![]() |
[Home] [Databases] [World Law] [Multidatabase Search] [Help] [Feedback] [DONATE] | |
England and Wales High Court (Patents Court) Decisions |
||
You are here: BAILII >> Databases >> England and Wales High Court (Patents Court) Decisions >> Lufthansa Technik AG v Astronics Advanced Electronic Systems & Anor (Re Interest) [2025] EWHC 1034 (Pat) (30 April 2025) URL: https://www.bailii.org/ew/cases/EWHC/Patents/2025/1034.html Cite as: [2025] EWHC 1034 (Pat) |
[New search] [Printable PDF version] [Help]
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
INTELLECTUAL PROPERTY LIST (ChD)
PATENTS COURT
B e f o r e :
____________________
BETWEEN:
LUFTHANSA TECHNIK AG (a company incorporated under the laws of Germany) |
Claimant |
|
– and – |
||
(1) ASTRONICS ADVANCED ELECTRONIC SYSTEMS (a company incorporated in the state of Washington USA) (2) SAFRAN SEATS GB ZODIAC SEATS UK LIMITED) |
Defendants |
|
AND BETWEEN: |
||
LUFTHANSA TECHNIK AG (a company incorporated under the laws of Germany) |
Claimant |
|
– and – |
||
PANASONIC AVIONICS CORPORATION (a company incorporated in the state of Delaware USA) |
Defendants |
____________________
MR IAIN PURVIS KC, MR PIERS ACLAND KC, MR MILES COPELAND and MR JEREMY HEALD appeared on behalf of the Defendants in both claims (instructed by Hogan Lovells International LLP in Claim No. HP 2017 000085 and Pinsent Masons LLP in Claim No. HP 2019 000019)
Hearing Date: 20 March 2025
____________________
Crown Copyright ©
Mr Justice Leech:
I. Introduction
II. Interest
A. Jurisdiction
(1) Equity
"In Law of Contract: Report on Interest (Law Com. No. 88) (1978) (Cmnd. 7229), the Law Commission decided not to make any recommendations for change as to the equitable jurisdiction. It is, however, interesting to note the following paragraphs of the report:
"10. Thirdly, there is the equitable jurisdiction. Interest may be awarded as ancillary relief in respect of equitable remedies such as specific performance, rescission or the taking of an account. Furthermore, the payment of interest may be ordered where money has been obtained and retained by fraud, or where it has been withheld or misapplied by an executor or a trustee or anyone else in a fiduciary position. . . ."
"(a) The equitable jurisdiction
"21. The equitable jurisdiction to award interest and to fix the rate at which it should be paid is extensive. It includes, for example, the power to order the payment of interest where money has been obtained or withheld by fraud or where it has been misapplied by someone in a fiduciary position. In such cases the court has an inherent power to order the payment of interest at whatever rate is equitable in the circumstances and may direct that such interest be compounded at appropriate intervals. Our view is that it would not be appropriate to impose statutory controls upon the exercise of the equitable jurisdiction to award interest, beyond those controls that are already in existence. We invited criticisms of this view in our working paper but no one disagreed with us. Accordingly, we make no recommendations for change in relation to the equitable jurisdiction."
From what I have said already it is clear that I agree with the statements in those paragraphs in so far as the equitable jurisdiction to award interest is regarded as "ancillary relief" but not in so far as they suggest that it is only equitable remedies in relation to which there can be the ancillary jurisdiction to award interest. The paragraphs are perfectly satisfactory as long as they are not regarded as exhaustive. It has to be remembered that the Law Commission were not intending to make any recommendations as to equitable interest."
"If there be no fixed rule of the Court; if there be no authority in which the point was ever decided, one way or the other; if all the general principles that govern a Court between a trustee and cestui que trust lead to one conclusion; if justice and equity lead to the same conclusion; viz., that one party is not to keep another out of possession for twenty years, applying to his benefit large balances, due to another, that other, embarrassed with debts, without paying interest, what is there of authority, principle, reason, justice, or equity, that should induce a Court not to say that that conclusion must follow? Upon these principles it is, I am of opinion, upon the first question that the mortgagor is in this case entitled to charge the Defendant with interest; and that it must be sent to the Master to compute that interest."
