The decision is Fives ECL v. REEL GmbH, UPC_CFI_274/2023, issued on February 11, 2026. The decision is the subject of a recent blog post on ip fray. Last June, I blogged about an earlier decision (of the UPC Court of Appeal) in this dispute, writing that “the patent owner had obtained from a German national court a judgment of infringement, prior to June 1, 2023, and a declaration that the defendant would be liable for damages; but it thereafter pursued its damages claim before the UPC. The UPC Court of Appeal held that the UPC was competent to hear the damages claim (but left open the question of whether national or UPC law would apply to that claim).” The current decision holds that German domestic law applies to the damages claim, but that it wouldn’t matter in any event in view of the Intellectual Property Rights Enforcement Directive (paras. 100-10). More interesting, however, is the court’s conclusion that, although the defendant was adjudicated to have made an infringing offer, it isn’t liable for any damages. A copy of the original decision, in German, is linked to above; below, I use a machine translation that I have compared with the original.
The patent in suit is EP c1 740 740 B1, for a “compact service module which is intended for electrolytic aluminium production plants.” Plaintiff and defendant compete “in the market for special purpose cranes, which are used worldwide in various countries in aluminum furnaces as part of aluminum production” (para. 5). In December 2016, the parties submitted competing bids for a project in Bahrain, which was to be built by Bechtel. The first offers, dated December 2, were for twelve service modules and auxiliary bridges. Defendant’s offer was higher than plaintiff’s. Bechtel then requested that the parties provide a price “in the event these two parts were split and continued separately,” which the parties responded to on December 15. Defendant offered a price reduction, while the plaintiff did not (para. 70). Plaintiff didn’t get the contract; but then Bechtel decided to reopen the bidding process, and plaintiff submitted a new bid on February 21, 2017, which included a price decrease of €6,500,000. Apparently plaintiff was then awarded the contract, but it (successfully) sued the defendant for having made an infringing offer, which it then followed up with this claim for lost profits.
The court rejects the claim for lost profits, for failure of proof as to amount and for lack of proof of causation. From what I gather, the plaintiff didn’t proffer the December or February offers to the court (see paras. 18, 47), but rather sought to rely on evidence of (1) the defendant’s typical profit margin, according to the latter’s publicly available financial data from 2011-16, and (2) “projects implemented by the plaintiff in the past” (para. 51). The former, however, is not sufficient proof, given that “defendant’s activities span multiple business segments,” and also that the submitted evidence reports the defendant’s gross margin (Bruttomarge), which may not be comparable to the profit margin for this project. The latter as well is not sufficient, because the projects “predate the tender for the [present project] by eight to thirteen years,” “included contracts with a wide range of volumes,” and were reflective in part of both the greater market power enjoyed by the plaintiff at those earlier dates and a better economic environment generally for aluminum manufacturers and suppliers. In addition, the court casts doubt on the technical advantage provided by the patented technology in comparison with alternatives (discussed further below), and concludes that in any event there is no evidence that any assumed advantage over the state of the art could justify the plaintiff’s alleged margin. Moreover, the defendant’s bid included an “erection and installation concept” that Bechtel favored, to the point of requesting the plaintiff to include a similar concept in its proposal when bidding reopened—which “contradicts the assumption that the plaintiff would have prevailed in a hypothetical scenario without the defendant’s patent-infringing bid,” insofar as “the defendant had a competitive advantage over the plaintiff that was independent of the” machinery at issue (paras. 76-77).
Finally, we come to the causation issue. The court begins this section by stating that it cannot “be ruled out that, even if the defendant had submitted an alternative offer that did not infringe the patent, the plaintiff would have had to reduce its offer of December 2/15, 2016” (para. 78). Here, the analysis gets a bit confusing, with the court first seeming to indicate that the existence of a noninfringing alternative is irrelevant to the plaintiff’s entitlement to lost profits, and then appearing to walk it back:
79 As a general rule, the claim—in this case, the asserted loss of profits—cannot be countered by the defense of lawful alternative conduct (see BGH, GRUR 2024, 1201, para. 43 et seq. – Verdampfungstrockneranlage). According to the case law of the Federal Court of Justice (BGH), the defense that the damage would have occurred even if lawful conduct had been adopted may be relevant for the attribution of the damage. The relevance of the defense depends on the protective purpose of the respective infringed provision (BGH NJW 2017, 1104, para. 24; BGHZ 194, 194 = GRUR 2012, 1226, para. 35 – Flaschenträger).
80 In the case of a patent infringement, the defense that the same economic result could have been achieved through non-infringing acts cannot, in principle, lead to the exclusion of a claim for damages. A patent does not preclude third parties from competing with the right holder by offering non-infringing products. However, the offering and placing on the market of the protected subject matter is reserved to the right holder. A culpable infringement of this exclusive right must result in the infringer having to compensate for the resulting damage even if he could have offered other products. These principles also apply to the patent-infringing offering of a product.
81 These principles do not apply in the present case. This is because it is undisputed between the parties that the customer would always have requested a second offer in order to foster competition . . . .
82 If one therefore assumes that a non-infringing alternative offer must be included in the assessment, it cannot be definitively established that the plaintiff would certainly have been awarded the contract with its original offer.
The court then goes on to explain why the defendant’s Pavlodar model would have been both technically and economically more attractive than the proposals the plaintiff submitted in December 2016. As a consequence, as stated above, the plaintiff fails to prove that it “would certainly have been awarded the contract with its original offer” (paras. 83-89).
I’ve noted (what I view as) similar inconsistencies in the German courts’ analyses of noninfringing alternatives before, for example in my June 2024 post on the Verdampungstrockneranlage decision cited above. Maybe it’s fair to say, however, that under German law, the existence of a noninfringing alternative doesn’t necessarily preclude the plaintiff from recovering damages for infringement, but that the plaintiff still must present evidence as to the amount of those damages; and where, as here, it proceeds instead with an untenable lost profits theory, it gets nothing, though perhaps under other circumstances it would still be entitled a reasonable royalty—as may have been the case in Verdampfungstrockneranlage, where it is conceivable that there was some value to the defendant in making an infringing offer within Germany, as opposed to a noninfringing offer somewhere else, even if the end result would have been the same in that the defendant would have been awarded the contract (for a noninfringing project carried out outside of Germany). If so, the German position may not be all that different from the U.S. position, under which (as reflected in cases such as Grain Processing Corp. v. Am. Maize-Prods. Co., 189 F.3d 1341 (Fed. Cir. 1999)), the existence of a noninfringing alternative means that the plaintiff can’t recover a lost profit (because it wouldn’t have made the allegedly forgone sales even absent the infringement), but the plaintiff may still recover a reasonable royalty reflecting the cost saving the defendant incurred by having used the patented technology over the noninfringing technology.
In any event, my most recent effort to compare and contrast the law of noninfringing alternatives can be found at page 144 of my book Remedies in Intellectual Property Law, where I note that, although Canadian and French case law seems more or less consistent with the U.S. approach, the U.K. courts “continue to follow the House of Lords’ 1888 decision in United Horse-Shoe & Nail Co. v. John Stewart & Co., holding that the existence of noninfringing alternatives is irrelevant” to both lost profits and awards of infringer’s profits (though the U.K. courts recognize that noninfringing alternatives are relevant to reasonable royalties); and that “German courts also have held that the existence of noninfringing alternatives does not preclude an award of lost profits, though such evidence can affect the amount awarded,” citing both Verdampfungstrockneranlage and Flaschenträger.
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