“I already explained that the approach to causation in profits and causation of damages is the same and the loss caused by a tort is worked out by reference to the difference between the claimant's actual state and their state in the counterfactual world where the tort did not occur. That is "but for" causation. It is the same with profits. A defendant is prima facie liable for all the profits accrued by the infringing trade as against the profits it would have accrued if it had not carried out that infringing trade. It is that latter which is the counterfactual position. It is trite law that the court approaches the counterfactual world as a question of fact to be proved on the balance of probabilities. What that means is that if the defendants want to say that, but for the infringement they would have sold some alternative non-infringing product, they must plead that course as a factual assertion, give disclosure in relation to it and prove it on evidence at trial. It is our understanding that the reason the defendants, it is our expectation, the reason they made the infringing product is because they did not think anything else was going to work in the market. They rejected these alternatives on the facts. Assume with me I am right and they are sitting on documents saying "We cannot make product X, Y and Z work, the tests, the customers hate it, the airlines hate it, it is not going anywhere". What I want to avoid is a situation where those documents are not disclosed because the issue is not properly pleaded and at trial, or at some point, I am surprised by the, "Ah you have seen our pleading we have said we are relying on these alternatives and we did X, Y and Z". Really it comes down to this. It is my proposition that it must be right that if they are going to take this approach, if they want to assert a counterfactual, they need to plead it. It is common ground that the argument is absent from the pleaded case as it stands, that what gives cause for alarm is the way my learned friends deal with this in their skeleton. If you could turn, please, to page 12, this is referred to as issue C. I accept that that paragraph (f) can have a role to play on what is broadly called apportionment. THE JUDGE: I am sorry, page? MR. CUDDIGAN: Page 12. Issue C is apportionment of profits and non-infringing profits. I accept that the paragraph (f) has a minor role to play on apportionment In effect, they say 1 that the patent is not a complete gateway to this market, you can get there other ways. So be it, but that is very different from saying not that other people have got there or one can, but "we would have done". "We would have done" is a very different state of affairs, a very different pleading, and the word "would" is absolutely critical. Would is an assertion of what would have happened in the counterfactual. So, they discuss apportionment from paragraphs 44 to 51 and then at 52 they record my learned solicitor's concerns. The concerns are, that the defendants do not plead that an in an alternative world, without the EmPower system, they would have attempted to sell or would have sold such products into the relevant market. So that is the counterfactual on my side we are worried about. There is no pleading of what they would have done but for their infringements. The response is, the issue of what the defendants would have attempted to do is directed only to the case of whether, had the defendants not sold infringing EmPower systems, they could have sold alternative non-infringing systems. There is a problem there in the mixing of would and could. They are critically different because counterfactuals are dealt with in this court as factual issues. THE JUDGE: Just a minute. Yes. MR. CUDDIGAN: The correct question is, are they advancing a case that they would have marketed, commercialised these products? Then if you move forward to paragraph 54, 54(c) is again my learned solicitor's concern. He says at 54(c) that if you are running this case it would require disclosure and evidence going to the question of whether the defendants would have attempted to sell these products into the market and whether the market would have responded positively. So that is a record of a very real concern. Again, the word "would" is important and it is not just disclosure. If a counterfactual case was pleaded, we would need far more extensive expert evidence, technical evidence about the performance of these products, etc. Indeed, possibly market evidence about the response of them. THE JUDGE: Is that additional evidence necessary over and above what you would need if it was just an apportionment --- MR. CUDDIGAN: Yes, because we can take apportionment because it is a minor aspect of the whole case. It really is relatively unimportant. Counterfactual could drive a coach and horses through the case and what we do not want is it just being waved at and said we do not -- and the alarm bells really come from paragraph 61, my learned friend's response to that concern. So if you turn up, please, paragraph 61 of the skeleton: "Mr McCulloch's third point does not apply to the product which was not an Astronics products (in respect of which there is no suggestion that Astronics could have sold in place of the Empower System). It can only apply to the two Astronics products" -- he is referring to the proposed amended points of claim. What he says there is not logically true but we are happy to take that as their position. He then says —"Further, in referring to 'disclosure and evidence going to the questions of ... whether the market would have responded positively', Mr McCulloch raises the spectre of an issue which is not live on the pleadings." -- we agree — "As explained above, the key issues are whether there were: (i) alternative designs of high voltage supply apparatus which do not use the inventive concept; and (ii) if these products were or would have been certified" -- again, on the pleadings we agree -- "At present, LHT's only responses are that the alternative products (i) are `hypothetical' and therefore not relevant to the assessment of the profits (PoR28 [7]); (ii) that they would not have achieved certification" -- again on the pleadings we agree. Then here is the real problem: "Nowhere is it pleaded that if these devices were real, certified and marketed by the Defendants that they would not have sold well." So, my learned friend's position is that it is for Lufthansa to plead a negative case on what his clients would not have done in the counterfactual world and until Lufthansa do that, on the basis of his paragraph 23(f), he can run a counterfactual. That is the worry. It cannot be right. It is an unworkable approach. It is clear that the legal and evidential burden falls on the defendants to plead and prove how they would have acted if they are going to run such a counterfactual case. This is the issue we need to flush out. It comes down to that line in the skeleton.”
