UPC Court of Appeal Rules - only Defendants can request Security for Costs

🎂Short & Sweet

Filing a counterclaim at the UPC does not make you a claimant, and therefore security for costs will not be ordered against you.   

🤷‍♀️Issues considered 

Overturning a decision of the UPC's Munich Local Division that ordered the counterclaimant for revocation to provide security for costs, the UPC's Court of Appeal explained in its Aorticlab v. Emboline decision of 20 June 2025 (ORD_29391/2025) that a defendant to an infringement action cannot be compelled to provide security to cover the costs of the counterclaim for revocation.

Article 69(4) UPCA only permits the defendant of an action to request security for costs from the claimant. Imposing such security requirements on the counterclaimant for revocation would unduly restrict its ability to defend itself using invalidity arguments.

Specifically, the Court stated: “Under the system of the UPCA and the RoP, a defendant is not allowed to challenge the validity of the patent by way of an invalidity defence in the infringement proceedings but only by lodging a separate counterclaim for revocation. In order for a defendant in an infringement action to be able to defend itself by raising invalidity arguments, it is forced to file a counterclaim.”

There is no invalidity defence without a counterclaim for revocation, no counterclaim for revocation with a security for costs.  

This was also held to be the case in a revocation action, in which a defendant files a counterclaim for infringement.  

🫵What does this mean for you? 

If you are the one that starts an action, then the defendant can request an order for security for costs from you.  However, if a counterclaim is filed, this decision means that the UPC will not consider you a defendant, so you are likely to be unsuccessful if you request security of costs from the other side in relation to the counterclaim.  

If you are on the receiving end of an action, then you can request an order for security for costs from the instigating party.  Filing a counterclaim does not make you a claimant and so, according to this decision, the UPC will not order you to provide security for costs.  

🤔More thoughts 

The Court’s statement could be interpreted as precluding any invalidity defence that has merely inter partes effects.

Does this principle apply only to the parts of the European patent that are in the UPC member States, or does it apply to all the parts of the European patents litigated before the UPC, including non-EU parts (e.g., UK)? The second option would raise significant questions regarding the UPC’s jurisdiction over the validity of non-EU parts of European patents, which according to the ECJ’s case law (Electrolux v. BSH, 25 February 2025, C‑339/22), can normally only be challenged with inter partes effect.

Does the Aorticlab v. Emboline decision imply that the validity of the UK part of a European patent cannot be challenged before the UPC? Alternatively, is there a way to reconcile the ECJ’s case law with Aorticlab v. Emboline such that the validity of the UK part of a European patent could still be challenged before the UPC, albeit with only inter partes effect?

An interesting question - not only for private international law experts but also for UPC claimants owning European patents in force in the UK and other non-EU/EFTA States.