(1) There was no dispute that the Court has a jurisdiction to grant relief (including an award of interest) where that relief is required in aid of other remedies in its equitable armoury. It may well be that the Court's jurisdiction to award interest extends very much further than this: see Westdeutsche (above) at 723F-724A (Lord Woolf). But it is unnecessary to explore the extent of the jurisdiction here.
(2) Put another way, a court of equity has always had jurisdiction to grant relief on terms in order to fashion the remedy which best does justice between the parties. Mr Cuddigan cited as an example Re Metropolitan Coal Consumers' Association (Karlsberg's case) [1892] Ch 192 where the Court of Appeal upheld the decision of Kekewich J to order rescission of an allotment of shares but also awarded interest at 4% per annum. The report states at 208:
"The Court held, that where a contract was rescinded, interest on money actually paid under it ought to be allowed, not by way of damages, but on the ground that the parties were to be restored as far as possible to their original position."
(3) The parties were agreed that the purpose of an account of profits for the infringement of a patent is to put the infringer back in the same position financially as if no infringement had taken place: see Lifestyle Equities CV v Ahmed [2024] UKSC 17, [2024] 2 WLR 1297 at [155] and [156] (which I cited in the Principal Judgment at [315]). In that passage, Lord Leggatt described the remedy as a form of restitution rather than as a punitive or compensatory remedy. Mr Purvis argued that it would be inconsistent with this purpose to require an infringer to pay interest as well as disgorging the profits. I disagree. The infringer has had the use of the profits since they were generated by the infringement of the patent and the patentee has lost the use of those funds in the meantime.
(4) It may well be that it is unnecessary to award interest in many cases where the infringement is recent and continuing. But there is no obvious reason why an infringer should not be required to pay interest where the infringement is historic. Take a simple example. An infringer secretly exploits the invention of a patent to generate profits for a business which they later sell generating both capital and income profits. A few days before the limitation period expires the patentee discovers the infringement and issues proceedings later electing for an account of profits. There is no reason in principle why the infringer should not be required to disgorge both the income and capital profits made from the infringement and also to pay interest for the use of the funds in the meantime.
(5) Furthermore, it makes no real difference in my judgment whether one characterises an award of interest on an account of profits as a separate element of the substantive remedy because the infringer has had the use of the patentee's profits either to invest in their business or to defray expenses like the mortgagee in Quarrell v Beckford or as compensation for the loss of the use of the money in the meantime which the Court awards in the exercise of its ancillary jurisdiction. Since Sempra Metals the Court has fully recognised the time value of money and it would be entirely artificial to carve out of the La Pintada principle a limitation for an account of profits for patent infringement based on eighteenth and nineteenth century cases where the Court was far more reluctant to award interest.
(6) In particular, there is no reason in principle to distinguish between an account of profits for patent infringement and an account of profits taken against a defaulting fiduciary. For example, in Recovery Partners GP Ltd v Rukhadze [2025] UKSC 10, [2025] 2 WLR 529 Lord Leggatt JSC recently articulated the principle that both accounts of profits had the same underlying justification at [104] to [106]:
"104. Thus, where, as between a principal (P) and fiduciary agent (A), P has the exclusive right to use and control the use of information, and A without the consent of P uses the information for A's own benefit, the law provides similar protection to that afforded when tangible property is used without the owner's consent. This protection includes imposing a liability on A to surrender to P any benefit derived from using the information. The liability may be enforced by ordering an account of profits. This remedy may be awarded when confidential information is misused: see eg Peter Pan Manufacturing Corpn v Corsets Silhouette Ltd [1964] 1 WLR 96 and Attorney General v Guardian Newspapers Ltd (No 2) [1990] 1 AC 109 The same principle applies to the misuse of protected "intellectual property". A patent, trademark or copyright confers an exclusive right to exploit the patented invention, trademark or copyrighted work. If another person does so without the consent of the owner of the right and makes a profit from doing so, that person may be ordered to account for the profit by paying it over to the owner of the right.
105. In the context of a fiduciary relationship, information about a relevant business opportunity is treated as property in the same sense. As between the parties to the relationship, the principal has the exclusive right to use the information so that the fiduciary may use it only for purposes authorised by the principal; and if the fiduciary makes use of it for other purposes, so as to make a profit, he or she may be ordered to account for the profit.
