UPC Penalty Payments Are Only Payable If Court Has Previously Ordered Forfeiture Of Sum For Non-compliance

The UPC Court of Appeal (CA) has clarified the framework for penalty payments in enforcement proceedings. Penalty payments in the UPC must be based on a prior penalty order from the court, specifically reinforced with the forfeiture of a penalty sum for non-compliance with an order. Non-enforcement notices from patent holder will not suffice.

Case details: Kodak v. Fujifilm,UPC_CoA_699/2025, October 14, 2025.

Background

Fujifilm sued several Kodak entities in the UPC Mannheim Local Division (LD Mannheim) and successfully obtained an injunction and various ancillary orders: for information regarding distribution channels, destruction, recall, and removal of infringing products from the channel of commerce. The LD Mannheim ordered a penalty for non-compliance with the injunction, but it did not set a deadline for complying with the ancillary measures nor a penalty fee for non-compliance. This was because the court considered the threat of penalties to be sufficient for these measures.

Fujifilm subsequently uploaded enforcement notices to the Court's Case Management System (CMS), seeking warnings that Kodak should pay a penalty sum per day of non-compliance should it fail to comply with the ancillary orders within a set time-period. However, the Judge Rapporteur refused this request because the court had explicitly refused to set a compliance deadline or penalty sum.

In turn, Kodak argued that the enforcement notices did not comply with the translation requirements, were unclear and conditional on a warning that had not been issued, and the time periods were too short. It also filed a confidentiality request regarding the requested information, but this was rejected.

The LD Mannheim rejected Fujifilm's request for a warning on the basis that this is not needed when the previous decision unambiguously states that the penalties may be imposed for disobedience. It ordered a lump-sum penalty for failing to comply with the ancillary orders and additional daily penalties for ongoing non-compliance. Both parties appealed.

CA decision

The CA partly allowed the appeal on the following grounds:

1. Penalties are not automatically payable for non-compliance with orders. Under R.354.4 RoP there needs to be a prior penalty order that is specifically reinforced with the forfeiture of a penalty sum for non-compliance with an order. This is generally included in the order or decision on the merits but, exceptionally, can also be issued separately, (even after a first refusal if circumstances have changed). It is not enough for the claimant simply to send an enforcement notice or allege non-compliance with an order. If the prior court order only mentions the possibility of penalties being imposed, the claimant must ask the court to order the defendant to pay the penalty sum.
2. The court should specify the time-period for compliance with each order as well as the penalty sum to be forfeited for non-compliance. This can be a lump sum or (preferably) a sum per item, act or time-period and it can be increased at a later stage. The aim is for a deterrent but proportionate penalty.
3. The claimant should suggest a penalty sum in its application, and the defendant should comment during the proceedings on the amount and time-period for compliance, based on what is reasonable and feasible. In the rare circumstances when the order does not set a time-period for compliance, the claimant should do so after service of an order for provisional measures or when notifying a defendant of its intention to enforce an order following a procedure on the merits. It then falls to the defendant to dispute it immediately after notification by the claimant or service of the enforcement notice. The defendant should not wait to do this until the time-period has lapsed.
4. Defendants bear the burden of providing a substantiated account of timely and complete compliance with a penalty-reinforced order. Claimants should suggest and the court should use its discretion to outline what would be sufficient evidence for compliance (e.g. an accountant confirming that information is complete or a bailiff certifying that infringing products have been destroyed).
5. The defendant's confidentiality concerns should be raised during proceedings on the merits. Confidentiality requests can be filed later but they do not stay the time-period for complying with a penalty-reinforced order.
6. The claimant needs to send an enforcement notice to the Court indicating which part of an order it wishes to enforce. This is served via the UPC CMS. Orders that are enforced by the UPC by way of forfeiture of a penalty sum do not need to be translated. Otherwise, the claimant needs to translate the orders to be enforced into the language of the state where enforcement is to take place.
7. The LD Mannheim had not imposed a penalty order for non-compliance with the ancillary measures, so the lump-sum payment order was set aside. Daily penalties were set going forwards, as valid penalty orders for future non-compliance.

Key takeaways and implications

• Claimants cannot seek penalty payments without first obtaining a penalty payment order from the court, specifically reinforced with the forfeiture of a penalty sum for non-compliance with an order. This penalty order needs to clearly specify the proposed penalty level, the triggers, and compliance timelines.
• Defendants need to comply with orders in the timeframe specified in the order and maintain clear records of compliance and remedial actions. If they have concerns about the amount or the reasonableness of complying within the time periods, or any other deficiencies in the penalty order, these need to be raised during the proceedings or immediately after notification by the claimant. Objections raised after the relevant period has lapsed will not provide further time for compliance. Similarly, late confidentiality requests will not provide further time for complying with a penalty order.

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.