“Functional non-essentiality a. The functionality of the Components is incidental to the overall function of EmPower Systems. Hereunder the Defendants rely upon the functions of such Systems, all of which are independent of and unconnected with the inventive concept, including: i. Power management, where configured with a Master Control Unit (MCU) or Advanced Master Control Unit (AMCU). ii. Converting 115V AC, 360-800 Hz aircraft power to 110V AC, 60Hz power. iii. Where configured for use with / integrated with In-Flight Entertainment (IFE) Systems, providing such Systems with a low voltage power source. iv. Where configured with seats that contain in-seat reading lights, providing such reading lights with a low voltage power source. v. Where configured with OUs that contain USB ports, providing passengers with a low voltage power source to operate passenger personal electronic devices. vi. Where configured with in-use indicators (IULs), using the same to indicate that at least one of the passengers in a group of seats is operating a passenger personal electronic device.” “c. Further or alternatively, for an electrical power supply product for installation in an aircraft cabin enabling inter alia the safe provision of in-seat high voltage power for passenger personal electronic devices to be fitted in and used in an aeroplane, it requires certification from the following regulatory bodies: the Federal Aviation Administration (FAA) in respect of the USA; and the European Union Aviation Safety Agency (EASA) in respect of EASA member states (of which the UK was one throughout the Relevant Period).”
“Commercial non-essentiality g. The ultimate customers / users of EmPower Systems are the airlines into whose aeroplanes such Systems are fitted (the “Customer”). h. EmPower Systems are typically purchased in two scenarios: (i) in conjunction with IFEs, or (ii) alone. i. The majority of sales is made per scenario (i), as to which: i. The EmPower System is supplied to the Customer by Astronics or the IFE provider. The latter is the entity responsible for selecting the System based on the IFE(s) it provides. ii. Save in exceptional circumstances, the purchasing decision / choice with respect to the high voltage supply apparatus is made by the IFE provider, not the Customer. The Customer’s purchasing decision / choice is driven by factors relating to the IFE(s) offered by the provider, including: 1. price; 2. touch screen technology, in particular use of capacitive touch screen technology; 3. use of Android-based operating systems; 4. seat integration; 5. monitor design; 6. media storage capacity; 7. redundancy at the “head end”; 8. after sales support capability; 9. weight; 10. power drawn by / efficiency of the IFE; 11. mean time before failure (MTBF); 12. live TV content, in particular live sport; 13. offerability by Airbus and/or Boeing. iii. The factors driving sales of the EmPower System from the perspective of the IFE provider include: 1. the reputation of the EmPower brand; 2. price; 3. whether the System was “turnkey” i.e. ready to be installed without further development or modification; 4. reliability and robustness of supply chain; 5. after sales service, in particular engineering support; 6. weight; 7. ability to integrate with IFE(s), including the technical feature of adequate heat dissipation; 8. offerability by Airbus and/or Boeing. iv. The Components are not essential to any of the factors listed above. j. The minority of sales is made per scenario (ii), as to which: i. The Customer or leasing company acting on the instructions of the Customer procures the EmPower System directly or indirectly from a/the supplier Astronics. ii. The key factors driving sales of the EmPower System from the perspective of the Customer include: 1. price; 2. after sales service; 3. weight; 4. power drawn; 5. MTBF; 6. offerability by Airbus and/or Boeing. iii. The Components are not essential to any of the factors listed above.”
“14. Lufthansa is entitled to an award of the following profits: (a) the profits that Astronics’ acts of infringement (namely the supply and disposal in the UK of components of the EmPower System) caused Astronics to accrue; (c) the profits that Safran’s acts of infringement (namely the manufacture of EmPower Systems in the UK) caused Safran to accrue; (d) the profits that Panasonic’s acts of infringement (namely the supply and disposal in the UK of components of the EmPower System) caused Panasonic to accrue.; and (e) the profits accrued by Panasonic caused by Panasonic’s common design with its customers to infringe by connecting the components to form the EmPower System in the U.K. Together, the above acts and activities are referred to as the “Infringing Dealings”. 14A. For the reasons set out further below, Lufthansa’s case is that the profits caused by Astronics’ Infringing Dealings include those realised on transactions between Astronics and the third parties with whom it engaged in the Infringing Dealings, namely the sale of, the supply of and other commercial transactions relating to, the following products and services: (a) the “Primary Components”, being Outlet Units (including mains AC/USB combined power outlets); power supply units known as ISPSs (In-Seat Power Supplies), SPMs (Seat Power Modules) or SPBs (Seat Power Boxes); and cables joining those components. Lufthansa’s current understanding of Astronics’ business practices is that the Primary Components are listed in Appendix A, which is an extract from AES’ Master Part List AES4-01227464. For the avoidance of doubt, the Primary Components include any parts which are functional substitutions for those listed in Appendix A for use in mains voltage power supplies; (b) the “Secondary Components”, being