Accounting For Profits – Interest And Double Recovery In Lufthansa v Astronics And Panasonic

Choosing to claim damages or an account of profits at the end of any intellectual property dispute is a difficult decision. It is typically driven by which the patentee thinks will lead to the higher recovery but that is often uncertain when it makes its decision.

In the UK, decisions relating to financial remedies are few and far between, as parties often simply settle once the main infringement action has been resolved (and in light of the final injunction awarded). Cases involving an assessment of an account of profits are even more rare, which is what makes this decision in the Lufthansa case so interesting.

In February 2025 the High Court made a provisional award as to the quantum of the account of profits between the defendants as follows: Astronics – US $4.42 million; Panasonic – US $7.384 million; Safran – US $81,800 (Lufthansa Technik AG v Astronics Advanced Electronic Systems [2025] EWHC 375 (Pat)). This followed from earlier proceedings finding infringement of Lufthansa's patent for an aeroplane cabin power supply system (Lufthansa Technik AG v Astronics Advanced Electronic Systems [2020] EWHC 1968 (Pat) and [2022] EWCA Civ 20). In April 2025 Mr Justice Leech decided the remaining outstanding issues on quantum (Lufthansa Technik AG v Astronics Advanced Electronic Systems [2025] EWHC 1034 (Pat)), finding that:

1. the Court had both equitable and statutory jurisdiction to award interest on profits for patent infringement;
2. given its jurisdiction, the Court should exercise its discretion to award interest; and
3. the Court only had jurisdiction to make a final, rather than provisional award on account of profits. Even if it had jurisdiction, the Court would not exercise its discretion to make a provisional award.

The Court accordingly ordered Astronics, Panasonic, and Safran (the "Defendants") to pay interest of approximately US $6 million on that account of profits. Thus, Lufthansa's total recovery on the account of profits (including interest) amounted to ~US $18 million, which is substantial in the context of previous UK awards on quantum in standard patent cases.

Taken together, these decisions help to clarify the general principles that apply to an account of profits, which is still a relatively uncommon method of recovery in UK patent cases, and provide guidance on the Court's approach where there is a risk of overlapping recovery in other jurisdictions for the same infringement ("double recovery").

Key takeaways

This ruling confirms that a patentee can receive a substantial recovery even when it opts for an account of profits. While this will depend on the circumstances of the case it is a helpful positive example for future patentees considering an account of profits. Also helpfully for patentees, the court has confirmed its jurisdiction to award interest on account of profits for patent infringement, on both an equitable and statutory basis, and that it is prepared to exercise its discretion to do so.

On the issue of double recovery, Lufthansa suggests that the English Courts are unwilling to grant provisional awards on account of profits, favouring finality. For patentees, there may be a strategic benefit to a particular sequencing of proceedings, for example to secure an early decision and finality in the UK.

However, it is worth noting that the April Lufthansa decision has been appealed to the Court of Appeal, with a hearing scheduled for March 2026, so the position may well change.

Background on account of profits

Under section 61 of the Patents Act 1977, a patentee is entitled to claim for an account of profits, as an alternative to damages, but needs to elect one or the other. The key features of recovery via account of profits are:

1. An account of profits treats the infringer as having carried on the business of the patentee on its behalf. Therefore, the patentee is entitled to profits derived from the use of its invention. What the patentee may have suffered as loss is irrelevant (in contrast to damages recovery) (OOO Abbott v Design & Display Ltd [2016] EWCA Civ 95).
2. However, determining an account of profits requires a similar assessment of factual and legal causation as for damages (the approach in Lifestyle Equities CV v Ahmed [2024] UKSC 17 was confirmed in the February Lufthansa decision). Notably, where an infringing product is complex the Court must consider whether the infringing component was the "real driver" of sales of the product as a whole (February Lufthansa decision, applying principles from Anan Kasei Co Ltd v Neo Chemicals and Oxides (Europe) Ltd [2023] EWCA Civ 11; see also OOO Abbott). If not, then the Court should apportion the relevant profits between the infringing and non-infringing parts of the product (OOO Abbott).
3. The defendant is permitted to make certain cost deductions from the account, including direct costs associated with the infringement, such as the costs of research and development or financing costs associated with the construction or operation of the relevant process or plant (Celanese International Corp v BP Chemicals Ltd [1999] RPC 203). It is worth noting that overheads are also deductible, both those that would not have been incurred but for the infringement and even a proportion of general overheads in some situations (OOO Abbott v Design and Display Ltd [2017] EWHC 932 (IPEC)).

