Court Of Appeal, October 14, 2025, Appeal Against An Order Re. Penalty Payments, UPC_CoA_699/2025

1. Key takeaways

System of penalties under the Rules of Procedure, specifics of a penalty order (R. 354.3, R.354.4 RoP)

• Pursuant to R. 354.3 RoP an order or decision may include an order for the forfeiture of a penalty sum in case of (future) non-compliance with an order (hereinafter: a penalty order). Although this must be considered the exception to the rule, it follows from the words "or an earlier order" in R. 354.3 RoP that a penalty order may also be issued separately in a later order, thereby connecting a penalty order to an order that is already contained in an earlier order or decision. Generally, the penalty order is included in the order or decision on the merits as this enhances legal certainty.
• This applies regardless of whether it was requested before but was rejected, or it is requested later for the first time. The circumstances of the case when issuing the order may have given rise to a rejection of a request for a penalty order. Similarly, at the time of filing a statement of claim the claimant may not have seen the need to ask for a penalty order. The circumstances may, however, change over time and later give rise to a different evaluation of the need to issue or ask for a penalty order. Such later request for a penalty order therefore does not require an appeal against the main decision.
• It follows from R. 354.3 RoP that the penalty amount that may be forfeited shall be set by the Court, considering the importance of the order in question. This amount should be sufficiently deterrent to be coercive, but also within reasonable limits for it to be an appropriate (proportionate) penalty.
• The penalty order must also specify upon which occurrence a certain penalty sum may be forfeited, e.g. as a lump sum or (preferably) for non-compliance per specified time period, per item, per act, etc. Where appropriate, the penalty order may also set a maximum amount of penalties that may be forfeited per order or overall. This, however, does not prevent the Court from increasing such maximum amount in any further order, e.g. in enforcement proceedings, for future further non-compliance, if the circumstances of the case so require (R. 354.3 RoP).
• In view of legal certainty for the defendant, the order or decision on the merits should generally also, where compliance is not required immediately after service of the order or decision, specify the time period for compliance with each order, after which time a penalty shall be forfeited.
• It follows from the wording "penalty payments provided for in the order" in R. 354.4 RoP that any order to pay any penalty sum in enforcement proceedings pursuant to this Rule, must be based on a prior penalty order having been made, either in the operative part of the main decision or order, or of a further order or decision to that effect. It is not sufficient for the claimant to send an enforcement notice pursuant to R. 118.8 RoP or to allege non-compliance. It is equally insufficient if the Court only in the grounds for its order or decision referred to the possibility that upon non-compliance of any order a penalty may be imposed.
• Thus, if a claimant alleges that a defendant has not or not timely complied with a penalty-reinforced order, a penalty does not become automatically payable, but the claimant must request the Court who issued such order, to order the defendant to pay the penalty sum forfeited. The penalty amounts and the time periods set for compliance, as provided for in the order or decision, shall generally be the basis for calculating the amount payable by the defendant. The Court may, however, deviate therefrom in favour of the defendant for reasons of reasonableness and proportionality, if the circumstances of the case so require. Relevant factors in this regard include, among others, aspects such as the severity of the established breach, its duration, and the defendant's ability to pay. It is for the defendant to present and substantiate facts that reasonably prevented it from fully and timely complying with a penalty reinforced order or that otherwise justify the imposition of a lower amount of penalties than the amount that would follow from the penalty amounts and the time periods set for compliance, as provided for in the order or decision or later order or decision (see also Belkin v. Philips (penalties), par. 35; 57).

Obligations of the Parties to specify details of penalty payments

• The suggested penalty amount for non-compliance with the relevant order(s) as well as the time period(s) for compliance therewith, must be included in the claimant's corresponding application (in the statement of claim, application for provisional measures or separate request as the case may be (see Court of Appeal, 3 October 2025, in Belkin v. Philips (merits), UPC_CoA_683/2024, par. 240).
• It is incumbent on the defendant to comment on both the penalty amount(s) as well as the time period suggested by the claimant during the proceedings on the merits or for provisional measures or for the separate request, as the case may be. If the claimant requests a penalty order but has not included a suggested amount and/or time period, the defendant may still comment on what it considers reasonable and feasible.
• In the rare case that no time period is specified in the order or decision containing a penalty order, it is the responsibility of the claimant to set a time period for compliance with the relevant order(s) (see Belkin v. Philips (merits), par. 240). In such case, if the order that is reinforced by a penalty (hereafter also: 'penalty reinforced order') is contained in an order for provisional measures, to which R. 118.8 RoP does not apply, the claimant must notify the defendant of the time period together with or immediately after service of the order; if the penalty reinforced order is contained in a decision on the merits, this must be done when notifying the defendant of its intention to enforce the decision under R. 118.8 RoP.
• It then falls on the defendant to dispute the reasonableness of the time period set by the claimant immediately after notification by the claimant or service of the enforcement notice, as the case may be; the defendant should not wait until the time period set has already lapsed.
• When a time period is set by the claimant and the parties disagree, it is left to the Court to determine a reasonable time period based on the submissions of the parties in the enforcement proceedings pursuant to R. 354.4 RoP. This time period applies retrospectively; a time period that is too short triggers the commencement of a reasonable period as established by the Court (Court of Appeal, 30 May 2025, in Belkin v. Philips (penalties), UPC_CoA_845/2024, par. 40-41).