106. The rationale for making an account of profits available in all these cases is linked to the nature of right which the law is seeking to protect. If P has an exclusive right as against A to exploit the use of the object in question (whether it be a physical object or an intangible asset), and A without P's consent uses the object for A's own purposes, the law cannot undo A's wrongful use. But it can do the next best thing of requiring A to surrender to P the benefits obtained by A from A's use and in that way making it as if the wrong had not occurred. Such a remedy is justified even if A's use did not prevent P from using the object or if P would have made no use of it anyway. The reason is that P's right is not just a right that A must not interfere with P's use of the object; it is a right that A will use the object only for P's benefit. A violation of the right that A must not interfere with P's use of the object can be remedied by requiring A to compensate P for any loss which A's wrongful interference has caused to P. But this does not by itself provide an adequate remedy for a violation of the right that A will use the object only for the benefit of P. To put P in an equivalent position to that which P would have been in if the wrong had not occurred, the law treats benefits obtained from A's use as if they had been obtained on behalf of P."
(7) Mr Purvis also argued that if an award of interest is treated as an element of the substantive remedy, it should have been incorporated into the account and resolved at trial on the basis of direct evidence about the Defendants' use of their trading profits. I reject this argument. The time to take this point was at the trial itself and the Defendants failed to do so. In my judgment, it is far too late to take it now.
(8) But in any event, the argument is misconceived. From a procedural perspective, an account is a flexible remedy. It was always open to the Court to order further accounts or inquiries once an account was taken if it was necessary to do so before a final order could be made or, by contrast, to move to an order for payment or other relief immediately if it was clear that an account was unnecessary: see Libertarian Investments Ltd v Hall [2013] HKCFA 93, 17 ITELR 1 at [168] (Lord Millett NPJ). Furthermore, Mr Purvis cited no authority for the proposition that it was necessary to conduct a detailed factual inquiry to establish precisely what use the fiduciary or infringer had made of the money before the Court could award interest. Indeed, it is clear that the Court has been prepared to award interest on general principles and without factual evidence: see, e.g., Karlsberg's case (above) and Wallersteiner v Moir (No 2) (above) at 388E-H (Lord Denning MR).
(9) I also take comfort from the fact that in Teledyne Industries Inc v Lido Industrial Products Ltd (1982) 68 CPR (2d) 204 the Federal Court of Canada awarded interest under the ancillary equitable jurisdiction and that this decision has been cited by a number of textbooks with approval: see Gurry on Breach of Confidence 2nd ed (2012) at 20.10 and Roughton, Johnson and Cook on Patents 5th ed (2022) at 8.152.
(10) Finally, I dismiss the argument that interest can only be awarded where an account has been stated. I agree with Mr Cuddigan's submission that Boddam v Riley was concerned with a different type of account in equity, namely, accounting for debts rather than an account of profits: see Snell's Equity 35th ed (2025) at 20—004. There is no hint of such a limitation in any modern authority dealing with an account of profits and, in any event, the editors of Snell's Equity consider that the jurisprudence governing this form of account is now obsolete.
(2) S.35A
"Subject to rules of court, in proceedings (whenever instituted) before the High Court for the recovery of a debt or damages there may be included in any sum for which judgment is given simple interest, at such rate as the court thinks fit or as rules of court may provide, on all or any part of the debt or damages in respect of which judgment is given, or payment is made before judgment, for all or any part of the period between the date when the cause of action arose and — (a) in the case of any sum paid before judgment, the date of the payment; and (b) in the case of the sum for which judgment is given, the date of the judgment."
"The power of the court to order the payment of interest on principal sums adjudged to be payable by a defendant to a plaintiff is conferred on it by section 3 (1) of the Law Reform (Miscellaneous Provisions) Act 1934. That subsection provides:
"In any proceedings tried in any court of record for the recovery of any debt or damages, the court may, if it thinks fit, order that there shall be included in the sum for which judgment is given interest at such rate as it thinks fit on the whole or any part of the debt or damages for the whole or any part of the period between the date when the cause of action arose and the date of the judgment ..."
There then follow three provisos which are not relevant to the present case. On the first question, whether Robert Goff J. had power to order the payment of interest on the principal sums awarded by him at all, it was submitted by Mr. Alexander that sums recoverable under the Act of 1943 were of a very special character indeed, and because of that did not come within the expression "any debt or damages" as used in section 3 (1) of the Act of 1934 set out above.
