UPC judge orders record security of €4M for costs, flatly rejects insurance policy as collateral even if issued by EU-based insurer

Context: In the Unified Patent Court (UPC), plaintiffs must give security if they are in a financially weak condition or if enforcement in the jurisdiction in which they are based might be impossible or unduly burdensome. The standard types of collateral are a deposit or a bond issued by an EU-based bank. Last year, the UPC’s Court of Appeal (CoA) rejected both a U.S. bank guarantee and a UK insurance policy, but with respect to the letter the decision was purely procedural: it was presented out of time (September 17, 2024 ip fray article).

What’s new: In his capacity as judge-rapporteur on two Syntorr v. Arthrex cases, Judge Tobias Pichlmaier of the Munich Local Division (LD) has ordered the provision of collateral to the tune of €2 million per case (€4 million in total), and has categorically rejected an insurance policy, even if issued by an EU-based insurer, as collateral, thereby treating the security options laid out in Rule 158 of the Rules of Procedure (RoP) as exhaustive (1, 2).

Direct impact: This is an interesting decision, but it could be reviewed by the panel and appealed from there. The plaintiff was apparently prepared for this outcome, as €2 million per case was the upper end of the range of a security amount is considered justified. It successfully opposed the defendants’ (three Arthrex entities) request for €3 million, but the statutory cap (which applies to all cases with a value exceeding €50 million) applied. Where Judge Pichlmaier agreed with the plaintiffs was that they should have six weeks to provide collateral, which is a generous time frame but apparently was deemed reasonable in light of the amount.

Wider ramifications: This may be a record for a security amount to be ordered by the UPC in connection with a single dispute. If the plaintiff appeals the rejection of an insurancy policy issued by an EU-based insurer, the question of whether the options offered by Rule 158 RoP ar strictly and literally exhaustive.