Burden of proof, evidence, confidentiality

• The burden of proof that a penalty reinforced order has been fully and timely complied with lies with the defendant, since the evidence concerns information within the defendant's own sphere which is not accessible to the claimant. It is generally incumbent on the defendant to provide a substantiated account of the measures taken to comply with the penalty reinforced orders (see also Belkin v. Philips (penalties), par. 66).
• It enhances legal certainty for the defendant if the claimant in its application already requests and the order or decision already specifies which evidence is required – but also sufficient – in this respect. Depending on the circumstances and always within the discretion of the Court, it may e.g. be required that the completeness of information to be provided is confirmed by an accountant; that a copy of recall letters is sent or a list of addressees of recall letters is provided, that destruction of infringing products is confirmed by a bailiff or other independent authority, etc. An explicit legal basis for this in the UPCA or the RoP is not required, since this a matter of evidence. It serves legal certainty and prevents disputes at the time of enforcement.
• If the defendant can reasonably foresee that the orders and evidence requested by the claimant may require it to disclose confidential information, this should be raised by the defendant during the proceedings on the merits, so that where necessary in the order or decision appropriate measures can be taken to protect such confidential information. Although it would still be possible to file a confidentiality request thereafter, confidentiality issues generally do not stay the time period set for compliance with a penalty reinforced order.

Start of the time period for compliance

• If the penalty reinforced order is contained in an order for provisional measures, to which R. 118.8 RoP does not apply, the time period for compliance with such a penalty reinforced order starts upon service of the order for provisional measures on the defendant or, if that order does not contain a time period for compliance, upon notification of the time period set by the claimant, in both cases provided that, if applicable, a security pursuant to R. 211.5 RoP has been rendered.
• If the penalty reinforced order is contained in a decision on the merits, the time period for compliance with such a penalty reinforced order starts upon service of the notification pursuant to R. 118.8, first sentence, RoP if all other requirements for enforcement are met including, if applicable, the rendering of a security pursuant to R. 352 RoP.

Enforcement notice, translation requirement (R. 118.8 RoP)

• It follows from R. 118.8 RoP that the claimant has to send an 'enforcement notice' to the Court in which he indicates which part of the orders he intends to enforce. Together therewith he needs to provide "a certified translation of the orders in accordance with Rule 7.2, where applicable, into the official language of a Contracting Member State in which the enforcement shall take place". Through the reference to paragraphs 1 and 2(a) of R. 118 RoP, which has the heading 'Decision on the merits' it is clear that 'translation of the orders' refers to the individual orders contained in the operative part of the decision.
• It is also clear from the wording of R. 118.8 RoP that a translation is required only from the order(s) that the claimant actually wishes to enforce and that these only need to be translated into the language of the Contracting Member State where such enforcement is to take place. The translation allows the enforcing authority (e.g. the bailiff) to understand in its own language what it needs to enforce. The requirement of notification of this translation to the defendant is to allow it to verify whether the translation correctly reflects the order in the decision to be enforced.
• Consequently, orders that are only enforced by means of the possible forfeiture of a penalty sum do not require translation, since pursuant to R. 354.4 RoP this enforcement is to be effected through the Court who issued the decision. There is no requirement that the enforcement notice itself – which should be drafted in the language of the proceedings – be translated.
• R. 118.8 RoP does not require that after the claimant has notified the Court which part of the orders it intends to enforce, the Registry must subsequently and separately serve this enforcement notice on the defendant in the manner as prescribed for the service of a statement of claim, i.e. generally by post. The service of further written pleadings and other documents from the parties as prescribed or allowed under the Rules of Procedure must be effected through upload of the relevant communication in the CMS (R. 6.1 (b), R. 271.2, R. 278. 1, 278.5 RoP). That applies also to an enforcement notice pursuant to R. 118.8 RoP (see also Belkin v. Philips (penalties), par. 37). Subsequent service by the Registry takes place by making this enforcement notice available to the representative of the defendant through its CMS.

2. Division

Court of Appeal

3. UPC number

UPC_CoA_699/2025

4. Type of proceedings

Appeal against an order relating to penalty payments

5. Parties

APPELLANTS:

1. Kodak GmbH (Stuttgart, Germany)
2. Kodak Graphic Communications GmbH (Stuttgart, Germany)
3. Kodak Holding GmbH (Stuttgart, Germany)

RESPONDENT:

Fujifilm Corporation (Tokyo, Japan)

6. Patent(s)

EP 3 511 174

7. Body of legislation / Rules

Rules 354.3, 354.4 RoP, Rule 118.8 RoP

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.