; leading judgment of Birss LJ affirmed key constructions and the liability findings (see [2022] EWCA Civ 20 and related interlocutory authorities cited in judgment).
• High Court (Patents Court): Liability judgment and inquiry ordered by Morgan J, declared infringement and ordered an account (see [2020] EWHC 1968 (Pat) cited in judgment).