Preclusion of Adjourned Issues in Patent Infringement Actions: Lufthansa Technik AG v Astronics [2023] EWCA Civ 1306

Introduction

The case of Lufthansa Technik AG v Astronics Advanced Electronic Systems & Ors ([2023] EWCA Civ 1306) was heard in the England and Wales Court of Appeal (Civil Division) on November 9, 2023. The central issue revolved around whether Lufthansa could advance certain claims, referred to as "Adjourned Issues," in an account of profits following earlier court orders that had adjourned these issues. The parties involved included Lufthansa Technik AG as the claimant, and Astronics, Safran, and Panasonic as defendants. Recorder Campbell KC initially ruled that Lufthansa was precluded from advancing the Adjourned Issues, a decision that Lufthansa sought to appeal. Additionally, Lufthansa applied for relief from sanction due to the late filing of its appellant’s notice.

Summary of the Judgment

The Court of Appeal examined Lufthansa's application for permission to appeal Recorder Campbell’s decision and its concurrent application for relief from sanction due to a delayed appellant’s notice. The appellate court granted Lufthansa permission to appeal but ultimately dismissed the appeal. The core determination was that the earlier orders by Morgan J and Recorder Campbell effectively precluded Lufthansa from advancing the Adjourned Issues in the account of profits. Furthermore, the request for relief from sanction was denied due to the significant delay and lack of compelling reasons.

Analysis

Precedents Cited

The judgment extensively referenced several key precedents to support the court’s interpretation of adjourned issues and court orders:

Pan Petroleum AJE Ltd v Yinka Folawiyo Petroleum Co Ltd [2017] EWCA Civ 1525 - Emphasized that the court's sole focus is the meaning of the order itself.
JSC BTA Bank v Ablyazov (No. 10) [2015] UKSC 64 - Highlighted circumstances under which a patentee may advance new infringement claims.
Sans Souci Ltd v VRL Services Ltd [2012] UKPC 6 - Clarified that judicial orders should be construed based on the language and context provided by the judge.
Mackenzie v Duke of Devonshire [1896] AC 400 - Demonstrated that supplementary statements like recitals cannot override clear operative terms.
Denton v TH White Ltd [2014] EWCA Civ 906 and R (Hysaj) v Secretary of State for the Home Department [2014] EWCA Civ 1633 - Outlined the three-stage approach for assessing applications for relief from sanction.

Legal Reasoning

The Court of Appeal focused on the interpretation of Morgan J's order concerning the Adjourned Issues. Recorder Campbell had determined that the phrasing of the order effectively prevented Lufthansa from raising the Adjourned Issues in the subsequent account of profits. The appellate court concurred, emphasizing that the operative part of the order, particularly paragraph 11 and the fourth recital, indicated that the Adjourned Issues no longer needed to be determined. Additionally, Morgan J concluded that Lufthansa had effectively abandoned these issues, thereby precluding their revival.

Regarding the application for relief from sanction, the court assessed the seriousness of the delay, the reasons provided by Lufthansa, and the overall circumstances. Given the lack of a compelling justification and the significant delay, the court refused relief.

Impact

This judgment reinforces the principle that adjourned issues, once formally dismissed by court orders, cannot be easily revived in later stages of litigation, such as in an account of profits. It underscores the importance of adhering to procedural timelines and the finality of court orders in determining the scope of allowable claims. Future litigants must exercise diligence in preserving and advancing all their claims within the appropriate phases of litigation to avoid preclusion. Additionally, the judgment serves as a cautionary tale regarding the consequences of filing late applications for appeal, highlighting the judiciary's strict stance on procedural compliance.

Complex Concepts Simplified

Adjourned Issues

Adjourned Issues refer to claims or arguments that are set aside during a trial to be potentially addressed in a later phase, such as an inquiry into damages or an account of profits. This procedural tool allows parties to streamline trials by focusing on primary issues first and reserving secondary issues for later determination if necessary.

Account of Profits

An account of profits is a legal remedy where the infringing party is required to disgorge the profits made from unlawful activities. Unlike damages, which compensate the claimant for losses, an account of profits aims to strip the defendant of any gains obtained through infringement.

Relief from Sanction

Relief from sanction is a legal mechanism that allows a party to seek permission to proceed with a claim or appeal despite failing to adhere to procedural requirements, such as filing deadlines. The court evaluates the seriousness of the breach, the reasons for the default, and the overall circumstances before granting relief.

Conclusion

The Court of Appeal's decision in Lufthansa Technik AG v Astronics Advanced Electronic Systems & Ors [2023] EWCA Civ 1306 underscores the judiciary’s commitment to upholding procedural integrity and the finality of court orders. By precluding Lufthansa from advancing the Adjourned Issues in the account of profits, the court reinforces the importance of timely and accurate preservation of claims throughout litigation. Furthermore, the refusal to grant relief from sanction for the delayed appeal filing serves as a stern reminder of the necessity for strict adherence to procedural timelines. This judgment will likely influence future patent infringement cases, emphasizing the critical nature of managing litigation phases diligently and respecting the determinations made by the courts.