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No rest for Virgin's flat-bed patent disputes

08/03/2011

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No rest for Virgin's flat-bed patent disputes

This article was included in the spring 2011 issue of Innovate - the patents newsletter.

On 23 February 2011, the Court of Appeal issued judgment in two cases, both relating to the European patent owned by Virgin Airways for its business class seats that convert into a flat bed ("the Patent") (Virgin Atlantic Airways Limited v Delta Air Lines Inc [2011] EWCA Civ 162 and Virgin Atlantic Airways Limited v Premium Aircraft Interiors UK Limited & another [2011] EWCA Civ 163). These decisions are part of a long-running dispute, which is being played out before the English Courts and the European Patent Office ("EPO"), and which demonstrate the interrelationship between rulings made in these two court systems. 

A chronology of some of the key dates involved in the litigation concerning the Patent is set out below:

July 2007 Contour Infringement Action commenced: Virgin sued Premium Aircraft Interiors UK Limited (known as "Contour") in the English High Court for infringement of the Patent. Contour makes "ship-sets" comprising of a number of aircraft seats and the plinths and all other fittings required to fit the seats into a particular aircraft. One of Contour's customers is Delta, to which it supplied ship-sets which were fitted into Delta's airplanes in the USA.
February 2008 EPO Opposition Proceedings against the Patent commenced by Contour.
June 2008 Delta Infringement Action commenced: Virgin sued Delta Air Lines alleging that Delta was jointly liable with Contour for Contour's acts of patent infringement. No further action was taken in these proceedings pending determination of the Contour Infringement Action and the EPO Opposition Proceedings. 
21 January 2009 In the Contour Infringement Action, the High Court dismissed Virgin's claims for unregistered design right infringement and held that the Patent was valid, but had not been infringed by Contour (as reported in the March 2009 edition of Innovate)
March 2009 In the EPO Opposition Proceedings, the Opposition Division decided to maintain the Patent in a slightly amended form. Both sides appealed against this decision to the Technical Board of Appeal.
22 October 2009 In the Contour Infringement Action, the Court of Appeal of England and Wales held that the Patent as it then stood was valid and infringed (as reported in the November 2009 edition of Innovate).
21 December 2009 In the Contour Infringement Action, the Court of Appeal declined to grant a stay in its judgment despite pending appeals of opposition proceedings before the EPO Technical Board of Appeal (as reported in the Spring 2010 edition of Innovate).
12 January 2010 In the Contour Infringement Action, the Court of Appeal granted injunctions and an inquiry into damages and costs against Contour (as reported in the Spring 2010 edition of Innovate).
September 2010 In the EPO Opposition Proceedings, the patent claims were amended. Claims to a seat unit for a passenger seating system for an aircraft were deleted. The Patent as amended now only claims "a passenger seating system for an aircraft". 
30 November 2010 In the Delta Infringement Action, Arnold J in the High Court granted summary judgment in favour of Delta. Deciding the case based on the amended patent claims, Arnold J ruled that Contour did not infringe because they did not make an assembly within the claim as amended and only made an incomplete kit of parts in the UK, a kit never used to make the patented apparatus within the UK. 


 

In the Delta Infringement Action, Virgin appealed against the summary judgment made against it on 30 November 2010, and in the Contour Infringement Action, Contour sought a variation of the order made by the Court of Appeal on 12 January 2010. On 23 February 2011, the Court of Appeal of England and Wales handed down its judgments on these two issues. 

 

Delta Infringement Action

The Court of Appeal overturned the summary judgment made against Virgin by the High Court on 30 November 2011. In so doing, it interpreted claim 1 of the Patent differently to the High Court, ruling that claim 1 of the Patent as amended was not limited to a ship-set fitted into an aircraft, but that it also covers a system capable of being so fitted. 

The opening words of the claim state "a passenger seating system for an aircraft".  The Court of Appeal held that the construction of this phrase should mean "suitable for". Having reviewed the relevant integers of the claim in detail, the Court of Appeal concluded that claim 1 covered a ship-set suitable for installation on an aircraft. Given that the ship-set was suitable, it was not necessary to consider contributory infringement and allied questions such as whether there was an intent to, and installation of, the ship-set in the United Kingdom. Therefore Virgin's appeal was allowed and the case will proceed to trial.

 

Contour Infringement Action

Both sides accepted that the amendment of the Patent in September 2010 meant that the injunction made against Contour could not continue. However, Virgin still sought to recover damages. Therefore Contour asked the Court of Appeal to discharge the Order on damages and to recover money already paid to Virgin. 

Applying the principles from Unilin Beheer BV v Berry Floor NV, the Court of Appeal dismissed Contour's application, holding that once damages had been ordered in interests of finality it should not be reversed even if the underlying patent is revoked or amended.

A further complication was that at the time of the Court of Appeal judgment, Contour had already contracted with Delta to supply ship-sets. Therefore, the Order of 12 January 2010 included undertakings allowing a "carve out" from the general injunction, to allow Contour to fulfil this order provided that (i) Contour's parent company gave a guarantee in relation to the damages, (ii) Contour made a payment to Virgin of £10,000 per seat following delivery to Delta and (iii) Delta would not use its airplanes fitted with those Contour seats on trans-Atlantic routes in competition with Virgin.

Contour had already paid £3.6 million under undertaking (ii) above. The Court of Appeal refused to order the return of this money, for the same reasons that it rejected the application to discharge the damages inquiry. 

Another issue was whether Contour should pay a further £450,000 on delivery of the remaining nine ship-sets to Delta that had been part of the carve out but had yet to be delivered. The Court of Appeal held that the damages should include the pre-existing disposal or offer to dispose of the nine ship-sets, but any acts of manufacture and supply which post-date the order would not be part of the damages.

Key points:

  • These related cases demonstrate the complications that can occur when the same European patent is being litigated at the same time before the courts of England and Wales and the EPO.
  • The Court of Appeal has reconfirmed the principles in Unilin Beheer BV v Berry Floor NV that damages for infringement will still be payable under a perfected court order even if the patent is subsequently amended or revoked so that the infringement issues may no longer arise.
  • Summary judgment may be granted in patent cases where the technology is relatively simple and easy to understand, although it will not be appropriate where the technology is complex.

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