Court of Appeal clears Lufthansa’s account of profits for take off

Lufthansa Technik AG v Astronics Advanced Electronic Systems & Anor [2026] EWCA Civ 964 (27 July 2026)

Damages vs Account of Profits

Conventional patent litigation in England and Wales is typically bifurcated: liability (validity and infringement) is determined first, followed by a separate quantum phase. Once a patent is found valid and infringed, a successful claimant has a choice of financial remedy – typically an inquiry into damages, or, in the alternative, an account of profits.

Out of these two, claimants more often elect for damages. It is usually simpler to prove and quantify one’s own losses than to force a defendant to disgorge its profits. The claimant/patentee generally has clearer visibility over its own accounts and the financial impact of the infringement. In comparison, seeking to claim an account of profits can be more burdensome and uncertain, requiring detailed access to the defendant’s records to identify profits “derived from” the infringement.

Where the defendant’s profits are likely to exceed the patentee’s damages, however, seeking an account of the defendant’s profits may be an attractive option. In such circumstances, claiming only the damage suffered by the patentee could leave the infringer better off than if it had not infringed, whereas an account of profits avoids that outcome.
  

Why quantum decisions are relatively rare

The bifurcated structure of English patent litigation allows parties to determine liability before committing further time and cost to quantum, which is often perceived as an advantage of the system. In practice, this division typically encourages settlement once liability has been resolved, either before quantum proceedings begin or during that phase. That remains true notwithstanding the potential for interim applications and associated costs along the way.

As a result, quantum judgments are much less common than liability judgments, and there is comparatively limited case law on accounts of profits.
 

The significance of Lufthansa

Against that background, the quantum phase in Lufthansa Technik AG v Astronics Advanced Electronic Systems & Anor¹  is notable because it progressed to the Court of Appeal and the resultant judgment provides valuable and relatively rare guidance on the approach of the English courts to an account of profits, including a refresh of key principles and, in particular, the role of legal causation in identifying profits derived from infringement.

Arnold LJ gave the leading judgment, with Lewison LJ and Nugee LJ agreeing, in a decision running to almost 100 pages.
 

Liability Phase – Patent Valid and Infringed²

Lufthansa’s patent relates to apparatus that safely supplies electrical power to in‑seat sockets for passengers’ personal electronic devices. The defendants – Astronics, Panasonic and Safran – manufactured, supplied and installed such systems, known as the EmPower Fusion system, into aircraft seats.

The liability trial addressed conventional validity issues and the Rotocrop v Genbourne³  principle, by which a supplier of a kit of parts with full instructions may be liable as a joint tortfeasor alongside the assembler. The case progressed to the Court of Appeal, which upheld the first‑instance decision that Lufthansa’s patent was valid and infringed.
  

Quantum and First Instance Account of Profits

Following the liability judgment, Lufthansa elected for an account of the defendants’ profits. The quantum trial before Leech J lasted three weeks. He held Astronics liable for $4.42 million, Panasonic for $7.384 million and Safran provisionally liable for $81,800, which was later revised upwards to $567,800 following a further hearing where the judge decided it was only appropriate for Safran to deduct incremental overheads. Interest was awarded at US Prime plus 2% for Astronics and Panasonic, and UK base rate plus 2% for Safran.
 

Quantum Appeal – Overview⁴

On appeal, Lufthansa argued that Astronics and Panasonic should account for all profits derived from the infringing EmPower Fusion systems, not just 13%, which was the position Lufthansa advanced at first instance. This ground of appeal raised various questions relating to causation.

The defendants also appealed two further issues: first, the award of pre judgment interest; and second, the judge’s earlier refusal to make an order designed to prevent double recovery by Lufthansa in parallel proceedings in France and Germany. Astronics and Panasonic also appealed “KID apportionment”: whether an earlier licence with KID Systeme GmbH (“KID”) under Lufthansa’s patent was exclusive and, as a consequence, whether a portion of the profits had effectively already been compromised in a settlement involving KID.
 

Legal Causation in an Account of Profits

Section 61(1)(d) of the Patents Act 1977 provides that the profits for which an infringer must account are profits “derived … from the infringement”. The profits must have been caused by the infringing acts, which involves (i) factual causation, typically assessed by the “but for” test; and (ii) legal causation, which is concerned with remoteness. In this context, legal causation goes towards establishing the separation between profits which justly belong to the claimant, and those which justly belong to the defendant.

At the first instance quantum trial, Morgan J had previously described the patent as a “barrier” or “gateway” patent – Astronics would not have obtained necessary certification or airframe manufacturer approval without using the patented features. Despite this, he still found that other factors drove sales of the overall system, including satisfaction of safety requirements, meeting certain technical specifications, product superiority and customer service unrelated to the patent.

Lufthansa appealed, arguing the judge misapplied principles of legal causation and erred in apportioning only 13% of profits to the patent.
 

Differential Profits Analysis vs Apportionment

On appeal, Lufthansa contended that profits derived from infringement should be identified by a differential profits analysis: comparing actual profits with those that would have been made using the best non infringing alternative. As no such alternative was established, Lufthansa argued that all profits were derived from infringement.

Astronics and Panasonic conversely argued for apportionment, a well‑established method in earlier cases. The Court agreed that differential analysis may be attractive in theory but is often difficult, costly and uncertain in practice, requiring a detailed counterfactual isolating the economic impact of the infringement. Some cases will justify awarding all profits, and where a clear non‑infringing alternative exists, differential analysis may be suitable. Otherwise, a fair apportionment is usually the most appropriate approach.
 