additional components of EmPower Sytems. Lufthansa’s current understanding of Astronics’ business practices is that the Secondary Components are listed in Appendix B, which is an extract from AES’ Master Part List AES4-01227464. For the avoidance of doubt, the Secondary Components include any parts which are functional substitutions for those listed in Appendix B for use in mains voltage power supplies. The Secondary Components include: (i) control units known as MCUs (Master Control Units), AMCUs (Advaned Master Control Units) or EMCUs (Enhanced Master Control Unit); (ii) in-use indicators/lights; (iii) installation kits, including kits for the galley, the head end, the MCU, ISPS, seats, the crew; (iv) covers, frontplates or faceplates, including for outlet units, the MC, ISPS and in-use light indicators; (v) backshells or other enclosures for Outlet Units, ISPS or other components; (vi) dripshields for MCUs; (vii) configuration modules; (viii) side wall / floor disconnects; (ix) mode select modules, power select modules or voltage source supplies; (x) termination caps, studs and termination plugs; (xi) circuit breakers, connectors, relays, resistors, rivets, pads, adapters; (xii) brackets, clamps, clips, holders, bumpers, jumpers, straps, spacers, latches and hinges; (xiii) screws, washers, screw retainers, nuts, plungers, grommets, pads, springs, tape; (xiv) any cables, harnesses, extensions and wires, grounding or passing between, to or from Primary and/or Secondary Components; (xv) DC power outlets, where such power outlets have been specified and supplied to be powered by an ISPS/SPM/SPB. For the avoidance of doubt, outlets integrated within IFE displays are not covered by this sub-paragraph. (c) the following “Ancillary Goods and Services”: (i) support services rendered with a view to completing qualification, including but not limited to testing, confirmation of parts conformity, provision of software, review of system integration and test plan, attendance at buyers’ facilities, review of installation engineering drawing package and wiring diagrams and related AES products, provision of simulated loads and DVD players to conduct EMI and flight testing, supplying fit check hardware, and on-site test and installation support; (ii) installation and support services; (iii) training services; (iv) warranties and extended warranties; (v) servicing, repairs and testing equipment (including but not limited to the parts listed in Appendix C, which is an extract from AES’ Master Part List AES4-01227464, and any parts which are functionally equivalent to such parts), and loaning testing equipment; (vi) shipping costs and charges; (vii) product and maintenance support; (viii) re-certification and refurbishment fees. 14B. Hereunder Lufthansa refers to transactions for the Primary Components, the Secondary Components, and/or the Ancillary Goods and Services, as the “Relevant Transactions”. 14C. Additional payments made in response to any failures to meet minimum order quantities are included within Lufthansa’s claims. 14D. Pending disclosure, evidence and further information received otherwise, in support of its case on causation against Astronics, Lufthansa will say that the Infringing Dealings drove the Relevant Transactions for the reasons set out below: (a) the relevant market was at all material times for the market for systems which provided AC mains voltage power in an aircraft cabin through sockets suitable for conventional plugs; (b) the key technical barrier to entry into that market was conceiving a power supply design which was sufficiently safe and robust to be certified by the relevant authorities and approved by the relevant airlines for use in the passenger cabin of an aircraft; (c) the incorporation of the invention in claims 1 and/or 2 of the Patent enabled the EmPower Systems to overcome that technical barrier and hence caused the Defendants to obtain access to that relevant market and to achieve the Relevant Transactions. 14E. Further, EmPower Systems are modular in that the Primary and Secondary Components can be configured in different combinations in response to the demands and requirements of particular customers. However, the Secondary Components are designed to be optional and/or subsidiary and to be connected directly or indirectly to one or more Primary Components. Accordingly, transactions for Secondary Components are themselves direct consequences of transactions for Primary Components. 14F. Further, customers for EmPower Systems may require or benefit from technical assistance for the specification, qualification, installation and maintenance of components of EmPower Systems. The provision of any Ancillary Goods and Services by Astronics to such customers is a consequence of transactions for Primary Components.”
“24A. Further or alternatively, Lufthansa is only entitled to a portion of the overall profits earned by the Defendants from their activities in respect of PPD EmPower Systems, such portion being quantified by reference to the total number of patents which protected the Primary Components (“Total Patents”) of which the Patent was but one. The remaining patents (the “Other Patents”) relate to ISPS/SBP/SPM units in the manner identified in Annex 5. The Defendants will say that insofar as the technology residing in the Primary Components was the subject of patent protection, the Patent and each of the Other Patents should be treated as equally important for the purposes of this Account. In the premises, the proportion of the overall profits to which Lufthansa is entitled in respect of PPD EmPower Systems comprising the ISPS/SBP/SPM Units in Annex 5 is no more than the reciprocal of the number of Total Patents set out therein.”
