In this short article, Sanjeet Plaha, IP litigation specialist and member of our UPC team, runs through all you need to know about security for costs.
She explains what it is, the Unified Patent Court’s rules and summarises some recent decisions from the Court on applications for security for costs.
Sanjeet Plaha
Partner | Solicitor (England and Wales)
Security for costs is a question that comes up now and again when I’m asked about litigation at the Unified Patent Court. Using some recent decisions made by the Court as examples, here’s a brief guide to security for costs at the UPC.
A party to litigation can apply for security. This is where there are reasonable prospects of success and there is a risk that the other side will not be able to pay a cost award at the end of the proceedings due to their financial position, or because it may be difficult to enforce the cost award against them.
Security is particularly important for defendants who, unlike claimants, do not have a choice about becoming a party to proceedings and incur the costs involved.
In short, either party to proceedings can request a decision on security from the Court, and a failure to comply with such an order may result in a decision by default being given by the Court.
By way of example, here are some summaries of recent decisions at the UPC that relate to this issue:.
Ballinno v UEFA[i]
UEFA, the defendants, applied for security on the basis that Ballinno appeared to have no assets other than the patent in suit.
Ballinno argued that security for costs should not apply in preliminary injunction applications.
The Court disagreed, ordering Ballinno to provide security of €56,000 due to an insolvency risk in its inability to elaborate on being able to pay recoverable costs in the proceedings.
The Court also held the fact that the patent in suit was only recently assigned to Ballinno, suggesting that the sole purpose of this transfer was to facilitate the litigation without any financial risk to Ballinno.
ICPillar v ARM[ii]
The second matter is ICPillar against ARM, a matter which HLK is involved with.
A security of costs application was made by ARM, based on ICPillar’s US domicile status and the fact that its financial position was unclear.
Whilst the Court did not consider ICPillar’s domicile in the States to be problematic, (as a UPC cost order can be enforced in the States), it did agree that there are concerns about its financial position. ICPillar was ordered to pay €400,000 in security.
Network System Technologies v Volkswagen[iii]
The last matter involves the Network System Technologies against Volkswagen case, where Volkswagen and others, the Defendants, requested an amount of €200,000 each against Network System Technologies.
This was on the basis that the Claimant company was domiciled in the States, making enforcement of the judgement on legal costs difficult.
The Claimant was also a small company with no physical assets, had a modest turnover and was also involved in a number of parallel proceedings.
However, in this instance, the Court didn’t consider there to be any evidence of insolvency or likely insolvency. Similarly, the applicants had also failed to provide sufficient evidence regarding difficulty of enforcing UPC decisions in the States.
The application was therefore dismissed.
Visit our UPC and UP latest updates page to read more insightful articles and analysis by our experts on the latest developments on Unified Patent Court and Unitary Patent matters.
This is for general information only and does not constitute legal advice. Should you require advice on this, or any other Unified Patent Court related topic, then please contact upc@hlk-ip.com or your usual HLK advisor.
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