Practice - Lufthansa Technik AG v Astronics Advanced Electronic Systems

Author Franzffm Licence CC BY-SA 3.0 Source Wikimedia Commons

 










Patents Court (Douglas Campbell KC) Lufthansa Technik AG v Astronics Advanced Electronic Systems and another [2023] EWHC 1136 (Pat) (12 May 2023)

In these proceedings, Douglas Campbell KC was asked to consider the following questions:
  • Can Lufthansa Technik AG ("Lufthansa") rely on additional ways of putting its case on infringement in the quantum stage which were not decided in the judgment on liability?
  • Is Lufthansa specifically prevented from advancing certain issues (“the adjourned issues”) by reason of an order made by the trial judge after trial?
The deputy judge decided the first in favour of Lufthansa and the second in favour of the defendants.  There was also an application by Lufthansa for permission to amend its statement of case to plead a point that had not been raised at trial which Mr Campbell refused.
 
Context

Lufthansa sued Astronics Advanced Electronic Systems, Safran Seats GB Ltd and Panasonic Avionics Corporation for patent infringement.  The action came on before Mr Justice Morgan between 22 and 26 June 2022. He held that each defendant had infringed at least one claim of  European Patent (UK) 0 881 145 B1 in Lufthansa Technik AG v Astronics Advanced Electronic Systems and another [2020] EWHC 1968 (Pat) (22 July 2020).  I discussed that judgment in Patents - Lufthansa Technik AG v Astronics Advanced Electronic Systems on 26 July 2020.

As the court had established that each of the defendants had infringed the patent, Lufthansa had the choice of damages to compensate it for the losses that it had sustained or recovery of the profits that the defendants had gained from their wrongdoing.  Lufthansa chose the latter and a proceeding known as "an account of profits" was ordered to determine the amount of those profits.  

In such proceedings, the parties are directed to file and serve pleadings known as points of claim and points of defence.  In their points of defence, the defendants alleged that they had gained very little if any profits from the infringements that had been proved at trial.   Lufthansa had alleged other infringements but the trial judge did not consider them because it had not been necessary for him to do so in order to hold the defendants liable to the claimant.   The claimant sought to recover the defendants' profits from those further infringements at the taking of the account.  The defendants denied that the claimant was entitled to do so.  One of their arguments was that Mr Justice Morgan had precluded consideration of the adjourned issues by an order that he made immediately after the trial.

These issues came on before Mr Campbell on 27 April 2023.  He handed down his judgment on them in Lufthansa Technik AG v Astronics Advanced Electronic Systems and another [2023] EWHC 1136 (Pat) on 12 May 2023.

The First Question

Lufthansa argued that a successful claimant could rely on any ground for recovery that was not res judicata or otherwise an abuse of process. The defendants agreed with those exclusions but contended that the test was whether it was “just and convenient” to allow a claimant to claim at an account or inquiry on a ground that had not been determined at trial. 

Mr Campbell began his task of resolving the matter by considering the authorities.   

He started with Lord Justice Jacob's dicta in Unilin Beheer BV v Berry Floor NV [2007] EWCA Civ 364; [2007] FSR 25:

“Now it is true that in an inquiry as to damages or account of profits the patentee is allowed to claim relief for types of alleged infringement not ruled on by the trial court. This saves the formal issuance of fresh proceedings in respect of these and is permitted as a matter of convenience, see General Tire & Rubber Co Ltd v Firestone Tyre & Rubber Co Ltd (No.2) [1974] F.S.R. 122 at 207. And of course if, in the inquiry or account, the patentee alleges a type of infringement not considered by the trial court, the court conducting the inquiry or account will have to rule on whether it falls within the scope of the patent.”

He then turned to Mr Justice Henry Carr's judgment in AP Racing v Alcon [2016] EWHC 815 (Ch), [2016] Bus LR 838:

"[23] Mr Cuddigan QC, who appeared for AP Racing, emphasises that this is a well established practice in patent litigation in the High Court which saves time and costs. He points out that a liability trial almost invariably involves a challenge to validity. If the challenge to validity is successful and the patent is invalidated, then time and money spent on infringement allegations is wasted. Accordingly, he submits that whilst some infringements must be brought forward in order to establish a right to relief, others may be left for subsequent consideration, which is indeed what happened in the General Tire case [1975] RPC 203.
[24] I would add that it is in accordance with the modern approach to intellectual property cases in general that the rights-holder should not be required to produce evidence of every possible infringement in the liability hearing but merely to bring forward sufficient examples so that the case of infringement can be dealt with in a cost effective and expeditious way. To require the claimant to specify all infringements and to introduce them into the liability trial would be wasteful, time consuming and a recipe for delay.
[25] It follows that I consider that the practice to which Jacob LJ referred in the Unilin case of allowing further infringements, once infringement is established, to be considered at the damages inquiry is entirely in accordance with the aims of the IPEC, in particular in accordance with the aims of simplifying trials of infringement, shortening proceedings and rendering them cost effective."