“Issue 8. What is the relative importance to the commercial success of the EmPower System of (i) the Components (as defined in paragraph 22 PoD) and (ii) the factors listed in paragraphs 23(a), (b), (i), (j) PoD. Model for Disclosure Astronics & Panasonic, to be provided in the manner proposed in HL’s second letter of24 Nov 2023 , save that each each of Lufthansa and Ds select 21 Astronics contracts concluded in the period 2007-2018, and 30 Panasonic contracts concluded in the period 2009-2018, with Lufthansa to select first. Request made of Lufthansa 8.1 Contracts recording purchases by or procurement on behalf of the Lufthansa Group Airlines of components of the SkyPower product (including procurement as part of an IFE system) during the Relevant Period (in respect of which Lufthansa was involved or a party) and all the requests for information (RFIs), answers to RFIs, requests for proposals (RFPs), proposals and compliance matrices, that lead to those contracts. 8.2 Recommendations by Lufthansa to the Lufthansa Group Airlines or requests from the Lufthansa Group Airlines to Lufthansa indicating a recommendation or preference for a particular in-seat power supply system, based on some or all of the factors listed in PoD (23i). 8.3 Documents recording the reasons for the selection of EmPower instead of SKYPower for inclusion in the Panasonic IFEs for Deutsche Lufthansa AG’s 747-8i aircraft (see the Memorandum of Understanding dated 24.10.2007 between Lufthansa, Deutsche Lufthansa AG and Panasonic for the 747-8i project in which that selection is afforded to Deutsche Lufthansa AG and Lufthansa). Response 8.1 – Agreed on a Model D basis whereby Lufthansa will conduct a search of pre-contractual materials based on search terms, to be agreed. Lufthansa is not proposing limiting these searches to only a selection of contracts, and will run searches across all relevant documents. The Defendants are at liberty to seek disclosure of the contracts themselves if appropriate. 8.2 Not Agreed. 8.3 Agreed. Issue 8A. Whether the relevant market was for AC mains voltage power, the barriers to entry into that market, and how EmPower Systems gained entry into that market. Model for Disclosure In relation to the relevant market – D (Astronics, Panasonic, to be satisfied by the Ds by disclosure given in respect of Issue 8). In relation to the remainder of the issue – C (Astronics, Panasonic) Model C disclosure from Lufthansa (see Request 8A.6 below). Request made of the Defendants The following documents in respect of Primary Components and of the 1171 Outlet Unit: 8A.1. FAA certification documents; 8A.2. Documents recording approval by airframe manufacturers; 8A.3 Documents sufficient to show offerability by each of Boeing and Airbus; 8A.4. Astronics’ submissions to the FAA, including safety assessment; 8A.5 The package of documents as submitted to Airbus and Boeing. Response 8A.1: Agreed. 8A.2: Documents recording approval by airframe manufacturers will be caught under Request 8A.3. 8A.3: Agreed 8A.4: Agreed. 8A.5: Agreed. Ds to provide (i) a list of packages submitted to Airbus and/or Boeing; (ii) one package of documents submitted to Boeing and one submitted to Airbus; (iii) one further package of documents selected by Lufthansa based on the list in (i). Request of Lufthansa 8A.6: All concluded contracts for LHT Airlines for IFEs and in seat power in the AES Relevant Period (showing the mix of mains voltage and USB in seat power on the aircraft). Response 8A.6: Not agreed. Lufthansa is willing to provide an extract from its procurement database (in the form of an excel spreadsheet) containing the number of USB-only outlets and the number of high voltage AC outlets which were sourced by Lufthansa for LHT Airlines (as defined in the DRD) from KID during the Relevant Period. Lufthansa also offers to search on aModel D basis for contracts concerning procurement of EmPower Systems by Lufthansa for Lufthansa Group Airlines during the Relevant Period.”
“Of the first letter of Hogan Lovells dated26 March 2024 and the paragraph: "As noted in your letter, our clients plead that both the 1171 Twist Lock Outlet (“Twist Lock”) and the IFPL 1225 Universal Outlet (“IFPL 1225”) did not use the inventive concept of the Patent, in that they provide power before full insertion of the pins (paragraph 23(f) of the Points of Defence). However we do not agree with the assertion that in pleading this, our clients are arguing that “there is a distinction in the degree of insertion of the pins before power is provided between the infringing EmPower System and each of the Twist Lock and the IFPL 1225”
“Given that Lufthansa has known the substance of the Defendants’ proposed amendments since10 May 2024 , and will have had more than 2 months by the date of the hearing next week before Leech J, it does not seem reasonable or proportionate to suggest that Lufthansa requires a further three weeks to respond to the RRAPoD. Accordingly, should the RRAPoD be permitted, the Defendants propose that Lufthansa can and should serve its Re-Re-Amended Points of Reply by 4pm on18 July 2024 .”
