Paris Central Division

Paris Central Division – application for review of an order can be admissible even in absence of a specific and direct legal provision

The Central Division in Paris of the Unified Patent Court (UPC) recently issued a potentially far-reaching order addressing security for costs in patent litigation (UPC_CFI_164/2024). The decision, involving Suinno Mobile & AI Technologies Licensing Oy and Microsoft, clarified procedural options and the principles underlying security for costs in UPC proceedings.

Correcting Errors in Legal Grounds

The court reaffirmed that incorrect citations of legal provisions in an application do not automatically invalidate it. In this case, Suinno misidentified the legal basis for its request to reduce the security for costs. Despite this error, the court examined the application on its merits, highlighting the importance of interpreting the substance of a claim over procedural missteps.

Changing Circumstances and Security for Costs

Suinno argued that its reduction of the damages sought in the infringement action (from EUR 5 million to EUR 2 million) warranted a proportional reduction in the security for costs, originally set at EUR 300,000.

The new fact of a damage claim reduction provided sufficient grounds for the Central Division to admit the application for a review of the security for costs order. The Central Division elaborates in its second headnote:

“Where, after issuing an order granting a security for costs and any subsequent appeal, there is a change in the factual circumstances underlying the order, the party affected by the measure, as well as the party benefiting from it, may apply to the Court to revoke the order or vary its terms. Granting this opportunity to the parties, even in absence of a specific and direct legal provision, is necessary to render the measure consistent with its purpose, namely to address the risk of non-recovery or significant difficulty in recovering costs of the proceedings.”

On the other hand, the court dismissed the argument as such. It emphasized that the security amount, calculated as a percentage of the maximum recoverable costs, is determined by the value of the proceedings at the time the action is filed. Subsequent changes to the claim, such as a reduction in damages, do not affect the pre-established value.

Other Substantive Arguments

The court declined to address Suinno’s broader critique of the security for costs order, such as its alleged disproportionate burden on claimants. These arguments, according to the court, should have been raised during the initial appeal of the original security order. Only new factual circumstances, not critiques of the prior decision, could form the basis of the current application.

Our Takeaways

• The UPC’s calculation of security for costs is tied to the objective value of the proceedings at filing. Later amendments to claims, such as reduced damages, are irrelevant to recalibrating this amount.
• An application for review of a (security) order can be admissible “even in absence of a specific and direct legal provision”. An application to modify (security) orders must be grounded in new, material facts, not a re-evaluation of previously decided issues.

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