Security for Costs before the Unified Patent Court (UPC) Current Case Law and Strategic Implications

Why is cost security important? 

As a starting point, the losing party must reimburse the legal costs and other expenses of the successful party before the UPC, particularly the reasonable and proportionate representation costs of the successful party, subject to value-based ceilings adopted by the Administrative Committee (Rule 152 of the Rules of Procedure (RoP)). 

For instance, the standard limit for recoverable legal fees in cases involving sums in dispute ranging from EUR 4 million to EUR 8 million is EUR 600,000, with potential increases and reductions in exceptional circumstances. 

This calibrates exposure for both sides, making the application for security for costs an important tool for the defendant in early case strategy: 

• For defendants security for costs protects recoverability of costs across borders.
• For claimants security for costs is an important budget consideration before starting a UPC action. Failure to provide security for costs as determined by the UPC may result in the claimant’s case being delayed or even dismissed. 

Who can apply for security of costs at the UPC? 

The Court of Appeal's June 2025 ruling in AorticLab v Emboline provides important guidelines on who can request security, with significant implications for infringement actions and revocation counterclaims. 

Legal framework: Article 69(4) UPCA and Rule 158 RoP.

According to Article 69(4) UPCA, at the defendant's request, the UPC may order the claimant/applicant to provide adequate security for legal costs and other expenses that they may become liable for.

Rule 158 RoP operationalises this power of the UPC and deals with timing, form and modification. Essentially, this means that, at any stage of the proceedings, the UPC may require a party to provide adequate security for the requesting party's potential legal costs within a specified period, either by deposit or bank guarantee, upon a reasoned request by one party. However, Rule 158 RoP states that 'the party' is entitled to apply for security for costs, and it does not distinguish between applicant and defendant.

Thus, the following questions arise:

• whether only the defendant or both parties can request security for costs, and 
• if only the defendant can request security for costs, who is the defendant if a counterclaim for revocation is filed in defence against an infringement action?   

The Court of Appeal's decision in AorticLab v. Emboline 

In this case, the Court of Appeal held that security for costs could only be requested by a defendant. 

The Court established two fundamental principles:

• Supremacy of the UPCA: The Court made it clear that, in the event of a conflict between the RoP and the UPCA, the UPCA provisions take precedence. Since Article 69(4) of the UPCA deliberately restricts the right to request security to the defendant, Rule 158 RoP cannot override this limitation. The RoP are subordinate to the UPCA and cannot extend the powers of the UPC beyond those explicitly provided for in the UPCA.
• Counterclaim is a defence: A defendant who files a counterclaim for revocation as part of their defence in an infringement action is not considered a 'claimant' under Article 69(4) of the UPCA. The Court emphasised that, under the UPC's procedural system, an invalidity defence is inseparable from a counterclaim for revocation. Therefore, imposing a security requirement on a defendant for their counterclaim would unreasonably limit their defence and hinder their access to justice. The Court states that there is no invalidity defence without a counterclaim for revocation and no counterclaim for revocation without the possibility of requesting security for this counterclaim.

In summary: Only the defendant may request security for costs before the UPC and this security may also cover the costs of a counterclaim for revocation, even though the defendant is formally the claimant/applicant of this counterclaim.

What are the requirements for a cost security order from the UPC? 

Defendants are not entitled to security of costs in all UPC cases. To grant security of costs, the UPC must be convinced that there is a legitimate and real concern that a potential costs order in favor of the defendant may not be recoverable from the claimant or that enforcing such an order would place an undue burden on the defendant. The defendant must substantiate and prove such a concern.

Based on UPC case law, the following criteria are relevant:

• The claimant’s financial position: One decisive factor is the claimant's own financial standing. The UPC considers the claimant's overall financial situation, including their assets, liabilities, liquidity. It is irrelevant whether the claimant belongs to a larger, financially sound group of companies (for example, Aarke v. Sodastream, 29 November 2024, UPC_CoA_548/2024) 
• Practical enforceability of a future order on costs and 'undue burden' standard: Apart from the financial situation of the claimant, the UPC also considers cross-border enforcement burdens. If a defendant can show that it would be uncertain, slow or costly to enforce a UPC cost order against a complainant in a non-EU/EEA country, then security may be justified. The defendant must provide well-reasoned facts to support this allegation.  
  
  Case law in this regard is currently evolving, as demonstrated by the divergent decisions in parallel proceedings in Jingao v. Chint. On 19 March 2025, the LD Munich ordered security based on the assumption that enforcement in a country failing to fulfil its obligations under the Hague Service Convention (China) would be unduly burdensome (UPC_CFI_425/2024). In contrast, on 2 April 2025, the LD Hamburg dismissed a similar request due to insufficient substantiation (UPC_CFI_429/2024). The LD Munich also confirmed its view in a recent order, dated 26 August 2025, in the Huawei v. MediaTec case (UPC_CFI_248/2025).
• NPEs and security: Non-practising entities (NPEs) without operational business whose model is based on patent litigation may be ordered to provide security for costs, especially if their only assets are the patents in question. The UPC has made it clear that NPEs are subject to the same legal test as any other claimant; however, the combination of limited assets and cross-border enforcement often tips the balance in favour of ordering security.  In the ICPillar v. ARM case (16 September 2024, UPC_CoA_301/2024), the Paris Regional Court ordered a security deposit of €400,000, which was later upheld by the Court of Appeal. The Court rejected the statement of a US insurance broker as inadequate security. LD Munich also took a firm stance in GXD-Bio v. Myriad (UPC_CFI_437/2024; 26 November 2024), imposing €112,000 in security due to doubts over the claimant’s solvency.
• Irrelevance of the likelihood of success: The UPC has stressed that cost security applications do not invite a preview of the merits; the UPC does not assess who is likely to win the main action when deciding Rule 158 requests. Arguments about infringement or validity are not relevant for security purposes (Aarke AB v. SodaStream, 29 November 024, UPC_CoA_548/2024). 