I do not accept that submission. In my opinion the words "any debt or damages," in the context in which they occur, are very wide, so that they cover any sum of money which is recoverable by one party from another, either at common law or in equity or under a statute of the kind here concerned. In this connection I adhere to the view with regard to the scope of section 3 (1) which I expressed in The Aldora [1975] QB 748, 751. I hold, therefore, that Robert Goff J. had power to order the payment of interest on the principal sums awarded by him."
"81. The reason why Dr Agbaje was an unwilling participant in the process was that he did not accept the Transfer Price determined by RFMCL of £24,000. RFMCL offered to pay Dr Agbaje this sum less what it said he owed the Partnership on 28 June 2011 and to pay the full sum on 18 May 2016, but he held out for a higher sum. Dr Agbaje was not even prepared to accept RFMCL's proposal of 1 July 2020 that he cash the cheque for £24,000 and pursue a claim for the difference. In the end the logjam was broken by the judge's decision, which resulted in a lower valuation of £21,188. Although paragraph 3 of the judge's order of 17 June 2022 ordered RFMCL to pay Dr Agbaje the sum of £21,188, strictly speaking that was not an order which the judge had power to make, as opposed to an order that RFMCL should pay Dr Agbaje the sum of £21,188 upon delivery up by Dr Agbaje of his certificate. RFMCL did not oppose the making of the order which the judge made because it had never disputed that Dr Agbaje should be paid the correct sum.
82. The proper analysis of Dr Agbaje's claim is therefore that it was not a claim for recovery of a debt, because no debt was ever owed to Dr Agbaje by RFMCL. As framed in the Amended Particulars of Claim, Dr Agbaje's claim was a claim for specific performance of the Agreement. Furthermore, as presented at trial, the claim was purely for the determination by the court of the correct value for his shares in circumstances where Dr Agbaje's unwillingness to accept either the Transfer Price determined by RFMCL or the payments offered and tendered by RFMCL were the only obstacles to his receiving the money. It follows that the court has no jurisdiction to award interest under section 35A(1) of the 1981 Act."
B. Discretion
(1) General
"24. First, as we have seen, s35A interest is intended to compensate the Claimant. However, having elected to seek and be paid D's profits, what can he be claiming to be compensated for? The whole point of electing to take D's profits is because C will expect to receive a sum that exceeds his loss. If C is obtaining more money on the account than he ever lost as a result of the infringement, he has no need for 'compensation'.
25. Second, the inevitable result of 'compensating' D by awarding an extra amount on top of the profits is that the fundamental principle behind an account explained in Lifestyle Equities CV v Ahmed [2024] UKSC 17 at [156] {LHTA/7/52} and Design & Display Ltd v OOO Abbott [2016] EWCA Civ 98 at [7] {DEFA/17/7} would be breached. These judgments make clear that a Defendant must not, as a result of the taking of an account, be placed in a worse position than they would have been, had it not been for the infringement. The Court can only proceed at this stage on the assumption that the sum found due on the account comprised all D's profits accruing as a result of the infringement. By switching attention to the Claimant under s35A (or the equitable jurisdiction) and making a further award to be made based on C's notional losses, the logical conclusion must be that the total award against Ds will exceed their profits.
26. Thirdly, prior to the election there was no basis on which Ds could sensibly have made the payments on which interest is now sought, because they could not know that an election for profits would be made. In BP v Hunt (No. 2) at first instance, Goff J quotes Lord Wilberforce on the subject of discretionary interest awards in an IP case in General Tire v Firestone {DEFA/30/64}: 'In a commercial setting, it would be proper to take account of the manner in which and the time at which persons acting honestly and reasonably would pay.' It is hard to see how it could be said that Ds in this case could be expected to have 'paid' over their profits, at least before the election was made."