These features raise certain issues which may in part explain why recovery via an account of profits is often less popular than damages. For example, apportionment requires disentangling the profits accrued due to infringing components from non-infringing components, as well as from factors like brand and marketing. Cost deductions can also be problematic and will diminish recoverable quantum. Whilst a patentee is entitled to make an informed choice between an account of profits and damages, and for this reason can require the defendant to provide information on its use of the patented products (an Island v Tring disclosure order), the patentee is nevertheless fundamentally relying on evidence provided by the infringer. By contrast, a patentee is better able to assess its own loss when determining damages.

Note that there was also an earlier appeal decision in these proceedings (given in November 2023) in relation to the provision of information on profits by the Defendants – so called 'Island v Tring disclosure'. There had been late production of evidence of profits by the Defendants (a witness statement produced after the initial election by Lufthansa for an account of profits significantly reduced the estimate of profits that an earlier witness statement had given). The Court of Appeal allowed Lufthansa to reconsider its election in light of this but confirmed that the financial information provided under Island v Tring disclosure was not required to be comprehensive, rather it should be a summary based on readily available information and estimates could be approximate.

Nevertheless, as in Lufthansa, an account of profits may be preferred where sales of an infringing article have been particularly profitable. Lufthansa has also provided more certainty on the recoverability of interest on account of profits, which may make this option particularly attractive if it has been a long time since infringing profits accrued.

Award of interest on account of profits

The Court found that it had both an equitable and statutory jurisdiction to award interest on an account of profits. Its decision on equitable interest was based on the fact that an account of profits is a form of restitution, and it follows that the patentee should be awarded interest to put it in the position as if it had made the relevant profits at the time of the infringement. The statutory basis was found in section 35A of the Senior Courts Act 1981. The court rejected the Defendants' argument that it should not exercise its discretion to award interest, finding instead that "an infringer is entitled to be treated as if he was conducting the infringing business on behalf of the claimant". Therefore, the Defendants were treated as holding the profits from infringing the patent for the benefit of Lufthansa.

Double recovery

Risk of double recovery on account of profits

The Defendants raised the issue that a final award on account of profits should not be made because of the risk of double recovery in parallel French or German proceedings. Although the extent or nature of the supposed double recovery was not precisely articulated as it was not yet clear at the time what claims Lufthansa would make in France and Germany, the risk was identified in the following scenarios:

1. profits made in the UK in respect of components shipped to third parties in the UK which are then shipped on to Germany or France. This would include profits that the UK court decides are non-infringing and therefore excluded from the UK account of profits but are claimed and "re-litigated" in a foreign jurisdiction; and
2. profits made in respect of Final Assembly Line ("FAL") components shipped directly to Germany or France but included in an English account of profits by virtue of being installed in the same aircraft as a UK delivered component. A proportion of FAL components will have been installed abroad thus risking overlapping recovery in a foreign jurisdiction.

Lufthansa accepted that there was a risk of double recovery but contended that this was more limited than the Defendants set out, highlighting that there is a defence of "performance" under German law which would limit recoverable damages. Leech J indicated he was not satisfied there was a "real risk" that the German or French courts would permit double recovery.

Refusal to make a provisional award

The Defendants also resisted a final award on account of profits, citing Spring Form v Toy Brokers [2002] FSR 17, which established that only one account of profits should be awarded against a patent infringer. Here, Leech J found Spring Form did not apply to overlapping cross-border claims. Instead, the principle of finality required Courts to give final judgement based on the evidence available at trial and was not required to anticipate future evidence or give parties the opportunity to reargue their case in light of future events. The Court did not consider it had jurisdiction to make a provisional award and, even if it did, it would not exercise its discretion to do so in this case for the following reasons:

1. there was no evidence that the German or French claims would be decided in the near future. Leech J cautioned that "the Court should be very wary of granting an open-ended permission to apply to vary or set aside an Order which a party might seek to exercise years later";
2. it is irrelevant that a patentee has the means to live with the uncertainty of a provisional order by raising and repaying funds;
3. the lack of a "real risk" of double recovery (as discussed above);
4. even if there were such a risk, Leech J still favoured finality; and
5. Leech J considered "it is unsatisfactory for the Court to be asked to give permission to apply without the Defendants formulating precisely what issue they should be permitted to bring back before the Court."

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.