What are the key considerations regarding the amount of security and its adjustment?

The UPC has discretion over the amount of security required when the defendant applies. The following applies: 

• Security must be 'adequate': This is generally determined based on the 'value of the action' and the maximum recoverable cost ceilings established by the UPC's Administrative Committee. When assessing the amount of security, the UPC also considers equitable principles, particularly in cases involving small enterprises with an operating loss. The aim is to ensure that the cost security does not unduly hinder the claimant's right to an effective remedy and access to justice.
• Security is not 'set and forget': The Paris Central Division has ruled that requests to increase security are considered modifications to the existing order and will only be granted if there has been a change in material facts. (Microsoft v. Suinno, UPC_CFI_164/2024, 27 December 2024). In this case, the Court of Appeal upheld an order for €300,000 in security, deeming it consistent with the value of the case (Suinno v Microsoft, UPC_CoA_596/2024, 12 July 2025). 
• Review of the security cost order: It must primarily be sought in the first UPC instance. A judge-rapporteur may issue a case-management order for security. However, before a party can appeal to the Court of Appeal, Rule 333.1 of the Rules of Procedure (RoP) requires a panel review of such case-management orders at the first instance. 
• Release of security: The Court of Appeal has clarified the framework for releasing security where the underlying action becomes invalid or is withdrawn. 'Release of cost security by analogy to Rule 352.2'. (Audi v. NST, UPC_CoA_217/2024, 19 February 2025).

What happens if the claimant fails to provide the ordered cost security?

According to Rule 158.5 and Rule 355 RoP, if the required security is not provided in time, the UPC may issue a default judgment on the merits at the defendant's request. 

In its order of 12 July 2025 (UPC_CoA_363/2025), the Court of Appeal clarified the procedural consequences of failing to provide cost security under Rule 158.5 RoP. In more detail:

• The case in question involved an infringement action brought by Suinno against Microsoft before the Central Division of the Paris court, which had ordered Suinno to provide security for costs amounting to €300,000. When Suinno failed to comply, Microsoft requested a default judgement under Rules 158.5 and 355 RoP. 
• The Central Division rejected the request, reasoning that, under Rule 355.2 RoP, a decision by default required sufficient evidence to assess infringement and validity. 
• On appeal, the Court of Appeal found that the Central Division had misapplied Rule 355.2, which only governs defaults by defendants, not claimants who fail to perform procedural steps. The Court of Appeal held that failing to provide the required security constitutes a procedural default under Rule 355.1(a) RoP and that the Court may issue a default decision without examining the merits, provided that it is fair and balanced. Upholding Microsoft’s application, the Court revoked the contested order, entered a default judgement against Suinno and dismissed the infringement action. Suinno was ordered to bear all costs of the first instance and appellate proceedings. 

Therefore, non-compliance with a security order can result in the UPC infringement action being dismissed on procedural grounds. 

Practical recommendations for parties involved in litigation before the UPC

For claimants: 

Anticipate the issue: If the financial situation of your company or its headquarters might raise concerns relevant to the order of cost security, consider providing such security for budgetary reasons, and prepare evidence to counter cost security applications based on lack of solvency and practical enforceability issues.  

Calibrate case value: The alleged value of UPC proceedings determines court fees, cost ceilings and, in practice, the amount of security required. Ensure that your valuation of the matter aligns with what can be defended at an early case management hearing. 

Check for modifications: If cost security is imposed by the UPC, track changes (e.g. narrowing of issues or settlement with some parties) that could justify reducing or releasing the security.

Do not fail to provide the ordered security: Failure to pay the UPC may result in a default judgement.

For defendants:  

Remember AorticLab: Only defendants can request security. However, if you also plead a revocation counterclaim in defence against an infringement action before the UPC, you may still obtain security from the infringement claimant for the costs generated by the counterclaim. 

Substantiate your request for cost security: You will need to provide evidence of the claimant's unclear financial situation and/or the time, cost and uncertainty involved in enforcing a UPC costs order at the claimant's place of residence (e.g. gaps in treaties on international enforcement, or a lack of local recognition of EU judgements). 

Quantify intelligently and specify the requested security: Link your requested amount to the value-based ceiling and your expenditure under UPC practice. Be prepared to justify why a deposit or bank guarantee is appropriate and to explain why certain types of security (e.g. certain insurance policies) may be inadequate.