Next, he referred to Mr Justice Norris's judgment in Fabio Perini SPA v LPC Group Plc and others [2012] EWHC 911 (Ch), [2012] RPC 30 where the judge refused to allow two issues to be raised at an inquiry as to damages which had not been decided at trial.  He held that one issue was res judicata and could not be reopened. The other issue was similar to one that had been raised unsuccessfully against a different party.  Mr Justice Norris conceded at para [49] of his judgment that “… [t]here are occasions in which a new cause of action can be raised and adjudicated upon in the inquiry. The question is always one of fairness and convenience." 

Mr Justice Norris continued:

"It is just and convenient to extend the inquiry to other cases of infringement by use for which PCMC is jointly liable (even if technically this involves introducing new causes of action) because these involve the same type of infringement as that on which the Court has ruled. Perini pleaded but failed to prove a cause of action for infringement by supply against PCMC. Having pleaded and failed to prove that type of infringement (which involved findings about the place of supply) against PCMC in respect of the supply to LPC it is not in my judgment convenient or just to permit Perini to go outside the terms of the inquiry which it sought and obtained, and to introduce a substantively new cause of action, reopening by reference to a different customer (who is not a party) the supply case which failed in respect of LPC.”

Finally, Mr Campbell referred to para [11] of Mr Justice Birss's judgment in  Warner Music and another v  Tunein Inc [2019] RPC 29, [2019] EWHC 3374 (Ch):

“In terms of the inquiry as to damages, it is a commonplace in intellectual property disputes that liability is decided by reference to particular instances of the activity alleged to infringe (i.e. samples) but that the scope of the damages inquiry is general. Now if, on the inquiry, instances emerge which raise issues which the main trial has not determined, then there are various ways forward. Experience shows that these problems are usually readily resolved by case management in the inquiry. It is not the law that detailed issues of liability not decided at the liability trial cannot be decided in the inquiry; the test is one of justice and convenience (see Norris J in Fabio Perini v LPC [2012] EWHC 911 (Ch) at paragraphs 44-51). If it is really necessary, then a distinct second liability trial could be conducted. In the present case I can see no justification at all for limiting the inquiry to the sample stations.”

Mr Campbell accepted the defendants' contention that the test was justice and convenience because it had been applied by Mr Justice Norris in Fabio Perinin and approved by Mr Justice Birss in Warner Music.  However, he directed himself that what might be just or convenient would depend on the circumstances of the case.

The deputy judge could see no reason why it would be either just or convenient to prevent Lufthansa from raising at the account of profits the further allegations of infringement that it wanted to make. He arrived at his decision for the following reasons which are listed conventionally at para [29] of his judgment:

1) The parties were concerned to ensure that the liability trial proceeded as efficiently as possible having regard to the pandemic. That included stripping out matters which did not need to be decided at trial  The deputy judge thought that that was a reasonable approach for both parties to adopt.
2) It was never suggested to Lufthansa that streamlining the case in that way would prevent it from raising those matters on an account or inquiry. 
3) Lufthansa's failure to object to para [286] of Mr Justice Morgan's judgment where he said that there was no need for him to consider additional grounds of liability at trial did not prevent the company from raising those grounds at the account of profits.   The judge had not been dealing with quantum at that point. There was no reason for  Lufthansa to challenge the judge's remark. 
4) Lufthansa won on all the infringement issues. This case was not like Fabio Perini where the claimant lost on an issue at trial and then sought to raise it again at the inquiry,
5) Were claimants prevented from raising new allegations of infringement at an account or inquiry, there would be a significant and pointless increase in costs at trial.  That would happen because claimants would have to raise all possible claims at trial or be prevented from raising them in relation to quantum.
6) The allegations did not relate to new parties or new products although A P Racing showed that it would not have mattered if it had. The allegations related to the same parties and to the same product. 
7)  Allowing additional grounds of recovery to be made at an account or inquiry would not prevent a fair trial. Nor would it require much additional evidence.
8) The Defendants also wanted to raise some infringement issues on the account.
9) Noting turned on the fact that Lufthansa had already been compensated in costs for the time spent on dealing with unresolved issues.  Costs had been incurred by the claimant because the defendants had denied infringement in the first place.

