SONN Patentanwälte – IP Attorneys

UPC Local Division: Security for legal costs

The defendants request that the claimant be required to provide security for the legal costs of the proceedings. The claimant is a Dutch llc with an issued capital of EUR 1; in addition, the claimant's business model is the enforcement of patents; accordingly, the patent in suit was transferred to the claimant in order to conduct the litigation without financial risk. The Court grants the request. Article 69(4) UPCA provides that the Court may order the claimant to provide adequate security for legal costs and other expenses incurring to the defendant, in particular in the cases referred to in Art. 59 to 62 UPCA. Pursuant to R 158.1 RoP, at any time during the proceedings, the Court may, on a well-founded request of a party, order the other party to provide reasonable security for legal costs and other expenses incurring to the requesting party which may have to be covered by the other party within a specified period. The scope of these provisions is not limited to the defense against enforcement risks. On the contrary, since decisions and orders of the UPC are directly enforceable in the Member States pursuant to Art. 82 UPCA, enforcement risks are not a relevant criterion for a claimant based in the EU. In fact, the relevant factor for the security order is the claimant's risk of insolvency. Although the RoP do not strictly require that the security amounts to the ceiling for recoverable costs, it provides a point of reference. The ceiling for recoverable costs based on the provisional amount in dispute of €500,000 is set to up to €56,000 by the Administrative Committee. Considering the claimant's interests, the specifics of the dispute at hand and the type of patent in suit, the Court considers the amount of €56,000 to be a reasonable security for legal costs potentially incurring to the three defendants combined (Hamburg Local Division, UPC 14 May, 2024, CFI 151/2024).