"Next, I have to consider the period for which it should be awarded. In cases of restitution, the date of loss is generally identical with the date of accrual of the cause of action; because by that date the defendant will have received the benefit in respect of which the plaintiff claims restitution. That was certainly so in the present case. Mr. Alexander, however, submitted that if interest should be awarded at all, it should only be awarded from the date of the service of the writ (viz. May 1975), because until that date Mr. Hunt had no knowledge that any claim was being made against him, and could not therefore have paid any claim before that date. As to this, I am satisfied, on the evidence before me, that at a meeting held on June 14, 1974, B.P. made clear to Mr. Hunt's representatives B.P.'s intention to advance a claim against him. The claim was expressed as a claim for cash, namely £17,000,000 in lieu of reimbursement oil, and there is no evidence that it was spelled out as a claim under the Law Reform (Frustrated Contracts) Act 1943, though it was stated to be a claim under English law and I have no doubt, on the evidence, that it was intended to be a claim under that Act. But this was, in my judgment, a clear indication that B.P. did intend to pursue a claim against Mr. Hunt in respect of the services which they had rendered, which would under the contract have been paid for by reimbursement oil; and if interest is to date from the time when Mr. Hunt was aware of B.P.'s claim, then it should date not from the date of the issue of the writ, but from June 14, 1974.
This is not a case where the facts giving rise to the cause of action were unknown to Mr. Hunt; on the contrary, he was well aware of all the relevant facts. Even so, he did not know until June 1974 that B.P. were going to make any claim upon him; and on the very unusual facts of the case Mr. Hunt could not, in my judgment, have been reasonably expected to know that B.P. were likely to make any claim upon him until they notified him of their intention to do so. It appears that Mr. Hunt's lawyers expressed surprise when B.P.'s representatives stated their intention at the meeting of June 14, 1974; there is no reason to suppose that this surprise was simulated, the circumstances being so unique and both parties' attention having been concentrated upon their respective rights vis a vis the Libyan Government, and upon their rights to the oil, rather than upon any claim in restitution. It is in just such a case as this that a court may, in its discretion, decide not to award interest before the claim is made. I am not however, prepared to postpone the commencement of the period to allow time for the making of investigations by Mr. Hunt, because the circumstances giving rise to the claims were well known to him or to those in his employment.
I therefore decide that the period for which interest is to be awarded runs from June 14, 1974, until the date of my order. It is right, however, that I should record that I would not have been inclined to abridge the period to June 14, 1974, on the separate ground that there had been any reasonable delay by B.P. It is true that 2 1/2 years elapsed between the date of accrual of the cause of action, and the date of notification of the claim to Mr. Hunt; and a further 10 months elapsed between that date and the issue of the writ. Thereafter, there cannot be said to have been any unreasonable delay by B.P.; on the contrary, having regard to the time inevitably occupied by Mr. Hunt's unsuccessful attempt to set aside the proceedings, which finally failed when Kerr J. gave judgment in October 1975, and having regard to the complexity of the case, it was a remarkable achievement to bring the case on for trial as early as October 1977. I am, however, concerned with the delay between December 1971 and June 1974. In all the circumstances of the case, I would not have regarded that delay as so unreasonable as to call for any reduction in the award of interest on that ground."
(2) Delay
"9. The key points I derive from the authorities are as follows. The starting point is that interest runs from the date of the accrual of the cause of action, and its purpose is to compensate the claimant for being kept out of his money. I also note that in commercial cases the courts have taken the approach of identifying a rate of interest that reflects the cost of borrowing, not by the particular claimant in question, but claimants with the general attributes of the claimant. That is referred to in Sycamore at [7], citing Tate & Lyle v GLC [1982] 1 WLR 149 at 154.
10. There may be a departure from this approach in the case of an unjustifiable delay, either by not awarding interest for a period or by adjusting the rate of interest. The rationale is that, although the defendant has had the use of the money and would get a windfall to the extent that interest is not awarded, the fact that the claimant has not received funds earlier is attributable to his own fault. The claimant has himself caused the loss of use of funds by choosing to delay. That is clear from the cases summarised in Claymore at [52] to [54]."
(i) 2011 to 2018
"Commencement of proceedings against AES and Safran in 2017
7. Lufthansa first issued proceedings for patent infringement against AES on 29 December 2010, with proceedings in Germany. The fact Lufthansa is domiciled in that jurisdiction, combined with its status as a highly significant location for aerospace manufacturing (in particular relating to Airbus aircraft) meant that this was a proportionate approach to the dispute for Lufthansa. Lufthansa only brought the German action after it was convinced that the facts known and the evidence at hand provided sufficient support for the action, though at that time it still did not have all the relevant information. For example, Lufthansa was not yet in possession of a copy of the Settlement Agreement between KID and AES, on which AES based defence arguments in the German litigation and in these proceedings.