The learned deputy judge, therefore, allowed all of Lufthansa's additional allegations except the adjourned issues to be raised on the account,

The Second Question

The "adjourned issues" were issues that were ordered to be adjourned with liberty to apply by Mr Justice Nugee at a pre-trial review that took place on 14 Jan 2020 and by Mr Justice Marcus Smith at a second pre-trial review on 22 May 2020.

The relevant part of Mr Justice Morgan's order was as follows:

"UPON the Orders of Nugee J dated 14 January 2020 and of Marcus Smith J dated 22 May 2020 adjourning certain issues of liability in both HP-2017- 000085 and HP-2019-000019 (the “Adjourned Issues”)

AND UPON the issues of liability other than the Adjourned Issues having been tried before Morgan J on 22-26 June and 1 July 2020

AND UPON the Court handing down Judgment on Wednesday 22 July 2020

AND UPON the Adjourned Issues no longer needing to be determined in the light of the Court’s Judgment


8. There shall be an inquiry in both HP-2017-000085 and HP-2019-000019 as to the damages suffered by the Claimant or, at the Claimant’s option, an account of the profits accruing to the Defendants and each of them, by reason of the Defendants’ acts of infringement of the Patent (“the Inquiry/Account”).

11. The parties have liberty to apply for further directions on the Inquiry/Account."

Lufthansa contended that there was nothing in the order refusing it liberty to apply to raise the adjourned issues on the account of profits.   The defendants focussed on the words "AND UPON the Adjourned Issues no longer needing to be determined in the light of the Court’s Judgment" in support of their submission that it was no longer necessary to consider the adjourned issues. They added that para 11 of the order discharged the liberty to apply that had been granted by Mr Justice Nugee and Mr Justice Marcus Smith.

Before determining the issue Mr Campbell considered Lord Justice Flaux's judgment in  Pan Petroleum AJE Ltd v Yinka Folawiyo Petroleum Co Ltd and others [2017] EWCA Civ 1525 which summarized the Supreme Court's judgment in JSC BTA Bank v Ablyazov (No. 10) [2015] UKSC 64; [2015] 1 WLR 475:

"(1) “The sole question for the Court is what the Order means, so that issues as to whether it should have been granted and if so in what terms are not relevant to construction (see [16] of [JCT]).
(2) In considering the meaning of an Order granting an injunction, the terms in which it was made are to be restrictively construed. Such are the penal consequences of breach that the Order must be clear and unequivocal and strictly construed before a party will be found to have broken the terms of the Order and thus to be in contempt of Court (see [19] of [JCT], approving inter alia the statements of principle to that effect in the Court of Appeal by Mummery and Nourse LJJ in Federal Bank of the Middle East v Hadkinson [2000] 1 WLR 1695).
(3) The words of the Order are to be given their natural and ordinary meaning and are to be construed in their context, including their historical context and with regard to the object of the Order (see [21]-[26] of [JCT], again citing with approval what Mummery LJ said in Hadkinson).”

Lord Justice Flaux continued:

“As Mr Joseph QC correctly submitted, those principles confirm a consistent line of authority that Court Orders are to be construed objectively and in the context in which they are made, including the reasons given by the Court for making the Order at the time that it was made. That point was made clearly by Lord Sumption giving the judgment of the Privy Council in Sans Souci Limited v VRL Services Limited [2012] UKPC 6 at [13]:

'…the construction of a judicial order, like that of any other legal instrument, is a single coherent process. It depends on what the language of the order would convey, in the circumstances in which the Court made it, so far as these circumstances were before the Court and patent to the parties. The reasons for making the order which are given by the Court in its judgment are an overt and authoritative statement of the circumstances which it regarded as relevant. They are therefore always admissible to construe the order. In particular, the interpretation of an order may be critically affected by knowing what the Court considered to be the issue which its order was supposed to resolve.'

