UPC Weekly - Mind your costs

2024 Week 14

The UPC Court of Appeal issued a collection of five appeal decisions on 3 April 2024 in the ongoing litigation between NJOY and Juul relating to vaping products. The substance of the appeals is the sort of thing to make most litigators shrug – the initial applications for revocation of the five patents incorrectly named “Juul Labs, Inc.” as the patent proprietor rather than the correct “Juul Labs International, Inc.”. The revocations actions were filed at the UPC Central Division in Paris.

The Central Division agreed to rectify the applications for revocation to use the correct name for the patent proprietor. The patent proprietor appealed and in these Court of Appeal decisions, the appeals were rejected. The Court of Appeal considered that the patent proprietor was not unreasonably prejudiced by the first instance court making the correction. 

It’s good to see both the first instance court and more importantly the Court of Appeal take a pragmatic approach to dealing with simple administrative errors. Although taking care to name the correct patent proprietor would have saved everyone some time here.

However, what caught our attention were some comments from the Court of Appeal (issued from a panel including the President of the Court of Appeal, Klaus Grabinski, no less) on how the court will approach the award of costs.

In UPC litigation, the basic principle is that the losing party pays the legal costs of the winning party. These costs include court fees and attorney fees. The court appears to have wide discretion on this and a cap on costs applies, based on the value of the dispute.

In these appeals, the Court of Appeal commented that the decision on any award of costs will be made following a decision on the merits of the case (i.e. the substantive revocation action). Therefore, there was no specific award of costs in relation to these appeal proceedings.

But the Court of Appeal pointed out that these appeal proceedings should be taken into account in the final costs decision:

However, the outcome of the appeal must be considered when, in the final decision on the action at hand, the Court determines whether and to what extent a party must bear the costs of the other party because it was unsuccessful within the meaning of Article 69 UPCA. [Emphasis added]

There is specific provision in the UPC Agreement (UPCA Article 69(3)) that:

a party should bear any unnecessary costs it has caused the Court or another party.

Together, we see here a clear suggestion that taking relatively minor points on appeal, and losing on them, may be detrimental to a winning party recovering their costs. Or worse, having to pay at least some of the costs of the losing party. It seems possible that the UPC will use the threat of adverse costs awards at the end of the proceedings to ensure that the parties spend reasonably and proportionately in the dispute.