8. Following a finding of validity in Germany (in distinct proceedings initiated by a subsidiary of AES), Lufthansa commenced infringement proceedings in the United States on 26 November 2014. That jurisdiction was chosen since AES was based there and manufactured its components for EmPower Systems there. AES also distributed components worldwide from its base in the U.S. Further, as I explain below, Lufthansa also maintained (and continues to maintain) extensive operations in the United States.
9. For the above reasons, Lufthansa did not consider that it was necessary or even appropriate to commence further infringement proceedings in the UK or elsewhere at this time.
10. From an enforcement perspective therefore, Lufthansa hoped that it would be able to obtain adequate relief against AES without having to pursue parallel proceedings outside of the two jurisdictions referenced above. That, however, turned out not to be possible.
11. In the U.S. infringement proceedings, AES counterclaimed against Lufthansa for revocation of its U.S. patent. This led to the U.S. patent being revoked at first instance by a judgment dated 20 July 2016. Lufthansa appealed the revocation, but the decision was upheld by the appeal court on October 19, 2017.
12. In response to the revocation of the U.S. patent, Lufthansa re-considered whether proceedings on equivalent patents in alternative jurisdictions needed to be brought from a recovery/enforcement perspective. The outcome was that Lufthansa commenced a UK claim against AES and Safran on 28 December 2017, with case number HP-2017-000085. It also filed an infringement claim in France on 29 December 2017.
Commencement of proceedings against PAC in 2019
13. I am instructed by Lufthansa that it was aware of PAC's involvement in EmPower System distribution before it started the German litigation. Certainly, it was aware that PAC distributed EmPower Systems in Germany by 17 June 2011, as this fact was mentioned in AES' Grounds of
Defense in the German action. However Jones Day and Lufthansa were at that time unable to determine the geographical scope or scale of such activity. Lufthansa therefore commenced discovery proceedings against PAC under s. 1782 of Title 28 of the United States Code (the "s. 1782 Proceedings") on 23 January 2018, seeking PAC's sales and financial information regarding its distribution of EmPower Systems. PAC first provided financial information in response on 3 April 2018, but this was clearly deficient and had to be reworked, and a second more useful iteration was disclosed on 6 March 2019 (the "s. 1782 Spreadsheet").
14. On 14 March 2019 Mr. Greenlee of PAC was deposed by Jones Day in the United States as to the precise content of the s. 1782 Spreadsheet. This was the point at which Jones Day (and by extension Lufthansa) started to gain a clear understanding of the scale of PAC's distribution of EmPower Systems, as well as the geographical scope of its infringing activity. The s. 1782 Spreadsheet contained in excess of 300,000 rows and more than 40 columns and had no mechanism to allow filtering by country. Accordingly, it took some time for the Jones Day team to manually analyse the contents of the spreadsheet and filter the data by jurisdiction.
15. Nonetheless Lufthansa was able to commence proceedings against PAC in the UK on 13 May 2019, in time for the case (no. HP-2019-000019) to be heard at trial concurrently with the proceedings against AES and Safran."
(ii) January to September 2022
(3) Rate
(i) Astronics
"14. There are some contexts (for example which side of the road to drive on) when the existence of a clear default rule is important, even if there is much which can be said for both competing options. I am satisfied that the default interest rate for US$ awards in the Commercial Court going forward should be US Prime, irrespective of whether the claimant has a US place of operations or not and irrespective of whether the claim is a maritime claim or not. I have reached that conclusion for the following reasons: i) There are long-standing decisions of the Commercial Court which have referred to US Prime as a starting point for US$ awards: see [4]-[7]. That practice is referred to in Civil Procedure §16AI.2. ii) LIBOR is in the course of being discontinued. iii) LIBOR itself is an interbank rate, rather than a commercial borrowing rate. iv) The trend of the more recent authorities has been to favour the use of US Prime. v) A default rule would not achieve the requisite clarity if it did not apply to particular commercial sectors of indeterminate scope. 15. There being no contrary evidence in this case, the starting point will be US Prime."
(ii) Panasonic
(iii) Safran
(4) Tax
(5) Timing
C. Calculations
(1) Astronics
(2) Panasonic
(3) Safran
III. Double Recovery
D. The Foreign Claims
(1) Germany
"82. The potential for double recovery arises in respect of the Germany 2 proceedings (which has loosely been referred to as the "indirect damages" claim but which includes claims for shipments to Germany both directly and indirectly). In those proceedings Lufthansa's cases are broad enough to catch the following:
(a) Profits made by Astronics in respect of Primary Components shipped to third parties in the UK (such as Safran) which are then shipped to Germany (after, for example, having been incorporated into seats). This scenario arises where the seats are for linefit on Airbus aircraft - the majority of Airbus final assembly lines being in France and Germany.
