Lufthansa Technik v Astronics: Court of Appeal clarifies approach to patent profit apportionment

The Court of Appeal has upheld a High Court decision that limited Lufthansa Technik's recovery to 13 per cent of the profits earned by two aviation suppliers found to have infringed its patent for aircraft passenger power sockets, in a judgement that settles a long-running dispute over how courts should calculate an account of profits in patent cases.

In Lufthansa Technik AG v Astronics Advanced Electronic Systems & Anor [2026] EWCA Civ 964, Lord Justice Arnold, with whom Lord Justice Lewison and Lord Justice Nugee agreed, dismissed Lufthansa's appeal against Mr Justice Leech's finding that Astronics and Panasonic Avionics should account for only a fraction of the profits generated by their EmPower Fusion in-seat power systems, despite the systems having infringed Lufthansa's patent for a safety feature detecting whether a plug was properly inserted.

The patent, which expired in 2018, covered a mechanism allowing aircraft seats to supply high-voltage AC power safely to passenger devices. Following earlier findings of infringement upheld by the Court of Appeal in 2022, Lufthansa elected for an account of profits rather than damages. At trial, the judge found that Astronics could not establish a viable non-infringing alternative to the patented feature, but nonetheless held that the infringement was not the primary driver of the defendants' commercial success, given the range of other regulatory, technical and commercial factors involved, and apportioned only 13 per cent of profits to Lufthansa using a royalty rate drawn from a later licensing agreement.

Lufthansa argued this was wrong in principle, contending that once a defendant fails to establish a non-infringing alternative, a "differential profits" analysis should entitle the patentee to the whole of the profits shown to depend factually on the infringement, with no separate role for apportionment. The Court of Appeal disagreed. Lord Justice Arnold held that factual causation alone cannot determine what profits are properly "derived from" an infringement, since it would allow patentees to capture profits attributable to entirely separate commercial factors. Differential profits analysis, he found, is merely one tool for identifying causation, useful chiefly where a clear non-infringing alternative exists; where it does not, apportionment remains a well-established and legitimate alternative, tracing back through authorities including Celanese v BP and this court's earlier decision in OOO Abbott v Design and Display. Lord Justice Lewison, delivering a concurring judgement addressing the wider implications for patent remedies, agreed that a rigid requirement to conduct differential profits analysis in every case was wrong, describing the correct approach as flexible and evaluative rather than mechanical.

The court did, however, allow a separate appeal by Astronics and Panasonic concerning Lufthansa's 1998 agreement with KID Systeme, the Airbus subsidiary that developed a competing system. Overturning the judge on this point, Lord Justice Arnold found the agreement in fact granted KID an exclusive rather than merely a sole licence under German contract law principles, a finding with consequences for how much of the disputed profits Lufthansa is entitled to claim given KID's separate compromised infringement claim against the defendants' predecessor.

Separate cross-appeals by the defendants on interest and on the risk of double recovery in parallel French and German proceedings were both dismissed. The court held that interest could properly be awarded on an account of profits from the date infringement began, reflecting the time value of money, and that questions of double recovery across jurisdictions were matters for the foreign courts to resolve applying their own law, not for the English court to pre-empt.