UPC Court Of Appeal Provides Framework For Enforcement By Penalty Payments

The Unified Patent Court (UPC) Court of Appeal has issued a significant decision in Fujifilm v Kodak (UPC_CoA_699/2025), offering guidance on the application of penalty orders. In no less than 22 headnotes, the Court sets out how the system of penalties under the Rules of Procedure should operate. The order provides welcome clarity for parties seeking to enforce UPC judgments and for defendants facing compliance obligations.

Background to the dispute

In April 2025, the Local Division Mannheim (LDM) issued a final decision in favour of Fujifilm in an infringement action against three Kodak entities domiciled in Germany concerning European Patent EP 3 511 174. The decision included an injunction with an associated penalty order, as well as orders for information, destruction, recall, and removal of infringing products. These latter orders were issued without penalty provisions.

Fujifilm subsequently initiated enforcement proceedings, alleging non-compliance by Kodak and requesting the imposition of penalties. The LDM responded by imposing a lump sum penalty of €100,000 against Kodak for past non-compliance and ordering daily penalties of €2,500, rising to €10,000, for future breaches. Kodak appealed, challenging both the legal basis and proportionality of the penalties.

Court of Appeal's findings on penalty orders

The Court ruled that penalty orders may be issued after the main decision, even if they were not originally requested or granted. That is because Rule 354.3 allows such orders to be connected to earlier decisions. However, the Court held that an order for an actual payment of penalties under Rule 354.4 requires a prior penalty order. As no such order had been issued for the €100,000 lump sum, the Court set aside the order for Kodak to pay the lump sum.

The Court upheld the validity of the orders for daily penalties for future non-compliance. These orders will act as the "prior penalty orders", and will allow for the issuance of an order to pay a penalty in case of future non-compliance.

Kodak had argued on appeal that there was a lack of differentiation between the various Kodak entities and their obligations, as well as a lack of attributability of the penalty amounts to specific acts of non-compliance. However, the Court dismissed these objections, ruling that a single penalty may cover multiple orders relating to different acts provided that the calculation method is sufficiently clear. In this instance the Court confirmed that, as long as at least one of the orders is not complied with, the relevant amount is forfeited for each day of non-compliance, whether or not only one or more orders are not complied with that day. The Court also held that penalties may be imposed on multiple defendants in general terms ("the defendants") where the underlying orders are similarly directed to the defendants in general.

On procedural matters, the Court ruled that the burden of proof lies with the defendant to demonstrate full and timely compliance with the orders. It also confirmed that the decision on the merits and associated orders may specify the type of evidence required to prove compliance, such as accountant verification or bailiff confirmation, even if such requirements are not explicitly provided for in the UPCA or Rules of Procedure.

Following the LDM's order for information, Kodak had submitted a request for confidentiality regarding the information to be provided. The Court dismissed the request as a delaying tactic, noting that the request for confidentiality should have been made during the proceedings on the merits.

Kodak's arguments regarding a failure by Fujifilm to comply with translation requirements were also dismissed. The Court clarified that translation requirements under Rule 118.8 apply only to the parts of the order that are being enforced, and only when enforcement is carried out by national authorities in the relevant Contracting Member States. If on the other hand orders are being effected by the UPC (such as in the case of penalty payments), then no translation is required.

Practical implications for litigants

This decision provides welcome clarity for UPC practitioners. It confirms that penalty orders can be sought post-judgment without appealing the main decision and that enforcement proceedings must be grounded in a prior penalty order to impose payment.

Parties seeking enforcement should consider proactively specifying penalty amounts and compliance periods in their original statement of claim in the main proceedings. They should also consider what type of evidence should be sought from the defendants to confirm compliance with any requests.

Defendants, meanwhile, must respond promptly to enforcement notices and meticulously document the steps taken to comply with orders, for evidence purposes. As early as in the statement of defence in the proceedings on the merits, defendants should consider objecting to a claimant's enforcement requests contained in the statement of claim, and raise confidentiality concerns regarding any request for information before the request is potentially granted.

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