“17C(B). Without prejudice to the foregoing, incorporation of the invention in claims 1 and/or 2 into the EmPower Systems is not an Infringing Dealing and the allegation in §14D(c) is not an allegation that supports a conclusion that the Relevant Transactions were caused by an Infringing Dealing. Further or alternatively, it is denied that the facts alleged in §14D(a)-(c) establish that the Infringing Dealings drove the Relevant Transactions. The decisions by third parties to enter into Relevant Transactions were in fact driven by considerations of the kind set out in paragraphs 23i-j below and not by Infringing Dealings. The Infringing Dealings were not a sufficiently proximate cause of the profits realised on Relevant Transactions because: (a) Customers entered into contracts relating to Relevant Transactions prior to any Infringing Dealing and with no or insufficient regard to where components of EmPower Systems would be supplied; (b) Although components of EmPower Systems were, in the cases for which Lufthansa claims in these proceedings, supplied in the United Kingdom, the location of supply was specified in Purchase Orders subsequent to the conclusion of the contracts relating to the Relevant Transactions. The location of supply was incidental to the Relevant Transactions and/or did not drive the Relevant Transactions. Further or alternatively had it not been possible to supply Primary Components anywhere in the world airline customers would have accepted the supply of a non-infringing system which provided AC mains voltage power in an aircraft cabin through sockets suitable for conventional plugs, namely the Modified 1171-based EmPower Systems defined at paragraph 23(f)(ii)(1A) below, which is repeated. In the premises profits realised on transactions in respect of Primary Components were not contingent upon an Infringing Dealing and accordingly an Infringing Dealing was not a proximate cause of such profits.”
“31. Moreover, consistent with the fact that the significance of power management was already a part of the case (and that MCUs – the components which carry out the power management in the EmPower System - are within the scope of Lufthansa’s claim – i.e. are a component that Lufthansa is claiming the profits to), at the time disclosure was negotiated and ordered, the Disclosure Review Document as ordered by Mrs Justice Bacon on20 December 2023 (the “DRD”, at Exhibit SDB-85) expressly covered the MCUs/AMCUs/EMCUs in almost every request: (a) the financial disclosure given by PAC and AES covers the MCUs/AMCUs/EMCUs, as Lufthansa are claiming the profits for these components (see requests 1.1 to 1.10, 3.1 to 3.10, and 3.12 to 3.14 of the DRD); (b) the extensive precontractual documents disclosed by PAC and AES cover purchases of the MCUs/AMCUs/EMCUs (see issue 8 of the DRD); (c) the contracts disclosed by PAC and AES cover purchases of MCUs/AMCUs/EMCUs (pursuant to request 1.11 and 3.11 of the DRD); (d) the Defendants have disclosed all datasheets for the MCUs/AMCUs/EMCUs (which are used in precontractual negotiations) (pursuant to issue 8C of the DRD); (e) all certification documents have been provided for the MCUs/AMCUs/EMCUs (pursuant to issue 8A of the DRD); and (f) all of the disclosed (and numerous publicly available) marketing materials include references to MCUs/AMCUs/EMCUs and AES’ “patented power management technology”, including its significance. Indeed, a number of the documents served with the Defendants’ CEA Notice also refer to the GD AES Patents on power management (see Exhibits SDB-88 and SDB-89). Indeed, even the marketing materials annexed to Lufthansa’s own pleadings are littered with references to “Astronics’ patented power management technology” and MCUs. 32. Mr McCulloch is accordingly incorrect to suggest that there has been no (or insufficient) disclosure in respect of power management and the importance attached to it, and to AES’ solution to it, by customers of the Defendants. Indeed, the importance of power management was already in the case and if Lufthansa required more disclosure pursuant to this issue it could and should have specified this at the time the DRD was ordered (although the Defendants fail to see what possible further documents Lufthansa could require on this in view of the substantial amount of disclosure given in this regard). 33. Furthermore, in respect of the contracts disclosed by AES, it can be readily ascertained whether an MCU/AMCU/EMCU has been purchased (and thus configured) with an EmPower System. I asked two junior associates to carry out the task this week and it took them only a few hours across two days. Mr McCulloch is therefore incorrect to suggest that there has been no disclosure in this regard – the contracts disclosed by Astronics reveal how frequently power management is used by revealing when MCUs were purchased. Nor would it be correct to suggest that the analysis of the documents that Jones Day has had for several months is time-consuming. 34. As to the suggestion that there has “been no disclosure on Astronics’ knowledge about different power management approaches on the market”, AES’ knowledge in this regard is irrelevant. The relevant issue to such disclosure, if this is a point that Lufthansa wishes to take at all, will be whether there were in fact power management systems on the market that did not implement the AES patents. The parties agree that AES and KID together accounted for the majority of the market. KID was licensed to use AES's technology and as Mr Mosebach (Lufthansa’s expert on the commercial market, who has also given fact evidence in this case) confirms it did so. The only question therefore is whether some third party developed a power management technology that was not in the scope of AES's patents. That is not a matter for disclosure from the Defendants.”