The Test for Legal Causation

Arnold LJ held that the judge had erred in his approach to legal causation. He confirmed the correct test, drawn from Celanese v BP and Abbott v Design & Display, is to ask whether the infringer’s product or process would not have existed at all but for the infringement, or whether the invention was the essential ingredient in creating the whole product or process. If the answer is yes, all profits are legally caused by the infringement. If the answer is no, then apportionment is required to distinguish profits derived from the infringement from those derived from other factors. In other words, if the patent is truly the gateway for the product, all profits are in play; if not, apportionment must be applied.
 

Method of Apportionment

Earlier authorities (e.g. Potton v Yorkclose, Celanese v BP) used a “distribution by costs” method, adjusted to reflect the invention’s contribution. Other cases (e.g. Hotel Cipriani, Jack Wills) used licence fees or royalty rates from comparable agreements as evidence of the value attributed to IP.

In this case, Leech J had adopted a licence‑based apportionment using the royalty rate from the 2014 Teaming Agreement between Lufthansa and KID as a proxy for the share of Astronics’ and Panasonic’s profits attributable to the patent. The Defendants’ expert Mark Bezant explained that licensing terms reflect how parties isolate the value of a patent in a commercial context, and so can inform its relative contribution in an account of profits.

Lufthansa had not proposed any specific alternative methodology or percentage at trial (other than arguing for 100%, i.e. no apportionment). On appeal, it argued that licence terms inherently share profits between licensor and licensee, whereas an account of profits should strip all patent‑derived profits from the infringer. The Court rejected this, holding that agreed royalties can legitimately be used as a benchmark for the patent’s economic contribution relative to other factors, particularly where no better evidence exists and no uplift was sought. Lewison LJ added that royalties can represent the agreed share of overall profits attributable to a patented feature in complex products.
  

KID Apportionment and the Single Pot of Profits

The KID apportionment issue addressed whether Lufthansa’s account of profits should be reduced to reflect profits that would have belonged to KID as exclusive licensee under a 1998 Teaming Agreement. Applying German contract law to interpret the agreement, and then UK patent law, the Court held that KID had an exclusive licence over the relevant exploitation rights (development, manufacture, marketing) for the “Advanced System”.

On that basis, KID stood in the shoes of the patentee for those rights. An earlier settlement between KID and Astronics’ predecessor (via cross‑licence and compromise) meant part of the infringing profits had already been dealt with as between exclusive licensee and infringer.

The Court addressed the “single pot of profits” question under sections 61 and 67 of the Patents Act: how profits should be shared between a patentee and an exclusive licensee, and what happens if an exclusive licence is infringed and the exclusive licensee compromises its claim against the infringer? Can the patentee nevertheless claim all profits made by the infringer?

There is only one pot of the infringer’s profits. To the extent rights are subject to an exclusive licence, the exclusive licensee is entitled to profits so far as the infringement involves its exclusive rights, with the patentee entitled to profits outside that scope. An account of profits is an equitable remedy; equity will not allow the patentee to take profits where an exclusive licensee’s rights are in play, even where such rights have been compromised, such as by way of a settlement agreement.

On that basis, the Court resolved the single‑pot issue in favour of Astronics and Panasonic and allowed their appeal on KID apportionment.
  

Double Recovery

The defendants also sought to guard against double recovery in parallel German and French proceedings. They argued that Lufthansa’s foreign claims could overlap with profits already awarded in the English quantum proceedings, for example, where components were shipped first to the UK and then to Germany.

Lufthansa accepted in principle that it is not entitled to recover the same profits twice, but the defendants asked for a recital stating that the English sums were “provisional” pending foreign outcomes, so they could later seek a reduction if overlapping relief was granted overseas.

The judge refused, and the Court of Appeal upheld that refusal. Assuming (without deciding) that jurisdiction existed to make such an order, the Court held the exercise of discretion was “unimpeachable”. Comity is a key factor – it is for the English court to decide the account of profits under UK law on the evidence before it, and for the French and German courts to apply their own laws, including deciding whether double recovery arises and how to manage it. The English court should not seek to “mark the homework” of foreign courts once they have ruled.
   

Interest on an Account of Profits

Finally, the defendants appealed the award of pre‑judgment interest on the account of profits, arguing that interest could only run from the date Lufthansa elected that remedy and only under section 35A(1) of the Senior Courts Act 1981, not in equity.

The Court rejected that, emphasising that interest compensates for the time value of money where the infringer has retained profits that should have been paid to the patentee. In equity, once an account of profits is ordered, the infringer is treated as having run the infringing business for the patentee. Therefore, profits should have been paid over to the patentee from the time of the first infringing act. Equity can accordingly award interest from that point.

Section 35A(1) was also held to apply. Once an account of profits is elected, the proceedings are for the recovery of financial compensation arising from patent infringement, so interest may run from when the cause of action arose, not merely from the election date.
   

Overall Result

The Court of Appeal:

• Dismissed Lufthansa’s appeal seeking a larger share of profits;

• Dismissed the defendants’ appeals on interest and double recovery; and

• Allowed Astronics and Panasonic’s appeal on KID apportionment.
    

Wrap-up

• Quantum decisions of this kind remain relatively rare, making the Court of Appeal’s guidance on accounts of profits particularly valuable.

• The case also shows that the quantum phase can be substantial in its own right: here, it involved a three-week trial and a lengthy appeal judgment following the earlier liability phase.

• More broadly, Lufthansa underlines that an account of profits is highly fact-sensitive, particularly where causation, apportionment, exclusive licences and interest are all in play.

 
¹ [2026] EWCA Civ 964
² [2020] EWHC 1968 (Pat); [2022] EWCA Civ 20
³ [1982] FSR 241. This case was analysed in detail by Arnold J in Virgin Atlantic Airways Ltd v Delta Airways Inc [2011] RPC 242
⁴ [2026] EWCA Civ 964