MP Accrual for LH operated, Upgraded Flight
 

While flying on an LH operated international flight on UA (016) ticket, I paid for an upgrade to business class at check-in.

MileagePlus Terms and Conditions don't clarify accrual rules for this situation other than "Mileage accrual for MileagePlus and other participating loyalty programs will be based on the original fare class purchased."
Should I expect to accrue miles for the upgraded C fare? LH receipt specifically states "upgrade from M to C".

UA has calculated miles based on the pre-upgrade class. Has anybody been in this situation before?

Per the rule you quote, it is supposed to accrue on UA as an economy fare.

M and C is the generic language LH uses to identify cabins, it is not the booking class. If you up-fared to proper C-class then you would indeed get credit for C-class ... I doubt that is what you did though. An upgrade at the airport often books into booking classes that may not even trigger an automatic credit and have to be chased through the MP service center. Consider yourself lucky you didn't have to do that and presumably got a good deal to fly LH business :)