“37. The first of these points is that the amendment put forward by the Defendants would require “i) a thorough analysis of the invalidity of Astronics’ power management patents”
“10. That search does not address specifically the importance which certification bodies, aircraft manufacturers and customers placed upon power management, and specifically upon the GD AES Patents. The search is a general one directed to trying to identify what (if any) of the myriad of factors relied upon as relevant to apportionment were actually relevant to the commercial success of the product. If power management had been pleaded as the key matter of import, Lufthansa would have taken a more focused approach to disclosure. Disclosure issues would need to focus on documents passing between the defendants and certification bodies, aircraft manufacturers and customers referring to power management and to the GD AES Patents. 11. Further, the infringement point would give rise to an inquiry into correspondence passing between Astronics and third parties regarding actual or potential infringement, licensing and/or validity of the GD AES Patents. 12. Once one appreciates the different nature of the inquiry at the time the DRD was settled, it becomes apparent why the disclosure ordered is not sufficient to address the new case. For example, datasheets for MCUs/AMCUs/EMCUs were disclosed under Issue 8A, but the functions and designs of the systems do not address the scope of the new claim. Similarly, certification documents for MCUs/AMCUs/EMCUs (Issue 8A) do not inform on the question as to how certification was achieved. Key documents would include those recording: representations made by Astronics to the various regulators and airframe manufacturers; the development of regulatory requirements over time and throughout the Relevant Period; and how other market players responded to those requirements, for example. The mere fact of certification of power management technology is insufficient in this regard.”
“17. The defendants' new case raises in effect a patent infringement case of considerable scope and complexity. The following matters would need to be addressed in evidence: 17.1. Who are the relevant third parties and where are they carrying on the allegedly infringing acts? 17.2. Did Astronics own any relevant patent(s) in that jurisdiction, and if so what was the scope of the patent protection? The scope of protection question is extremely wide-ranging, and would require extensive technical evidence on the relevant technical common general knowledge in respect of power management systems, and what the patent(s) would disclose to the hypothetical person skilled in that technical field as being the invention claimed. 17.3. Were these patents valid according to the relevant national patent law in force in the Relevant Period in the relevant jurisdiction? This too is an extremely wide-ranging question, which would require identification of relevant prior art in the technical field, and extensive technical expert evidence as to what that prior art would disclose to the person skilled in the technical art, and whether the claimed invention was obvious to the skilled person, or genuinely inventive, in the light of that prior art. I should emphasise that almost the vast majority of the liability trial before Morgan J was directed to this issue. 17.4. Did the acts of the third party infringe the patent? This is a very complicated question, because the GD AES Patents claim connected systems, much like the Lufthansa patent-in-suit. In this action, the defendants have raised a myriad of non-infringement arguments based on the fact that they supply the components of the system in unconnected form. That part of the liability trial which was not directed to validity, was directed to this question of infringement. For example, the defendants have at one point or another relied on each of the following arguments as demonstrating non-infringement: the disconnected components do not fall within the scope of protection of a patent which claims a connected system; the components are supplied in separate consignments; whilst they know how to connect the components, they do not know how the underlying system, once connected, actually works; they supply different parts of the system into different jurisdictions. This in turn has led Lufthansa to advance indirect infringement allegations under s60(2), arguments based on the doctrine of equivalents, arguments based on joint tortfeasance with customers, and arguments based on the doctrine of a kit of parts. 18. Further, the new case raises arguments that go beyond a mere patent infringement trial, because the following points are also critical: 18.1. Could third parties have designed around the GD AES Patents? This is a complicated technical question which involves not only an investigation of the scope of protection of the patents, but also the technical feasibility of achieving alternative solutions to the technical problem. 18.2. What were AES's own practices in enforcing the GD AES Patents? What allegations of infringement were made? Did third parties request licences? Were they granted, and why? What were the terms of those licences? Did third parties fail to enter into the market because of these infringement issues, or for other commercial considerations? This would require additional disclosure and rounds of evidence. It is inconceivable that Astronics would not have important documents going to at least some of these issues.”
“(1) It is not enough that the claim is merely arguable; it must carry some degree of conviction: ED & F Man Liquid Products Ltd v Patel[2003] EWCA Civ 472 at paragraph 8; Global Asset Capital Inc. v Aabar Block SARL[2017] 4 WLR 164 at paragraph 27(1). (2) The pleading must be coherent and properly particularised: Elite Property Holdings Ltd v Barclays Bank Plc[2019] EWCA Civ 204 at paragraph 42. (3) The pleading must be supported by evidence which establishes a factual basis which meets the merits test; it is not sufficient simply to plead allegations which if true would establish a claim; there must be evidential material which establishes a sufficiently arguable case that the allegations are correct: Elite Property at paragraph 41.”
“a) whether to allow an amendment is a matter for the discretion of the court. In exercising that discretion, the overriding objective is of the greatest importance. Applications always involve the court striking a balance between injustice to the applicant if the amendment is refused, and injustice to the opposing party and other litigants in general, if the amendment is permitted; b) where a very late application to amend is made the correct approach is not that the amendments ought, in general, to be allowed so that the real dispute between the parties can be adjudicated upon. Rather, a heavy burden lies on a party seeking a very late amendment to show the strength of the new case and why justice to him, his opponent and other court users requires him to be able to pursue it. The risk to a trial date may mean that the lateness of the application to amend will of itself cause the balance to be loaded heavily against the grant of permission; c) a very late amendment is one made when the trial date has been fixed and where permitting the amendments would cause the trial date to be lost. Parties and the court have a legitimate expectation that trial fixtures will be kept; d) lateness is not an absolute, but a relative concept. It depends on a review of the nature of the proposed amendment, the quality of the explanation for its timing, and a fair appreciation of the consequences in terms of work wasted and consequential work to be done; e) gone are the days when it was sufficient for the amending party to argue that no prejudice had been suffered, save as to costs. In the modern era it is more readily recognised that the payment of costs may not be adequate compensation; f) it is incumbent on a party seeking the indulgence of the court to be allowed to raise a late claim to provide a good explanation for the delay; g) a much stricter view is taken nowadays of non-compliance with the CPR and directions of the Court. The achievement of justice means something different now. Parties can no longer expect indulgence if they fail to comply with their procedural obligations because those obligations not only serve the purpose of ensuring that they conduct the litigation proportionately in order to ensure their own costs are kept within proportionate bounds but also the wider public interest of ensuring that other litigants can obtain justice efficiently and proportionately, and that the courts enable them to do so.”
