Claimants hold the power at the beginning of UPC infringement actions. They can choose to shelter their patents from the UPC by opting out, and then withdrawing the opt-out when it suits them. They get to choose the timing of the action, the division and language it is started in, and can frame the dispute in terms of the patents asserted and the construction of the claims. The claimants’ proposed case value is only rarely challenged or changed by the court, and it is the case value that determines the court fee payable and the ceiling of recoverable representation costs.
As a general rule, the losing party at the UPC has to pay the costs of the winner. By launching the action, the claimant is also applying potentially significant costs risk to the defendant. Further, where there is an argument that a costs order may not be enforceable on the losing party (due to financial position or jurisdictional issues), the court can order a party to provide security for costs, typically in the form of a guarantee from an EU-based bank.
Security for costs at first instance
In a first instance decision about a year ago Emboline v. AorticLab (LD Munich 16 April 2025), the court decided that it was possible for the claimant to obtain such security for costs against a defendant. This was based on a reading of the Rules of Procedure (R.158 RoP) that suggested either party can obtain security for costs, and also on the fact that there was a counterclaim for revocation in which the patentee was technically the defendant.
The CoA swiftly stomped on this logic. In AorticLab v. Emboline (CoA 20 June 2025), the CoA clarified that the corresponding part of the UPC Agreement (Art. 69(4) UPCA) says that it is the defendant who may request security for costs from the “applicant”. The CoA’s view was that a counterclaim for revocation is intrinsically linked to the infringement action – it is part of the defendant’s defence. Given that they did not start the action, it would not be right force the defendant to provide security for costs in order to mount a complete defence.
What about security for costs in an appeal?
In December 2025, the CoA were dealing with a request for security for costs in appeal proceedings. The patentee Grundfos had won at first instance, with the patent being held valid and infringed. The defendant Hefei appealed and Grundfos responded with an application for security for costs, concerned that a costs order against the Chinese defendant may be difficult to enforce.
In Hefei v. Grundfos (CoA 19 December 2025), the CoA relied heavily on the word “applicant” in Art. 69(4) UPCA. In the appeal we have the appellant and the respondent. It is the appellant who chooses to start the appeal – they are the “applicant”. Therefore, the respondent is entitled to request security for costs in respect of the appeal proceedings, even if they were the claimant at first instance.
But appeal proceedings can be more complex than this. Both parties can appeal in due time. Or one party can appeal and then the other party can file a cross-appeal later. In these cases, each side can request security for costs but only for the costs of responding to the other side’s appeal. Where the defendant from first instance appeals on the correct basis that there is a manifest error in the first instance decision (this is a very high bar), then that party can request security for costs.
More recently, the CoA built further on this, in Suinno v. Microsoft (CoA 7 April 2026). This has been a running saga at the UPC, with Suinno launching patent infringement proceedings against Microsoft, and then Microsoft filing a counterclaim for revocation and successfully requesting that Suinno pay security for costs in respect of the infringement action. Security for costs was not provided, and so Microsoft then got a decision by default, dismissing the infringement action. Subsequently, Microsoft applied for an award of their costs in the infringement action, which was granted and approved by the CoA. But no costs were in fact paid over. The revocation counterclaim carried on and the patent was revoked by the Paris Central Division in January 2026, the same court granting an order for Suinno to pay Microsoft’s costs in respect of the revocation counterclaim.
The CoA’s 7 April 2026 order relates to Suinno’s appeal against the decision in the revocation counterclaim. Specifically, Microsoft sought security for costs in respect of that appeal, but also in respect of the unpaid costs from the first instance proceedings.
The CoA agreed with the request for security for costs for the appeal proceedings, and notably decided that this should be at the ceiling of recoverable costs for the case value. Failure to provide security for costs once more carries with it the risk of another decision by default in the appeal against revocation. However, since costs awards had already been made at first instance, a request for security for those costs was inadmissible.
Is there a way to avoid security for costs?
There have been plenty of cases about security for costs at the UPC. We reviewed the early ones in UPC Weekly 2024 w52. But what would be the effect of a litigation costs insurance policy? Initial cases decided that insurance might not cut the mustard.
