Advanced Standard Communication LLC v. Xiaomi Inc. and others, Case no. UPC_CFI_617/2025
In Advanced Standard Communication v. Xiaomi, the Munich Local Division of the UPC considered an application by Advanced Standard Communication (“ASC”) to review and set aside an earlier case management order requiring it to provide security for costs in SEP infringement proceedings concerning EP 3 016 464 B1. As part of their FRAND defence, Xiaomi had previously provided a bank guarantee intended to secure any future licence fee obligations to ASC. ASC argued that this “FRAND security” eliminated the need for it to provide separate security for costs, particularly as the value of the bank guarantee exceeded the amount ordered as security for costs.
The Court rejected these arguments and upheld the earlier order requiring ASC to provide €300,000 security for costs. It confirmed that, under Article 69(4) UPCA and Rule 158 RoP, security for costs may be ordered where there are legitimate concerns that a costs award may not be recoverable. The Court held that a bank guarantee provided by a defendant as “FRAND security” does not relieve a party of its obligation to provide security for costs since such a guarantee is not a recoverable asset available to the counterparty for enforcement of a costs order, nor does it establish that licence fees are owed against which costs could be set off. Whether any licence payment obligation will arise remains uncertain and dependent on the outcome of the proceedings. The Court emphasised that this approach is consistent with prior UPC case law. It also noted that the terms of Xiaomi’s bank guarantee reflected the uncertainty in outcome; so far none of the conditions under which the guarantee was payable had been met.
The Court also rejected ASC’s alternative proposal to rely on prospective after-the-event (ATE) insurance. ASC had not yet obtained ATE insurance and the Court held that the mere intention to obtain it (or negotiations to that effect) could not automatically remove the obligation to provide security for costs. The Rules of Procedure require security to be provided by deposit or bank guarantee, and the Court is not obliged to await the conclusion of insurance arrangements.
Accordingly, the panel dismissed ASC’s application for review, upheld the original order requiring €300,000 security for costs, and refused leave to appeal.
A copy of the Order can be found here.