“12.CPR 1.1 (2) provides that dealing with a case justly and at proportionate cost includes “ensuring that the parties are on equal footing” (CPR 1.1 (2)(a)) and “ensuring that the case is dealt with expeditiously and fairly” (CPR 1.1 (2)(d)). One aspect of this is the need to take into account the impact on a party’s trial preparation. The parties need to be “on an equal footing and can participate fully in proceedings, and that parties and witnesses can give their best evidence”
“It is relevant to have regard to the degree to which the case sought to be advanced by the amendment is one that the parties have in fact already been addressing. In Hawksworth v Chief Constable of Staffordshire[2012] EWCA Civ 293 (CA) , the Court of Appeal stated, obiter, that it might appropriate to permit an amendment at trial in respect of a matter which, although not raised in the pleadings, had nevertheless been raised in some of the witness statements and experts’ reports served before trial. In Ahmed v Ahmed[2016] EWCA Civ 686 , the claimants applied to have letters of administration revoked on the basis that the will annexed to them had not been duly executed or witnessed. At the start of the trial the claimants obtained permission to amend their particulars of claim so as to allege that the will had been forged. The Court of Appeal dismissed an appeal against that grant of permission: the amendment was no more than a formality bringing the claimants’ case into line with what had been argued for at least six months; the appellants had not been taken by surprise by the amendment and, indeed, had themselves sought at the pre-trial review permission to call a handwriting expert.”
“22. A consideration of whether or not amendments are permissible is one that takes place at the date of the hearing of the amendment application – the question is not when the amendments were first foreshadowed or applied for – see Holding[2018] EWHC 852 (TCC) at 41(3): “Even after the application was made… where it was being opposed there was no reason, in my judgment, then for the claimant to take steps to meet the case that was being advanced in a proposed amended pleading, in respect of which no consent had been given and no permission provided by the court”
“(1) Subject to the following provisions of this Part of this Act, civil proceedings may be brought in the court by the proprietor of a patent in respect of any act alleged to infringe the patent and (without prejudice to any other jurisdiction of the court) in those proceedings a claim may be made— (a) for an injunction or interdict restraining the defendant or defender from any apprehended act of infringement; (b) for an order for him to deliver up or destroy any patented product in relation to which the patent is infringed or any article in which that product is inextricably comprised; (c) for damages in respect of the infringement; (d) for an account of the profits derived by him from the infringement; (e) for a declaration or declarator that the patent is valid and has been infringed by him. (2) The court shall not, in respect of the same infringement, both award the proprietor of a patent damages and order that he shall be given an account of the profits. (6) Subject to the following provisions of this Part of this Act, in determining whether or not to grant any kind of relief claimed under this section and the extent of the relief granted the court or the comptroller shall apply the principles applied by the court in relation to that kind of relief immediately before the appointed day.”
“155. A central purpose of intellectual property rights is to encourage and reward creativity and innovation by enabling the owner of the right to enjoy the fruits of its exploitation. That purpose is promoted by allocating profits made from exploiting the right to the owner, including where the right is infringed by commercial use made without the owner's consent. For this purpose it does not matter whether the infringement is deliberate or innocent. The reason for redirecting the profits to the owner of the right is not to punish or deter wrongdoing. It is to achieve the goals which the right exists to further. As Robert Stevens puts it in a valuable discussion of this subject in The Laws of Restitution (2023) at p 306: "The remedy of an account of profits is here the continuation of the reason for the right." This explains why, in the words of Kitchin LJ in Hollister Inc v Medik Ostomy Supplies Ltd[2012] EWCA Civ 1419 ; [2013] Bus LR 428, para 55, the infringer "is treated as if he has conducted the infringing business on behalf of the claimant." 156. Seen from this perspective, ordering an account of profits against an innocent infringer is in fact easier to justify than awarding compensatory damages. Whereas an award of damages may make the infringer worse off than if the infringement had not occurred, an account of profits does not have this effect. The effect is simply to put the infringer back in the same position financially as if no infringement had taken place. It is hard to see how an innocent infringer can legitimately object to such restitution. Thus there is no irrationality in the approach adopted in theCopyright, Designs and Patents Act 1988 of establishing a defence based on lack of knowledge to a claim for damages but not to a claim for an account of profits. But I find it hard to see how the converse approach could be justified. As, therefore, lack of knowledge is no defence to a claim for damages for infringement of a trademark, it should not defeat a claim for an account of profits.”
