UPC Protects Defendant's Financial Risk During UPC Proceedings

Almost since its inception, the UPC Courts have had a reputation for being patentee friendly. Certainly, the time limit for the Defence (three months in main proceedings) can put a lot of pressure on the defendant in a complex or complicated case. Also, the potential for forum shopping between divisions, as well as the quick turnaround from initiating an action to receiving a decision are features often considered to benefit the patentee. Further, the UPC is also often in direct competition with the domestic German Courts. The three main German Patent Courts, Munich, Mannheim and Düsseldorf, have long held reputations for being efficient and cost-effective courts for patentees in which to pursue an infringement action.

On the other hand, several recent decisions have illustrated that the UPC are prepared to make orders that will protect the defendant's (usually the alleged infringer's) financial exposure to the costs of litigation through the provision of substantial security by the claimant. Furthermore, the UPC has recently clarified that a defendant to a Counterclaim is not in the same position as a defendant to the first (usually, infringement) action regarding the availability of security for costs. Recent proceedings have seen the UPC order the maximum amounts for security for costs for defendants, whilst denying any security for costs for claimants.

In UPC CFI 114/2025 and UPC CFI 358/2025, by orders dated 11 August 2025 the Claimant, Syntorr LP was ordered to provide the maximum security of €2m by the end of September. Whilst the Defendant, Arthrex had requested more (€1.1m for each of the three Defendants), the Local Munich Division did not consider awarding an amount beyond the regular ceiling for recoverable costs to be justifiable. Nonetheless, what the Court considered to be the maximum was awarded. The Court noted that a Claimant's litigation insurance policy was no substitute for providing security.

Those two orders follow on from the recent Court of Appeal order in UPC CoA 393/2025 confirming that security for legal cost compensation is a protection only provided for the defendant of the first action brought before the UPC. Therefore, security for costs is not available to a claimant that filed an infringement action (first action) even if the claimant then finds themselves a defendant in a (second) revocation counterclaim action.

In that case, Emboline, Inc brought about an infringement action against AorticLab srl based on EP 2129425. AorticLab filed a counterclaim for revocation and Emboline, Inc thus found itself to be a defendant. Based on its new "defendant" status, Emboline requested security for costs. (Emboline further argued that Art. 69(4) UPCA and R. 158 RoP allow claimants in infringement proceedings to request security for costs.) The Munich Local Division ordered the provision of €200,000 in security to be provided by AorticLab. The division reasoned that the above situation was caught by a "reciprocal interpretation" of Art. 69(4) UPCA, as Emboline had become a defendant. AoritcLab appealed.

The Court of Appeal found that Art. 69(4) UPCA contains deliberate language to restrict the possibility to request a security order to a defendant. The Court could not find any support in the EU Enforcement Directive that would expand the UPCA's language in Art. 69(4) to cover an order for security for costs at the request of the claimant. The Court further considered the rationale behind Art. 69(4) UPCA is the protection of a defendant against an insolvent claimant who initiated proceedings but may not have sufficient means to provide compensation for the defendant for the legal costs should their action be unsuccessful. Furthermore, a counterclaim for revocation was a direct result of the infringement action brought about the Claimant and therefore a direct consequence of the Claimant's own actions. Accordingly, the rationale behind Art.69(4) did not apply. The order of the Munich Local Division to provide security for costs was overturned.

UPC CoA 393/2025 has since been cited in UPC CoA 542/2025, where the Claimant that initiated infringement proceedings sought security for costs against the Defendant. UPC CFI 245/2025 saw a similar situation where the Claimant that initiated infringement proceedings but instead sought security for costs against an Intervener of proceedings. In both cases, the request for security for costs by the claimant was dismissed.

In the English Courts, security for costs is also an available preliminary measure. A defendant to a revocation counterclaim could, in principle, seek security for its costs. In practice, such a remedy is unlikely to be given unless the defendant is doing more than defending itself. A substantial competition law claim might provide such an exceptional circumstance.

Patentee friendly the UPC may be. However, it is the defendant's financial risk that will primarily be protected.

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