Lufthansa Technik AG (a company incorporated under the laws of Japan) v Astronics Advanced Electronic Systems (a company incorporated in the state of Washington USA)

Hearing dates: 11 and 15 July 2024

Approved Judgment

I. The Application

By Application Notice dated 24 May 2024 (the “ Application”) the Defendants (“ Astronics” and “ Safran” in the first action and “ Panasonic” in the second action and together the “ Defendants”) applied for permission to re-re-amend the Re-Amended Points of Defence and to rely upon a Notice of Experiments (the “ NOE”) served on 25 April 2024. The facts which they sought to establish were that when measurements were carried out in accordance with the protocol in Schedule 1 the length of a plug pin which remained outside the socket of a number of different outlets was as set out in Schedule 2.

The Claimant (“ Lufthansa”) originally opposed both limbs of the Application. On Thursday 11 July 2024 and Monday 15 July 2024 I heard the Application and by its commencement Lufthansa had accepted that permission should be granted for the Defendants to rely upon the NOE subject to the Court giving directions for the repetition of the experiments, the service of any reply experiments and the service of any further expert evidence. By the end of the hearing the Defendants did not oppose the timetable for directions which Lufthansa asked the Court to make.

The Defendants also sought permission for an extension of time until 11 July 2024 for the exchange of two expert reports one relating to the commercial market for the Defendants' products and the other relating to forensic accountancy. By the end of the hearing the parties had also agreed a short further extension for service of the expert reports. Subject to one point I address the proposed amendments only in this judgment. However, Mr Hugo Cuddigan KC and Ms Miruna Bercariu, who appeared for Lufthansa, submitted that the Court should take into account the significant additional burden which the experiments would impose on the parties in considering whether to grant permission to re-re-amend. I must therefore consider the NOE and its consequences in that context.

II. Procedural History

(1) Background

The patent in suit EP(UK) 0,881,145 B1 (the “ Patent”) claims a number of safety features of an in-seat power supply (“ ISPS”) for supplying power to a socket in an aircraft seat for use by passengers to power their personal electronic devices. Claim 1 of the Patent is to an ISPS system in which the socket is located remotely from the power supply, with cables passing between the two and a detector within the socket which detects the presence of a plug.

Astronics manufactures the components for a mains voltage ISPS system called the EmPower In-Seat Power Supply System (the “ EmPower System”) in the USA. The EmPower System is supplied from the USA (still in component form) into the UK by both Astronics and Panasonic (separately). The components are then installed into aircraft seats by a number of different installers which include Safran. EmPower Systems can be supplied on a standalone basis or in conjunction with an in-flight entertainment or “ IFE” system. Panasonic supplies the EmPower System exclusively in conjunction with the IFE systems which it manufactures and produces.

In a reserved judgment dated 22 July 2020 Morgan J held that the Patent was valid and that all three Defendants were liable for infringement: see [2020] EWHC 1968 (Pat) (the “ Liability Judgment”). He declared that the EmPower System fell within claims 1 to 3 of the Patent but that a modified version of the EmPower did not fall with claim 2. He ordered an inquiry as to the damage which Lufthansa had suffered or, at its option, an account of profits: see the Order dated 22 July 2020. Lufthansa ultimately elected for an account of profits (the “ Account”).

By Order dated 27 April 2023 Mr Recorder Douglas Campbell KC (sitting as a judge of the Patents Court) amended the Order dated 22 July 2020 so that it declared that Panasonic had infringed claims 1 to 3 of the Patent “by reason of its common design with its customer to connect the components to form the EmPower System in the UK”. By Order also dated 27 April 2023 the judge gave directions for the trial of the Account. He also ordered that a second CMC should be heard before 7 July 2023 and that the PTR should take place in the week commencing 9 September 2024. The PTR is now listed before me on 10 September 2024. The trial is also listed to commence before me on 1 October 2024 with a time estimate of 15 days.

(2) The July Hearing

On 12 July 2023 the second CMC took place before Sir Anthony Mann. It was primarily intended to deal with disclosure issues although shortly before the hearing the Defendants made a strike-out application. There was an issue between the parties whether it was necessary for the Defendants to plead any counter-factual upon which they relied in answer to Lufthansa's causation case. Mr Cuddigan, who also appeared for Lufthansa on that occasion, submitted that the Defendants had to do so and, if they did, this would require wider disclosure and evidence. Pages 60 to 64 of the transcript record as follows:

“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,...