(b) Profits made in respect of FAL components shipped directly to Germany where they are included within the scope of the English Account by virtue of being installed in the same aircraft as a UK-delivered Primary Component.
(c) Profits, said to be payable by Astronics, but made by Panasonic in respect of Primary Components shipped to the UK (which parts are then shipped by others to Germany).
83. Whether and precisely how double recovery arises depends on whether and precisely how each of the allegations above is pursued by Lufthansa and the findings made in the foreign proceedings. However, take the following examples:
(a) A Primary Component is shipped to the UK by Astronics. Astronics contends that the Judgment proceeds on the basis that, in effect, Astronics receives payment and makes its entire profit in respect of that part upon supply in the UK . That same part is shipped by a third party (assume a seat maker) to Germany. Astronics received no further payment for that part upon its delivery to Germany (and so no further profit). In that scenario there is only one transaction that caused profits to be generated for Astronics, namely the shipment to the UK and all of Astronics' profits in respect of that part were in play in this Account. It is clear from Lufthansa's second letter of 14 March 2025 {I/1076/1} that Lufthansa nonetheless intends to claim in Germany in respect of the same transaction, for example by arguing that the 87% that this Court has not attributed to the infringement are somehow available in Germany and are not "the same profits" in respect of which a determination has been made in this Account. If that is the case, the Defendants wish to argue that recovery of such profits would be re-litigating an issue that has already been decided by this court and amounts to double recovery.
(b) FAL components shipped directly to Germany where they are installed in the same aircraft as a UK-delivered Primary Component. Again, the UK award covers FAL components relative to the number of Primary Components shipped to the UK. A proportion of such FAL components will have been installed in Germany.
(c) Profits made by Panasonic upon shipment to the UK. Panasonic makes no further profits when such parts are shipped to Germany having been incorporated into a seek. Nonetheless, in Germany Lufthansa is arguing that Astronics is liable for such profits."
"By way of example, consider an EmPower System manufactured by Astronics in the USA, sold by Astronics to Panasonic in the USA, subsequently supplied by Panasonic to Safran in the UK, assembled by Safran in the UK, and then supplied by Safran to Airbus in Germany. Panasonic's and Safran's profits derived from their acts of infringement of the UK Patent (which do indeed relate to the same product) are captured by this account. Astronics' profits on the other hand are not, because its acts in the USA were not acts of infringement of the UK Patent. Mr Jaekel explains, however, that under German law Astronics' acts did infringe the German patent where it knew that the EmPower Systems it supplied to Panasonic in the US would ultimately infringe the German patent (or was negligent as to the same). On that basis, Lufthansa may in Germany be able to claim profits obtained by Astronics further up the supply chain for the same product."
(2) France
E. Final or Provisional Award
(1) The Defendants' case
"65. To the extent that the profits sought in these proceedings are duplicative of profits awarded in the German proceedings there should be no double recovery. To the extent that the profits sought in these proceedings are in respect of the same products for which damages are sought in the French Proceedings, in the event that the appeal is allowed there should be no double recovery."
(2) Finality
"With the exception of claims to which the amended s.2 of the Damages Act 1996 applies, it remains the law that the award must be in the form of a lump sum for which judgment is entered. No other form of final award is currently allowed to the court, so that in Fournier v Canadian National Ry, it was held to be improper and illegal to award an annuity by way of damages. Just as the rule was, before legislation intervened, that the Court of Appeal could not substitute its own award for the jury's even with the consent of the parties, so there is no reason to believe that in cases untouched by the replacement s.2 the hallowed lump sum award could be bypassed by agreement. As for the structured settlement, which formed an important part of the 1990s scene, it was admittedly alternative to the lump sum award but did not represent an award of damages as there was no judicial power to award to the claimant, or to impose upon both claimant and defendant, such a settlement; structures were agreed voluntarily between the parties. However, such matters are now of no more than historical interest since the jurisdiction to award damages for future pecuniary loss in the form of periodical payments has entirely superseded the court's jurisdiction to approve structured settlements, the applicable Practice Direction once attached to CPR Pt 40 having been duly revoked."
