While the Unified Patent Court (UPC) has started issuing its initial substantive decisions, the litigation of procedural matters continues at both the UPC’s courts of first instance and at the Court of Appeal. For parties involved in UPC proceedings, establishing the best possible procedural position is important for the further course of the proceedings.
This article summarizes the current state of play of UPC case law on applications to change the procedural language and security for litigation costs.
German to English
At the discretion of the claimant, proceedings will be held in (one of) the official language(s) of the relevant division (Article 49(1) of the Unified Patent Court Agreement (UPCA). Upon request by the other party, however, the language may be changed to (one of) the language(s) in which the relevant patent was granted (Article 49 (5) UPCA and rule 323 of the Rules of Procedure (RoP).
The court will decide on such a request based on grounds of fairness, taking into account the relevant circumstances of the case, particularly the defendant’s position (Article 49(5) UPCA).
The choice of procedural language holds significant weight for parties involved in UPC proceedings, who want to have their case conducted in a language with which they are familiar.
From the start of the UPC, the German language emerged as a preferred choice among claimants before the German local divisions, where most of the UPC cases were pending. This prompted multiple defendants to file applications seeking to change the procedural language to English, with some being more successful than others.
After multiple decisions by the courts of first instance, on April 17, 2024, the CoA delivered a decision in the Curio Bioscience v 10x Genomics case (UPC_CoA_101/2024), which elucidated the criteria outlined in Article 49(5) UPCA.
The CoA established comprehensive guidelines that should be applied by courts of first instance when assessing requests to change the procedural language. All relevant circumstances should be considered, primarily as they relate to the specific case and the position of the parties and particularly the position of the defendant.
Relevant factors include: the predominant language in the relevant field of technology; the language of the evidence and prior art; the nationality or domicile of the parties; the potential impact of a change of the language on the course of the proceedings; and the relative sizes of the parties involved.
Less significant (or even irrelevant) factors include the nationality and native language of the judges, the language proficiency of the legal representatives, and factors resulting from strategic choices such as the preference for English for coordination purposes.
When the interests of the parties are considered and found to be evenly balanced, the position of the defendant is the decisive factor.
The CoA also emphasized that the language of the patent cannot be unfair to the claimant, who had the opportunity to select the language when applying for the patent. The claimant thereby assumed the risk of engaging in legal proceedings in that language.
The CoA’s decision provides helpful guidance to the first instance courts and a degree of predictability for parties as to which factors are relevant and thus will be considered.
Any decision will still hinge on a careful balancing act of the specific circumstances of each individual case which can result in diverging outcomes, as is clear from two recent orders by the local division in Düsseldorf on June 18 (UPC_CFI_99/2024) and May 30 (UPC_CFI_26/2024). In any case, recent statistics show that the use of the English language is currently prevailing over the German language.
Security for legal costs
If a party fears that the other party’s financial situation prevents it from recovering a potential future cost order, it can request that the court order security for legal costs (Article 69 (4) UPCA and R.158 (1) RoP).
This ensures that defendants, who – after all – did not choose to initiate the main action, are not left vulnerable to the risk of unrecoverable costs should they prevail in the proceedings.
Upon a request for security for costs, the court will balance the rights of the defendant against the right of the claimant to enforce its patent rights. From the Munich Central Division’s decision in Nanostring v Harvard it follows that the factors that will be weighed include the financial position of the other party, which may give rise to a legitimate and real concern that a possible cost order might not be recoverable.
In addition, the likelihood that a possible cost order by the UPC may not, or in an unduly burdensome way, be enforceable will also be considered.
So far, different local divisions have provided different views on applications for security.
The local division in The Hague has shown hesitancy in issuing security orders in proceedings involving EU-resident claimants. In Plant-e v Arkyne (UPC_CFI_239/2023), it emphasized that the goal of providing security is to ensure enforceability of cost orders against non-EU resident claimants.
Providing security on alternative grounds (e.g. the potential insolvency risk of an EU-based claimant) should only be possible in exceptional circumstances, especially when the claimant is an SME whose right to access to justice may be hampered if it is ordered to provide security.
This strict approach seems to stem from Dutch procedural law, where it is not possible under any circumstances to request security from claimants that are domiciled in the EU, which is also specified by the decision.
Conversely, German and French divisions have shown to be more willing to order security for costs based on the claimant’s financial position, regardless of domicile.
The Hamburg local division in Ballinno v UEFA (UPC_CFI_151/2024) explicitly held that for claimants domiciled in the EU, the insolvency risk is the relevant factor (The Paris local division in ARM v ICPillar ordered security for costs based on a lack of indication about the claimants’ financial situation and the insufficient insurance that was taken out, without domicile being a relevant factor (UPC_CFI_495/2023).
This broader approach by German and French Courts can be relevant for SMEs considering initiating an action before the UPC, as this may have impact on their financial ability to commence proceedings.
It remains to be seen which approach other local divisions will take.
Conclusion
The necessity for clear guidelines regarding the procedural tools of the UPC is essential for the involved parties and the effective functioning of the court itself.
The CoA provided clear guidance in Curio Bioscience v 10x Genomics on how to deal with applications to change the procedural language.
Decisions will however remain dependent on a careful examination of the specific details of each case. As for applications for security, we await a decision by the CoA, which may harmonize the different perspectives currently maintained by the local divisions.
This article was first published in ManagingIP on July 23, 2024
