Lufthansa Technik AG v Astronics Advanced Electronic Systems & Anor

Factual and Procedural Background

Company A owned a European patent for an aircraft passenger power-supply apparatus, and the patent expired on 22 May 2018. [Para 34] Company A had previously succeeded on liability for infringement against Company B, Company C and Company D, and the court ordered an inquiry as to damages or an account of profits at Company A’s election. [Para 35][Para 36] Company A elected for an account of profits on 22 September 2022, and the relevant accounting periods differed between the defendants because the claims were brought on different dates. [Para 37]

The account was heard before Judge Leech, who awarded profits against Company B, Company C and Company D and later determined interest and a double-recovery issue. [Para 44][Para 45] The present appeals concerned Company A’s challenge to the quantification and apportionment of profits, and the defendants’ challenges to interest, double recovery, and the construction of a 1998 teaming agreement said to be an exclusive licence. [Para 47][Para 48][Para 232][Para 519][Para 649][Para 681]

Legal Issues Presented

1. Whether, in an account of profits for patent infringement, the court should treat differential profits analysis and apportionment as alternative approaches or whether both could be used. [Para 33][Para 233][Para 240][Para 436]
2. What the correct approach to legal causation is in this context, including whether a “real driver” analysis was appropriate. [Para 33][Para 444][Para 450][Para 452]
3. Whether the court should have apportioned profits at all on the facts, and if so how. [Para 47][Para 159][Para 208][Para 500]
4. Whether the 1998 teaming agreement constituted an exclusive licence, and what consequences that had for the account of profits. [Para 48][Para 520][Para 530][Para 565]
5. Whether Company A could recover all profits notwithstanding any share attributable to the exclusive licensee, and whether double recovery in foreign proceedings justified a provisional order. [Para 531][Para 635][Para 664]
6. Whether interest could be awarded before the date of election for an account of profits, and at what rate. [Para 682][Para 724][Para 751][Para 767]

Arguments of the Parties

Company A's Arguments

• Company A argued that once the defendants failed to establish a non-infringing alternative, all profits were “derived from the infringement” and should not be further apportioned. [Para 240][Para 242][Para 439]
• Company A argued that differential profits analysis was the correct way to identify profits causally attributable to the infringement, and that apportionment was inconsistent with that approach. [Para 240][Para 241][Para 408]
• Company A argued that the judge wrongly treated legal causation as turning on whether infringement was “the real driver” of sales. [Para 444][Para 446][Para 449]
• Company A contended that the 1998 teaming agreement was only a sole licence, not an exclusive licence. [Para 68][Para 520][Para 530]
• Company A maintained that any foreign recovery risk was only theoretical and did not justify a provisional order. [Para 663][Para 664][Para 669]

Company B's and Company D's Arguments

• Company B and Company D argued that apportionment was a well-established English law response where profits were generated by multiple causes. [Para 243][Para 244][Para 299][Para 307]
• They argued that the judge was entitled to find that the infringement was not the legal or proximate cause of all the profits because other regulatory, commercial and competitive factors drove sales. [Para 184][Para 186][Para 194][Para 200]
• They argued that the 1998 teaming agreement granted an exclusive licence, which meant Company A could not claim the whole of the profits subject to the compromise with the licensee. [Para 522][Para 523][Para 529][Para 562]
• They argued that interest was available, but that the rate should reflect the commercial claimant’s borrowing position. [Para 682][Para 753][Para 758]

Table of Precedents Cited

Court's Reasoning and Analysis

The court held that factual causation alone was insufficient because “but for” causation can over-reach in complex-product cases; legal causation must still separate profits attributable to the invention from profits due to other factors. [Para 405][Para 406][Para 413][Para 454] The judge’s findings that the patent was a barrier or gateway patent did not end the inquiry, because the real question was whether the infringement drove the profits or whether regulatory compliance, product quality, weight, power-management, and market competition were the true drivers. [Para 182][Para 184][Para 186][Para 194][Para 200][Para 467]

On Company A’s first ground, the court rejected the proposition that differential profits analysis and apportionment were mutually exclusive. [Para 437][Para 438][Para 440] The court held that differential profits analysis is useful only where a suitable, uncontested non-infringing option exists; otherwise, English and Australian authority permits a fair apportionment of a single profit pool. [Para 435][Para 436][Para 455] The judge had therefore not erred in using apportionment after rejecting the only pleaded non-infringing alternative. [Para 438][Para 439][Para 440]

On legal causation, the court held that the judge had used the wrong framing by treating the issue as whether the infringement was “the real driver,” but that error did not undermine the result because the substantive enquiry was whether all profits were causally attributable to the infringement or whether they had to be apportioned. [Para 451][Para 452][Para 454][Para 457] The court accepted that the judge’s evaluative conclusion was justified by the evidence of multiple non-infringing causes, including airframe approval requirements, superior products, and the defendants’ broader commercial success. [Para 465][Para 466][Para 467]

On the 1998 teaming agreement, the court concluded that, applying German contract law principles to the agreement, the document granted Company B an exclusive licence under UK patent law, not merely a sole licence. [Para 570][Para 595][Para 605] That construction mattered because it meant Company A could not claim the whole “single pot” of profits: where an exclusive licence covers part of the patent rights, the exclusive licensee stands in the patentee’s shoes for that part, and the profits must be allocated accordingly. [Para 640][Para 644][Para 645]

On double recovery, the court upheld the refusal to make Company A’s award provisional or to stay execution pending foreign proceedings, holding that comity required the French and German courts to deal with any overlap under their own laws. [Para 667][Para 669][Para 674][Para 679] On interest, the court held that interest was available both in equity and under section 35A, because an infringer should not retain the time value of profits that should have been paid to the patentee from the outset. [Para 723][Para 724][Para 750][Para 751] The court also upheld the use of a US interest rate for US$ profits. [Para 762][Para 763][Para 766][Para 767]

Holding and Implications

Company A’s appeal was dismissed; Company B’s and Company D’s appeals on interest and double recovery were dismissed; and Company B’s and Company D’s appeal on KID apportionment was allowed. [Para 519][Para 649][Para 680][Para 767][Para 769] The practical result was that the court preserved the apportionment approach to the account of profits, confirmed that pre-election interest can be awarded in an account of profits case, and held that an exclusive licence can reduce the patentee’s recovery where the licensee has a relevant proprietary share in the profits. [Para 644][Para 723][Para 751][Para 768]

The decision also reinforces that, in complex-product patent cases, courts may apportion profits without first identifying a perfect non-infringing alternative, and that legal causation remains a distinct evaluative step after factual causation is shown. [Para 436][Para 455][Para 456][Para 482]