The legal background relating to the payment of costs during revocation actions stems from Article 69(1) of the Unified Patent Court Agreement (UPCA). This article indicates that: “Reasonable and proportionate legal costs and other expenses incurred by the successful party shall, as a general rule, be borne by the unsuccessful party, unless equity requires otherwise, up to a ceiling set in accordance with the Rules of Procedure.” Article 69(1) is supported by Rule 152(2) of the UPC Rules of Procedure, which outlines that: “The Administrative Committee shall adopt a scale of ceilings for recoverable costs by reference to the value of the proceedings. The scale may be adjusted from time to time.”

Scale of ceilings for recoverable costs (November 2024)

Rule 152(2) indicates that in order to determine the ceiling for recoverable costs an assessment of the value of proceedings must be undertaken. The UPC has issued guidelines for the determination of the court fees and the ceiling of recoverable costs, in which section II.2.b dictates that: “(1) The value of a counterclaim for revocation or of a revocation action should be determined having regard to the value of the patent to be revoked.”

The guidelines therefore indicate that in order to evaluate the value of the proceedings and subsequently determine the ceiling for recoverable costs, the value of the patent to be revoked must be taken into account. This can be based on the factors we will discuss below as well as consideration of the value of an appropriate license fee. Of course, it might be difficult for a claimant to determine the value of the patent if they are not able to see licence details, and this might mean that they are deprived of a key indicator to elevate the value of recoverable costs. It is not clear whether a claimant could force a defendant to disclose such information, but the guidelines indicate that an appropriate license fee can be calculated based on the turnover of the parties for the remaining lifetime of the patent.

In its order, the court applied this legal background, observing the requirement for an assessment of the value proceedings (by the value of the patent to be revoked) in order to ultimately deduce the ceiling for recoverable costs. Relevant factors indicated by the court for assessing the value of a patent are:

• The remaining lifetime of the patent;
• The number of UPC and non-UPC states in which the patent is validated;
• The value of the relevant market (in this case, the court took account of the fact that no information was provided by the defendant as to products falling under the patent sold in UPC member states, but considered the value of the global market relevant to the patent in suit as evidenced by the claimant and the defendant);
• The presence of pending opposition proceedings;
• The timing of the revocation action filing (in this case, the defendant decided to file the revocation action before EPO opposition proceedings were completed, suggesting heightened patent value, despite the fact that the defendant had not opposed the patent in suit before the EPO); and
• The claimant’s area of practice (in this case, the court noted that the defendant operated in the same field as the patent in suit such that patent revocation would potentially increase their freedom to operate).

The court noted that in this case these factors speak for an elevated patent and/or action value, such that the lowest band for recoverable costs cannot be applicable. However, the court also noted that the claimant did not appear to put into practice the patented technology in the contracting member states such that the value of proceedings must reside in one of the lower bands.

Interestingly, the court also emphasised that the assessment of the value of proceedings must be made based on the filing party’s objective interest at the time of filing the action, and that therefore circumstances arising after the time of filing the action are not to be considered. This, in theory, means that a claimant should not be able to take into account the strength and contents of a defendant’s counter arguments when putting forward a value of the proceedings. However, in this case the claimant was allowed to change their position, with the court indicating that the original selection of a value of proceedings by the claimant was not relevant since nothing in UPC Agreement or Rules of Procedure suggests this is binding, and the initial indication was only subjective and acted as a starting point for discussions.

It is not currently clear to what extent invoking one of these factors would raise or lower the value of the patent and thus increase or decrease the recoverable costs ceiling. However, it would seem to be the case that providing specific evidence concerning the value and use of products covered by the patent in suit is an important factor in elevating the value of the litigation and thus the recoverable costs to be awarded.

Useful links

• Unified Patent Court Agreement, 2013/C 175/01: dycip.com/upca-2013-c17501
• UPC Rules of Procedure (PDF): dycip.com/upc-rulesofprocedure
• UPC guidelines for the determination of the court fees and the ceiling of recoverable costs, 24 April 2023 (PDF): dycip.com/upc-court-fees-23