But in Syntorr v. Arthrex (CoA 18 February 2026), the CoA overturned the first instance decision, and decided that a properly-constructed litigation insurance policy would be suitable to avoid the need to provide security for costs by way of deposit payment or bank guarantee. The court looked carefully at the terms of the policy and noted that its anti-avoidance endorsement was an effective safeguard against the insurer cancelling the policy. This is important news for litigation funders.
Appeal costs – go back to first instance
One interesting wrinkle is all about how you get your appeal costs back. If you win on appeal, and want to make an application for reimbursement of your costs, you don’t ask the Court of Appeal for this.
In the excellent woodchipper case where infringement was decided for the first time on appeal (see UPC Weekly 2026 w9), the patentee filed an application for their appeal costs at the Court of Appeal. Which seems initially logical. But in Rematec v. Europe Forestry (CoA 30 March 2026), the CoA explained that a costs application is a separate procedure at the UPC. So, even if you are seeking your costs for appeal proceedings, you file the application for those costs to a first instance division, and you had better do that within the time limit.
Appeal overturns first instance – costs ping-pong
There are two related infringement and validity cases about LEDs that we have been keeping an eye on, between Seoul Viosys and expert e-Commerce.
In the first case, all about EP 3223320 B1, the Local Division decided that the patent was invalid and this decision was upheld on appeal. See UPC Weekly 2025 w45 for the substance.
The second case concerned EP 3926698 B1 and at first instance the patent was held valid and infringed but this decision was overturned on appeal – the relevant claims were held invalid. We explained all this in UPC Weekly 2025 w40.
So after the appeals, the outcome is that the defendant has won both cases, and now costs orders have been issued. As explained above, even for an assessment of the costs in the appeal, the parties need to go through costs proceedings at a first instance division.
The assessment of costs for the first case was fairly straightforward, in Seoul Viosys v. expert e-Commerce (LD Düsseldorf 9 April 2026). With the encouragement of the court at first instance, the parties had agreed that each side had recoverable representation costs of €100,000. The defendant argued that the same agreement should apply to the appeal costs. The court said no – there was no evidence that the original agreement should apply at the same amount in respect of the appeal, and there was no separate agreement covering the appeal.
The defendant’s actual costs in the appeal were about €50,000, and so this lower amount is what was ordered to be paid by the claimant.
The second case was more complicated because the appeal overturned the first instance decision. The costs order is Seoul Viosys v. expert e-Commerce (LD Düsseldorf 10 April 2026). Following the first instance decision, the defendant had already paid costs of about €80,000 to the claimant. But now after the appeal, the defendant was seeking (i) that payment to be returned, (ii) their own costs for the first instance proceedings and (iii) their costs in the appeal proceedings.
The claimant tried to argue that (i) could not be covered in subsequent costs proceedings, but the court disagreed and ordered the money to be paid back as part of the overall costs award.
Request (ii) was fairly straightforward because this was covered by an agreement between the parties relating to the costs at first instance.
Request (iii) was only allowed in part. Again, the defendant argued that the first instance agreement should also apply to the appeal proceedings but the court disagreed, and awarded a lower amount of €61,000, covering the actual costs incurred.
So where are we?
The claimant has the risk of needing to provide security for costs at first instance. That can be mitigated with a suitable litigation costs insurance policy. But when it comes to the appeal, it is possible for the original claimant, to the extent that they are the respondent in the appeal, to request security for costs from the defendant. Where the defendant loses at first instance and has limited financial resources, this should be a factor to be taken into account when deciding whether to appeal. Failure to provide security for costs will probably lead to a decision by default and failure to pay ordered costs at one instance will strongly reinforce a request for security for costs in a subsequent instance.
For the sake of saving time, it is advisable to agree costs with the other side. The courts appreciate this and probably it is cost-effective for the parties too. We see a tendency of the parties to agree the costs at the relevant cost ceiling. So it is worth making sure exactly what the limits of the agreement are and in particular whether it is intended to apply to any appeal. Given that appeals should typically incur lower representation costs, the best approach is probably to propose a separate costs agreement in relation to the appeal, once the level of incurred costs is clearer.
