[Unnamed applicant] v. Amycel LLC, UPC Court of Appeal, Order of 2 July 2026, UPC-CoA-935/2025
Background
In a significant procedural ruling handed down on 2 July 2026, the Court of Appeal of the Unified Patent Court (UPC), presided over by President Klaus Grabinski, has issued a comprehensive order on the security for costs regime under Article 69(4) of the UPC Agreement (UPCA) and Rule 158 of the Rules of Procedure (RoP). The case, which concerns European Patent EP 1 993 350 and involves AMYCEL, LLC, a California-based respondent, as against an unnamed appellant (the defendant in the underlying infringement proceedings before The Hague Local Division) offers patent practitioners a clear articulation of how, when, and in what amount security for costs may be ordered at the appellate stage of UPC proceedings.
The underlying infringement proceedings resulted in a default decision of The Hague Local Division dated 21 October 2025, granting injunctive relief and ancillary measures in favour of the respondent, awarding interim damages of €50,000 and ordering the appellant to bear the costs, with the value of the action set at €500,000.
The decision followed earlier provisional measures proceedings between the same parties in which the Local Division had already granted a preliminary injunction and awarded the respondent interim costs of €11,000. The appellant challenged the first-instance decision and several procedural orders, requesting that the infringement action be dismissed or, alternatively, remitted to the Court of First Instance. Against this background, the respondent applied for an order requiring the appellant to provide security for legal costs in the amount of €56,000 pursuant to Article 69(4) UPCA and Rule 158 RoP. The Applicant sought to have this application dismissed.
Who May Seek Security for Costs?
The Court of Appeal took the opportunity to restate and consolidate its now well-established position on the threshold question of standing to apply for security for costs. Article 69(4) UPCA permits an order for security for costs only against the applicant, that is, the party that initiates the relevant proceedings by lodging the procedural act by which those proceedings are commenced, and not in the applicant’s favour.
For patent practitioners, the practical implications of this principle are significant and wide-ranging. At first instance, there is no legal basis for granting security for costs at the request of a claimant in infringement proceedings, and the same applies to a claimant in a revocation action. Importantly, the Court went further and addressed the position where a defendant files a counterclaim for revocation: the fact that a defendant has filed such a counterclaim does not entitle the infringement claimant to seek security for costs in respect of it, since the counterclaim is a direct consequence of the infringement action brought by the claimant and an order requiring the defendant to provide security would unduly prejudice its ability to defend itself. This reasoning is likely to be of considerable practical relevance given the frequency with which revocation counterclaims are filed in UPC infringement proceedings.
In appeal proceedings, the appellant initiates the proceedings by lodging the appeal and is therefore to be regarded as the applicant within the meaning of Article 69(4) UPCA. Consequently, as a general rule, only the respondent may request security for costs in appeal proceedings, irrespective of whether that respondent was the claimant or the defendant before the Court of First Instance. The same principle applies where both parties appeal or where a cross-appeal is lodged.
The Legal Test: What Must Be Shown?
The Court’s articulation of the substantive legal test for security for costs is of considerable practical utility. The purpose of the provision is to protect the opposing party against the risk that a future order for costs may not be recoverable or may be enforceable only in an unduly burdensome manner, and security for costs may therefore be ordered where the financial position of the applicant gives rise to a legitimate and real concern that such a risk exists.
Critically, the Court confirmed that the threshold is not a high one. While the mere fact that a party is domiciled in another Member State, or that its financial situation is not fully known, is not in itself sufficient to justify an order, proof of actual insolvency is not required, nor is the Court required to establish that recovery of a future costs order will be impossible. It is sufficient that the circumstances objectively demonstrate a genuine risk affecting the practical recoverability or enforceability of such an order.
On the question of burden of proof, the burden of substantiation lies initially on the applicant. Once the reasons and facts have been presented in a credible manner, it is for the opposing party to challenge them in a substantiated manner, since that party will normally have knowledge and evidence of its own financial situation. Throughout, the Court must take into account all relevant circumstances and strike a fair balance between protecting the respondent against the risk of non-recovery and safeguarding the appellant’s right of access to justice.
One notable point arising from the assessment of the specific facts is the Court’s treatment of non-payment of previously awarded sums. The Court acknowledged that non-payment does not necessarily demonstrate inability to pay and may also reflect a party’s litigation strategy or disagreement with the underlying orders. However, when considered together with repeated assertions of financial hardship, the absence of substantiating financial information despite previous requests by the Court, and the absence of evidence enabling the Court to assess the actual availability of assets for enforcement, the continued non-payment of amounts previously ordered constituted a significant factor in the assessment. The Court also confirmed, importantly, that a party seeking security is not required first to undertake enforcement measures in respect of existing claims and to demonstrate their failure, since the purpose of a security for costs order is preventive.
Amount, Form, and Consequence of Non-Compliance
On quantum, the Court resisted the respondent’s request for the full €56,000 ceiling. The applicable ceiling for recoverable representation costs does not represent the amount that will automatically be awarded; rather, it establishes the maximum amount that may be recovered, subject to the Court’s assessment. Having regard to the nature and complexity of the issues, which were primarily legal and procedural, the Court considered it unlikely that recoverable costs would reach the applicable ceiling, and set security at €28,000, corresponding to approximately fifty per cent of the ceiling, as proportionate to the scope and complexity of the appeal.
As to form, the security must be provided either by a deposit into the account designated by the Court or by an unconditional and irrevocable bank guarantee issued by a bank licensed within the European Union. The security is to be provided within three weeks of service of the order. The consequences of non-compliance are stark: pursuant to Rule 158.5 RoP, if the security is not provided within the prescribed period, a decision by default may be given against the appellant.
Why This Decision Matters
This order is important for several reasons. First, it consolidates a line of Court of Appeal authority on standing, providing practitioners with clear guidance on which party may apply for security at each stage of proceedings. Second, it definitively closes the door on claimants in infringement proceedings seeking to use counterclaims for revocation as a vehicle for obtaining security for costs against defendants. Third, it articulates a “legitimate and real concern” standard that, while not demanding proof of insolvency, requires more than mere conjecture, with the burden shifting dynamically between the parties. Finally, its proportionality-based approach to quantum, departing from the applicable ceiling in favour of a contextually calibrated amount, signals that practitioners should deploy nuanced, case-specific arguments on the amount of security rather than simply invoking the maximum recoverable figure.
The Court of Appeal’s order can be read here.