Mr Campbell also said that subsequent cases had added that caution should be exercised in using the parties’ submissions as a guide to the interpretation of order: and cited SDI Retail Services v Rangers Football Club [2021] EWCA Civ 790 and Banca Generali spa v CFE (Suisse) SA [2023] EWHC 323 (Ch as examples.

The deputy judge decided that Mr Justice Morgan's notes were admissible in construing his order.   His lordship's draft contained the following annotation:

"[Lufthansa: AND UPON the Adjourned Issues having fallen away in light of the Court’s Judgment
........
11. The parties have liberty to apply for further directions on the Inquiry/Account and [Lufthansa: (insofar as may be necessary following any appeal)] in relation to determination of the Adjourned Issues."

Mr Campbell concluded that Lufthansa had led the judge to believe that it wanted a recital to the effect that the adjourned issues had “fallen away”.  He also held that Lufthansa had wanted the words “” insofar as may be necessary following any appeal" to be inserted into para 11.

In  Lufthansa Technik AG v Astronics Advanced Electronic Systems and others [2020] EWHC 2296 (Pat) which he handed down on 21 Aug 2020, Mr Justice Morgan said:

"The form of the order
[2]. The form of the order is largely agreed and I will make an order as drafted in relation to agreed matters. The order I will make will also reflect the findings contained in this judgment on the issue as to costs and the application by the Defendants for permission to appeal. The only other matter which I need to refer to is that the Claimant wishes the order to provide for there to be permission to apply in relation to the determination of what are defined in the order as “the Adjourned Issues” if that should prove to be necessary following a successful appeal by the Defendants. It is not said by the Claimant that, absent a successful appeal, it might wish to seek a determination of the Adjourned Issues in order to allow it to argue for a wider remedy than the remedy it will be entitled to on the basis of the findings as to infringement in the first judgment.
[3] I consider that it is not appropriate for the order to provide for permission to apply in relation to the Adjourned Issues following a successful appeal by the Defendants. The order I will make will record the position following my decision at first instance. In accordance with that decision the Adjourned Issues do not need to be determined. If there were to be a successful appeal against my order, then the Court of Appeal can be asked to make whatever order is appropriate to give effect to the consequences of its judgment on appeal. It is not for me to include anything in the current order providing for what those consequences might be.

[12] The Defendants say that the Claimant should not have its costs of the Adjourned Issues because those issues have not been decided. They are not issues on which the Claimant has succeeded and the Defendants have failed. The Defendants also say that the Claimant has not abandoned the Adjourned Issues so that they have not fallen away so that the Claimant wishes to keep the Adjourned Issues alive in case it needs to rely on them later.
[13] I will deal first with the suggestion that the Claimant has not abandoned the Adjourned Issues but wishes to keep them alive. That is not my understanding of the Claimant’s position. I will make an order to the effect that the Adjourned Issues do not need to be determined. Whatever the position might be following an appeal will not affect the order as to costs that it is appropriate to make following judgment at first instance. In any case, as I have already explained, I do not see how the Adjourned Issues will become material following an appeal in relation to the validity of the Patent, if they are no longer material at first instance."

Mr Campbell concluded at para [49] of his judgment that  Mr Justice Morgan's order did prevent Lufthansa from raising the adjourned Issues at the account of profits.  It was clear from the above paragraphs and his annotated draft of the order that that was the outcome that Mr Justice Morgan had intended.  Mr Campbell added that if Lufthansa wanted to raise the adjourned issues at trial they would have to appeal against Mr Justice Morgan's order.

The Amendment Application

Lufthansa applied to insert the following paragraph into its points of claim:

"13B. For the avoidance of doubt, it is Lufthansa’s case that the joint liability between Astronics and Panasonic results in Astronics being jointly liable in respect of the judge’s finding recorded in paragraph 3(e) above."

This paragraph would have raised an issue that had not been aired at trial.  Mr Campbell ruled that it could not be raised at the account of profits and refused to allow it.

Comment

As most proceedings in the Chancery Division are bifurcated this case is relevant to all litigation in that Division and not just intellectual property cases. 

Contact

Anybody wishing to discuss this article can call me during office hours on +44 (0)20 7404 5252 or send me a message through my contact page.

Comments

Popular posts from this blog

Copyright: Primary Infirngement - Copying

Patents - Gilead Sciences Inc v NuCana Plc

Copyright in Photographs: Temple Island Collections and Creation Records