"Once the damages have been fully assessed, and no further appeal against the assessment is possible, there is today no method available—unless the circumstances have permitted resort to a claim for provisional damages—for altering the award. An award to a disabled man of 30, based upon normal life expectancy, cannot be reduced even if another accident kills him within a very short time; nor can he have his damages increased upon proof that his disablement has now turned out to be much greater than had been anticipated. It was said in earlier editions of this work that this result of the system of lump sum awards not subject to revision might one day lead to the adoption of the proposal, advocated in 1978 by the Pearson Commission, by a majority, in respect of the future pecuniary loss caused by serious and lasting injury that the courts should in general make their awards in the form of periodical payments and that the periodical payments should be subject to later revision when there is a material change in circumstances. While little or nothing was done about the Pearson Commission's recommendations for many years, they have, from 2005, come to fruition."
"The final question under this head relates in my judgment to computation.
If a defendant is liable to indemnify, directly or indirectly, the other defendants, then in a damages claim his exposure is limited to the claimant's damage on Gerber v. Lectra principles. Where an account is claimed, the indemnity will affect the actual profit which he makes. It may be capable of extinguishing his own profit if he pays it. This must be the case down the line of infringers. My reaction is that each defendant is able to set off against his profits the payments which he is obliged to make to other defendants on behalf of the patentee's claims. While this may entirely extinguish his liability to account, he will still lose if his payments to the others exceed his own profits. It follows that the accounts must be taken together, and that no order for payment should be made in respect of any infringing article until the claimant undertakes not to make a claim in respect of that article against any other defendant. Unless this is done the account becomes hopelessly complicated."
(3) Discretion
(1) There was no evidence that the French or German claims would be resolved in the near future and it could be years before a final award of profits is made. I might have been prepared to stay any final Order and grant permission to apply if those claims were likely to be determined in a matter of weeks or months but that was not the position. In my judgment, the Court should be very wary of granting an open-ended permission to apply to vary or set aside an Order which a party might seek to exercise years later.
(2) Furthermore, I am not prepared to grant a stay of execution of any final Order pending the determination of the French and German claims. Mr Acland attempted to meet this point by stating that the Defendants were willing to comply with the Order and pay over the funds and that Lufthansa would only be required to pay them back if the Defendants sought permission to apply and were successful in setting aside or varying the Order. In my judgment, this is unsatisfactory. No party who has the benefit of a final judgment should be required to live with the uncertainty that they might be ordered to repay the fruits of the judgment. The fact that Lufthansa is a multi-national corporation with the ability to raise and repay the funds should not, in my judgment, make a difference.
(3) Mr Acland did not challenge Mr Jackel's evidence in relation to the defence of performance under German law or argue that they would not be able to deduct the profits which they are ordered to pay by the English Court either as costs of manufacturing the infringing articles or as a matter of general principle. I am not satisfied, therefore, that there is a real risk that the German Courts (or, for that matter, the French Courts) would permit double recovery or that Lufthansa's assurance in the Reply does not give the Defendants adequate protection.
(4) But even if there is a risk that the French or German Courts would permit double recovery, I have reached the conclusion that this should be a matter for determination by them and not by the English Courts. For example I have held that the Defendants are liable to pay 13% of the profits in issue. It is possible, say, that the French Courts may award a further 15% of those profits and the German Courts a further 25%. It does not appear to me to be self-evident that each award should be set off against the others so that the Defendants pay a total of 25% of the profits. The French Court might take the view that profits awarded by the English Court should be set off against its own award but the German Court might take the view that the awards should be cumulative. Much may depend on the evidence and the principles of law which the Court must award. In my judgment, those are matters for each national court applying its own law.
(5) Finally, even if I were persuaded that this is a matter for the English Court, it is entirely unclear what the scope of any further issue between the parties will be. Again, it is unsatisfactory for the Court to be asked to give permission to apply without the Defendants formulating precisely what issue they should be permitted to bring back before the Court. If I make a provisional award of profits and give the Defendants permission to apply, I fully expect the parties to treat this as an invitation to re-open the Order which I have made and to raise a raft of issues about the effect of the French and German decisions. It is time to bring this litigation to an end (at least at first instance).
IV. Disposal