“22. Factual causation is established in the conventional manner. For lost profit damages, this involves assessing the difference between (i) the real world in which an infringer accrued revenue from acts of infringement at the patentee’s expense and (ii) the counterfactual (“CF”) world in which the patentee made profit from satisfying that same market demand with its own products. The assessment of the infringer’s profits is simply the converse exercise. The court assesses the difference between (i) the real world in which an infringer accrued revenue from acts of infringement and (ii) the CF world in which those acts of infringement did not take place, and that revenue was not accrued. 23. In order to accurately and fairly to assess the CF position, the court must consider how third parties and the infringer would have competed absent any acts of infringement. This may in turn involve the assessment of the viability and profitability of a non-infringing alternative course of business. So if the defendant can prove that it could and would have obtained the same market share with a non-infringing sales of a different product, the claimant’s lost profit damages caused by the acts of infringementwill be zero. Similarly, the infringer’s profits caused by the acts of infringement will be zero.17 Profits calculated according to this causation approach are typically called “differential profits” or “incremental profits”
“28. It is well-established in patent law that a patentee can recover as damages lost profits for both the products covered by the patent in suit, and lost profits on ancillary goods (and services) which they prove would have been sold alongside the patented products. These ancillary trades have come to be called “convoyed goods”. 29. In the present case, Lufthansa seeks to apply the “convoyed goods” approach to profits. It asserts that, in addition to the patented products, Ds sold a range of associated goods which are required and intended to allow the ISPS systems to function. These include cables, in-use lights and master control units. Lufthansa seeks an award of the profits associated with these convoyed goods on the basis that, but-for their infringing acts, Ds would not have accrued those profits at all. 30. The UK jurisprudence on profits on convoyed goods under the apportionment approach is currently uncertain.”
“43. In particular, Lufthansa apparently contends that, as a matter of law (1) the “but for”/factual causation/differential profits approach it prefers to adopt and the concept of apportionment are mutually exclusive alternatives (and on this flawed basis Lufthansa has hitherto elected not to engage properly with the Defendants’ case on apportionment); and also (2) the “but for”/factual causation/ differential profits test upon which it relies constitutes the only relevant test for causation, and (once asked and answered) exhausts the whole of the enquiry into causation that the Court needs to undertake in this case. 44. Lufthansa’s contentions are incorrect as a matter of law (as well as wrong on the facts). This will be a matter for detailed legal submissions at the trial but, in summary, the Defendants maintain that: (a) both the counterfactual differential profits approach and apportionment are relevant, necessary and complementary aspects of the overall enquiry into causation which the Court must undertake on the Account; in particular, even if, for the sake of argument, the counterfactual approach based on the non-infringing alternative product (the Modified 1171-based EmPower System referred to above) were not to be adopted by the Court at trial, it would in any event still be relevant and necessary for the Court to consider, analyse and ascertain apportionment as part of the full and proper determination of the causal enquiry arising on the Account; and (b) the correct approach to this enquiry into causation involves the full and proper analysis and application of the test of legal causation (sometimes referred to as ‘proximate’ causation) and not merely the (threshold) “but for”/factual causation test - which is necessary, but not sufficient, to establish causation for this purpose. 45. Accordingly, the Defendants for their part dispute that there is a strict or rigid distinction, or a watertight and mutually exclusive division, between the “but for”/factual causation approach on the one hand and apportionment on the other: properly viewed, both are integral to the analysis of the issue of causation, i.e. to ascertaining what portion of profits was properly attributable to the infringing use of the invention. Very similar, if not identical questions, arise under both. For example, the issue of what factors drove the Defendants’ customers’ decisions to enter into profit-bearing transactions (to what extent was it the infringing nature of the EmPower Products or to what extent was it other factors?) is live both under the apportionment approach and also in determining whether in the absence of infringement the Defendants would have sold the Counterfactual non-infringing alternative, and if so how well the Counterfactual product would have sold.”
“Before turning to the case law, I should start by explaining why I reject the suggestion that the incremental route is an alternative way of working out an apportionment. If these two routes arrive at similar figures it is a coincidence and no more. That this is so can be demonstrated as follows. If an infringer's process makes no profit overall, then whether infringement accounts for 10% or 100% of the profits, on an apportionment the plaintiff will recover nothing. A large percentage of zero is still zero. This was accepted as correct by Mr. Watson. He said it was inherent in his case that if BP made no profits, HC would recover nothing. On the other hand an infringer may benefit very significantly from infringing even though the whole process makes no profit overall. For example if a process makes a loss of£1M p.a. with the infringing step but would have made a loss of£3M p.a. without it, the benefit to the infringer is£2M p.a. Mr. Young accepts and asserts that on his incremental approach to an account, the latter sum would have to be paid to the plaintiff. The two approaches are quite different and in most cases are likely to produce different figures.”
“Whether the relevant market was for AC mains voltage power, the barriers to entry in the market, and how EmPower Systems gained entry to that market.”